The trend these days, if you're a bank CEO, is to shit on bitcoin. This isn't hard to understand. If bank execs know anything, it's how money works, and bitcoin clearly isn't money (Aswath Damodaran's contentions notwithstanding). As Credit Suisse's Tidjane Thiam said Thursday:
From what we can identify, the only reason today to buy or sell Bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble.
But Lloyd Blankfein has taken a different tack. He's the tolerant dad of the big bank executive class, willing to at least entertain the notion that what's all the rage amongst kids these days might not be utter horseshit. In a Bloomberg interview Thursday, Blankfein elaborated on his complex crypto feelings:
I have a level discomfort with it as I have a level of discomfort with anything that's new. But I've learned over the years that there's a lot of things that work out pretty well that I don't love.
It's not just bitcoin's status as today's most hyped-up newfangled craze that has Blankfein feeling introspective. It's the theoretical implications of a currency printed not in metal, nor in law, but in code:
I read a lot of history, and I know once upon a time a coin was worth $5 if it had $5 worth of gold in it. And then a piece of paper was worth $5 but only if it was backed by gold in the treasury or silver in the silver certificate, and even then people were suspicious. Now we have paper that's only backed by fiat; the government says I think that's what it's worth.
Maybe in the new world something gets back by consensus. Instead of a government fiat, maybe it's a consensual arrangement by people that agree that it's worth something, kind of like what social media does. It's not my natural state of comfort, but if you told me that if we went into the future and bitcoins were successful, I'd be able to explain how it's a natural evolution from hard money.
None of those words rhyme with “fraud” or “bubble” or whatnot. Clearly ol' Lloyd has been doing some pondering on the crypto question, and he's intrigued by what he sees. And even if he does privately believe bitcoin is a fad/scam/con, he's circumspect enough to hold his tongue until Goldman can get in there and drink everyone else's milkshake.
(A brief tangent: Blankfein's monetary history is true in the broad strokes of modern Western history, but obscures the fact that money (i.e., transferable debt) has ever and always been a primarily social institution, sustained more by convention than arbitrary physical quantities, from the big useless stones of Yap to medieval English tally sticks to the fiat currencies of today. Bitcoin, being arbitrarily hard-wired to run out once 21 million have been minted, is actually far less societally “consensual” than most monetary arrangements that have ever existed.)
Anyway, despite it being plausible that bitcoin prevails in 200 years, Lloyd isn't betting on it. At least not personally:
Maybe 200 years from now even someone like me might be comfortable with it, but right now, I tell you: I don’t have an investment in it, but I’m not willing to pooh-pooh it and that’s why I say I’m open to it.