Why Bitcoin Should Work
In a recent interview at the Economic Club of New York, Goldman Sachs CEO, Loyd Blankfein, said he adopted a cautiously positive tone towards bitcoin, terming it a “consensus currency” similar to fiat currencies. He had criticized bitcoin last November and called it a “vehicle to perpetrate fraud.”
CEO Blankfein’s remarks come as his Wall Street investment firm readies the opening of a futures trading desk for cryptocurrencies later this year.
“I can’t say why it (Bitcoin) should work,” he said. “But if it did work, I should be able to explain it in hindsight.”
Mr. Blankfein compared Bitcoin’s rise to the evolution of money from gold to hard currency to paper.
“You start out with gold as money, and people would only take hard currency, and you make gold coins,” he explained.
“Eventually, they would give you a piece of paper with the promise that there was $5 in gold to back the $5 piece of paper, and you can go in and redeem it. Then they gave you a piece of paper and said, ‘there’s $5 of gold, but you can’t redeem it … and we are still doing that today.”
A fiat (paper) currency derives its worth from government diktat and a similar approach could be used to legitimize bitcoin as a “consensus currency.”
On a personal note, Mr. Blankfein was skeptical of cellphones when they were introduced. “I thought who the hell is going to lug this thing around,” he said.
Notably, I felt the same when they were a size of a briefcase, I cannot be without my BlackBerry now! (We do own Bitcoin early).
Currently, Bitcoin is trading at 6,266.57, +6.22, +0.0994%, as of 7:39a BST, the market is open
Mr. Blankfein sounded a note of caution about the current state of cryptocurrencies.
“It would be painful for someone to put his or her net worth into cryptocurrencies today,” he said, in a reference to the scandals and volatility that have punctuated their journey to mainstream spotlight.
“But it’s not a systemic issue. People are passionate for it and passionate against it.”
Mr. Blankfein said he doesn’t own any Bitcoin and neither does Goldman Sachs, per his knowledge, adding, “It is not for me.”
There is no doubt some CryptoCurrencies with fail, some will be scams, and some will live on to change the very nature of money and wealth, no wonder the old dudes are scared.
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