A former Goldman Sachs banker explains why people on Wall Street are wrong about Bitcoin. His name is John Haar and he currently works for Bitcoin Swan. On this occasion, friend John has drawn the letter of misunderstanding in an essay that he has recently published for his private clients. Apparently, not only do “legacy finance” folks misunderstand what he considers to be one of the primary tenets of Bitcoin (BTC), but the idea of sound money is generally lost. The “you don’t understand” card is one of the cheapest in the condescension repertoire. Suddenly, it’s not that the other person doesn’t understand. Suddenly, it is that we do not know how to explain ourselves. Or, suddenly, it is that he does understand, but does not agree with our point of view.
John Stith Pemberton invented Coca-Cola in 1986 as a remedy for opium addiction at the height of the temperance movement in the 19th century. Pemberton was a pharmacist. And his quirky invention was originally sold with a morphine-free medicine for teetotalers after the American Civil War. The popular Kleenex was not invented for us to wipe our noses during a cold. This product was originally designed to remove facial creams. A book is not a paperweight. A sandal is not an insecticide. Nevertheless, the idea of drawing the “you don’t understand” card in these cases is ridiculous. If I want to eat a hamburger with a Coca-Cola, I do it, period. The original intentions and aspirations of John Stith Pemberton don’t give a damn. Understand what?
I must confess that when using Bitcoin the least I care about are the intentions and aspirations of Satoshi Nakamoto when writing the code. Actually, I am not very interested in the original idea behind the invention or the use given to it by a certain group. Personally, Bitcoin is very convenient for me when it comes to making some transactions that I cannot do otherwise. On the other hand, Bitcoin as an investment has been the investment of my life. No other asset in my portfolio has given me so much return. With the exception of some altcoins. Of course in the case of altcoins my positions have been smaller and shorter. Therefore, the total gains have been better with Bitcoin.
As a user and investor, I am very satisfied with Bitcoin. And I remain bullish in the long term, because I think the demand will be higher in the future. What matters most to me is the usefulness that Bitcoin represents for me. I mean the way it enriches my life. Everything else doesn’t matter to me. For example, I don’t care at all that many bitcoiners have a political agenda with Bitcoin. All that “monetary insurrection” and liberatory utopia is not my goal. My goals are purely financial. And I would dare to say that Wall Street sails in this same river.
Now about solid money. That debate is older than suction cups. It’s not that Wall Street doesn’t understand “sound money.” The thing is, he’s not interested in solid money. Wall Street makes money by investing in assets with cheap credit. The dollar goes up. The S&P 500 falls. The dollar goes down. The S&P 500 rises. The Federal Reserve withdraws currency. The S&P 500 falls. The Federal Reserve injects currency. The S&P 500 rises. Liquidity is what moves the markets. Bitcoin is attractive as a digital asset that is driven by an increase in the money supply. But, as a private currency with anti-statist aspirations, its popularity is limited to a political minority. Wall Street is in the business of making money. Not in the currency reform business.
The obsession of conservatives in the United States with sound money has historical roots. If inflation has its own winners and losers, deflation also has its own winners and losers. In the 1870s and 1880s, a coalition of farmers and workers from the South formed to protest against the gold standard. Northern bankers, on the other hand, defended the status quo. Sound money lowers product prices and increases the weight of credit. Which was an inconvenience for the farmer in the country, but a great advantage for the rich banker in the city. In other words, in a sound money system, it is more profitable to hoard money than to produce goods and services. It benefits capital, but harms the producer. Conservatives want to “preserve” that old system. But not everyone agrees. In fact, most disagree. At present, the system that favors production is preferred.
Wall Street invests mainly in productive assets. Dow Jones, Nasdaq, and S&P 500 represent the productive apparatus of the United States. In fact, bull cycles are characterized by an abundance of liquidity. And that allows investors to use their dollars to invest in assets. Because keeping the dollars is not profitable. Liquidity and cheap credit are what drive asset prices risk on like Bitcoin. In fact, institutions are beginning to show interest in Bitcoin due to its great potential. Potential of what? Its great potential to increase in price over time due to an increase in demand. What else is there to understand?
If Wall Street wants to influence politics, it does so by giving money to lobbyists in Washington. But Wall Street as such is not directly involved in political projects. Wall Street understands money. If the asset is profitable, that sparks interest. Because what every institution on Wall Street is looking for is to be as profitable as possible in order to attract more clients.
“You do not understand”. What is not understood? We need money for our expenses every month. Someone has to pay the bills. We need food, shelter, transportation, health, training, etc. And somehow or other, this is a problem that needs to be solved. The constant need in a world of scarcity. Bitcoin is an instrument that makes my life easier. What else should I understand? Is it necessary to follow an instruction manual written by others to say that one understood? I buy it and use it as I see fit. If I want to use Coca-Cola to clean bathrooms, I do it, period. There is nothing to understand.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
It may interest you:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.