It appears that the “vampire squid” of Wall Street is going to start taking its clients bets on the value of Bitcoin. Last week, the often criticized Goldman Sachs announced that it would begin to offer derivatives that are tied to the value of Bitcoin.
Goldman did point out that for now, they will not be dealing in cryptocurrencies themselves.
Instead, they will offer clients access to contracts that will pay in fiat currency, but whose value is determined by the price of Bitcoin. In many ways, this is similar to what is traded currently in Chicago and is not a way to accumulate actual bitcoins.
Major investment banks are still wary about how they would store cryptocurrencies. With the string of high profile hacks over the last year, there is every reason for anyone who is used to doing business in the fiat world to look at how cryptos are stored and traded with some amount of caution.
Perhaps the most interesting part of Goldman’s move is the fact they are introducing a Bitcoin contract after deciding there was sufficient demand from their existing client base.
Peter Thiel Wants In
Peter Thiel is one of the founders of PayPal, and has been a vocal proponent of cryptocurrency. He reports having a stash of Bitcoin, which he sees as a potential competitor for gold. It looks like he is also interested in crypto exchanges, based on a recent regulatory filing.
Mr. Thiel made an investment via his venture capital vehicle, called ‘Founders Fund,’ in a company that is working to streamline crypto trading worldwide.
According to regulatory filings, Founders Fund has backed Tagomi Systems, and appointed Napoleon Ta as a director to their board. Tagomi is working on a tool that would help to integrate crypto trading across global exchanges and increase liquidity for traders.
It is unknown whether or not Peter Thiel is directly involved in managing the investment, but he has expressed his support for the cryptocurrency space on many occasions.
One major advantage to operating an exchange is the ability to profit no matter which direction the market goes, which is a distinct disadvantage for investment banks that offer futures contracts that force them to act as the market maker.
JP Morgan Hates Cryptos Loves Blockchain
Jamie Dimon, CEO of US mega bank JP Morgan, has been an outspoken critic of cryptocurrencies. Apparently, that distaste doesn’t extend to the blockchain, because last week JP Morgan announced they had patented a new blockchain-based interbank settlement system.
JP Morgan cites the inefficient nature of the current international bank transfer system, which requires multiple steps to do what could be done simply with a blockchain-based system.
There was no mention of why people would choose to use the system that JP Morgan patented and not an open source system, which isn’t controlled by a money center that has a history of market manipulation and outright fraud.
Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology.