I would keep in mind that about 12 years ago Goldman was piling in on CDOs and Subprimes before going short the very same asset classes a year later. The fact that there is money to be made immediately doesn't mean they believe in it long term.
Goldman Sachs is getting in because it see a future in making profit from others trading in cryptocurrency. Goldman Sachs believes that the profit it will make from this exchange's trading fees will be greater than the cost of purchasing it. It is that simple.
Exchanges are price-neutral volume plays. Better if you offboard customer service and custodian services to someone else. You make money on volume, and thus volatility, independent of price. (Similar to Berkshire Hathaway’s acquisition of a gasoline additive company a few years ago.)
I also believe in Bitcoin, but there may be a case against legitimacy at this point in the game: future changes to the protocol might become subject to state scrutiny.
Scenario:
(a) Regulators approve Bitcoin for use in banking, let's say
(b) Some change is proposed to the Bitcoin protocol, improving privacy
(c) Regulated firms are not able to do proper KYC/AML stuff if the upgrade activates
(d) Firms and regulators (and maybe legislators) push back against the upgrade
Now you have core protocol changes subjected to the scrutiny of the broader political process, which would be a total nightmare and may permanently stop development of the protocol.
Ultimately I think that's one the big issues with crypto. Even though most altcoins boast decentralization, their development is only controlled by a few people who have commit rights to the git repository. When someone disagrees with them, it usually ends up in forking a new currency. Perhaps someone with more experience in the crypto space can shed some light on this...is there a way to truly decentralize development as well?
The only coin really trying to tackle this governance problem is Cardano in my opinion. Charles Hoskinson does a great job explaining their goals with this.
> core protocol changes subjected to the scrutiny of the broader political process, which would be a total nightmare and may permanently stop development of the protocol.
It could be argued this would be a good thing.
As it stands, if someone nabs your crypto you have no means of recourse, this is a bad thing.
You have the same recourse that you would if someone took your physical cash, which Bitcoin seeks to mimic properties of. Do you make the same arguments against physical cash, or is there some other substantive difference, are you singling out Bitcoin?
> You have the same recourse that you would if someone took your physical cash
People don't speculate in physical cash. Also, cash being physical constrains the speed at which it can move. It also makes things like cameras useful.
I don't usually engage on Crypto posts but I'll bite. What specifically do you believe in with regards to Bitcoin?
I'm bullish on crypto as a global "internet dollar" but bearish that Bitcoin is the right one.
I might add that banks want in because they make money on orderflows. Bankers will trade anything (orange juice concentrate/pork belly/oil/derivatives/shares/you name it.)
Personally i think bitcoin and maybe Eth and LTC will be the only long term survivors.
Every new "coin" that comes along now just becomes a pump and dump.
Bitcoin was around before it had any value and people were just giving it to one another for fun or buying Pizzas for 20,000. It has benefited most from the "network effect" . My only major concerns about it are the environmental effects and transaction throughput.(other coins are allegedly faster for now but will probably buckle if they become as big as the above three.)
LTC is around nearly as long ,, and ETH is a whole new concept, though it has security and programming issues.
I should mention its survival doesn't mean it's value will go up.
I'd add something like Monero, or other coin designed with privacy/fungibility in mind, as a long term survivor. Bitcoin's development bureaucracy is too slow and cumbersome and who knows how much the community is willing to embrace absolute privacy, yet that is exactly what plenty folks in the crypto scene prefer.
I know the question may not be directed to myself, but I will answer why I believe in Bitcoin.
The real value is in the Decentralised/P2P store of money. This allows not just people, but entities and even software can "own" bitcoin.
For example a coffee machine that accept BTC, it can then pay for the water, electricity and buy more beans, milk etc from the Bitcoin it earns itself without human attention. Arguably easier to track the profitability and economics of the machine, with less effort - still needs to be cleaned and refilled (for now!).
You could take this one concept and apply them to things like self-driving cars or mobile phones.
I find it unlikely that bitcoin will remain so dominant in the market. Other currencies are slowly solving bitcoin's problems, like transactions speed, fees, anonymity. It might ultimately come down to the best implementation, or we might see a great degree of diversification, different currencies for different needs.
Would of disagreed a year ago, however since then we've seen BTC explode due in part to unchallenged Tether/BitFinex shenanigans and zero verifiable transparency.