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Wells Fargo’s Malfeasance Makes Case for Decentralized and Trustless Bank Alternative

Wells Fargo is being sued by a former employee who alleges that Wells Fargo deliberately choose to shut down the accounts of those whom complained of fraud rather than properly investigate claims “under the pretext of a ‘business decision’”.

Matthew Valles is the former employee bringing suit and also claims that he was wrongfully “fired in retaliation for his complaints about ‘hundreds’ of mishandled cases”. A bank is required by law to investigate customers’ claims of fraud, but Valles alleges that there was an  “internal culture whose ‘directive’ was to ‘meet Wells Fargo’s metrics at all costs’”. These actions left customers having to absorb the costs of fraud themselves rather than the bank.

This accusation adds to Wells Fargo’s previous misbehavior of opening accounts for customers without their permission. Wells Fargo had to pay $110 million USD in a class action lawsuit and $185 million USD to the federal and Californian governments. They were also recently punished by the Federal Reserve with sanctions that restrict their growth until Wells Fargo fixes their problems.

Decentralized and trustless networks offer an alternative

Banks originally arose out of necessity because of the high risks for consumers to store their liquidity on hand or in their homes. Banks were able to offer security through a centralized and trusted third party to pool everyone’s funds and invest in safeguards like safes, insurance, and central money processors to guard against theft and fraud. Cryptocurrencies with blockchains are now able to achieve security through decentralized and trustless networks. Cryptocurrencies are distributed across thousands and thousands of economically incentivized computers worldwide solving complex mathematical algorithms, which allows for consumers to have confidence to store their liquidity in a decentralized system without having to trust any specific organization or individual. This system allows consumers to have immediate access to their liquidity without sacrificing security.

Some critics point to the fact that some exchanges, not blockchains, have been hacked that caused users to lose funds. However, the Wells Fargo incident demonstrates loss of funds is not isolated to the crypto space. Consumers will still have to go through a lengthy and time consuming process to try to get their money back from Wells Fargo. Furthermore, crypto impedes long-term repetitive illicit money loss via hacking through added incentives. Cryptocurrencies reduce a moral hazard that arises in the traditional banking system when consumers believe their money is insured by the bank and the government. Consumers fail to do the proper due-diligence and supervision of their banks, which leads to banks taking unnecessary risks and malfeasance. Cryptocurrencies are the opposite since it puts the responsibility on the consumer to ensure the quality of their crypto maintaining their store of liquidity and to demand changes if all is not right, which is a properly structured incentive system to ensure both parties strive to better the other.

Dash offers a secure blockchain and sound financial tools

Many of the top blockchains, including Dash, offer heavy security and economically sound incentives. For one, Dash currently has a hashrate just over 2.5 petahash, up from 1 petahash a few months ago, which further adds to the security of the Dash blockchain. However, Dash sets itself apart from other cryptocurrencies with a unique governance and treasury system. The increasing base of Dash masternodes are heavily invested in Dash and thus have an incentive to improve consumer confidence in Dash so as to maintain and increase the usage and price. Masternodes, want to properly invest treasury funds into projects that are best positioned to improve the security of Dash and serve consumer demands. These projects encompass the many necessary channels to satisfy consumers starting from the core with paid developers to continuously strengthen Dash, to third party solutions and partnerships to increase Dash integration, and even conferences and sponshorships to spread knowledge of Dash.

These additional economic incentives go above and beyond the traditional incentives of many blockchains that rely on only miners and volunteer development to improve the blockchain’s security. Dash is able to leverage these more powerful economic incentives to best serve consumers with added security features in the form of wallets, exchanges, and merchant solutions as quickly as possible.


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