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Goldman Sachs Considering Bitcoin Trading Operation, Bullish on Distributed Ledger Technology

Last month, JPMorgan Chase CEO Jamie Dimon told an investor conference in New York that Bitcoin “won’t end well,” because “it’s a fraud” and “worse than tulip bulbs,” Bloomberg reported.

Dimon said he would fire any employee trading bitcoin for being “stupid.” JPMorgan being one of the world’s top financial firms, Dimon’s statements caused a short-lived drop in the price of bitcoin, which then recovered.

Now the Goldman Sachs Group, another of the world’s top financial firms, seems poised to take a very different position. Goldman Sachs is considering a new trading operation dedicated to bitcoin and other digital currencies, according to people familiar with the matter, The Wall Street Journal reports. If this rumor is confirmed officially, Goldman Sachs will become the first top Wall Street firm to engage directly in cryptocurrency trading,

“In response to client interest in digital currencies we are exploring how best to serve them in this space,” a Goldman Sachs spokeswoman reportedly said. Both the currency-trading and the strategic investment team of the firm are exploring various options, according to the Wall Street Journal sources.

The unnamed sources reportedly said that the project is still in its early phase. However, in view of Goldman Sachs’ prestige, the move could boost bitcoin’s standing among investors and Goldman would be well positioned to capitalize on further developments in the cryptocurrency sector.

In a Bloomberg video, financial reporter Dakin Campbell speculated on what moves and projects Goldman Sachs could be planning in the cryptocurrency space.

One plausible possibility is that the firm could be looking at ways to make owning and trading bitcoin easier, safer and hassle-free for investors. Another possibility is that Goldman Sachs could be planning new financial instruments, such as derivatives and Exchange-Traded Funds (ETFs) linked to the price of bitcoin and/or other cryptocurrencies. The firm could also be looking at ways to bridge the gap between the native, unregulated nature of cryptocurrencies and the regulatory compliance that mainstream investors expect.

"The smartest Wall Street firms have an opportunity to lead the market in offering financial services to the burgeoning cryptocurrency industry," said former Goldman Sachs vice president Matthew Goetz, now managing partner and CEO at cryptocurrency investment firm BlockTower Capital, as reported by CNBC.  "I think it behooves the smart and more forward-thinking firms to be involved in cryptocurrency, given the number of new services and business lines that will stem from it as this important new industry continues to build and institutionalize."

All the rumors and considerations above are focused on Bitcoin as a currency — a means of payment (digital cash), a store of value (digital gold) or both. The attitude of Goldman Sachs’ peers toward cryptocurrencies has been so far ambiguous at best, and often hostile.

But things change when it comes to the potential of the underlying blockchain technology to simplify, streamline and reshape entire industry sectors. A blockchain-based ledger is, essentially, a distributed open database whose integrity is protected by state-of-the-art cryptography, in such a way as to permit establishing a trustless, tamper-proof common record of all transaction and exchanges that have happened in a system. This is widely recognized to have countless applications beyond digital currencies, from supply chains to robotics and the upcoming Internet of Things (IoT).

“Blockchain could be a revolution in the way everyone — businesses, governments, organizations and individuals — work together,” concluded a sleek Goldman Sachs blockchain technology primer. “It provides a simple, secure way to establish trust for virtually any kind of transaction, helping simplify the movement of money, products or sensitive information worldwide. It’s a transformation that’s already begun. And organizations —both the ones that it can help, and the middlemen at risk of disintermediation — will need to be prepared as the technology matures.”

State Farm Is Testing a Blockchain-Based Subrogation Manager

State Farm announced on December 10 that it is experimenting with a blockchain-based solution for managing the subrogation process in the insurance industry, making the company the latest major enterprise to explore blockchain technology.

LinkedIn Finds Blockchain Developer to Be 2018’s Most Rapidly Growing Job

Distributed Summary:

  • In 2018 U.S. Emerging Jobs Report, LinkedIn says blockchain developer hiring grew by 33x
  • Top skills required for the position include Solidity, Node.js, Ethereum and cryptocurrency
  • IBM, ConsenSys and Chainyard are top hirers for the position and SF, NY and ATL the top locations

U.S. Congressman Suggests “Do Blockchain” and “Wall Coins” to Fund Border Wall

Distributed Summary:

  • Ohio State Representative Warren Davidson throws out blockchain-based fundraising to construct wall between U.S. and Mexico border
  • Floats the cryptocurrency name “wall coin” in seemingly offhand remark
  • Demonstrates awareness, if not sophisticated understanding, of blockchain-based fundraising and incentivization

BlockFi, a Cryptocurrency Lending Firm With Credit Card Plans, Receives Funding From Fidelity and Mike Novogratz

Financial services behemoth Fidelity Investments and perennial crypto booster Mike Novogratz have provided funding for BlockFi, a cryptocurrency lending startup.