Goldman Sachs and the return of ‘Blockchain not Bitcoin’
Now it’s happening again. Goldman Sachs CEO David Solomon published an op-ed in The Wall Street Journal headline “Blockchain is much more than crypto”, which claims that there is a future for the technology – as long as that future is decided by a small group of powerful people. Here is a selection from the article:
“I still see blockchain as a promising technology if it is allowed to innovate under the right conditions. Under the guidance of a regulated financial institution like ours, blockchain innovations can flourish“, Solomon wrote (emphasis mine). “While some blockchain startups require regulatory oversight, not all have the ability to meet such requirements because they are young organizations.”
You get the idea. The message from the Goldman boss is essentially that the only way crypto and blockchain can be viable is if they are left to big banks like his.
For crypto veterans, this is like sitting through a bad movie for the second time. The first time was in 2014-15 when, as now, a crypto bubble popped and scandals abounded. The title was different (“Blockchain not Bitcoin” was the popular cry back then), but the plot is the same: Trust the banks to create a private and secure version of the blockchain instead of relying on public chains Bitcoin and Ethereum.
This plan didn’t work then, and it won’t work now. The first time, major banks threw more than $100 million at a consortium called R3, led by a corporate outfit with the right connections to Wall Street. Over the years, companies like R3 have produced little, even as decentralized crypto communities have unleashed a wave of innovations such as Layer-2 solutions, zero-knowledge proofs, NFTs, and staking.
While private blockchains will never compete with public ones on a technology basis, there is a risk that big banks like Goldman Sachs will use their power in Washington, DC to make their vision of blockchain the only legally viable one. This would be a bad result. Imagine if Congress wrote key laws in the 1990s to oversee the Internet, did so in a way that gave control of the Web to the likes of AT&T, AOL, and Verizon.
Blockchain, including cryptocurrencies, is too important a technology to allow this to happen. As Solomon himself writes in his op-ed, blockchain offers a faster and superior way to verify transactions related to finance, stock trading and real estate. He is right, and those applications are only the tip of the iceberg. Goldman Sachs should be commended for embracing blockchain – as long as Solomon and his banking buddies are willing to let everyone else do the same.
Jeff John Roberts
[email protected]
@jeffjohnroberts
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