A friend pointed me to this news article about Goldman Sachs’ recent investment in Circle, a Bitcoin startup. So, is Goldman Sachs actually betting on Bitcoin? I don’t think so.
We must differentiate between Bitcoin the currency, and Bitcoin the payment technology. The startup in question, Circle, is quite clearly all about leveraging the payment technology. I think there is a huge opportunity and future for micropayment technology. This part of the financial technology sector has been ripe for disruption since PayPal, Visa et al stopped innovating years ago. GS is clearly betting on that aspect here, not on the future of the currency itself.
As the article notes, the official blog post by GS about this investment does not even mention the word “Bitcoin”. This is also clear from Circle’s product offering:
Circle has also announced that it will begin taking deposits in U.S. dollars, which can then be used to make payments in either bitcoin or USD. By giving customers the ability make bitcoin transactions without having to actually store the digital currency, Circle assumes all of the investment risk resulting from the high volatility of bitcoin’s market value.
This is an exciting time for financial technology, with Silicon Valley set to give Wall Street a run for their money.