Op-Ed: Michael R. Bloomberg, Lloyd Blankfein Naive on Bitcoin
Michael R. Bloomberg sat down with Lloyd Blankfein of Goldman Sachs and the Bloomberg network’s Alix Steel to discuss Goldman Sachs’ strategy for ignoring Bitcoin in the world of investment banking.
These Guys Don’t Understand Bitcoin, Blockchain …
What’s interesting in this interview is that Bloomberg made several references to a pretty scary idea of what he thought was a utopian financial system: where all money was digital and the government not only controlled it, but had privy to everyone’s transactions; (even the humble panhandler on the side of the road).
Bloomberg sees the blockchain as the foundation of this utopian world, where (let’s be honest), the wealthy and the power hungry will finally have the absolute control they so desire.
I also love the way they romanticize the panhandler and the small business owner to distract you with your own compassion.
In the end, Blankfein doesn’t really answer Steel’s original question using any measure of common sense. He just ends with an answer that sounds nice and makes it seem like she forgot her original point.
Interview Excerpt, Commentary in Italics
Alix Steel: For small businesses and businesses in general, when do they have to have a bitcoin strategy, Mike?
Michael R. Bloomberg: Not in our lifetime.
Steel: For real? Really?
Bloomberg: I … Bitcoin is not … Forget about whether you think it’s a fraud, whether you think it’s a game and tulip bulbs or not; the small businesses have to worry about how they’re going to attract [five?] people, to produce a product; how they’re going to figure out how to sell it, and keep the door open, and clean up at the end of the day.
Small businesses are where the rubber meets the road. They’re not dealing in extensive financial transactions. They’re dealing in trying to create products that people want to buy. It’s one person selling to one person much more so than all the things we talk about.
Well, small businesses can have 5, 25, 100, 250, or 500 employees depending on what textbook definition you use. Many handle volumes of online and offline transactions. Many handle a lot of money.
The blockchain based cryptocurrency systems are the only financial systems, (besides bartering), that are about one person selling to one person. Therefore they’re perfectly suited to the needs of small businesses. The traditional system has hundreds of people and organizations involved in almost every transaction, depending on what country you live in.
Steel: So let’s broaden that out, Loyd, you have not rejected or endorsed bitcoin?
Lloyd Blankfein: No.
Steel: Okay. But, when does Goldman have to have a bitcoin strategy?
lankfein: Have to have it?
Blankfein: Not today. I mean–
Blankfein: I said … when … I’d say life must be really, really rosy if this is what we are talking about. It just feels–
Steel: This is what Wall Street’s talking a … Okay.
Blankfein: I don’t think–
Why do we care so much about these people accepting Bitcoin and cryptocurrency? Seriously, we have to start asking ourselves. Why do we care so much about mass acceptance? These people control the broken system we’re trying to escape.
What do you honestly think will happen if/when the traditional system starts to value cryptocurrency?
Be Careful What You Wish for
On November 30th, 2017, a reporter asked the White House what their stance was on bitcoin and whether it was time for regulation.
Sarah Huckabee Sanders answered that bitcoin was being monitored by their infamous “team,” but there were no specific briefings or announcements at that time.
She said that she would be happy to get back to the reporter with specifics and that Tom Bossert with the Homeland Security team brought it up earlier in the week. They were keeping an eye on it, and they would keep the press posted.
Jeepers! the Homeland Security Team?
That’s right gang. The attention and mass acceptance you want for Bitcoin and crypto is only going to equal regulation that publicly aligns the original goals, beauty and strengths of cryptocurrency with the goals of terrorists and other threats to “homeland security.”
Shouldn’t we be looking to create marketplaces that operate on their own? If we need to buy groceries with Bitcoin, we need people to open grocery stores that accept it.
Shouldn’t we be looking to develop our own systems? Why are we trying to sell the blockchain to these sharks?
On these points, let’s jump back into the interview from earlier. Again, my commentary below is in italics:
Steel: I was talking to Jeff Currie over at Goldman the other day. He said the only thing that people are asking him are bitcoin and ETFs. You’re a huge investment bank. You have to be thinking about this.
Blankfein: Life must be really rosy if this is … Yes. I’m thinking about it because I get asked about it. I said, “Look. Where I am is, it’s not for me. But there’s a lot of things that weren’t for me in the past that worked out very well.”
If you told me that … if it was 20 years forward and it worked out, I could tell you why it worked out. But based on everything I know, I’m not guessing that it will work out. But I can say … I’m not going to stand there and be stride and say, “It’s a fraud. It can’t,” because it might.
Bloomberg: Alix, I think also people confuse bitcoin with bitchain.
There is a technology where you can have different accesses to data, different people can control it. You can see who’s doing what and that sort of thing. There are places where that is a useful thing. In fact, the Bloomberg system is a blockchain. We just, instead of having the users control it, we control it. But it has all the attributes of that.
Bitcoin is something very different. Bitcoin … and there’s a whole bunch of cryptocurrencies that have been started every other … every day you have a new one. That’s something very different.
And whether or not the governments of the world will lose control of monetary policy, I’m skeptical. They’re just not going to let that happen and they shouldn’t.
Okay. He literally said the benefit of the blockchain is that it’s a magical technology, “… where you can have different accesses to data, different people can control it. You can see who’s doing what and that sort of thing.”
Bitcoin and cryptocurrency are apparently a bunch of yim yam and he doubts the governments of the world will let it continue.
He’s right. If we keep shoving it in their faces and begging the “cool kids” to accept us, no; they won’t let it happen without the types of regulations most people reading this article will hate. However, we’re lucky enough that many of the “cool kids” still don’t really care. They’re not paying attention yet.
We’ve still got time to cut and run. We can still say, “Oh it’s not that big a deal after all. Oh. What are we doing over here? Just computer stuff, programs and stuff, boring, really boring.”
Seriously, folks, do you really see mass acceptance of crypto ending well?
Blankfein: Something that moves up and down 20 percent in a day doesn’t feel like a curren … doesn’t feel like a store of value.
Bloomberg: And it’s being quoted up and down. I don’t… There’s no value–
Blankfein: Yeah. It’s not trading … [unintelligible]
Steel: Maybe not a currency. But Jeff Currie told me it was a commodity. That goes to your expertise Lloyd. You grew up in the commodity business. So talk to me about what are the unregulated trading world of bitcoin. Where’s the fraud going to come?
Blankfein: The whole concept is … I don’t … Well, first of all–
Steel: Is it buyer? Is it seller? Is it price discovery? Like where’s the risk there in the financial world?
Blankfein: One of the main uses of bitcoin is as a vehicle for perpetrating fraud because you can’t trace it. There’s no payment–
Steel: So is cash, sometimes.
Blankfein: So is cash. But guess what? It’s hard to accumulate cash, sometimes.
Yeah and “sometimes” you can just see the gears turning in a scumbag’s head. “Hmm. Let me throw in a scare tactic backed by a non-fact. This works sometimes to confuse people like her.”
However, it’s a well-known fact that bitcoin payments are traceable.
Bloomberg: Yeah. But the world is going in a different direction if you think about it. Go look in China where they’re basically getting rid of cash. Everybody is paying with their smartphones. People who are begging in the streets have a little sign next to where they’re sitting in the streets. These are people who really need help from society. Instead they’re sitting there begging for money. They have a sign with a code on it, a QR code.
If you want to give them money–
Bloomberg: … you point your cell phone at the QR code, hit a button and they have a bank account. That’s the way they’re getting their money.
China is heading in the direction. They’ve gone a very large way … as is India starting to do the same thing of getting rid of cash.
Since when does anyone in America look to China for the model of a utopian society? I love how he introduced the panhandler as a compassion distraction. People from India are trying to move here. What are you talking about? This is literally so ridiculous; yet he makes it sound good, like we just read the lyrics of, “The Greatest Love of All.” But nobody really wants to live this way.
Seriously, it’s amazing how adept certain people are at getting people to drink the Kool-Aid.
Bloomberg: And one of the reasons is that you can then stop the black market and stop the drug dealers. You can track where all the currency’s going. We’re not going to go in a different direction. America may not be ready to go there, although we’re going to be left behind if we don’t because this is a much more efficient way of paying for goods and services.
If we have a cashless, centralized, digital money system; that will stop drug dealers and the black market? Seriously, dude?
Oh. But wait, there’s more. For a limited time, let’s inject a little scarcity here before closing out the sales pitch:
“America may not be ready to go there, although we’re going to be left behind if we don’t because this is a much more efficient way of paying for goods and services.”
Steel: So. Loyd, that’s what–
Blankfein: They’re also going to know what everybody’s doing with their money.
Bloomberg: Of course they’re going to know. But Google already knows exactly what you’re doing–
Steel: Yeah. And Amazon by the way. [crosstalk]
Bloomberg: … and nobody complains at Amazon. Nobody complains about that.
Yeah. FYI. They’re right on this. People, we seriously need to wake up. You’re giving away your rights to privacy left and right to social media giants, sales platforms and data collection platforms.
All the data they collect is called Big Data, (which will likely eventually power Big Brother. Big Brother could then use a centralized blockchain to control your finances. At least that’s what many a wealthy creep’s utopian dream is anyway. Or didn’t you know?)
Steel: But, Loyd, that raises the question. You have to be thinking about investment banking strategy with bitcoin. I can’t believe that you’re not.
Blankfein: No. I don’t have to be thinking about it. You can’t make me.
Steel: You want to tell me you’re not talking to any of your guys?
Steel: You’re not talking to your guys about what the strategy is going to be?
Blankfein: No. I hear it and I do it, but we’re spending too … It’s just… You know. We’ll see. If it works out and gets more established, and it trades like a store of value, and it doesn’t move up and down 20%, and there’s liquidity in it; we’ll get to it.
Fair enough. Makes sense for him to answer this way.
But you asked me … The original question was, “When do small business people have to think about their bitcoin strategy?” I’d worry about opening the doors, producing things that people want to buy, dealing with their business planning.
Just when I started to think you might be telling the truth, “sometimes.”
There are many benefits small businesses experience when they accept bitcoin and other cryptocurrencies. Most businesses find it to be a positive experience that doesn’t interfere with their other payment processes. Many businesses are also able to attract customers they wouldn’t have attracted before.
These people can keep lying, filibustering and stalling about crypto all they want. At the end of the day, the crypto community should realize that when these people get involved, it’s only going to suck. The way these people think sucks. That’s why most of you are involved in crypto in the first place.
We should strive to improve the crypto-system so that it meets our needs, instead of going halfway and expecting the current system to do the rest.
My hopes are that the crypto community will start to realize this and leave the cool kids, jerks, bullies, and scumbags to dwell in their own egotistical, narcissistic establishments and structures.
We don’t need their approval or acceptance because at the end of the day, I think that’s what many crypto-enthusiasts striving for acceptance want. And just like the moral of many a high school movie, when you align yourself with these types of people, it’s not going to be what you think; and one day, you’ll realize you miss your nerdy friends.
Do you think that mass acceptance of cryptocurrency is a good thing? Do you think cryptocurrency will offer the same benefits if governments start to accept it and regulate it, or will it begin to operate like the traditional system? Chime in below.
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