Citing use cases in emerging markets, Goldman Sachs quips cryptocurrencies are ‘real money’

January 11, 2018

Goldman Sachs has stated that, given use cases in emerging markets, cryptocurrencies such as Bitcoin could succeed as ‘real money’.

2018’s earliest days have seen some of Bitcoin’s most ardent critics about-face, and now investment bank Goldman Sachs has clarified that – given their use case in emerging markets – cryptocurrencies could ‘succeed’ as real money.

In a new report, company strategists wrote that “In recent decades the U.S. dollar has served its purpose relatively well… [however] in those countries and corners of the financial system where the traditional services of money are inadequately supplied, Bitcoin (and cryptocurrencies more generally) may offer viable alternatives.”

Read: Bank of Israel opines digital currencies are an asset, not a currency

The company’s shift in opinion is mirrored by the quick adoption of cryptocurrencies around the world in nations with either developing economies or repressive governments.

Specifically, Zimbabweans have turned to cryptocurrencies such as Bitcoin to transact, while Dash recently revealed a major deal to position itself as the forefront digital currency with the nation.

Elsewhere, Venezuela has moved to issue the first 100 million units of its new Petrocurrency, while the Kim Jong-Un regime in North Korea has increased its hacking attempts on South Korean exchanges – with the view of acquiring cryptocurrencies – by more than three-fold.

Goldman Sachs strategists warned, however, that “Our working assumption is that long-run cryptocurrency returns should be equal to (or slightly below) growth in global real output—a number in the low single digits. Thus, digital currencies should be thought of as low/zero return or hedge-like assets, akin to gold or certain other metals.”

Goldman Sachs’ comments will likely come as welcome relief for beleaguered cryptocurrency investors, as South Korean financial authorities are reportedly moving to ban cryptocurrency investment within the nation, while other countries, such as Russia, are proceeding to issue a state-backed cryptocurrency.

Read: Mark Zuckerberg highlights cryptocurrency in his ‘annual challenge’ address

What are your thoughts on Goldman Sachs’ new views? Be sure to let us know your opinion in the comments below!

Follow Bryan Smith on Twitter: @bryansmithSA