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When Goldman Sachs talks, Wall Street and Washington listen. Now Goldman says Bitcoin is real money.
White shoe investment bank Goldman Sachs has admitted that Bitcoin and other digital currencies could succeed as real money in developing economies. Goldman strategists wrote in a recent report:
āIn recent decades the U.S. dollar has served its purpose relatively well. [But] in those countries and corners of the financial system where the traditional services of money are inadequately supplied, Bitcoin (and cryptocurrencies more generally) may offer viable alternatives.ā
Nonetheless, the investment bank warns against expecting 2017-level returns:
āOur working assumption is that long-run cryptocurrency returns should be equal to (or slightly below) growth in global real outputāa number in the low single digits. Thus, digital currencies should be thought of as low/zero return or hedge-like assets, akin to gold or certain other metals.ā
Changing tides
This is a remarkable change of tune from the skepticism with which big banks and āmainstreamā investors have generally treated digital currency. JPMorgan Chase CEO Jamie Dimon famously called Bitcoin a fraud last year, while legendary billionaire investor Warren Buffett insists that Bitcoin isnāt money and people should stay away. Likewise, hedge fund magnate Ray Dalio dismisses Bitcoin as a bubble.
Outsized importance
Goldman Sachs holds outsized influence in the world of finance and politics. Both The Independent and Al Jazeera refer to Goldman as the bank that controls the world. The Atlantic is only slightly more subtle, referring to Goldman Sachsā growing influence in the US government as āThe Quiet Coup.ā
Likewise, the Huffington Post has written extensively about the ārevolving doorā between Goldman Sachs and the US government. The publication points out that two Goldman Sachs CEOs - Rubin and Paulson - have served as US Treasury Secretary, and former CEO Jon Corzine became a US senator. Other Goldman alums serve in various positions throughout government and finance.
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