
Goldman and IDG Put $50M to Work in a Bitcoin Company - mrb
http://www.nytimes.com/2015/04/30/business/dealbook/goldman-and-idg-put-50-million-to-work-in-a-bitcoin-company.html
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oska
Official Circle announcement:

[http://blog.circle.com/2015/04/29/new-circle-investors-
new-u...](http://blog.circle.com/2015/04/29/new-circle-investors-new-us-
dollar-account-features-china-horizons/)

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zhte415
This is interesting, but I'd not focus on Bitcoin too much. This could be a
test-bed for Goldman for something much bigger, because central banks are
seriously thinking about digital, potentially Bitcoin style, currencies.

From the Circle announcement oska linked, emphasis mine:

 _" As the financial services industry continues to become more digital and
open, we see significant opportunities in companies and solutions that have
the promise to transform global markets through technical innovation. We think
that Circle’s product vision and exceptional management team present <b>a
compelling opportunity in the digital payments space</b>.”

What is the Connection to China?

IDG Capital Partners likewise brings a strategic capability to Circle as we
bring our products and services to China. We believe in a hybrid digital
economy in which <b>value moves freely around the world and converts into
other currencies -- including both crypto and fiat currencies -- seamlessly,
safely, and instantly</b>."_

I'd like to link this to the Bank of England's recent report, the One Bank
Research Agenda
[http://www.bankofengland.co.uk/research/Documents/onebank/di...](http://www.bankofengland.co.uk/research/Documents/onebank/discussion.pdf)
[PDF, 50 pages] posed topics related to digital currencies, including the
question "Why might central banks issue digital currencies?" [on page 31]
Again, emphasis mine.

 _" The emergence of private digital currencies (such as Bitcoin) has shown
that it is possible to transfer value securely without a trusted third party.
While existing private digital currencies have economic flaws which make them
volatile, the distributed ledger technology that their payment systems rely on
may have considerable promise. This raises the question of whether central
banks should themselves make use of such technology to issue digital
currencies.

<b>There are two parts to this question.</b> The first is whether there is any
rationale for a central bank to issue a digital currency supported by some
form of distributed ledger payment system. <b>The second addresses the
economic, technological and regulatory challenges of doing so</b>."_

Goldman are getting experience at the second question with this largely before
anyone else, and waiting (for now) for the first question to answer itself.

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drcross
|This is interesting, but I'd not focus on Bitcoin too much. This could be a
test-bed for Goldman for something much bigger, because central banks are
seriously thinking about digital, potentially Bitcoin style, currencies.

So bitcoin without the bitcoin? Have a think about what you said and what
attributes bitcoin lacks that don't qualify it for widespread adoption. The
narrative that's being pushed by the media is that bitcoin is almost perfect
but unfortunately the big guys can't use it. The reason is that they can't
print more of it, for free, on a whim.

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yc1010
Well banks used to use gold as an asset and then give loans on top of that,
nothing stopping anyone making Bitcoin IOUs on top of bitcoin holdings. The
problem is the same that was solved by banks hundreds of years ago, why would
someone store gold with them instead of storing it at home, replace gold with
bitcoin in previous sentence ;)

Anyways this might explain Goldman Sachs involvement, when one puts bitcoin
into Circle you do not control the keys (the "gold" is no longer yours) you
get a Bitcoin IOU and you put your trust in Circle, down the road once Circle
have millions of users they could offer a lending service and/or make it
easier for people to get into stocks (and hence Goldman Sachs profit) and
other investments

~~~
jasonisalive
You can't send perfectly divisible quantities of gold halfway around the world
in seconds. You also can't store gold in your brain and thus move unlimited
quantities of gold across national borders undetected. Furthermore, unlike
gold, Bitcoin storage and transaction signing needs can and will be satisfied
by low-cost dedicated computing units, opening the freedom to store bitcoin to
any who wish to use it, and the chance of possessive governments successfully
trying to prevent people from doing so is about as likely as governments
stamping out smartphone use.

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yc1010
You don't need to "sell" bitcoin to me :) I use it almost daily since
2011-2012 ;)

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bottled_poe
Circle transactions are free... What is their revenue model?

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yc1010
Well bitcoin transactions are almost free (miners fee is what nowadays 1-2
cents regardless of amount?) as is. It is hard to compete with that

Their aim is to grow and acquire users and become an import cog in bitcoin and
financial worlds

Once you get lets say to a few million to a hundred million users then you
endup with all sorts of possibilities such as becoming a bank and offering
loans (this alone coupled with a good database of users could be a money
maker), offering checking/savings accounts, hell making it easier for users to
invest in stocks etc (might be what Goldman interested...) and so on

Remember the likes of Facebook and Twitter didnt have a "revenue model" at
start either, look where they are now...

edit: another possibility would be mobile payments (nfc or qr code) to any
merchant accepting bitcoin of which there is a growing number thanks to
bitpay, think of all the data that could be mined there, they can basically
make the whole credit card network obsolete by bypassing it

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ceejayoz
> Remember the likes of Facebook and Twitter didnt have a "revenue model" at
> start either, look where they are now...

Facebook's doing OK (they have the advantage of not locking themselves into
being a simple 140 character messaging service), but Twitter's quarterly
results were fairly abysmal.

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RyanKoo
This sounds great.

