We're Not Fixing Money to Build More Casinos

So the other day, I was talking to a longtime River client, and he told me that he has never been more bullish on Bitcoin, but he has also never been more worried about the people who do not have any. He told me that he gave his nephew some money to start investing. What he found out was that instead of buying Bitcoin or some long-term investment, his nephew started playing around with prediction markets and lost a lot of it.

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I do not think the story is unique. It is happening more and more these days. I was thinking about why this is happening, and I think what we are seeing is that the American dream is getting harder and harder to reach for the average young person. There are a record number of obstacles to having the financial future that young people want, the one that their parents were usually able to achieve.

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Housing affordability is terrible. The number of 30-year-olds who are married and own a home continues to fall off a cliff.

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Banks used to be a place where you could build your wealth. Our parents were told, put a fraction of your paycheck in the bank every two weeks and your wealth will compound. You will earn compounding interest. That is just not the case anymore. You cannot save in a bank and build wealth. The interest rates are not there. Inflation eats it all up.

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So with all of this financial uncertainty, with all of these obstacles, more and more young people are coming to the conclusion that they have to gamble or speculate to get anywhere close to the financial future that they want.

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Historically, banking or investing and gambling were two very different things.

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A bank was a place that kept your money safe. You could make long-term investments in a brokerage account, and you went to a casino to gamble. It was entertainment. You walked into Caesars Palace. You walked into the Venetian. You played roulette, played poker, and had some fun. Two very different things. But more and more recently, we are starting to see this unholy marriage of banking, finance, and gambling.

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The reason this is happening is because companies are starting to prey on the desperation of young people. We can see it in the numbers. Sports betting continues to skyrocket in popularity. Very recently, prediction markets have unlocked something new. They have unlocked the ability for financial institutions to offer sports betting natively in their apps. Financial institutions whose missions were to democratize finance or bring economic freedom to the world are now pushing betting on the Super Bowl or betting on March Madness.

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Now, we are in a casino right now. I am not saying gambling should be illegal. I like to play a game of roulette when I visit Vegas, or bet on my favorite boxer every few years. But I think we also need to be honest about what is happening. The fintech industry, the crypto industry as a whole, should not lie to themselves about what is happening here.

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Gambling, the proliferation of gambling, and the normalization of it as a daily habit in the apps that we trust with our money to build our wealth just is not good for society. In every jurisdiction where gambling proliferates, personal bankruptcy goes up. Calls to the National Gambling Helpline have skyrocketed in the last few years, and people are gambling younger and younger. You used to have to walk into a casino to gamble. Now all you need is a phone app and your parents' debit card, and you are off to the races.

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I think what is happening here is that people leading a lot of these newer financial institutions are starting to offer financial products that they would actually never want their kids to use. They would never want their family to use them, but they are pushing them on their users. That is what I think needs to change.

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So we have at our feet two somewhat dystopian futures: this very boring future where we use old, stodgy banks that get your paycheck and do not give you anything in return, and these fintech apps that are telling you they are democratizing finance, but really are just pushing sports betting down your throat. So how do we fix this? What is the positive vision here?

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We have to be realistic. We need financial institutions to be able to make money, but they should also provide products that benefit their clients. They should be secure. They should be transparent. They should be available. People need access to their money 24/7 in the modern era.

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Traditional banking has historically been pretty strong at some things. Banks have actually had pretty good service and a pretty good track record of security. They have been reliable places to keep your money, but they have not been win-win. Well, they might have been win-win, but the bank wins both times.

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Bitcoin exchanges have also had major benefits for people. They have helped people build a lot of wealth, they have had great business models, and they also provide access to this 24/7 payments network.

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So what I think is that the future of the financial institutions that will drive our society forward toward a positive future are going to start looking like Bitcoin banks. They are going to have the best of banking and the best of Bitcoin exchanges.

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Bitcoin banks are uniquely positioned. They allow wealth generation without gambling. They allow their clients to succeed while having a viable business model. Because they typically have a business model of Bitcoin brokerage, they can afford to pay you the interest you deserve on your cash.

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They can also operate 24/7 because Bitcoin does not sleep, and Bitcoin gives you access to a global payments network, which is a huge upgrade from the fiat network we have today. They can be far more transparent than banks. Bitcoin allows proof of reserves, whereas banks can publish their financial statements, but you do not really know what is happening behind the scenes.

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I think what we are going to see is this slow acceleration toward a trend of all financial institutions slowly starting to look more and more like Bitcoin banks. We are already seeing this get started. Sixteen of the top 25 largest banks in the country are already building Bitcoin products. Now, I do not think that tomorrow Citibank is going to offer buy Bitcoin on the home screen of its app. It is going to take a while, but these are promising signs.

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Our industry is also moving more toward banking, but we have a long way to go. We have built some great products in our industry, but we are not known for security in the Bitcoin space, or in the crypto space more broadly. Especially, our industry is also not known for its customer service. Banks have a leg up there, so we have a long way to go.

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At River, we are building toward this. You can already get paid to your River account and auto-convert your direct deposit to Bitcoin. You can earn a high-yield interest rate on your cash, and that interest is paid in Bitcoin. You can replace your checking account. You can pay all of your bills from your River account.

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Our clients are investing for the long term, and they are building wealth for the long term. Unlike these sort of speculative gambling apps, 70% of our clients have never sold their Bitcoin.

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I think Bitcoin banking gives us a third path forward from two other dystopian futures.

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There is so much left to build, and there is so much room to grow. Bitcoin has such a small percentage of global wealth today. It has tremendous growth as an asset. The number of public companies with Bitcoin holdings is still quite small but continues to grow exponentially. Bitcoin held by registered investment advisors is growing reliably every single quarter. The most powerful financial institutions in the world continue to grow their Bitcoin exposure.

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Lastly, the biggest institutions of all, the nation states of the world, are continually growing their Bitcoin holdings. Now, I know some of you are thinking some of this is from confiscating other people's Bitcoin. Yes, that is true, unfortunately. But nonetheless, years ago they would have just sold it. More importantly, we are seeing that the growth in positive regulatory postures toward Bitcoin is accelerating.

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Fifty countries in the last five years have increased their regulatory friendliness to Bitcoin. I will end with this. This is an animation showing our planet with a gold dot for every business that accepts Bitcoin. I feel very confident that next year this globe is going to shine even brighter, and I feel very honored to stand alongside all of the great companies here helping make that happen.

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Thank you.