Why Doesn’t Wall Street Understand Bitcoin? Goldman Sachs Veteran Explains

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John Haar – a for­mer mem­ber of Gold­man Sachs’ Asset Man­age­ment divi­sion – pub­lished an arti­cle detail­ing what he per­ceived were com­mon­ly held views about Bit­coin, sound mon­ey, and eco­nom­ics on Wall Street.

He list­ed mul­ti­ple rea­sons for which mem­bers of tra­di­tion­al finance either object to or fail to appre­ci­ate Bitcoin’s poten­tial as glob­al money. 

Ignorance of Economic History

As explained in a blog post for Swan on Mon­day, Haar said that “vir­tu­al­ly no one” has spent time under­stand­ing the his­to­ry or fun­da­men­tals of mon­ey. For exam­ple, they do not grasp the char­ac­ter­is­tics that made gold his­tor­i­cal­ly dom­i­nant mon­ey: dura­bil­i­ty, divis­i­bil­i­ty, rec­og­niz­abil­i­ty, porta­bil­i­ty, and scarcity. 

By exten­sion, this impairs Wall Street’s under­stand­ing of Bit­coin – which is often referred to as “dig­i­tal gold” for pos­sess­ing these qual­i­ties even more strongly. 

Haar boils the lack of under­stand­ing down to education:

“To the extent that those work­ing in tra­di­tion­al finance have any opin­ions about the his­to­ry or fun­da­men­tals of mon­ey, it’s almost entire­ly shaped by Key­ne­sian eco­nom­ics,” he said, “and per­haps by MMT in more recent years.”

Key­ne­sian eco­nom­ic the­o­ry and mod­ern-mon­e­tary the­o­ry both advo­cate for cen­tral­ized con­trol of a nation’s mon­ey sup­ply to man­age the economy. 

Bit­coin, by con­trast, resem­bles a grass­roots com­mod­i­ty mon­ey with an absolute­ly fixed sup­ply that nobody can change. In fact, cen­tral bankers like Ben Bernanke and Chris­tine Lagarde have a his­to­ry of speak­ing poor­ly about the asset. 

Despite their pur­port­ed igno­rance, Wall Street investors were like­ly to “pre­tend” to be well-versed on Bit­coin and oth­er finan­cial top­ics. As such, they’d often take strong posi­tions against Bit­coin that “sim­ply repeat the objec­tions they have heard in the main­stream media.”

Closed Mindedness and Lack of Perspective

Haar also described Wall Street types as “high per­form­ing con­sen­sus fol­low­ers,” unlike­ly to be ear­ly adopters of new tech­nolo­gies. “They are the peo­ple who gen­er­al­ly fol­lowed the rules through­out their lives… and they gen­er­al­ly trust author­i­ty and alleged experts,” he said. 

Fur­ther­more, the lega­cy finance world­view is gen­er­al­ly con­tained in devel­oped coun­tries with rel­a­tive­ly sta­ble cur­ren­cies and secure prop­er­ty rights. Under such cir­cum­stances, the neces­si­ty of Bit­coin is less appar­ent than for cit­i­zens of Argenti­na, Turkey, Venezuela, Nige­ria, and the like, where Bit­coin adop­tion hap­pens to be quite high. 

Haar con­cludes that most peo­ple in lega­cy finance that oppose Bit­coin have not arrived at their posi­tion through deep research or understanding. 

For the few who under­stand mon­e­tary his­to­ry, he sus­pects they may be peo­ple with senior roles with a finan­cial incen­tive to speak crit­i­cal­ly of the asset. The­o­ret­i­cal­ly, Bit­coin could allow peo­ple to store their wealth with­out “invest­ing” their mon­ey, mean­ing less busi­ness for invest­ment firms. 

“They would pre­fer the world’s cap­i­tal to be forced into invest­ments, which their com­pa­nies just so hap­pen to pro­vide access to and earn juicy fees on,” said Haar. 

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