Goldman Sachs CEO Lloyd Blankfein has spoken against crypto currencies in the past comparing them to tulips and calling them a vehicle to commit fraud. Then, on February 5, 2018, the head of investment research Steve Strongin said that because of the lack of intrinsic value, the crypto currencies that do not survive devaluation will most likely trade to zero, and that it’s unlikely that many coins will ever recover to their recent all-time high values. In short, the company’s position was that the crypto market would crash and that people would do better cutting their losses.
Well, 30 days later, Goldman Sachs did an apparent 180 degrees turn on their views and purchased the exchange Poloniex through their small company called Circle. Now Circle X is coming. A hybrid exchange that will sell utility coins like Ripple (XRP) and Security ones like Polymath (POLY) on the same site.
That is the first blow of the all-out battle that is looming on the horizon between crypto and security tokens to see which the preferred market is for investors.
While the Securities Exchange Commission (SEC) unleashes itself onto the crypto market causing prices to drop, issuing subpoenas, and sending letters to cease and desist to a number of ICO companies, the Polymath network, in collaboration with private Wall Street hedge funds, has been quietly and privately positioning itself to monopolize the upcoming securities market. However, under the developing Polymath Exchange only accredited investors would be allowed to buy securities. To be considered an accredited investor in the U.S., a person must have a net worth of at least one million dollars (excluding the value of his/her primary residence), or have an income of $200,000 per year for two consecutive years.
With the announcement of the Circle exchange, Circle may have just beat them to the punch, taking on Polymath from a total opposite perspective by making securities available to the public at large.
So, this is now a race to see who starts the first securities exchange with most likely their own number of coins. The introduction of Polymath into the securities market will no doubt cause a shift of money from crypto to the stock market, causing the price of Bitcoin to drop significantly. And the talk of the day will be that Bitcoin is the past and Poly is the future.
But I do not believe this will last, for two reasons: one, a lot of people is working on enhancing Bitcoin’s scalability and fees problem (making it more competitive), and two, Bitcoin is a survivor and is already established. It is already popular worldwide as a method of payment and its simplicity makes it highly adaptable and resilient to hacking. Upgrades of the Bitcoin network with improvements like SegWit, Graphene, and the Lighting network will keep Bitcoin relevant and the crypto market surging. So, while securities have their day in the sun and the prices of Bitcoin are down, savy investors will be loading up on cheap crypto and do well when the market regains its former value and glory.
It will be extremely interesting to see what the future will bring and how the two exchanges with completely different approaches will market securities. Investors will be confronted with the choice of IPOs or ICOs on the same exchange, and the banks will have to acknowledge crypto currency as a real instrument of value.