Are Direct Debits Modern Day Enslavement?

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As I reflect on 2018 and the decisions that I made in crypto, I can’t help but wince a little at the amount of money that has seemingly disappeared from my grasp.  Having been a hodler of btc since 2016 I am still technically in the money, but when you look at the balance going from 7 digits, to 6 and then to 5 it can get a little depressing.

I suppose the hardest part of all of this, is that I personally chose to become crypto sufficient, in other words I went “all-in” and sometimes I feel like I am paying the price. In retrospect I can feel a little stupid to be honest, stupid with regards to some of the projects I believed in, and stupid that I didn’t cash out, buy a yacht and go for a float around the Balearic Islands.

But then I remind myself of why I got in to crypto in the first place, and I still believe that cryptocurrency is a logical progression in the future of the monetary system.  I recently streamed a crypto hangout with Peter McCormack who hosts the popular “What Bitcoin Did” podcast, and during our chat he said something that left a lasting impression on me.

 

“In the future, when we’re all flying around in our millennium falcons, do you really think we’ll still be using paper money?”

It’s a valid point, and with the likes of Elon Musk and Richard Branson, two of the most prolific entrepreneurs of our generation pushing the boundaries of space exploration, it’s only a matter of time before a truly decentralised form of transaction settlement needs to be implemented.  Now I’m not suggesting that we need an interplanetary monetary system in place, nor that we have to wait until we have successfully colonized another planet or moon. In fact what I am proposing is much simpler and within our reach.  I propose that we as a society boycott a popular system that we all currently accept as being normal and fair, when in truth it couldn’t be further from that.

So what is this problem in the traditional banking that we take for granted? What is it we have accepted as the norm, that is actually incredibly intrusive that needs to change? The major thing we need to break free from is accepting that we have to pay certain fees and charges.  Charges that stem from unreturned payments for example, so lets’ start with the marriage of convenience that is the “direct debit” and recurring payments.

We are told that a direct debit is there for our convenience, and that recurring payments that automatically come from our pockets is the future of money.  This is a lie that started 50 years ago, when there was a need to collect revenue from thousands of ice cream vendors. The idea was first floated by a Unilever executive called Alastair Hanton.  His suggestion was simple

 

“why don’t we ask for permission to take money in varying size amounts direct from peoples bank accounts”

 

This idea rocked the banking world, and despite the fact that today it benefits banks hugely, they were still very reluctant to accept this change back in 1964.  This reluctance is something we still see today, as cryptocurrency is met with a huge amount of resistance from the banking community, and it’s easy to see why.  The very thing that changed the fortunes of many, the direct debit, needs to be abolished for crypto to move forward.

I often hear of crypto start ups attempting to mimic the traditional banking system, and in some cases even buying banks. This is  quite startling as die hard crypto enthusiasts see the current banking system as enslavement, and that enslavement can be traced back to Alastair Hanton’s original idea.

I speak from experience, as a business owner in Spain I have to pay a monthly contribution to the social security office via direct debit. This is one of the few direct debits I have.  I don’t have a mortgage, I don’t have many bills, but the bills I do have such as electricity, local taxes, internet access and water rates, I go to the bank to or a hole in the wall cash machine to pay manually.

I’ve been doing this for 8 years, which is when I first moved Spain, and whilst it may seem like a bit of a mission to some, it’s  far better than the “convenient” alternative I had in the UK.  Back home I had so many direct debits that I needed a spreadsheet that Ian Balina would be proud of just to stay on top of it all.

Whilst I can’t remember exactly how many I had, it was easily over 20 and it was along the lines of 6 different insurance policies, 5 credit cards, water, gas , electric, tv licence, sky tv, landline, internet, 2 car repayments, mortgage and usually a loan repayment.  If this wasn’t enslavement then I don’t know what is. However I didn’t see it as such at the time. I was in my mid 20’s, I drove a Porsche 911, I had a very middle management 3 bed townhouse with garage on the outskirts of the city and a salary that on paper that looked like I should have been living the dream.

The reality is that this was complete enslavement, and eventually I was consumed like bitcoin consume alts, and I was forced in to voluntary bankruptcy.  I lost everything, the wife, the house, the company the car.  Everything the entire system had given me, was taken away from me, almost as if it was punishment for my insolence.

 

I have been free(er) of this enslavement for the best part of a decade, and I don’t doubt that cryptocurrency will eventually free us all from this system, but that’s not going to happen for a while.  After all, the first idea of the Direct Debit was drafted in 1964 and wasn’t implemented until the 1970’s and didn’t become the norm until the mid 80’s.

 

Unfair Charges

 

Today I noticed I had been charged 10% for a bounced payment for my social security over the last week. This is a result of being unable to pay the €350 into the appropriate account over Christmas because (wait for it…) the bank chose to close early and take a few days off over the holiday period.  My routine was upset by the banks choices.

 

The charge was only for €35 but that is not the point, the point is that someone deemed that it was no longer my €35 and that is the problem that cryptocurrency will one day fix. The system had decided that I should be penalised for my insolence once more, and these charges serve as a friendly yule tide warning

“pay your debits on time or else”

As if that wasn’t enough of a reminder, when I paid the money in to my bank (plus a little extra for other bills for my business) an amount equal to what I owed to the social security office was “held” to ensure that they didn’t miss out on what they deemed to be “their” money this time around.

Whilst this account of my banking experience today may seem trivial to some, to me it feels like a gross injustice, and it really does feel like I am enslaved.  This is why despite the crypto bear market, I will continue to be a vocal advocate of cryptocurrency.  So do yourself a favour, (NOT FINANCIAL ADVICE) cancel as many direct debits as you possibly can and start managing your finances for yourself.  Start to pay those whom deserve to be paid, as this is the only way we can start to break free from the shackles of the traditional banking system.

According to Wikipedia, Direct Debit accounts for the payment of 73% of household bills and almost nine out of ten British adults have at least one Direct Debit commitment

Just think of the impact the boycotting of the direct debit system would have on the banking sector worldwide. This is something that would truly be disruptive, and until this is done, crypto will never be adopted as mainstream.  To me we need to take one step back in order to move forward.

 

1 Comment on "Are Direct Debits Modern Day Enslavement?"

  1. What a great post, couldn’t agree more Keith. You’re starting to sound like a revolutionary

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