March 6, 2018
If you’ve been in the crypto space for more than 2 years. You can remember when the main message was to get away from the banksters and legacy systems that look to control our economic resources. But when you listen to the mainstream news today. And even some of the “alt-media” platforms. The popular narrative is changing, or should I say has changed. Now you hear things like “we need to get the wall street guys in cryptos” or “having wall street involved would bring legitimacy and stabilization to the market…”
But what does that have to do with Goldman Sachs you ask? Well, in case you missed it. In the last week of Feb 2018, Circle a cryptocurrency exchange for large value traders reportedly paid $400 million to acquire Poloniex. If you don’t know what Poloniex is, it is a centralized cryptocurrency exchange used by the regular members of the community like myself. Full discloser, I have an account but never used it. And don’t plan on using it because of this situation. Which, will become clear in a moment.
Poloniex is one of the top 5 crypto exchanges. However, I have heard some mumbling of some users changing to other platforms. But the trading volume hasn’t shown any significant dip. I do wonder where they will be by the end of the year? I figure at some point a new user policy will be emailed out to account holders. Reshaping the end user experience but more importantly the terms of how they use the exchange. Hell, next year they could even start sending out 1099 like CoinBase.
So why all the fuss? Remember what I said in the beginning about what the main message used to be.
Ok, here is where Goldman “sneaks in” the back door. Circle was a startup fintech backed by, you guessed it, Goldman Sachs. So, by proxy, Goldman was able to buy its way into the crypto space without directly exposing its self to the volatility of the market by actually holding cryptos. I will admit, from the business standpoint. It was a brilliant indirect business acquisition. And one that most of us did not really see coming.
What does this all mean? Well for those who have been around for long as I have, and I know I don’t speak for all members of the crypto community, this is a very dangerous game-changing event. Well at least to those of us who remember what the message started out as. Which was the total opposite of what we just saw happen? The concern her is that, one of the biggest legacy players just appeared smack in the middle of the room. And no one saw them come in. The questions now are, what does this mean for other centralized exchanges? Who else is in secret talks to be acquired? What’s going to be the next sellout price $800 million? Or what about $1 billion? $400 million is a large sum of money for an average startup. But that is just relative chump change for Goldman. Contrast that with the fact that the crypto market is still growing for the total market cap. Depending on how you look at it. That could be a low ball price and it was bought at a steal. Understandably it was Circle who put the money out there. But you have to remember where their money originally came from.
There are also some questions on when did the negotiations start for this. The SEC has made recent announcements on plans to take a harder look at the crypto space. And there have been some mentions of the business practices of Poloniex. Ozzy The BS Filter was the first person in the crypto space I heard bring this up. If you’re not tracking. When one company buys another, you are then responsible for everything that comes with that company. That includes past business practices if they should come under any type of investigation. Now, who really thinks a startup like Circle had the pull to know that after they bought Poloniex there would be no investigation.
For the first couple of days, the buyout was the buzz on all media, from the Youtube influencers to the crypto news platforms. Reddit was awash with opinions stated as facts. And Bloomberg was there to give the talking points.
For that matter, all of this is just my unsolicited opinion on the matter.
Now I have a bigger question. When will one of the decentralized exchanges be bought out? And then how much is that going to be for? At this point in my mind, it is only a matter of time. I can see someone starting one in hope of selling. This brings me back to question of why are you involved in the crypto space. Is it all just for the money. And I’m not saying anything is wrong with money. I know we all need it to pay bills and basically live in the world. I mean look, I started a company to make a living in the space. But if the ideal was to take back and, in some cases, gain economic sovereignty. Then how do you combat or limit firms like Goldman from doing this again?
At one point I would’ve just said it’s all about decentralized exchanges like Forkdelta or Changelly. But that was when the issue was just centralized exchanges like Coinbase. And I do admit CoinBase has helped the community grow. But it came at a cost, in my opinion. Which I will address in another post. The thing now is the issue has evolved into something different. What that something is and how it will affect the community is unclear. For those of us who still hold to the original ideology. I would say hope is not lost. Even with Goldman using its deep pockets to “reverse engineer” (I use that phrase loosely) a path of bringing traditional stocks and bonds into the crypto space. This is just my conjecture on what I think part of their plan is. I still think we can limit more legacy companies like Goldman just buying their way in.
For me, talking directly with people and educating them about cryptos and what blockchain technologies are working now and growing around them. Is how we can counter the relic platforms trying to take over the ecosystem. To be clear, selling the dream of getting rich off $100 is not education. I am constantly on the lookout for disruptive blockchain technologies. I believe that when people become aware of these technologies and they become easier to use. More people will start to walk away from the old systems.
So, in the end, it won’t matter what side deals get worked out with wall street and the regulatory bodies. People will know better and have the tools at their fingertips. It sounds optimistic, I know. But I will do my best to get the word out.