The mortgage industry adapted to a form of virtual currency long ago, before we knew what virtual currency was.

I came across an interesting article in the Globe this week about virtual cash, and the possibility that it may get some traction.  The opening sentence in the article was an eye grabber, “Imagine a day when virtual cash gives central banks a run for their money – literally“.  The digital revolution that we’re witnessing, and experiencing first hand, has changed our lives significantly.  The most profound effect is that very impossible seems possible today.  For example, I’m not shocked or surprised that the gatekeepers of all things monetary are worried about competition.

The Bank of Canada just released a paper saying that central banks are unlikely to stand aside and let the new industrialists such as Amazon and Facebook cut into their action.  I’m not going to pretend to understand the nuances and business models of companies such as Bitcoin, a software company who’s niche is virtual currency, but clearly they’ve grabbed the attention of the Bank of Canada, given the fact that they’ve responded by releasing the paper.  The central banks position that is that virtual currency will never become fully convertible into real cash, thus limiting virtual currency to just the internet.  Hm… anyone want to bet against Amazon or Facebook figuring out a way to make it work? 

There isn’t a day that goes that by that I don’t read something about our changing world or economy, and immediately wonder how can this make us obsolete?  Is the thought of virtual currency a threat to our industry?  Don’t think so. Why? Because the mortgage industry is miles ahead in this regard.  A broker, a lender, a lawyer and the borrower never see the product we provide as an industry.  It’s not as if I show up at a brokers office with a wheelbarrow full of cash, our average balance at Merix Financial is just north of $280k, and dump it on the broker’s desk and say, “here you go”. Then the broker wheels it over to the lawyer’s office, and he in turn takes it to the lawyer for the other side, and so on and so forth.  Magically someone along the line gets to actually keep some of the cash, but we never know how the final balance works out.  What an interesting concept.  We sell something you can’t see, and can’t touch.  Can you imagine if we did?  Imagine the cash in the wheelbarrow scenario, after I dump the cash on the brokers desk I say, “I’d like you to count it, and sign off stating all the information you provided is correct”.  And if the borrower happens to be there, we say “take a good look at this pile; this is what you owe me, plus more”.   Thankfully we don’t do business this way, for if we did we would all be curled up in the fetal position, sucking our thumbs, paralyzed with fear.

Virtual currency doesn’t pose a threat to us.  Could it change how we do things?  Possibly, but we long ago adapted to a form of virtual currency, even when we didn’t know what virtual currency was.  If virtual currency becomes the norm it will elicit a collective industry yawn.  Now, what won’t surprise me is if one day we pull out a twenty dollar bill and on the back of the bill is a picture of Mark Zuckerberg.

Until next time,

Cheers.