YouSaid · the spoken record

Jeffrey A. Sprecher

lines on the record: 38
first: 2018-04-19
most recent: 2018-04-19
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Think the list of technical specifications that we now realize need to be met has probably gone from a hundred item list to a thousand item list. And so an appreciation of just how hard the problem is I think has grown.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“What other things changed a lot is you've raised a lot of capital, which now has a stake in seeing commercial applications of these crypto technologies come to light. So I think there's a big vested interest now that wasn't there three years ago as well.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Taken a lot less market share from gold, platinum, and those type of commodities, I would have nationally thought, which I think goes to underscore the difficulties it faces in terms of being used even as a store of value.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“When the research division first covered Bitcoin back in 2014, in the top of mind series, the message was Bitcoin likely can't work as a currency, but there's some sense that the ledger-based technology that underlies it could hold promise. That seems remarkably consistent with what I've heard today. What's surprised each of you the most about where we are today relative to that point four years ago?”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“I don't think there's a regulatory agency in the world that doesn't think this is still a problem area. I mean, when you look at the price action, when you look at the unsolved crimes, when you look at the IPO type practices that we've seen, this still has all the earmarks of a market that's being abused for get-rich quick schemes. And I think that's going to be true for a while.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“And so it's going to take quite a while to develop the technical specs to make these really usable from a regulatory standpoint. On the other hand, I think they're inevitable. If you think about the notion that today the ledgers are basically sit in one place subject to computer manipulation by cyber attack, and no ability to run them backwards through time to contaminating transactions, the notion that these are the technologies of the future is almost undeniable. It means things like this that we develop in the future to meet the actual needs.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“The ones who hire people to read for you. It would be really nice to have that embedded inside of something like an encrypted blockchain and be able to move houses more quickly and do proof that way. But even with that application, if you think about a simple issue like a lien on a house for tax purposes, that's not going to have made it into the blockchain. So that broader process isn't going to go away. It's simply going to give you something to link into to check against other databases.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“So I think the regulators are very interested in creating more robust ledgers. I think they see the promise of the concept, but also the distance from where we are. So I think there's a lot of broad interest in the technology, but a lot of hope that industry participants are going to move it quite a bit forward before it becomes part of the regulatory environment. Nevertheless, I think the need is there. I think you have similar issues in settlement. I think that when contract lawyers look at this and the notion that you can embed a contract, one of the examples that's used a lot is in selling homes. If you think about all those documents that happen when you buy a house.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“The one area where we do see applications fit the criteria that Steve laid out is in physical traded commodities. In the one market that seems to be where we will see use of it will be in liquefied natural gas LNG. One of the reasons why is you're trading between West Africa, Asia, and dealing with places they don't have established banking system. Speed of transaction is not that concerning, but verification of parties is very important. And typically you have three parties, a bank and then the buyer and the seller speed in the location where these transactions take place are ones that's applicable. But you get beyond that even when you get into oil and metals that take place in places in the OECD countries. There's not a lot of demand.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“The derivative and structure in the same contract. There's lots of places where a better ledger would be helpful and a distributed ledger would be more robust. So those comments are just right. The notion that blockchain is a half a step away from there is where the exaggeration is.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Could a distributed ledger be helpful? Absolutely. Is it a distributed ledger of the type that's currently built into blockchain? The answer to that's probably no. Because if you're going to do hundreds of transactions in a second on exchange, you're going to have multiple ledgers at sort of known custodians. You're going to be able to reconcile that at the end of the day. You're going to be able to run it backwards in time to deal with bad trades. If you think about the technical requirements of that ledger, you realize that it's a lot different than the thing we're looking at today, both in terms of speed and function. And so that's the kind of thing that requires a ground up redesign as opposed to adjustments. That's true whether you're talking about the equity systems, whether you're talking about its application to supply chains that people want to do, whether it's the applications to over-the-counter derivatives where you want to embed the confirm.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“A lot of talk about using it as for settlement, clearing, and in both equity space and some fixed income markets. That system's badly flawed today in the sense that execution happens in milliseconds, settlement clearing happens in days, is technology like this applicable to that problem?”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“When we get to the later versions of this that people use, you're going to believe in your central bank again. You're going to believe in your banking system again. You're going to believe in contract law again. And these systems are going to design to be efficient based on reasonable resilience as opposed to outright hostility of environment. And that's going to mean very large technical changes. And so it's probably going to be a three-year, five-year, 10-year process of designing what amounts to a new technology built on the inspiration of blockchain as opposed to small technical adjustments to blockchain that'll make it a panacea for all our current financial problems.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“The current one is not designed to solve the right problems. What are the big insights? Well, the big insight is that encryption is going to allow a more temper-proof system that allows sort of better, more robust record-keeping, and that it's possible to distribute a ledger to multiple places, which will again give you resilience. Those are good outcomes. The current system, on the other hand, is designed where no participants trust anyone else, and the entire community is used to use up resources to verify every transaction. So this is essentially saying is we're going to solve the problem for the most hostile possible financial system and use up all the necessary resources to compensate for that hostility in the basic design of the system.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“You just mentioned distributed ledger or blockchain, the technology underlying cryptocurrencies. You've been positive on the potential for blockchain for a while, but we haven't yet seen many applications for the technology beyond cryptocurrencies. Why is that?”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Jeff keeps coming back to the economic problem. And I think if you think about the core economic problems people want this to apply to, distributed ledger so that ledgers are better preserved against cyber attack, more robust. Certainly these technologies offer some promise, but on the other hand, when you think about how much they will need to change to meet that need, you realize that it's going to be version 22. It's not going to be version 1. You're going to need good tax records, you're going to need good contract records. You know, a lot of what the new research is in is how to embed the tax accounts, the IDs, and the contracts into the transaction. Now, it's almost hard to think of something that's more opposite the original spirit of Bitcoin than restructured it to include a contract, an ID, and an unchangeable tax record. But that's actually where the research is. And I think when you think about...”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“I kind of find it ironic we talk about institutional money and anti-establishment in the same discussion. But I think what we find obviously is that the primary market participants are retail participants and mainly speculators. But let's ask the question about institutional money, because that's what prompted a research we did. And when we looked in it, if you could deal with the custodial issues that Steve was referring to and create a product, a Bitcoin product that passed all of the anti-money laundering and other type of regulatory requirements to create what we called an AML clean anti-money laundering clean Bitcoin, the question is, would there be demand for this? And let's go back to what economic problem it solves and asked as an institutional investor need to take money off the grid and conceal it or operate.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Again, as a currency, it needs to be easy to transact. And anybody who's tried to transact in cryptocurrencies in the last three or four months knows, at least currently, it's not the least bit easy to transact, nor is it necessarily very anonymous. You have to set up a wallet and set up a lot of institutional infrastructure in order to get access. So I think it's failed to come even remotely close to just carrying cash around in a briefcase as far as currency services are concerned. Having said that, if you try to think where does it have the best chance of getting some traction, I would say possibly in emerging markets where the local currency has been thoroughly debased, possibly by monetization of fiscal deficits and the like, and where maybe dollarization has gotten some traction where the local demanders of currency services have just adopted foreign currencies, in those kind of environments you could imagine that a well-functioning, easy to transact, secure cryptocurrency could crowd out the local currency and replace dollars, but we haven't seen it.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Is not offering you returns that are competitive in the markets. It's offering you probably negative returns very often on an inflation adjusted basis. Whereas I think the motivations of most of the investors who've piled into cryptos as a currency has been this idea that was going to add that value. My own view is that, and I think Jeff touched on this a minute ago, there's an element of appeal that cryptos have that's basically off the grid or it's anti-establishment. And I do think there is a lot of pint up kind of animosity towards the formal financial system that's visible in all kinds of different pockets than lots of different communities of users and enthusiasts for cryptos. I think a lot of this just captures a general dissatisfaction with the way things have gone for a lot of people over the last decade or two in being an enthusiast for cryptos as a way to kind of express that anti-establishment feeling towards organized financial markets.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“We've speculated about the best case scenario as a currency, and I want to kind of use that word narrowly to distinguish it from a commodity or possibly as an asset, because I actually like the asset metaphor that's like land. It's useless on its own if it's just dirt and rocks. But if you can put a productive asset on top of that, like a building, then it can become a cash flow generating asset. So I think there's some speculative land value type of dynamics in the minds of a lot of people who are investing in these currencies, thinking about it as a platform. But as a currency per se, where the value of the currency is to provide a stable store of value, I would say it fails dramatically. If you look at the daily volatility of your bank account or of a three-year treasury bill, the volatility is measured in basis points if it's above zero. Whereas cryptos in the last year have had volatilities in the hundreds and hundreds of basis points daily. So that's not a typical characteristic of a currency, number one. And then number two, as a store of value, typically a currency”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Think there's some evidence indirectly that the countries where smuggling money across the border was an economic use that was in focus, I think there's some evidence judging by the volumes on the exchanges that we saw in Asia, for example, that it may have been getting used for that purpose. But it's pretty hard to track, right? I mean, that's one of the virtues of it in the first place is that it doesn't leave a paper trail. And so it's hard to know for sure who's been using it for what purposes. But I do think it serves, as Steve suggested, a valuable use if you're trying to move large amounts of money and do it quietly in the unofficial system.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“One argument that's been made for it, and it's compelling is that some people operate in countries where the nominal currency or the currency that's used in the country is either highly variable or the government is distrusted to preserve that value over time, hyperinflation and the like. Have we seen adoption in those kinds of countries?”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Or you could ask the question around what economic problem does it create. If you're trying to secretly move Fort Knox, that's really nice. If you're worried about somebody stealing Fort Knox from you, it's a real problem that somebody can put it in their pocket and walk out of your home. One of the real problems people have had with setting up exchanges, broker-dealer relationships, arbitrage, is that figuring how to do custodial care of Bitcoin has essentially been impossible. There's a lot of highly publicized examples of where money was stolen from exchanges Can you think of a single headline of someone being caught? That's a really dangerous thing.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“question and it doesn't really solve an economic problem that many actually need to deal with unless you're trying to conceal money or you operate in an area that does not have an established banking system.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Let's go back and ask what purpose do platinum and gold serve? When we look at those take out the radioactive elements because they're dangerous to put in your pocket. And we focus on platinum and gold. Platinum is the highest density of any element. So if you're trying to pack a lot of money into a small space, platinum, and then followed by gold will accomplish that, given both the value and the density of these elements. Now when we introduce Bitcoin as a store of value, the amount of money we can store in a space is infinite. So like to point out, you look at the total market cap, at least when we did the piece of Bitcoins for somewhere around $190 billion of existing coins out there. That's about the size of Fort Knox. So in other words, I could put Fort Knox on a key fob and put it in my pocket and walk away. That's an impressive attribute. But let's go back and ask what economic problem that solves. That's a whole different...”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“You've said it possesses some attributes that are superior to other commodities. You cover the gold market, you cover a lot of other places that are stores of value. But you also pointed out it has limited applications. Talk us through that.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“When you buy one of these assets, you own it for what it's worth. And when we think about what was unique about Bitcoin, it was the very first digital commodity. We have seen digital money going back two decades. What was different is you could take this money off the grid and you could put it in your pocket and walk away. And that's why it would be classified as a commodity because it doesn't have that liability.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Jeff, as we mentioned at the top, you run commodities research here. In some level, positioned itself as a commodity with mining and scarcity and the like. What's your perspective on the so-called cryptocurrency? Well, I think as we termed it in the piece, it was a crypto commodity. And by the way, the regulators agree with us. They've classified it as a commodity. Now, in terms of understanding why it's a commodity, let's go back and let's look at what a currency is. And a currency is a security. And a security typically has a liability to it. And we think about why is an equity a security because it is secured to future earnings of a company. Why is a currency of security? Because it's secured to future tax revenues of a country. So when we think about a commodity, it typically does not have a liability.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“When you think about how people responded to our prior arguments about cryptocurrencies going to zero, the primary argument back has been, well, they haven't gone down yet. That's not particularly compelling. We've seen a lot of damage to the price level. There'll probably be more over time. It's still hard to see any of the current currencies surviving the long term.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“One would expect normally in markets of this sort that at the end there's going to be two or three eventual technologies that are quite valuable and all the preceding ones in this case are probably going to price to zero. The fact that we currently have hundreds if not thousands of these that are trading very correlated at fairly high levels is probably the clearest indication this is a speculative bubble and not an assessment of a technology.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Think this is one of those cases where last man standing is the better analogy. We often talk about version 2.0. Today's cryptocurrencies would be lucky to be 0.1. These are the early experiments. This is the airplane that uses a rubber band as opposed to an engine. We're eventually going to need to run hundreds of transactions a second. These technologies are capable of running four transactions a minute. We're just not even close to the zone of what will be doable. And when people talk about using this for stock exchanges or foreign currency markets, there are literally hundreds of technical requirements that these technologies don't meet yet from reporting to tax authorities to providing records to providing methods of recovery for lost assets. These are things that people take absolutely for granted in usual technology.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“With the environment the way it is today, sometimes in technology there's a first mover advantage. Do you think the early cryptos will be around five or ten years from now or will we see a different version over time?”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Actually, I think Tulip Springly is the better example for understanding the correlations. When a dotted tulip and a purple tulip are highly correlated with a yellow tulip, that kind of makes sense. In cryptocurrencies, it's sort of a situation where may not be quite winner-take-all, but it's going to end up really close. And so if one's going up, the others probably ought to be going down. This should be a battle of best technology, and instead it seems to be a common wave of enthusiasm. And that's probably the thing that's most worrisome from the bubble standpoint. Enthusiasm rather than the technical aspects of each currency seem to matter more.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“So for investors looking for a little alpha, all of a sudden they thought they found it. Steve, you said that the high correlation between different cryptocurrencies worries you. What do you mean by that, and how is it different from other currencies?”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“I'd say the most important context is that there just hasn't been that much to get excited about in the last couple of years, right? Valuations have been very high, very stretched. Volatility has been unbelievably low. And that's just not a very exciting environment for investors who are looking to make big returns. And then along comes crypto and posts hundreds and hundreds of percent returns. And that's something you can get excited about.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Tulips are probably easier to understand than cryptos, but I do think that this bubble probably has more, or it's had more in common with conventional bubbles. I mean, the dot-com was really the last telltale market bubble that we had that we can point to in recent history. And I think it has a lot in common with that bubble, right? The fact that when you change the name of a company to include blockchain or Bitcoin, you got stock prices doubling by two or three times. That was also characteristic of the dot-com boom. So I would argue it has more in common with past bubbles than differences.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Academic research has done a lot of work to try to lay out the taxonomy of a bubble and what are the characteristics of all bubbles have in common. And so the point we were making there is just that this bubble, and I use the term in quotes or not, this bubble has a lot of those telltale characteristics, most important of which I would argue is the one Steve just mentioned, which is that price action generates a lot of excitement. So that's sort of the first fundamental agreement that it pulls new investors who haven't been contaminated, so to speak, into the circle of people who are excited about an idea. A second characteristic is it has to have some plausibility, right? It can't be completely dismissive of any kind of fundamental anchor. And so I think there is a lot of very interesting technology here that kind of gives it a plausibility, even if nobody really understands what cryptocurrencies are. And I think those are kind of the two most important signatures of a bubble or the ingredients of a bubble, which is that there's a lot of price action that's given it, a lot of investor excitement.”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT
“Charlie in February the research division's top of mind series put out a report titled Is Bitcoin a Bursting Bubble with the word bursting in brackets You wrote in that report that the cryptocraze fits the classic definition of a specular bubble why is that”
2018-04-19 · Goldman Sachs Exchanges · Is Bitcoin a (Bursting) Bubble? · IDENTIFIED FROM THE TRANSCRIPT