Goldmans, MOBI & Crypto - The New Asset Class

The New York Times yesterday reported that Goldman Sachs, maybe the most prominent Wall St investment banking player, has announced they are going to open a Bitcoin Trading Operation.  What this means is that Goldman, in a move lending further legitimacy to virtual currencies, is going to be the first bank to “begin using its own money to trade with clients in a variety of contracts linked to the price of Bitcoin”.  Last week we wrote about the market cap for cryptocurrencies breaching US$400billion and last night it shot through US$450 billion, up a healthy 13%.  That news article talked of these types of institutional players getting involved.  

This is huge news especially given that the majority of the banking fraternity worldwide have taken a somewhat negative view of the burgeoning cryptocurrency markets.  Jamie Dimon of JP Morgan was famously quoted as saying that Bitcoin was a “fraud” and then took back the comment months later.

To have a regulated institution the size of Goldman Sachs make the leap forward embracing this new technology certainly positions Goldman as being one of the most technologically sophisticated firms on Wall Street.  

Other news which further highlights that blockchain and the concepts and possibilities that it represents is not going anywhere, is news of a new alliance between BMW, Ford, GM and Renault.  Essentially these 4 big players in the automobile industry want to bring blockchain to your car.  The consortium aptly named, the Mobility Open Blockchain Initative (MOBI) is hoping to use the technology for payments and car-to-car data.

Over the last couple of years different companies such as IBM and ZF (German car parts manufacturer) have been experimenting with concepts including testing a crypto car wallet.  However what the different companies have realised is the real power and economies of scale lie in working together rather than each creating their own separate products.  And so the idea for MOBI was born.  As Chris Ballinger, the chairman and CEO of MOBI said when interviewed by CoinDesk:

“…he realised the need for a consortium after conducting several blockchain proofs-of-concept with startups.  What is required to move those forward, he said, is a decentralised business network.  You really have to have common standards and common ways for cars to communicate, to identify themselves and make payments.”

The consortium plans on working on projects such as vehicle identity and data tracking; ride sharing; mobility ecosystem commerce and data markets for autonomous and human driving.

As other industries are fast discovering data is an extremely valuable commodity.  The concept of ownership of data is also something consumers are waking up to as well, especially in light of the recent Facebook revelations around data privacy, or lack thereof.  Blockchain technology is aiming to provide self-sovereignty and ownership of data to whoever creates it.

As Ballinger highlights, “everybody wants that data.  Apple has their car play, Amazon is putting Alexa in the car, Microsoft Azure has their car system, Google’s got theirs.  The car is the fourth screen and the next big data battleground.  It’s a trillion-dollar prize.”

Topically, we wrote about the AI revolution and the blockchain’s role in this last Friday.  Whilst the naysayers fixate on either ‘just’ Bitcoin or whitewash ‘the lot’ with dodgy ICO’s they completely miss that we are witnessing the early adoption of the first new asset class since derivatives and a game changing, completely disruptive technology reaching far far beyond the ‘financial asset’ space.

The late great philosopher Eric Hoffer said it so insightfully:

“In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists.”