Bitcoin might become money, Goldman Sachs report says
A report sent to investors on Wednesday by Goldman Sachs says that the cryptocurrency Bitcoin might be regarded as money soon, due to its growing reputation. In the paper titled “Bitcoin as Money” it’s predicted that Bitcoin would continue to grow this year, beating its previous record in 2017.
Top banks would likely begin considering it, and more reputable companies would accept the cryptocurrency as a payment option. The nine-page report also notes that while the Bitcoin might be gaining grounds, it’s highly unlikely that it would replace strong currencies such as the US dollar.
“Once the blockchain technology becomes entirely mainstream, Bitcoin may offer viable alternatives in countries and corners of the financial system where the traditional services of money are inadequately supplied,” says an analyst in the report.
According to Zach Pandl, lead report author, cryptocurrencies have a higher possibility of being regarded as money majorly in countries where there’s an increase in displeasure with the central banking system. He noted that Google Trends have shown that “Bitcoin” is one of the most popular search terms in countries with unstable national currencies such as Nigeria, Ghana and South Africa.
The report further notes that Bitcoin could be regarded as money in theory, and is capable of achieving such status in the financial industry if “it proves capable of facilitating transactions at a low cost and/or providing better risk-adjusted returns for portfolios.”
“Volatility remains one of the main obstacles. It would likely need to come down drastically (either naturally or through the widespread adoption of cryptocurrencies designed to better stabilize purchasing power via supply adjustments) before we see broader adoption,” says Pandl.
“Interestingly, the Goldman strategist expects cryptocurrencies to deliver low returns in the long term,” he continues.
“The report says ‘our working assumption is that long-run cryptocurrency returns should be equal to—or slightly below—growth in global real output. Digital currencies should be thought of as low/zero return or hedge-like assets, akin to gold.’”
The Goldman report is coming at a rather stifling time when numerous reputable politicians, economists, investors and regulators are insistent that Bitcoin isn’t a form of money.
While there are numerous ways of earning online—like playing at a free online casino—David Stockman, former businessman and politician, had earlier noted that Bitcoin didn’t represent money or even a real asset class.
“It’s basically a class of really stupid speculators who have convinced themselves that trees grow to the sky,” he said.