Goldman Sachs to Open a Bitcoin Trading Operation (nytimes.com) 50
Even as most big banks have maintained distance from virtual currency Bitcoin, Goldman Sachs is bucking the risks: It plans to set up what appears to be the first Bitcoin trading operation at a Wall Street bank. From a report: In a step that is likely to lend legitimacy to virtual currencies -- and create new concerns for Goldman -- the bank is about to begin using its own money to trade with clients in a variety of contracts linked to the price of Bitcoin. While Goldman will not initially be buying and selling actual Bitcoins, a team at the bank is looking at going in that direction if it can get regulatory approval and figure out how to deal with the additional risks associated with holding the virtual currency. Rana Yared, one of the Goldman executives overseeing the creation of the trading operation, said the bank was cleareyed about what it was getting itself into. "I would not describe myself as a true believer who wakes up thinking Bitcoin will take over the world," Ms. Yared said. "For almost every person involved, there has been personal skepticism brought to the table."
Why am I not reassured. (Score:3)
First thought: here come the Bitcoin flash traders.
Re: (Score:1)
First thought: here come the Bitcoin flash traders.
Flash crashes usually happen inadvertently, usually by fat-fingering a trade. The institutions causing them almost always lose money.
If you are referring to HFTs, it is likely bitcoin markets already have those, but the transaction costs limit the opportunities.
Re: (Score:2)
What ' transaction costs' are you referring to?
A lot of trading platforms will let you do trades for 0.1% of the value - doesn't sound too prohibitive.
Re: (Score:2)
A lot of trading platforms will let you do trades for 0.1% of the value - doesn't sound too prohibitive.
HFTs operate on razor thin net profits, often matching up buyers and sellers and making a tiny profit on the spread. A 0.1% transaction cost is going to squeeze most of them out of the market.
Re: (Score:2)
Perhaps in typical markets, but 0.1% move in crypto happens many times every second.
Re: (Score:2)
Goldman will not initially be buying and selling actual Bitcoins... a variety of contracts linked to the price of Bitcoin.
So they'll only be selling futures or something, probably CFDs (a way of losing even more money than ordinary futures).
Re: (Score:3)
Re: (Score:3)
Bitcoin Network and High Frequency Trading are mutually exclusive.
You can engage in HFT only within one single exchange's ecosystem, because major crypto-exchanges have coin pools where wallets are referred rather than actually holding assets, but then you can only make a profit within that exchange, the overall market effect being limited because the exchanges are siloed.
Money Laundering (Score:5, Interesting)
Re: Money Laundering (Score:5, Insightful)
ITS Goldman Sachs you stupid or what?! They never needed BTC to make money laundering, they even cheated European Union to let them think Greece had money while they were bankrupt !!! (To let them join Europe when they should not have join Europe and euro group...) this is the bank who created the euro debt crisis! (Which was caused by the subprime America crisis, in which Goldman Sachs bet against his own clients...)
Re: (Score:2)
Re: Money Laundering (Score:2)
Re: (Score:2)
Re: (Score:3)
I know in Europe banking laws are written so you can't set up a banking structure that lets you launder money and pretend you didn't know that was happening.
Ah, those wonderful Europeans and their financial cleanliness. Except for Switzerland. Oh, and don't forget Cyprus. Isle of Mann? That too I guess. Lichtenstein banks unsually well capitalized. Luxembourg doing alright I hear as well. I think Russia's entire 1% has their money stashed in London (not 'London' London...but the City of London). All above
Limited number of logical constructs (Score:2)
There's only a limited number of these logical constructs. IMO they're (cryptos) are very similar to non-voting, non-dividend-paying shares of a company. Not much you can really do other than trade them (Google's class-c's [investopedia.com] are over a grand a piece now [nasdaq.com]). There's the ledger to which all transactions propagate, like a secure Usenet. Kinda limits its use as a true currency when some rando on the left coast gets his ledger updated when I make a transaction on the other side of the country.
Goldman Sachs... (Score:1)
Aren't those guys supposed to be in jail for something?
Re: (Score:3)
Aren't those guys supposed to be in jail for something?
No. Goldman Sachs didn't need a bailout, and they didn't cause the crash. While everyone else was running up the housing market and pawning subprime mortgages off on Fannie Mae (backed by tax dollars), Goldman Sachs was betting against it, helping to deflate the bubble. If everyone had done what Goldman did, the financial crisis would have never happened.
Re: (Score:2)
My recollection of the movie (which I highly recommend) is that GS lose big time.
I don't think so. The big loser depicted in the movie was Morgan Stanley. Frontpoint, a subsidiary of MS, was shorting housing, but most of MS's bets were in the "wrong" direction. They lost big.
Re: (Score:2)
They were also involved in selling sub-prime mortgage backed investment vehicles - in fact, theirs was named "The Worst" (it was also a tiny offering).
So, yes, they made of profit on both sides of the game. BUT, to be fair, they paid back all their TARP with interest.
I hate Goldman Sucks as much as anyone - having worked there for a short period in the late 1990s - but, let's keep the facts straight.
Of course! (Score:5, Insightful)
Oh boy (Score:5, Insightful)
Now that Goldman Sachs is involved, surely nothing can go wrong. They're reputation is impeccable.
Re: (Score:2)
Yes, just what we need. Experienced, professional sharks trading in an unregulated market where they can make their own rules. Would you trust them?
Here we go again (Score:2)
Fuck Goldman Sachs. (Score:1)
See subject.
yeah right! (Score:2)
Gamble house take bets on a new game (Score:1)
Is anyone surprised?
GS opening a trading operation is no different than a gamble house taking bets on a new ball game. They can engineer it so they themselves take no position at all, i.e. they take a skim of the transactions regardless of who won/lost.
This is no different than accepting bets on the result of a ball game, it is by no means endorsing the game itself, it only indicates there may be enough people interested in placing bets.
HOWEVER, as the betting pool gets larger, there is always the problem
"likely to lend legitimacy" (Score:2)
Goldman Sachs or the big finance industry in general will do the very opposite of lending legitimacy. It is like suggesting that Russian oversight lends legitimacy to a democratic election...
How do you know a trend is over? (Score:2)
When mainstream media reports about it.
How do you know a financial trend is over?
When Goldman Sachs et al get involved in it.
Not the first and not trading BTC (Score:2)
Confirmed... (Score:2)
It's now confirmed that Bitcoin is a scam...
Hurray! (Score:2)
Dogecoin to the moon*!
* the moon equals 10 dollars.
Now bitcoin is too big to fail (Score:3)
I mean, it's gonna fail anyways, but now we'll pay for it.