‘I read a lot of history, and I know that once upon a time, a coin was worth $5 if it had $5 worth of gold in it. Now we have paper that is just backed by fiat…Maybe in the new world, something gets backed by consensus.’
This is what Goldman Sachs Group Inc. [NYSE:GS] chief, Lloyd Blankfein, said on Thursday to Bloomberg TV. His basic message to investors was not to dismiss bitcoin.
At the moment it’s hard to see how bitcoin isn’t a bubbly asset. Investors are buying into the coin with the hope that prices will continue to rise and sell their holdings for a handsome profit. But of course this wasn’t what bitcoin was created for.
Why Was Bitcoin Created?
In 2008, the digital currency was created as a peer-to-peer medium of exchange. It eliminated the need for financial middle men who check our every move and hard high fees for doing so.
Of course, you can’t blame bitcoin holds for not using their digital coins as currency. Who wants to spend bitcoins for food or items when the token continues to climb up with no end in sight.
While bitcoin does have its problems, scaling has become an issue; it’s still a worthy cause to get behind. But not only is the idea of bitcoin easy to get behind, the underlying blockchain technology of the coin is set to revolutionise how businesses record and store information.
Goldman is among the most active businesses developing blockchain technology. As reported by Bloomberg last month:
‘Lloyd Blankfein last week tweeted that he’s “still thinking about #Bitcoin,” but the bank he leads is doing more than just thinking about the technology that underpins the cryptocurrency.
‘Goldman Sachs Group Inc. is the fifth most active corporate blockchain investor, with involvement in four companies focused on the distributed-ledger technology since 2012, according to a report by tech researcher CB Insights. The bank’s investments include software developer Digital Asset Holdings, payments company Circle and Axoni, which provides blockchain infrastructure for capital markets.’
‘I’ve learned over the years that there’s a lot of things that workout pretty well that I don’t love,’ Blankfein said. At the moment, Blankfein doesn’t have a stake in bitcoin. But he’s not ready to pooh-pooh the idea of buying into cryptos just yet.
If you’d like to know more about the secret world of bitcoin, click here.
Junior Analyst, Money Morning