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Businesses The Almighty Buck Technology

Goldman Sachs Explores a New World: Trading Bitcoin (wsj.com) 43

Several readers share a report: Goldman Sachs is weighing a new trading operation dedicated to bitcoin and other digital currencies, the first blue-chip Wall Street firm preparing to deal directly in this burgeoning yet controversial market (Editor's note: the link from WSJ, which originally reported this development, could be paywalled; alternative source), according to people familiar with the matter. Goldman's effort is in its early stages and may not proceed, the people said. The firm's interest, though, could boost bitcoin's standing among investors and fuel the debate around digital currencies, which were initially viewed as havens for illicit activity but are pushing further into the mainstream investment world. China in recent weeks has banned exchanges that trade bitcoin, fearing the virtual currency could provide an avenue for capital flight. J.P. Morgan Chase & Co Chief Executive James Dimon, whose bank is the largest dealer in global currencies, last month called bitcoin a "fraud" and said he would fire any employee who traded it. Yet Japan's government has embraced bitcoin, creating regulations to legitimize its trading. India and Sweden have mused about creating their own virtual currencies, and the U.S. Federal Reserve has studied bitcoin and the technology underpinning it.
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Goldman Sachs Explores a New World: Trading Bitcoin

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  • by Anonymous Coward

    it is underwritten by illicit activity - isn't that better than gold?

    • it is underwritten by illicit activity - isn't that better than gold?

      It is underwritten by speculation, not activity, illicit or legitimate.

      • Re: (Score:1, Interesting)

        by Anonymous Coward
        incorrect. You cannot hop online and purchase real goods and services with 'speculation.' I can actively trade back and forth between gold bullion and BTC, you can't do that with 'speculation.' Give me any definition of currency that doesn't involve the US government and I can tell you how BTC fulfills it.
        • Give me any definition of currency that doesn't involve the US government and I can tell you how BTC fulfills it.

          How does that work during a power outage, or natural disaster that results in no power? I can have cash in hand, BTC might as well be a unicorn fart without a functioning computer.

          • by Anonymous Coward
            Does that situation happen to you often? Am I led to believe that you don't have a survival kit stashed away somewhere?
          • by JeffSh ( 71237 )

            if there's a natural disaster or power outage, i have bigger problems than being able to transact in bitcoin.

            if our society suffers some sort of calamity that renders bitcoin unusable then my pile of USD will likely also be rendered obsolete.

            • In Puerto Rico right now, gold, silver, Visa and BTC are not useful - only government printed USD cash. So in localized disasters, cash is king. That being said, I just bought more BTC on the strength of this announcement.
            • if our society suffers some sort of calamity that renders bitcoin unusable then my pile of USD will likely also be rendered obsolete.

              Or not. See Puerto Rico for an excellent contemporaneous example where cash is king. Some 1% of US citizens are in that boat as we speak.

          • How does that work during a power outage?

            How does power work during a power outage? I mean you still use power even though it can stop working from time to time right?

        • incorrect. You cannot hop online and purchase real goods and services with 'speculation.'

          You absolutely can. Back in the day you could trade a tulip for goods and sevices too. All you need is the another speculator, the "greater fool" to cash you out or barter.
          https://en.wikipedia.org/wiki/... [wikipedia.org]

          I can actively trade back and forth between gold bullion and BTC, you can't do that with 'speculation.'

          Doubtful. Your exchange likely takes your BTC, converts it to fiat (often by sale to a "greater fool") and uses fiat to purchase that bullion. Much like with all the goods and services "purchased in bitcoin" where the merchant never sees nor touches a bitcoin, rather the merchant's exchange/payment proce

        • incorrect. You cannot hop online and purchase real goods and services with 'speculation.'

          Of course you can, that is how real estate works right now.

    • FAR more illicit activity is conducted in US dollars than Bitcoin.

      • by Anonymous Coward

        On volume, not percentage based

  • regulations will kill it and if it becomes more bank like then tacking / tax laws will be very hard to put in places without big changes.

    • Its already taxed. In the U.S. its considered an asset by the IRS. Mine it, report the basis (value on the day you received it) and your operating expenses (mining hardware, electricity). Hold it and then cash it out or "spend" it, report the value on the day you acquired and the day you disposed of it, report the capital gain or loss.

      Yes its inconvenient to have to compute a capital gain/loss on those fractional coins used to buy a cup of coffee. But your wallet software can do that for you to simplify/a
      • Bank Reporting Guidelines may hurt it as having accounts if no names does not fly even more so when there is over $10,000 in a single cash transaction or they are over other levels.

        • Bank Reporting Guidelines may hurt it as having accounts if no names does not fly even more so when there is over $10,000 in a single cash transaction or they are over other levels.

          The US government recently shut down a very popular international exchange over exactly those issues, BTC-e. Bitcoin seems unaffected.

  • by Anonymous Coward on Monday October 02, 2017 @11:53AM (#55293855)

    How do you know if the monetary activity you're participating in is shady? Easy, when Goldman Sachs gets in on it too, you can be certain there is an exploitable financial angle somewhere.

  • A nobel prize does not exempt him from giving some reasoning. All I can find in all those links is name calling, "bubble". The tech bubble was clearly over-inflated startups with absurdly dubious business plans and investors just trying pull one off on each other before the inevitable bust. The housing bubble was clearly something similar, although there was more value in homes, bankers were clearly trying to make money off selling loans they knew couldn't be repaid. They'd get their bonuses without rec

  • by rnturn ( 11092 ) on Monday October 02, 2017 @02:49PM (#55295671)

    How long will it be before the geniuses at the too-big-to-fail banks can find a way to totally screw up bitcoin?

    • Screw it up from what? I mean, what is Bitcoin now other than a pure speculative gambling instrument?
      I'm struggling to think how you could get any less use out of than now?
  • Back in the last financial crisis, Matt Taibbi described Goldman Sachs as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money". I guess nothing has changed much since then - they smell money, so they're going after it.
  • More specifically, what's the difference between bitcoin and a non-dividend-paying, non-voting stock?

    Both are worth how much someone is willing to pay for them, but bitcoin has a bit less friction in being able to be used in a transaction. Otherwise very similar.

  • Many people use, or want to use cryptocurrencies, because banks are such hypocritical assholes that are basically running the whole rigged game. They don't like BTC or any other thing that they don't control.

    I will pay more in fees, wait more time, generally receive worse service if I can just avoid dealing with banks.

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