Wednesday , 21 March 2018

Goldman Sachs CEO thinks that Bitcoin is too volatile

Goldman Sachs CEO Lloyd Blankfein appears to have soured on bitcoin following its historic march to $10,000 and subsequent volatility.

He has been one of the most open-minded Wall Street CEOs on Bitcoin. He isn’t a Bitcoin bull like Michael Novogratz; but neither has he derided the currency as has JP Morgan Chase CEO Jamie Dimon.

In fact, Blankfein has even pointed out that people distrusted paper currency when it was first introduced and later accepted it. The implication of his statement is that Bitcoin could become an acceptable means of exchanging value in the future, even if it isn’t widely accepted today.

In an interview with Bloomberg Television, Blankfein derided the flagship cryptocurrency as a “vehicle to perpetrate fraud,” stating that an asset as volatile as bitcoin does not strike him as an effective currency or store of value.

“Something that moves up and down 20 percent in a day doesn’t feel like a currency, doesn’t feel like a store of value,” Blankfein said on Thursday. “If it works out — and it gets more established, and it trades more like a store of value, and it doesn’t move up and down 20 percent, and there is liquidity to it — we’ll get to it.”

Lloyd Blankfein does not believe that everything is rosy for Bitcoin. When asked about the risks associated with Bitcoin, he highlighted its use in crime:

“One of the main uses of Bitcoin is as a vehicle to perpetrate fraud. And that is maybe because you can’t trace it. So is cash, but guess what, it is hard to accumulate cash, sometimes.”

Bitcoin may be used in crime, but the favourite currency of criminals all over the world remains the US dollar. Even JP Morgan Chase was found guilty of assisting money laundering in Switzerland. So the Goldman CEO was certainly on weak ground when highlighting that particular risk factor

On Wednesday, the bitcoin price had stormed to $11,441 on bitcoin exchange Bitfinex — an all-time high — but it has since struggled to maintain the $10,000 threshold. At the time of writing, bitcoin was trading at $9,577 — nearly $2,000 off its all-time high but still up 20 percent for the week.

Despite reports that Goldman Sachs is considering launching a full-scale cryptocurrency trading desk, Blankfein said that the investment banking giant does not have a “bitcoin strategy” and has no plans to establish one — even though CME, CBOE, and even the Nasdaq are preparing to launch bitcoin futures contracts on their trading platforms.

In the past, Blankfein had stated that although he was not comfortable with bitcoin, he was “open” to it and would not let his own biases preclude Goldman Sachs from making a foray into cryptocurrency trading.

Now, however, Blankfein, who was joined in this interview by Michael Bloomberg — a bitcoin skeptic himself — displayed a noticeably more hostile tone toward cryptocurrency than he has in the past.

“Bitcoin is not for me. But there is a lot of things that there weren’t for me in the past that have worked out very well. If it was 20 years forward and it worked out, I could tell you why it worked out. But based on everything that I know, I am not guessing that it will work out.” he concluded.

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