Deposits to regulations: The long history of banking
Banking is a mainstay of modern civilisation, but its origins stretch back over four recorded millennia and perhaps even further.
From simple deposits to concepts of interest, the creditor-debtor relationship, letters of credit, institutional independence, and the ongoing conversation of regulation, we track some key developments in the history of banking.
Babylonia gets the ball rolling on interest
Although the concept of depositing wealth is likely to be even older, the palaces and temples in the Mesopotamian state of Babylonia are among the first to record a key innovation: interest.
Those wishing to store their gold were required to pay 1.6% interest of its value to the institution.
Julius Caesar changes the creditor-debtor relationship
The Romans brought banking out of the temples and made it a distinct sector. During Julius Caesar’s five year reign as dictator, he granted creditors the power to confiscate land from debtors who could not pay with money.
This new dynamic consolidated the power of banking institutions for generations.
Italian banks set a new standard
Banking during the Renaissance era took on a new level of sophistication.
Hubs in Venice and Florence developed innovative credit products that enabled merchants to travel long distances without fear of financial ruin from their stores of cash being stolen. These were analogous to modern cheques. Florentine banks later also created treasury bonds.
18th and 19th centuries
The template for modern banking emerges
Adam Smith conceptualised a model of banking that was independent of state oversight and self-regulated. Alexander Hamilton later developed this idea into the creation of a national bank and uniform currency in the US.
This created stability for a sector that had become notoriously parochial and ephemeral; local banks generally did not survive longer than five years.
20th and 21st centuries
Retail banking grapples with regulation
By now, retail banks offered customers three primary products: credit, deposit, and wealth management.
Lack of regulation in banking precipitated both the 1929 Great Depression and the 2008 financial crisis. The conversation regarding what banks can and can’t do with depositor funds continues to this day.
Upgrade launch new credit card with bitcoin rewards
Upgrade, a fintech company focused on providing credit for mainstream consumers, has launched the Upgrade Bitcoin Rewards Card a new version of its Upgrade Card featuring bitcoin rewards. Under the new programme, users earn unlimited 1.5% bitcoin rewards on every purchase as they make payments.
The custody and trading platform for holding and selling bitcoin is provided by NYDIG and the card is a Visa Signature card, which includes benefits such as trip and baggage insurance, purchase protection, and extended warranty coverage.
The company offers credit lines from $500 to $25,000 with the Upgrade Bitcoin Rewards Card depending on your credit score. It works with Apple Pay and Google Pay. Like other Upgrade credit cards, there are no monthly fees, late fees, or returned payment fees.
"Upgrade Card is already delivering over $3 billion in annualised credit to consumers," said Renaud Laplanche, co-founder and CEO at Upgrade. "Starting today, anyone can apply for an Upgrade Bitcoin Rewards Card and enjoy the same affordable and responsible credit as with any Upgrade Card, plus the potential upside and fun of owning bitcoin."
Participating in the crypto economy
Upgrade isn’t the first company to announce a credit card with bitcoin rewards, but it’s the first one that is generally available. Anyone can apply with no waitlist, and start using their virtual card immediately until they get their physical card in the mail.
"Crypto rewards introduce cardholders to a new asset class that is increasingly part of a consumer's financial portfolio," said Terry Angelos, SVP and Global Head of Fintech at Visa. "Whether you're a crypto enthusiast or just getting started, programmes like the Upgrade Bitcoin Rewards Card offer an engaging and low-risk way to participate in the crypto economy."
At the moment, you can’t do much with your bitcoins. You can choose to hold them or sell them. There’s no way to transfer your bitcoins to another wallet for instance. If you choose to sell your rewards, there’s a 1.5% transaction fee.
This card is not currently available in all 50 states. Customers in Hawaii, Indiana, Iowa, Louisiana, Nebraska, Nevada, New Hampshire, North Carolina, Washington, West Virginia, Wisconsin, and the District of Columbia can’t order an Upgrade Bitcoin Rewards Card at the moment.