Goldman Sachs: In theory Bitcoin can be a legitimate form of money

posted about 1 year ago
Bitcoin can be a legitimate and widespread form of money but mostly in theory, for now, according to Goldman Sachs strategists.

"The widespread use of the dollar outside the US — and full dollarization in some countries — suggests there is already demand for an internationally accepted medium of exchange and store of value," said Goldman's Zach Pandl and Charles Himmelberg in a note on Wednesday.

"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."

For example, bitcoin exchange volumes surged in China after the country started clamping down on capital outflows in 2016.
In that sense, there's demand for bitcoin as a form of money to make transactions. But as part of a currency portfolio, cryptocurrencies are "more consistent with a classic speculative bubble," the strategists said. They noted that Korea and Japan dominate bitcoin exchange volumes, but are also countries with stable monetary systems.

The reality is that cryptocurrencies still have a high regulatory bar to clear in most places, the strategists said. To start with, governments can't track who's paying or receiving digital currencies.

Goldman Sachs is reportedly preparing a cryptocurrency trading desk.
Tags: bitcoin, opinion