Goldman Sachs has said a lot of things about Bitcoin, but now they finally threw in the towel and admitted the cryptocurrency is, well, currency. In a nine-page report to their clients hilariously titled, “Bitcoin is Money,” Goldman went back on all the trash talk they’d previously put out.
Notably, Goldman Sachs has been on the record saying Bitcoin is a bubble, that it’s worthless, and is for criminals. While there’s an air of truth to some of those statements, cryptocurrency’s rising popularity, especially with multi-national investment banks means Goldman is taking crypto seriously.
With bulge bracket banks paying attention, a rules-based system will likely develop for trading bitcoin. There’s already a surprising number of companies that accept payment with Bitcoin, like Microsoft, Overstock.com, Expedia, and Subway franchises, but only in Buenos Aires.
The cryptocurrency offers a viable alternative in countries where traditional money services are limited. Since Bitcoin can facilitate transactions at lower costs, countries usually subject to high or changing exchange rates benefit from crypto exchange.
In Dubai, you can pay for real estate with Bitcoin. Venezuelan president Nicolas Maduro tried to scrap the dollar entirely and launch an oil-backed cryptocurrency. His congress said nope, but we’ll see how that goes.
Even Abkhazia, a self-proclaimed state recognized as a country only by Russia, is considering launching their own crypto.
So basically, with nearly everyone at least paying attention to Bitcoin, Goldman Sachs decided they might as well join the fun.
Zach Pandl, Senior Economist at Goldman, noted, “Digital currencies should be thought of as low/zero return or hedge-like assets, akin to gold.”
Like Bitcoin, gold is not technically considered money, but can be converted to cash and gains value with its limited supply. Only 21 million bitcoins will ever be mined in total, and right now almost 17 million are in circulation.
Of course, the dollar still dominates global trade. Around 65 percent of global foreign exchange reserves are made up of the dollar, and roughly 30 percent of global trade (besides the U.S.) is invoiced in dollars.
While the dollar is backed by the U.S. government and printing press, Bitcoin relies on a critical mass of users. Considering there are over one thousand cryptocurrencies and Bitcoin dominates the market, they’re doing pretty well in terms of popularity.
Despite this, Goldman Sachs shot down rumors that they’re setting up a Bitcoin trading desk. Back in December, reports circulated saying the investment bank was launching crypto trading desk in June 2018.
CEO Lloyd Blankfein clarified, “What we said was we were opening – we, we’re clearing futures in bitcoins for some of our futures clients. We’d clear them. We’re a prime broker and so if our clients are going to do it, we’re going to do it.”
Since cryptocurrency is a highly speculative, risky investment, a Goldman spokesperson previously noted, the company is “evaluating the specifications and risk attributes for the bitcoin futures contracts.”
So while Goldman Sachs may not be opening that trading desk any time soon, they’ve at least gotten on board with the whole Bitcoin is real currency thing.
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