Goldman Sachs – Blockchain To Change Asset Management - Essay Example

Recently, Heath Terry, a Global Investment Research analyst at Goldman Sachs revealed that the blockchain technology offers many advantages for numerous types of assets and “the ability to transfer ownership of digital goods.”

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In a podcast, “Exchanges at Goldman Sachs”, Terry talked about both bitcoin and the blockchain, appreciating the distributed ledger as a technology that would have “massive implications” for asset and ownership transfer.

He stated, “It’s fascinating in really early stages, but it’s hard to see a world where blockchain technology doesn’t change the way we think about asset ownership.

We’re first pitch, first inning in terms of seeing how companies are going to use that technology.”

According to Terry, the reasons that hinder a wider bitcoin adoption is due to the fact that the potential users are afraid of the volatility of the crypto currency.

He admitted that in within time bitcoin will mature and that the “sheer volatility” of the marketplace was frightening to many users.

Terry declared, “If I’m giving you something that you don’t know whether or not it’s going to be worth the same amount tomorrow that it was today when I give it to you, you’re going to be reluctant to adapt that for anything that you don’t necessarily have to.”

In April 2015, Goldman Sachs Group Inc. invested $50 million on a bitcoin startup Circle Internet Financial Ltd in a funding round.

The company joined an expanding list of Wall Street institutions who are exploring the potentiality of bitcoin technology in order to provide quicker and cheaper financial payments and transactions.

Terry believes that the adoption of bitcoin as a currency has been held back by it fluctuating price against fiat currencies.

He explained, “The volatility around bitcoin scares a lot of people, it was great in those periods when bitcoin only seemed to go up. It’s gone up, it’s gone down and it’s gone up.

For a lot of people, the point of having a secure currency the way bitcoin is supposed to be is having a secure store of value, having a way to transfer value.”

Terry mentioned that at the moment bitcoin is not competitive against traditional payment methods. It is only being used when there are no other options.

He concluded by stating, “Over time though bitcoin is going to mature, a lot of that volatility will likely come out of the system. You’ll probably see more use cases as it does.”

However, force is to remind that many operators offer the possibility to peg your bitcoins to your fiat currency, in order to avoid suffering from the volatility.

Finally, bitcoin is already competing against other payment solutions and offers several advantages such as lower costs, higher speed and no exchange rate.