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Mostly I think it's 1. A lot of people jump on guys like Jamie Dimon and Lloyd Blankfein for calling Bitcoin massively volatile / a bubble / whatever, like the

Mostly I think it's 1. A lot of people jump on guys like Jamie Dimon and Lloyd Blankfein for calling Bitcoin massively volatile / a bubble / whatever, like they hate cryptocurrencies. They don't care, and they aren't supposed to. Their business is to sell whatever the customer wants to buy, cheaper or easier than they can get it elsewhere - and right now the customer wants to buy Bitcoin. Who cares if the backside falls out of it later?

52-6F-62 9y ago
Don't forget Jamie Dimon's company is founding their own blockchain for transactions, Quorum. https://www.jpmorgan.com/global/Quorum https://www.jpmorgan.com/global/Quorum
- fitchjo 9y ago
  Finding a use for the underlying technology supporting bitcoin is very different than saying bitcoin as a fiat currency is worth the value at which it is currently trading.
  - 52-6F-62 9y ago
    Undoubtedly. My comment was only meant to frame that he may have a vested interested in lambasting one implementation of the tech while promoting his own, and that he wasn't merely acting as informed commentator. He can't be merely a skeptic when he's selling his own version to some of the largest banks in the world.
  - mulmen 9y ago
    I'm not a financial expert but I thought the value proposition of Bitcoin is that it is not a fiat currency.
    - spenczar5 9y ago
      That's a strange thing to say. I think of a "fiat currency" being one which 1. is not backed by a physical good, like gold, and 2. is recognized by a government, so you can pay taxes and fines with it. Why would it be beneficial that you cannot pay your taxes with Bitcoin?
      - njarboe 9y ago
        fiat - an arbitrary decree or pronouncement, especially by a person or group of persons having absolute authority to enforce it. The amount fiat currency can be doubled overnight by the authority over the fiat currency. Stealing, in effect, from all of the people holding that currency. Non-fiat, like gold or bitcoin (at least this is what the true believers believe), have a high amount of work that needs to be done to just get a little bit more of it. No grabbing half the currency overnight.
        aboodman 9y ago
        Nit, but an interesting subtle one: bitcoin-core can double the amount of bitcoin overnight. They can commit new code which does that and shows up in the next client. But, that would presumably be noticed: either in the oss repo, or in the blockchain itself. So I think more accurately, it's sort of in between a fiat currency and a commodity. It's a fiat currency whose operation is completely transparent.
        CrystalLangUser 9y ago
        Well, they could but the entire community can just fork. Miners are under no obligation to stick with a crazy change like that. The core developers would only shoot themselves in the foot and make themselves never to be trusted again. And with Bitcoin Cash gaining in popularity, a fork is not an impossibility. In fact, BCH is popular because it's actually usable unlike BTC at the moment (extremely high fees, slow confirmation times).
      - mulmen 9y ago
        My understanding is that the mining metaphor is supposed to be reminiscent of gold's scarcity. It is also my understanding that the crypto- in cryptocurrency enables anonymous trade. This would seem to preclude the need to even pay taxes since no government could even track the transactions. As I understand it this is the primary value proposition of Bitcoin. Why would you want to pay taxes to the US government in any currency other than the US Dollar? I really don't understand the value there. Do people pay US income taxes in Euros? Why? How?
    - notyourday 9y ago
      BTC has no value proposition. None what so ever. Just like sea shells as currency have no value proposition. Blockchain technology aka shared public ledger has a value proposition.
cm2187 9y ago
They got burned by doing the same with subprimes, selling securities to clients who requested them but in which they did not believe themselves (and were shorting at the same time). This sort of move carries a significant reputation risk. I am sure not everyone at GS believes in crypto-currencies, there must be a lot of internal emails in the style "this is a pyramid scheme", "this thing will crash", etc... Reminds me a lot of 2007.
- vkou 9y ago
  That's not quite correct. The problem with subprimes was that banks were issuing questionable loans, and then selling them to investors (Without telling them that the loans weren't worth the paper they were printed on.) This carries a significant reputation risk because they were, quite literally, defrauding their customers. A crypto trading desk, on the other hand, just lets them buy or sell crypto on a customer's behalf, and charge them a fee for it - much like Coinbase does for retail customers. They won't have any insider knowledge about crypto, and they probably won't even care if BTC goes to $100,000 tomorrow, or to $0. The customer asks the bank to sell them BTC, the bank gives them a quote, and the customer accepts or rejects it. The bank doesn't know if its a good price, nor does it care - and the customer knows that the bank doesn't know, or care. There's still ways to defraud customers in this arrangement, but there are far fewer incentives to do so... Compared to offloading toxic, shitty mortgages off your books, after having bribed ratings agencies to rate them AAA. If you really care about crypto, this is a Good Thing (tm). Currently, the counterparty risk with Bitcoin exchanges is through the roof. Some of them allow illegal wash trades, some of them don't follow KYC, some of them go belly-up and steal all your bitcoin and dollars, some of them may be front-running their users, some of them don't allow half their users to withdraw USD, some of them are down for minutes a day... For anyone trading in an extremely volatile environment (Like Bitcoin), this practically screams: "RUN, DON'T WALK AWAY." The counterparty risk with a Goldman Sachs trading desk is... Much lower.
  - cm2187 9y ago
    Investors buying subprimes were professional investors. Most of them didn't like subprimes but were buying them because that was the only way to pick up a little bit of yield in a market where credit spreads were massively compressed. It's after they lost their shirt that they suddenly pretended having never realized that subprime stood for loans to riskier borrowers. This is not very dissimilar. I am certain the majority of investors who will buy bitcoin did not do their due diligence in term of how the currency works (in fact I see a lot of pretty financially switched on people around me who seem quite confused on how it works). They buy now because they want the return and will complain that they weren't aware of the risks when they lost their shirt.
adamnemecek 9y ago
They kinda do cause at that point they didn't have a slice of the pie.
bogomipz 9y ago
I think the same but its, 1 because of 2 i.e high net-wroth clients fear of missing out.

52-6F-62 9y ago

Don't forget Jamie Dimon's company is founding their own blockchain for transactions, Quorum. https://www.jpmorgan.com/global/Quorum https://www.jpmorgan.com/global/Quorum

fitchjo 9y ago
Finding a use for the underlying technology supporting bitcoin is very different than saying bitcoin as a fiat currency is worth the value at which it is currently trading.
- 52-6F-62 9y ago
  Undoubtedly. My comment was only meant to frame that he may have a vested interested in lambasting one implementation of the tech while promoting his own, and that he wasn't merely acting as informed commentator. He can't be merely a skeptic when he's selling his own version to some of the largest banks in the world.
- mulmen 9y ago
  I'm not a financial expert but I thought the value proposition of Bitcoin is that it is not a fiat currency.
  - spenczar5 9y ago
    That's a strange thing to say. I think of a "fiat currency" being one which 1. is not backed by a physical good, like gold, and 2. is recognized by a government, so you can pay taxes and fines with it. Why would it be beneficial that you cannot pay your taxes with Bitcoin?
    - njarboe 9y ago
      fiat - an arbitrary decree or pronouncement, especially by a person or group of persons having absolute authority to enforce it. The amount fiat currency can be doubled overnight by the authority over the fiat currency. Stealing, in effect, from all of the people holding that currency. Non-fiat, like gold or bitcoin (at least this is what the true believers believe), have a high amount of work that needs to be done to just get a little bit more of it. No grabbing half the currency overnight.
      - aboodman 9y ago
        Nit, but an interesting subtle one: bitcoin-core can double the amount of bitcoin overnight. They can commit new code which does that and shows up in the next client. But, that would presumably be noticed: either in the oss repo, or in the blockchain itself. So I think more accurately, it's sort of in between a fiat currency and a commodity. It's a fiat currency whose operation is completely transparent.
        CrystalLangUser 9y ago
        Well, they could but the entire community can just fork. Miners are under no obligation to stick with a crazy change like that. The core developers would only shoot themselves in the foot and make themselves never to be trusted again. And with Bitcoin Cash gaining in popularity, a fork is not an impossibility. In fact, BCH is popular because it's actually usable unlike BTC at the moment (extremely high fees, slow confirmation times).
    - mulmen 9y ago
      My understanding is that the mining metaphor is supposed to be reminiscent of gold's scarcity. It is also my understanding that the crypto- in cryptocurrency enables anonymous trade. This would seem to preclude the need to even pay taxes since no government could even track the transactions. As I understand it this is the primary value proposition of Bitcoin. Why would you want to pay taxes to the US government in any currency other than the US Dollar? I really don't understand the value there. Do people pay US income taxes in Euros? Why? How?
  - notyourday 9y ago
    BTC has no value proposition. None what so ever. Just like sea shells as currency have no value proposition. Blockchain technology aka shared public ledger has a value proposition.

cm2187 9y ago

They got burned by doing the same with subprimes, selling securities to clients who requested them but in which they did not believe themselves (and were shorting at the same time). This sort of move carries a significant reputation risk. I am sure not everyone at GS believes in crypto-currencies, there must be a lot of internal emails in the style "this is a pyramid scheme", "this thing will crash", etc... Reminds me a lot of 2007.

vkou 9y ago
That's not quite correct. The problem with subprimes was that banks were issuing questionable loans, and then selling them to investors (Without telling them that the loans weren't worth the paper they were printed on.) This carries a significant reputation risk because they were, quite literally, defrauding their customers. A crypto trading desk, on the other hand, just lets them buy or sell crypto on a customer's behalf, and charge them a fee for it - much like Coinbase does for retail customers. They won't have any insider knowledge about crypto, and they probably won't even care if BTC goes to $100,000 tomorrow, or to $0. The customer asks the bank to sell them BTC, the bank gives them a quote, and the customer accepts or rejects it. The bank doesn't know if its a good price, nor does it care - and the customer knows that the bank doesn't know, or care. There's still ways to defraud customers in this arrangement, but there are far fewer incentives to do so... Compared to offloading toxic, shitty mortgages off your books, after having bribed ratings agencies to rate them AAA. If you really care about crypto, this is a Good Thing (tm). Currently, the counterparty risk with Bitcoin exchanges is through the roof. Some of them allow illegal wash trades, some of them don't follow KYC, some of them go belly-up and steal all your bitcoin and dollars, some of them may be front-running their users, some of them don't allow half their users to withdraw USD, some of them are down for minutes a day... For anyone trading in an extremely volatile environment (Like Bitcoin), this practically screams: "RUN, DON'T WALK AWAY." The counterparty risk with a Goldman Sachs trading desk is... Much lower.
- cm2187 9y ago
  Investors buying subprimes were professional investors. Most of them didn't like subprimes but were buying them because that was the only way to pick up a little bit of yield in a market where credit spreads were massively compressed. It's after they lost their shirt that they suddenly pretended having never realized that subprime stood for loans to riskier borrowers. This is not very dissimilar. I am certain the majority of investors who will buy bitcoin did not do their due diligence in term of how the currency works (in fact I see a lot of pretty financially switched on people around me who seem quite confused on how it works). They buy now because they want the return and will complain that they weren't aware of the risks when they lost their shirt.

adamnemecek 9y ago

They kinda do cause at that point they didn't have a slice of the pie.

bogomipz 9y ago

I think the same but its, 1 because of 2 i.e high net-wroth clients fear of missing out.