Is Traditional Banking Dead? Tim Draper’s Advice Shake Up Financial Landscape

1. Relying on a single bank or governing body is no longer viable.
2. Businesses should maintain short-term cash reserves in local and international banks.
3. Investing in digital assets, like Bitcoin, can act as a safeguard against risk.

In the wake of the unexpected collapse of Silicon Valley Bank (SVB), American venture capitalist and entrepreneur Tim Draper have issued a series of recommendations to help business founders navigate the uncertain financial landscape. With concerns over domino runs on banks and increased government intervention, Draper asserts that relying on a single bank or governing body for cash management is no longer a viable option.

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In a report published on March 25, Draper advised founders to maintain six months’ worth of short-term cash reserves, divided between two separate accounts—one at a local bank and another at an international bank. He emphasized that having a global approach to cash management would provide businesses with additional security and flexibility.

Furthermore, Draper called on businesses to invest in digital assets, suggesting they hold the equivalent of two payrolls in Bitcoin or alternative cryptocurrencies. He argued that this strategy would act as a safeguard against the risk of governments seizing control of banks or becoming insolvent themselves.

Draper’s advice comes as numerous startups have been forced to seek emergency relief following the sudden closure of SVB and other financial institutions. In response to these events, he underscored the importance of having contingency plans in place, reminding company boards and management of their responsibility to meet payroll deadlines—even in times of crisis. 

By diversifying their financial holdings and preparing for the unexpected, Draper believes that business founders can successfully navigate the tumultuous economic landscape that lies ahead.

In other news, Sony Interactive Entertainment, the gaming industry behemoth responsible for the PlayStation brand, has recently submitted a patent application for an innovative framework that enables players to transfer and utilize nonfungible tokens (NFTs) across a range of gaming platforms.

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