Just this week the early bitcoin skeptic, the CEO of the largest bank in the US JPMorgan Chase Jamie Dimon revealed he regrets labeling bitcoin as a ‘fraud’, acknowledging that the ‘blockchain is real’. Now, it seems, the turn is for the multinational and globally influential finance company Goldman Sachs.
In a recent report, published on Wednesday, January 10, two company’s strategists highlighted bitcoin’s potential in terms of real money in the developing economies.
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Bitcoin Has Nothing To Do In The U.S. But In The Rest Of The World…
According to Bloomberg, supply maladministration and the high level of inflation have fueled the drop in the value of many African countries’ currencies in sub-Sahara region. Therefore, foreign public currencies have conquered the market of such nations as Zimbabwe and the Democratic Republic of the Congo. If in the second one foreign fiat money makes up over 90% of the country’s loans and deposits, the second one had to give up on the own currency around three years ago due to the strength of external money.
No wonder that in emerging-market countries virtual money has way more potential than in the U.S., where the national currency dollar is steady and transaction fees are already satisfactory so its citizens don’t have to look up for alternatives. Besides developing regions, bitcoin has also a lot to offer in states, where authorities impose sanctions or other types of restrictions on the adoption of foreign public currencies.
That’s precisely what Goldman Sachs strategists Charles Himmelberg and Zach Pandl believe in. In their recent report, two specialists emphasized that within the past decades the American national currency has been relatively useful. But bitcoin could replace some functions that fiat money offer in the developing world.
“In those countries and corners of the financial system where the traditional services of money are inadequately supplied, Bitcoin (and cryptocurrencies more generally) may offer viable alternatives,” suggested Goldman Sachs strategists.
Future to Be Boring If Bitcoin Adopted Widely
Additionally, the experts pointed out that the situation will not be the same if bitcoin is used as real money. Should the virtual money be used more widely, there is less possibility that bitcoin and its ilks will bring lots of profits as we are observing it nowadays. So investors should brace for a more ‘boring’ future.
“Our working assumption is that long-run cryptocurrency returns should be equal to (or slightly below) growth in global real output—a number in the low single digits. Thus, digital currencies should be thought of as low/zero return or hedge-like assets, akin to gold or certain other metals,” said Himmelberg and Pandl.
Transforming Attitudes
It is surprising how the sharks of the financial world become less skeptical about bitcoin. The report by Goldman Sachs experts has been subsequent to the astonishing acknowledgment by JPMorgan’s Jamie Dimon. In September 2017, he made scandalous remarks regarding bitcoin, labeling the most known digital currency a “fraud”. But just after five months, he changed his position, claiming on Fox Business that he admits blockchain is real and bitcoin is something that will not governments calm.
