The bitcoin community is hopeful for the digital currency to become the currency of choice across the world one day. However, it may not happen anytime soon. To start with, bitcoin has a long way to go both in terms of its adoption or the technical development. Even if it looks a bit farfetched, it will eventually get there.
An old school financial services investor, J. Christopher Flowers has a different take on it. According to him, the fintech revolution what we are seeing around us in the recent days is going to end badly for most startups. While speaking at the Super Return private equity conference held in Berlin, he mentioned that most of the alternative financial services startups are leveraging upon the power of bitcoin to offer their services to those who are not catered by the mainstream banking sector. This may lead to poor lending decisions which may lead to huge losses in the long run due to defaults.
While J. Christopher Flowers puts a lot of trust in the established conventional banking system, he seems to have omitted the fact that banks feel threatened by the growth of bitcoin industry. The banking industry is trying to counter the growth of bitcoin sector by incorporating the very technology used by bitcoin into their operations. Also, the banking sector is not a perfect model. It was proven in the last decade during the recession. Big banks, considered too big to fail either closed their doors or received bailout packages from the Federal Reserve.
In addition, J. Cristopher Flowers also stated that some of these fintech startups are going to be very successful while the rest will fail. He fails to mention anything new that is not already known. There are enough data already available which states that the failure rate […]
