Why Goldman Sachs CEO is Open Minded Towards Bitcoin

crypto hedgeIn an interview with CNBC’s Kayla Tausche, Goldman Sachs CEO Lloyd Blankfein stated that he is keeping an open mind towards bitcoin and the new asset class it has introduced.

“I have an open mind about these things [bitcoin and cryptocurrencies] because there are a lot of things that work really really well today that I thought was stupid and wrong. I have a much more open mind about this and I know a lot of history of finance and I pointed out that there was a time wherein people only took gold coins,” said Blankfein.

Bitcoin is a New Asset Class

As Leo Melamed, the chairman of CME Group, the largest options exchange in the world, stated, bitcoin is a new asset class and not merely a digital currency. It has begun to transform the global financial industry and it is positive that leaders of the financial market such as Blankfein is maintaining an open-minded attitude towards bitcoin.

During the interview, Blankfein stated that he is not keen on engaging in the bitcoin market or establishing a bitcoin trading platform. But, he emphasized that he understands the history of finance and how abrupt changes have occurred in the past. For instance, not too long ago, gold was the standard currency that was used by general consumers to transact.

However, the US government forcefully confiscated gold and introduced the fiat system, which had no value of any sort, to the public and forced the integration of the fiat monetary system, given that the government can gain absolute control over it.

“A five dollar gold coin was worth five dollars1 because it had five dollars worth of gold in it. Then they issue paper money that is backed by gold in the treasury. Then one day, they issue paper money that does not have the backing of gold. There was no pledge that if you turn it in, I’ll give you five dollars of gold. It is fiat money. I say this piece of paper is worth five dollars and so therefore it is five dollars and a lot of people did not take that for a long time. But, now they do without question. You move a little bit further and you get bitcoin that is not a fiat currency so I don’t trust, it and I don’t like it. On the other hand, if it works, I say maybe it was a natural progression from hard money to digital money, said Blankfein.

Adoption of Bitcoin Could Take Time, as it Did with Fiat Money

As it was difficult for general consumers to accept and adopt fiat currency, it could take some time for bitcoin to be adopted by the mainstream. But, one of the many merits of bitcoin over fiat currencies is that it is voluntary. A government agency or authorities are not forcing anyone to use it or to invest in it. The decentralized and voluntary nature of bitcoin has allowed the transformation of paper money to digital money seamless and efficient.