Banks and Bitcoin
Goldman Sachs is considering ways to incorporate bitcoin and other digital currencies into their trading operations, according to people familiar with the banking company's plans.
Those sources tell The Wall Street Journal that the development is still in its earliest stages and was inspired by client curiosity. “In response to client interest in digital currencies, we are exploring how best to serve them in this space,” a Goldman Sachs spokeswoman told the WSJ.
According to the WSJ, Goldman Sachs intends to serve their own investors who have bet on bitcoin to be the next big thing. If done properly, their operation could lead to the creation of new markets that operate in much the same way as the markets used to buy shares in a company. Being the first to create such an operation would also put Goldman Sachs in a prime position to further expand the market.
"The smartest Wall Street firms have an opportunity to lead the market in offering financial services to the burgeoning cryptocurrency industry," Matthew Goetz, CEO of cryptocurrency investment firm BlockTower Capital and former Goldman Sachs vice president, told 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."
Goldman Sachs isn't the first financial institution to explore blockchain technology, nor is this the first time they've expressed interest in it — they even have a page of their website dedicated to explaining the tech. However, they are the first blue-chip Wall Street firm to consider facilitating the trading of cryptocurrencies.
While Goldman Sachs explores ways to move forward with blockchain technology, other financial institutions are being vocal about their disinterest in it. JP Morgan's CEO has even called bitcoin "a fraud," and this hesitation to dive into the world of cryptocurrencies is understandable. They started out as a mysterious alternative to government-backed money and were often linked to shadier dealings. Even though cryptocurrencies such as bitcoin and ether have seen record price increases over the past year, the market still volatile.
While the WSJ's sources were sure to note that Goldman Sachs may not move forward with crypto trading, the fact that they're even considering it is promising. The more institutions and governments we have exploring how cryptocurrencies can best be incorporated into society, the sooner we'll be able to take advantage of all the benefits of blockchain.
Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.