Wells Fargo, the 4th largest bank in the USD, experienced severe downages on Thursday night and Friday morning. This may sound unrelated to crypto, but it is actually part of the case for investing in cryptocurrencies.
As many supporters of the technology have repeatedly pointed out, cryptocurrencies are specifically designed not to experience the sort of outage that Wells Fargo went through. This may sound like a fanciful promise, but by having a decentralized structure, it becomes eminently possible.
Analyzing What Happened
The general reaction from customers, some of which couldn’t access direct deposits, was of rage. Banks are seen to be universally responsible for their customers’ funds and any issues that prevent access to these funds is bound to shake the faith those customers hold in their institution.
Actual details on the issue are scarce, but it seems like customers across several different states had trouble accessing funds and were told to not deposit money using ATMs. This is a rather foreboding message to receive from your bank, and now, missing fund reports are starting to pour in.
Initial estimates on the number of affected customers are not available, but it sounds like a significant number of customers experience a total blackout (mobile app, online banking, and ATM service). This is just one more “scandal” in a long string of allegations and court cases that paint a picture of a company with too issues to count.
The Implications for Crypto and Wells Fargo
It was initially thought that hackers had compromised the system, but was later revealed that smoke had incapacitated the main server farm for the bank. Bitcoin proponents view this as a sign that there is weakness in the current financial architecture.
It is virtually impossible for an “outage” to occur for Bitcoin because there are so many nodes concurrently mining and supporting the system. Even if these banks don’t change their tune and begin to talk about some of the reasons you might buy Bitcoin, they may start to adapt to a more distributed IT system. Having their servers spread out and not so centrally vulnerable to a weakness like a little smoke would be help consumer confidence in the banks.
Although Bitcoin is more of a replacement for fiat currency than banks as a whole, exchanges like Coinbase or CEX.io will soon be able to provide similar services. Or a whole new cryptocurrency could pop up that would be able to offer functions very much like that of banks.
An interesting detail of this story is how little it was covered by the mainstream media, with few stories reporting on it. Although the outage only lasted several hours, it is still a very significant occurrence when a behemoth like Wells Fargo. Their Twitter feed did offer a few small comments on the downage, but remained quiet so as to not draw more attention to the issue.
From an investor’s perspective, the main conclusions to be taken from this event are heavily varying. Some users may take this as a cue to look deeper into cryptocurrency, some may look for a new bank, and others may look into buying gold. Liquidity and the ability to access funds is always an issue, and it pays to be careful. Perhaps the best decision is to look into all 3 of these solutions, as you never know where the issues are going to be.