
What Goldman Is Telling Big Money Clients About Bitcoin - ivorium
https://www.bloomberg.com/news/articles/2017-08-09/here-s-what-goldman-is-telling-big-money-clients-about-bitcoin
======
Animats
Bear in mind that Goldman Sachs is now about making Goldman Sachs money. For
well over a century, they were about making rich people richer and taking a
cut. That's no longer the case, and their advice to their clients is no longer
particularly good. It's now just usual sell-side broker "analysis". Read "Why
I am Leaving Goldman Sachs."[1]

A friend who was a Goldman Sachs client noticed this when, around 2011, they
started suggesting dumb deals. He pulled all his money out of there.

[1] [http://www.nytimes.com/2012/03/14/opinion/why-i-am-
leaving-g...](http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-
goldman-sachs.html)

~~~
luckydude
I was a very small Goldman client for a while (they typically don't take
people with less than $10M and I was way less than that). A buddy of mine got
them to let me in as a client.

He had $110M with them and he thought that would be enough that they'd treat
him well. Not the case, they tried to sell him crap. He thought, at the time,
that you had to be worth $1B before you were "in the club". He was pretty
disgusted and moved elsewhere.

I'm not really sure why anyone would want to be a Goldman client.

------
nartz
Why do people say it 'Cant be tracked'? Its a fully public ledger. I would
think that it could be tracked much easier than dollars that remain liquid or
laundered.

~~~
HNNoLikey
I've heard that bitcoin mixers can take care of completely/somewhat
obfuscating coin ownership.

> According to Wikipedia: _User can send his bitcoins on this service, pay
> small commission, and then receive the same sum of utterly different
> bitcoins._

If they're paid out to one address it still wouldn't provide the desired level
of anonymity, if however they are paid out to multiple addresses belonging to
the same user, I would imagine the anonymity level would increase but not
totally since one could still add up payments made to different addresses
whose total should amount to a given range.

~~~
phyalow
Yes possible but impractical when you split the new payments to multiple new
addresses, in unequal amounts and at random times....

~~~
PeanutCurry
This has been what I've read as well. Unless a massive and coordinated entity
like Five Eyes has decided to focus a significant amount of its resources on
you, bitcoin mixers seem to provide 'adequate' levels of obfuscation.

------
acchow
I wonder how much of BTC's $71bn market cap is eternally lost coins.

~~~
Andrenid
Count my 10 as lost! To be fair they were worth a few bucks at most when I
lost them.

I personally saw someone accidentally wipe 150 or so when they were around
$10.

~~~
jomkr
It was fairly big news in the UK when somebody announced he had thrown away a
hard-drive containing 10,000 coins. He considered searching through the dump
but didn't bother in the end.

~~~
_fizz_buzz_
That's about $40,000,000.- I would do more repulsive things than diving into a
dumpster for that kind of money.

~~~
roel_v
It wasn't just a trash can, it was an actual garbage dump site he'd have to
search through. Chances of finding something there are slim I'd say. IIRC
there was a photo with the article of the guy standing at a dump site - not
sure if he didn't actually go look for it a bit and gave up when the reality
of the situation hit him.

------
MediumD
Unfortunately, this is a pretty standard fluff piece with not much
information. Would love to know what Goldman actually thinks about the
prospects of cryptocurrency and distributed ledgers, but"real dollars are at
work here and warrant watching" is the only shred of information this article
give.

~~~
canoebuilder
What use case is there for a distributed ledger that is superior to a
centralized ledger?

As soon as a critical mass is formed around a particular use case,
consortiums, i.e. governments will form to regulate and enforce trust and the
system will move to far more efficient centralized ledgers.

~~~
mrb
The main use cases for decentralization are: absolute control of your money,
and censorship resistance.

Think deeply about what this means. Most people have no idea. Just a few
examples (typing on the phone): no company or system can
accidentally/intentionally deny your transactions, no merchants can charge you
against your will, harder for oppressive government to seize wallets of
targeted citizens/organizations, etc.

~~~
canoebuilder
I see the appeal in those things for some people.

But I think most people are happy to forego those things and not have to worry
about losing significant chunks of cash to fat-finger mistakes or hacks.

When most people barely know what a browser is, illuminating them to the
intricacies of bitcoin seems a tall task. And if they can just use some system
like Coinbase and "not even know they're using bitcoin," then they're
essentially just using Paypal.

It's hard to see how it ever goes beyond a very niche market, and as long as
that niche market is in a speculative frenzy it's hard to see how it becomes
of much use to that market beyond a vehicle for speculation.

And should some group trade amongst themselves while avoiding censorship from
some other group, the persecuted group as it grows in number becomes likely to
use it's numerical sway to influence the govt doing the censorship in a new
direction, or form a new govt that facilitates more efficient trade between
the group.

And efficiency here refers not just to a couple ledgers instead of thousands,
but also the massively reduced overhead of every member not having to do
extensive security themselves, but rather offloading the security to central
authorities.

Trust is beneficial to society, the more trust in a society the better a
society scores on a host of other metrics.

~~~
mbrock
Bitcoin and other blockchains enable more or less trusted associations to form
using side channels. A typical example is using off-chain collaboration to
exchange signed transactions of deposited funds. It seems reasonable to
consider trustless cryptocurrency as a base layer for "international
settlement." Coinbase is significantly different from PayPal because of this
final public settlement layer that is open and well-defined, unlike the
proprietary bank systems.

~~~
canoebuilder
That was my point. I don't see how using "side-channels" or "off chain"
systems are materially different from using the Visa or the Kroner system, and
then when you want a public settlement layer that is open and well-defined
converting some funds from those systems to a crypto system. What's the
difference?

Can't off chain systems be seen as simply analogous to transacting in
deposited funds with paypal where your paypal password is the signature?

Maybe these systems send something out to a public blockchain, but you're
still trusting them to honor withdrawals of your deposited funds in the same
way you would with paypal, correct?

What is the actual use in practice of side channels and off chain systems
these days?

~~~
mbrock
Blockchain payment channels can have security properties that go way beyond
just trusting a third party with deposits.

Here's a little example of setting up a reasonably secure payment channel with
the help of an Ethereum smart contract:
[https://medium.com/@matthewdif/ethereum-payment-channel-
in-5...](https://medium.com/@matthewdif/ethereum-payment-channel-in-50-lines-
of-code-a94fad2704bc)

------
EGreg
How to do an ICO totally legally?

Is it even possible to register these securities without "going public"?

~~~
TrickyRick
You create a new type of coin, sell it to investors for dollars and put it on
the blockchain. What rights the owners of these coins get is up to you to
decide, there is no regulation at play.

------
justinzollars
It seems Ethereum, Bitcoin and Litecoin are correlated but how will they do
with a stock market downturn?

~~~
fullshark
My guess is they will tank since their value is driven by speculation right
now.

~~~
lagadu
Hard to say, more and more BTC in particular is being used as a shelter from
the woes of fiat currencies. It's not the first time that a downturn in a fiat
market leads to btc price increases as some players exchange their assets for
btc.

~~~
nylonstrung
How can you identify what growth is a 'shelter from fiat' vs mere speculation
on technology ect when it's growing super fast all the time? There's no
correlation with fiat currency value (except maybe in Venezuela) as far as I
can tell

------
fourstar
What do people in the Bitcoin community think of this being perceived strictly
as an investment vehicle?

~~~
xxxxxxxx
That's a totally valid use case. Bitcoin can be many things simultaneously.

~~~
canoebuilder
_strictly_ as an investment vehicle

If by strictly, he means solely, then something that is strictly an investment
vehicle makes no sense. The piper must be paid at some point.

I can invest in shares of a company, but the shares aren't strictly an
investment vehicle, they serve as a way for the company to acquire capital to
put toward it's mission.

~~~
nylonstrung
Gold is strictly an investment vehicle for all intents and purposes. The vast
majority of its price is due to recognition as a store of value vs inherent
utility.

It doesn't require a 'mission' to have value- the fact enough of society
(still a small minority which actually invests or knows the price) recognizes
that others recognize it has value allows it to fulfill exactly this function

~~~
canoebuilder
Doesn't gold's role as a store of value ultimately rest on it's underlying
potential utility and it's material scarcity. Crypto currency is anything but
scarce these days, certain brands of crypto may be more or less scarce, but
gold is not separated from other elements by a brand name over-top of
substantially similar functioning and composition.

~~~
nylonstrung
Gold's value is ostensibly about it's utility but the price is completely
disconnected from said utility. A massive amount of the supply is devoted to
speculation and jewelry, which itself is a reflection of the arbitrary value
and price vs any actual physical properties of it. In many ways its value is
still a function of properties it had hundreds of years ago that made it
eminently suitable for coinage and the belief networks have persisted.

If we weren't using gold in this way the price would indisputably be a
fraction of what it is vs if the industrial applications stopped it would
definitely still retail value.

Bitcoin is limited to 21M coins and we are at 19M of them. It is functionally
more scarce than gold in that once we hit 21M that's it- we can't develop some
new technology that unlocks more gold like asteroid mining.

------
shoshino
ctrl+f, "finite": 0 of 0 ctrl+f, "supply": 0 of 0

Very disappointed by the quality of the discussion in this thread.

~~~
havetocharge
You seem to complain but not contribute. Can you explain maybe why the
discussion around the funniest supply important?

~~~
shoshino
"If you don’t believe me or don’t get it, I don’t have time to try to convince
you, sorry."

------
aiyodev
As a long term owner of Bitcoin, I can say this is the absolute worst time to
start investing in it. It's development has been taken over by a group of
mentally unstable developers with weird personal agendas and beliefs. The
official Bitcoin website and subreddit are heavily censored and are no longer
a reliable source of information. It's widely reported elsewhere that their
moderator stole millions of dollars worth of Bitcoin from users.

There are other cryptocurrencies that deserve attention but I won't mention
them here so I don't look like a shill. Be wary of the 4chan crowd who seem to
be everywhere hyping obscure currencies to get rich off of pump-and-dump
schemes.

If you're going to invest in a cryptocurrency, thoroughly research it before
buying. Trust nothing on an official website or forum. Verify everything you
read on public forums.

And never leave your money at exchanges. The #1 rule of cryptocurrency is
this: Coins are not in your possession until you are the only one with the
private keys.

~~~
xor1
>There are other cryptocurrencies that deserve attention but I won't mention
them here so I don't look like a shill.

Shit, I'd appreciate it if you named some. I'm actually planning on putting my
entire next paycheck towards crypto. Currently eyeing Neo even though I
apparently missed the boat by not buying it when it was called ant.

~~~
tradersam
Litecoin is extremely undervalued. Ethereum has an incredibly bright future,
Monero is an incredible tool for privacy.

Check out bitfinex.com and start trading pairs there. They have a description
under every currency that should help.

~~~
panarky
It wasn't long ago that crypto prices on Bitfinex were quite a lot higher than
other exchanges because you couldn't withdraw national currencies [0].

Are their banking issues all resolved now?

Also, if you're domiciled in the US, Bitfinex won't even do business with you
[1].

For US customers who what to be legal, Gemini seems pretty solid and verifies
new accounts quickly, though they only support Bitcoin and Ethereum [2].

[0] [https://www.coindesk.com/spreads-widen-bitcoin-exchanges-
ami...](https://www.coindesk.com/spreads-widen-bitcoin-exchanges-amid-
bitfinex-banking-issues/)

[1] [https://www.bitfinex.com/posts/216](https://www.bitfinex.com/posts/216)

[2] [https://gemini.com/](https://gemini.com/)

~~~
tradersam
I know this, but you can still use Bitfinex by depositing crypto and using a
VPN. Not really "illegal".

Gemini is great, but they are slow to verify and as you stated very limited on
your trading pairs.

------
cerealbad
btc seems like a great way to spy on everyone using it.

~~~
Temasik
Unless state is replace by message handling

[https://github.com/EOSIO/Documentation/blob/master/Technical...](https://github.com/EOSIO/Documentation/blob/master/TechnicalWhitePaper.md)

~~~
AgentME
I've been reading through the paper. It looks fundamentally like Ethereum, but
with a runtime environment with specific functionality baked in, and some kind
of ongoing voting system for governance of the chain. It doesn't seem to have
anything novel in way of privacy: the references to a user's "private
database" seems to be using "private" in the sense that only the user can
update their own database, not that their database is out of view of other
users. This seems to support that:

>All state communication among accounts must be passed via messages included
in the blockchain.

As far as I know, blockchain-based cryptocurrencies so far only seem to be
able to achieve privacy through ring signatures or zk-snarks, and that link
doesn't feature either. Additionally, it's prominently built around enabling
arbitrary computation like Ethereum, and arbitrary communications that have to
be executed by every node have to use something like fully-homomorphic
encryption to be private from the nodes computing them, which is presently
impractically-inefficient for this use-case and not featured in the link.

------
runeks
I like that he calls Bitcoin an “anti-currency” since, all too often, it seems
people view Bitcoin as just-another-currency, when it’s fundamentally
different from the national currencies we’re used to using every day.

National currencies are backed by government bonds, while Bitcoin is
commodity-like, in that it’s not backed by anything — it’s a monetary unit in
its own right. This avoids the recursive relationship between national
currency and the government bond, which exists because government bonds are
denominated in the very currency whose backing is that bond. So currency is
valuable because it’s backed by bonds, which are valuable because they’re
denominated in that currency, which is valuable because it’s backed by
bonds... etc.

The problem with a currency backed by bonds is that the value of a bond
depends on the rate of interest which, in turn, means that the value of the
currency depends on the rate of interest. Traditionally, bonds were
denominated in gold, which avoids the recursive definition of the value of
money, because it ensures that the value of the monetary unit does not depend
on the prevailing (bond) interest rate.

~~~
soVeryTired
Currencies aren't backed by bonds.

~~~
runeks
Bonds comprise the vast majority of assets on the balance sheet of the central
bank, so why not?

When gold was the primary asset on the balance sheet of central banks, we said
that their currency was backed by gold. So why isn’t it backed by bonds now,
when they have replaced gold in this regard?

~~~
soVeryTired
When the dollar was backed by gold, it was possible to go to the central bank
and redeem a fixed number of dollars for a certain amount of gold. While
central banks do hold bonds on their balance sheets, it is not true that an
investor can convert a predetermined dollar amount into a bond at the central
bank: bond prices are determined by the market.

