One of the biggest US banks, Goldman Sachs, has issued a research report, where it claims that Bitcoin Bubble is bigger than the Dutch tulip mania. What are other Goldman Sachs Bitcoin Bubble Warning Details?
24 January, AtoZForex – The US banking giant, Goldman Sachs, has stated that Bitcoin is a bubble that is bigger than the Dutch tulip mania and the dot-com era. The bank has published a research letter, where it has warned about the increase in the cryptocurrency prices.
Goldman Sachs Bitcoin Bubble Warning Details
The report “(Un)Steady as she goes” highlights the price movements of Ethereum and Bitcoin. It also notes the increases in the stocks prices of the firms that use Blockchain for promotion purposes. For instance, one such entity, The Crypto Company, has seen its price spiked more than 17,000% prior to when the US Securities and Exchange Commission (SEC) has suspended the trading of its stock.
According to the authors of the research, the mania is surprising. This is due to the fact that the world most famous and biggest cryptocurrency, Bitcoin, has not even fulfilled the role it has set for itself.
The report reads:
“We think the concept of a digital currency that leverages blockchain technology is viable given the benefits it could provide: ease of execution globally, lower transaction costs, reduction of corruption since all transactions could be traced, the safety of ownership, and so on. But bitcoin does not provide any of these key advantages.”
Bitcoin Network Issues
Following on this, the report further stated that a single Bitcoin transaction nowadays can take up to 10 days to process. Additionally, the value of the same single Bitcoin can vary depending on the exchange for the transaction. There was a greater than $4,000 discrepancy in the price of Bitcoin between different exchanges at the same time.
The report adds that this means that one user could be possibly paying 31% more for BTC on one exchange than on another.
The Goldman Sachs Bitcoin Bubble warning report also stresses another issue of this cryptocurrency. The analysts talk about the high transaction costs. In spite of the inflation of Bitcoin and altcoins, there is no risk that they will be affecting the US or any other global economy.
The cryptocurrencies make up just a small fraction of the US and world GDP – 3.2% and 0.8%, respectively. However, the dot-com bubble has appeared much more significant for the US and the entire world at that time – 101% and 31% of GDP, respectively.
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