BANKING BILLIONAIRE FEARS FUTURE OF BITCOIN VS. BANKS
BITCOIN ECONOMICS, BITCOIN OPINION, BITCOIN PROGRESS, NEWS01/06/2015BY EVANDER SMART
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Imagine life as a the patriarchal head of a fiat currency banking empire. Life is good, with the ability to create fiat currency out of thin air, thanks to fractional reserve banking practices which effectively legalizes counterfeiting money. You compare notes with other billionaires. Your donations and campaign influence have politicians wrapped around your finger when it is time regulate new competitors or new technologies. With effective control of politicians, regulators, and consumers sending you multiple streams of income, life couldn't be better. With one exception.
What if there was something, like Bitcoin, which the establishment's bankers couldn't wish into the corn fields?
billionaireControlling politicians, regulators, the general public, and national economies is pretty sweet, but can all that power protect you from new technologies? What if people had an option where they didn't have to cut the banks in on every loan, transaction, or new economic measure passed through government? What if people start to figure out you don't need a bank to live a prosperous life? What if a new technology removed the banks from the equation, leaving people to manage their own money, without a corporate middleman with their hand in your pocket? If you were a billionaire who owned a massive national bank, that might cause you to lose some sleep over the potential erosion of your empire.
Uday Kotak is the founder and executive vice chairman of Kotak Mahindra Bank in India, and he has a problem. Digital currency innovations like bitcoin, mobile payment apps like the recently announced Android Pay and Apple Pay offer great opportunity, but a great risk for a traditional banker like Kotak, currently worth over $7 billion. Where do these new financial technologies fit in with a banking industry that is built around the status quo?
"I am excited, but very challenged. I keep wondering at night 'Will I have a bank the next morning?' or will some technology company be doing banking without needing a bank?" Kotak told CNBC. "As long as there are cash and the economy is running, all is well. But as a bank, we'll have to test, experiment, try a hundred different things. A few may work, a few may fail, but we have to experiment and try."
