Goldman Sachs Bullish on Ethereum


It may well be a very different cost to buy one Bitcoin compared to one unit of Ethereum at today’s values, however Ethereum is the second most popular cryptocurrency, and with its rate of development, is catching the attention of the astute. You could call it ‘the clever money’.

Ethereum’s highly advanced abilities such as its blockchain’s ability to write self-executing “smart” contracts right into the code underlying a transaction between parties as well as the upcoming ETH 2.0 version are just two aspects that have caught the attention of those who see it as a massive force in the future.

Today, a further indicator of this has come to light, this time in the form of a leaked document from Goldman Sachs, one of the world’s largest Tier 1 investment banks, itself a master of the electronic trading world at top market-maker level.

The leaked report, according to sources, suggests that Ethereum will overtake Bitcoin to become the prominent cryptocurrency internationally. Following the leaked document, analysts have been quick to give their opinions, which are very bullish, mainly because of Ethereum’s technological advancement, increasing functionality and wide range of use cases including real estate, collectibles and the disruption and modernization of finance in its current form.

Perhaps as a more comprehensive view, this particular document follows a message which was circulated to Goldman Sachs clients two weeks ago that said Ethereum could eventually overtake Bitcoin in the race to become the top digital store of value.

What a contrast to a few years ago, when investment banks were railing against popular cryptocurrencies. Now they are not only making top-level predictions about their future value, but investing heavily in blockchain technology too.

In its letter to clients recently, Goldman Sachs highlighted Ethereum’s smart contract capability which allows its blockchain to store small pieces of self-executing code. The Ethereum network was the first programmable blockchain and thousands of decentralized applications (dApps) run on the platform. In contrast, Bitcoin’s blockchain ledger records transactions but cannot store smart contracts.

Goldman Sachs has made quite a few predictions relating to Ethereum over recent weeks, this being the latest, and this is interesting in itself.

Banks which have a reliance on legacy systems for their own Tier 1 dealing platforms are, although bound by legacy technology, very much aware of where the electronic trading business is going and they know their tech.

In this respect, Ethereum is going places. Recent activities for the evolution of Ethereum include enacting an upgrade in the next few weeks. EIP-1559, in crypto-speak, is one of the most highly anticipated updates of the network since its launch six years ago.

EIP 1559 will change how Ethereum miners are paid, with a base rate plus a tip, to better manage network congestion at times of peak demand. It also includes a fee-burning mechanism that will remove ether from circulation — behaving almost like a stock buyback.

This in itself is investment bank-speak mixed with cryptocurrency tech advancement. Perhaps big banks see Ethereum as a potential future solution to legal contracts, investment banking, trading the markets and infiltrating the world of big company stock investments which are usually conducted only by major shareholding directors of large firms.

The distributed nature of Ethereum is therefore multi-faceted, and this is why it has a fascinating future, and possibly why the big boys are concentrating their efforts on making predictions.