Bitcoin has stepped up from its tarnished ‘Silk Road’ image to be quoted on trading platforms
Declan McEvoy, founder of newly launched data trading firm CoalFace Capital and formerly head of European investor sales at Standard Chartered, talks about fintech and robo-advising.
What are the big tech investment projects in the financial sector?
Blockchain technology is creating a lot of interest across the financial spectrum, given its potential to change the basic plumbing of the financial industry. Many banks also have ‘bank-within-a-bank’ projects underway in an attempt to build entirely new IT infrastructure fit for the twenty-first century, as opposed to the many legacy systems a bank typically runs.
How do you envision the future of Bitcoin?
The fundamental principle of Bitcoin, that it is a finite resource, is, of course, interesting as that means its value should only go up. Its reputation as a currency alternative though has been tarnished from the outset because of its association with the disgraced Silk Road website which was shut down in 2013 and other shady users but it is now quoted on many trading platforms. The real interest is not necessarily in Bitcoin but in the underlying blockchain technology.
How does fintech affect financial markets?
Fintech has become a term much like hedge funds, a broad, catch-all term that covers many different types of offering. The application of technology has been changing financial markets for several years now, making them much more efficient and transparent. However, as evidenced by the rise of high frequency trading, which is a program trading platform that uses powerful computers to transact a large number of orders at very fast speeds, there are downsides. For example, liquidity appears much deeper than it is, when many technology “market-makers” are not really making markets at all and are merely transmitting someone else’s price. Financial markets at their essence are about the efficient pricing and distribution of risk and technology can help in many ways on this front, but can also allow some players to masquerade as “risk takers” and allow them to get paid for that activity without actually doing it.
What do you think of robo-advisers?
We think they are a great idea and will reduce costs for mass market investors. However, they are not without challenges, as algorithms cannot predict everything and human input is necessary.
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