How to Become Bankless
A 5-Step Guide to take control of your money and freedom
Plugs in Headphones 🎧 — “Empire State of Mind” x JAY-Z🎶
One of the best frameworks for improving your life is avoiding what tech bros call premature optimization. Paul Graham put it beautifully — “Instead of working back from a defined goal, work forward from favorable situations, meaning that we should not be quick to make decisions that leave us with no flexibility to change our fortunes in the future.
Elon Musk once tweeted about how Charlie Munger told a full table of how Tesla will fail; he affirmed that Munger wasn’t wrong in his thinking, but it was worth trying anyway;
even Elon did not know how Tesla would evolve, but Munger quickly pronounced its death with certainty. Twelve years later, Elon was right.
These lessons apply today in how skeptics think about web3 and its ecosystem. Avoiding premature optimization is a vital mindset. Rather than saying, “crypto is too risky, I’d just wait till later” or “it won’t work.”
Be open-minded to understanding what web3 is, why decentralization matters, and how you can become more bankless - taking sovereignty over their money and freedom.
Why? Because you want to increase your optionality - having options is good because the only predictable thing in life is that it’s unpredictable;
Therefore with so many unknowns, having a lot of options that will give you a good range of outcomes afterward is how you better your life.
Businesses get insurance to manage their risk in the case of an unforeseen circumstance; in the same manner, people get second passports to protect themselves if something makes a living in their home country dangerous or undesirable. So now you know why selling citizenships is a $25bn a year industry, and global insurance is estimated to be over $5 trillion - Optionality!
As we established in the first part of this series, becoming bankless matters. This article solves the how part of the equation.
Rather than reinvent the wheel, I have outlined five steps with links to well-detailed and researched resources that will bring anyone up to speed in taking some form of sovereignty over your money and freedom.
Let’s dive in
Step 1: Learn how to buy Bitcoin & Ethereum
This is an essential step, in my opinion; you have to get your hands dirty with the nitty-gritty of how to purchase crypto. In most countries, it is a relatively simple process; download an exchange app of your choice, connect your card, and that’s it, but in Nigeria, where the CBN has blocked on-ramp rails, it is a bit complex. Still, with this simple guide, anyone can learn how to buy on Binance through P2P or deposit through their card on Luno.
Why only Bitcoin and Ethereum? Because we are interested in learning how to become bankless, not a speculative drive to make money.
Step 2: Read, Read, Read
The web3 revolution began on October 31, 2008, with the publishing of the Bitcoin Whitepaper by Satoshi Nakamoto. In an age where most products start their lives with marketing campaigns and press drumrolls, not crypto, I think that is instructive for people looking to separate the wheat from the chaff. So look for projects with detailed whitepapers and vital research explaining what they are trying to solve.
Rather than just screaming, do your research without providing any guidance. Here are a few links that should help you as you begin your journey to understand
The first article to read is Kevin Roose’s The Latecomer’s Guide to Crypto, which provides high-level exposure to crypto without much jargon.
First Steps - provides links to very well-researched explainers of critical concepts.
Canvas: The web3 world - explainer doc synthesizing all critical concepts in crypto
Crypto can be crazy - the dummy guide to everything in crypto
Step 3: Get a Non-Custodial Wallet
Most people in crypto stop at step 1, where they interact with centralized exchanges such as Binance or FTX and think it is crypto. However, those platforms are custodial -which means that the centralized exchanges have control over people's funds, and that's why they can enforce government restrictions.
So they require documentation before allowing you to use their product; as such, they can kick you out when pressured by wielders of the monopoly of force, aka governments.
While centralized exchanges are essential for the onboarding and adoption phase of web3, they are simply a means and not the goal.
A non-custodial wallet lets you be your bank. This implies complete control over your funds and the associated private key. Using non-custodial wallets is how to unlock more value in crypto - DeFI is an example, which we will discuss below.
No one can take this away from you without your permission - Not your keys, not your coins! - and this is the first step to becoming bankless.
When you get a non-custodial wallet, you should remember that these apps are merely gateways that allow you to create, store, and manage cryptographic keys without having technical skills. The wallets do not hold your funds; they will enable you to interact with the blockchain easily.
If you lose your wallet's private key and secret phrase, there's no way of recovering access to the wallet, so it is essential NEVER to share your secret phrase and practice healthy wallet security. A few guides to get you started below
I recommend getting a MetaMask wallet as it is the safest and most trusted portal into web3.
Exploring crypto wallets: Teju’s brilliant article explains this step in detail, why it matters, and wallet options for you to consider
After you’ve set up your wallet and transferred some Ether from the centralized exchange of your choice to your public address, you want to ensure you are protecting your wallet. Remember, this is your bank. So it must be safe at all times! Here are some links that provide simple tips on protecting your wallet.
Protecting your wallet by Rainbow
A Crypto checklist to protect you and your funds
I understand why this may seem intimidating for the average person all at once. Not to worry - take your time to learn every step in detail, or please reach out to me or any web3 fanatic you know and ask them to guide you. They will be more than happy to guide you.
Step 4: Set up your ENS (Ethereum Name Service)
Suppose you tried step 3 above or wanted to send a crypto payment. You’d have noticed that you needed to have typed in a long text composed of digits and letters that look like gibberish 0xd8dA6BF26964aF9D7eEd9e03E53415D37aA96045, missing even just a simple number from that string can lead to unfortunate circumstances and as such very intimidating for newbies.
In the early days of the Internet, you had to type in the IP address to access any website, which was also difficult for anyone to remember until DNS came along, eliminating the need for humans to memorize IP addresses. That innovation turned 142.250.178.4 to google.com.
That analogy is what ENS solves for today! The Ethereum Name Service (ENS) is a name and lookup service that allows for the simplification of machine-readable addresses e.g. 0xd8dA6BF26964aF9D7eEd9e03E53415D37aA96045) to human-readable addresses =Vitalik.eth
But not just that, ENS can also serve as your web3 username and can even point to a decentralized website, all with one name.
In the same way, your email/phone number and, in many cases, “Sign in with a big corporation like Google or Facebook” serves as the portal through which you can access most social media and banking platforms today.
Soon in the future, we will all have control over our data and be able to sign in with our web3 name - that no one can take away, possible with ENS.
No more registering for new websites, no more remembering passwords or usernames. Sign in to your favorite website using your web3 account (samlogic.eth, for example, and that’s it. Don’t believe me? You can try this today! Go ahead and try it out now at login. XYZ.
ENS is the first genuinely self-sovereign, neutral, open, public identity protocol of the Internet that allows for simplified crypto payments: receive any cryptocurrency, token, or NFT and so much more
Anyone can register a.ETH name on ENS without a single centralized entity. And it is essential to remember that ENS is not a naming service just for Ethereum; it is a name service built on Ethereum that allows us to become more bankless.
So how can you get one today? I have two simple guides for you
How to register an ENS name for your wallet address by Teju Adeyinka
Own your Ethereum name with ENS (Full tutorial) by The Defiant
Step 5: Play with DeFi
DeFi, short for Decentralised finance, can be understood as a new paradigm where financial services (lending, asset management, insurance, savings, etc.) are possible without trusting centralized intermediaries such as banks but rather a transparent and open smart contract built on a decentralized public blockchain.
The 2008 financial crisis, which was, at the core, a trust crisis, revealed how opaque and fragile our economic system is. It was also a unique opportunity to rebuild trust in our financial institutions. Still, instead, we decided to throw more money through quantitative easing and other measures such as bailout for the banks emboldening the bad actors as too big to fail.
DeFi is a bottom-up innovation that takes the component of centralised finance and replaces human trust with math-based trust, paperwork with smart contracts, legal enforcement with cryptographic enforcement, and third party audit with open source code and public ledger - Adith Podhar and Kamini Shivalkar
With DeFi, you can do most of the things you get from a bank. It is essential to state that this is possible today — you can earn interest, borrow, lend trade assets, and so much more — only that it is faster, doesn’t require paperwork or a third party, and perhaps the most critical part - Open to all.
As a Nigerian who, by and large, is cut off from the global financial system, suffering from chronic inflation, lacking access to credit opportunities to chase ideas and dreams, and with no reliable store of value, the promise of DeFi is a welcome opportunity that increases optionality.
The development of DeFi offers anyone a way to spend, borrow, lend and move crypto assets around in a trustless and non-custodial fashion. This is a new era of finance where people can claim complete control over their funds and get started with just an internet connection.
Sounds interesting, I know; what’s the best way to get started? Of course, reading is vital, but with DeFi, the best way is to get your hands dirty; as such, I recommend you earn some badges by trying out a few things on Rabbithole.
Closing Thoughts: This time, it's different.
Time and time again in our short history, we’ve responded myopically to innovation, from the horse industry pushing against Ford’s car asking ‘how will war items be moved’ or Washington Post wondering what planes could be used for or More recently, the staff of PC World wishing that the iPhone was more like a blackberry.
Much of the innovation in the world today is underrated, underappreciated at birth, and even mocked until mass adoption.
Creating something new that changes how we work, live, behave or organize as a society requires incredible imagination. Still, even the most imaginative minds cannot foresee where today’s innovations will eventually lead.
When Steve Jobs presented the iPhone, everyone laughed and thought, oh, just another iPod. Only builders saw Snapchat, Uber, Facetime, WhatsApp, and the entire mobile revolution.
Here’s some advice, never bet against imagination and intelligent people working to solve a problem. Humanity always has a way of solving even our challenging issues.
The promised future of a decentralized, sovereign individual, where we slowly replace trust in centralized institutions that have repeatedly abused that faith with one where leadership does exist but exudes itself with soft power, will happen; it may take longer than expected; a delay is not denial.
WAGMI
Thanks to Dayo, who looked at drafts and made helpful comments to this article before publishing.