In March 2019, amid a flurry of questions and panic regarding the global economy, TF Blockchain founder Jonathan Blanco interviewed Shamir Karkal, Co-Founder and CEO of Sila, a banking and payment API platform that leverages blockchain technology to make money transfer easier and cheaper, to answer questions about banking, stablecoins, the effect COVID-19 has on the economy. This article is a follow up to that interview.
Like never before, the world, along with the global economy, is going through a wild time,many thanks to the Coronavirus, which started around December 2019 in China. As a result, global markets have crashed and are still crashing, as reported in The Economist. As a result of this ravaging pandemic, leaders of the world’s top economies are confronted with massive indecision, fear, and trepidation. This, therefore, begs the question, "what are the implications of a looming market crash and how long will the markets need to recover?"
Back in March, we turned to Shamir Karkal, Founder and CEO of Sila, a banking and payment API platform that leverages blockchain technology to make money transfer easier and cheaper, to answer our questions on the current state of the economy during this unprecedented COVID-19 era. During the interview, Shamir explained the role of technology in banking, the effect of COVID-19 on the economy, and the projected timeline for the economy’s recovery.
According to Shamir, the global financial system is a grand system, which is currently valued at $15-20 trillion dollars per year in revenue. It has existed for several years as an exclusive industry for “experts only" making it impossible for others to breakthrough. Interestingly, it took the introduction of technology into the financial system to change that, making it the level playing field that it is today. The introduction of technology in the financial sector is responsible for improving and automating the delivery of financial services that were once known to be moribund and restrictive.
The fintech industry contains different and diverse sectors and industries, which range from investment management, education, retail banking, fundraising and nonprofit, and cryptocurrency. This speaks of a very diverse market, made possible by the technological revolution. Interestingly, the surface of fintech is just being scratched, especially in the past two decades, since the invention of PayPal. Shamir explained that although “fintech” might seem to be the "new kid on the block," certain aspects of it still use old banking structures to transact business and reach out to their customers. This means that aspects of fintech are not the perfect alternatives to traditional money as we were led to believe. This is because they still depend on the banks for their transaction. Traditional money is heavily regulated, and when compared to the blockchain, the difference is clear. Blockchain and cryptocurrencies are less regulated. In other words,the banking system has evolved from a rigid and regulated system to a flexible system.