Dear Goldman Sachs,
On May 27, you hosted a private conference call for your clients to discuss the current US economy and the value of gold as well as Bitcoin. According to a slide deck, you declared that Bitcoin is not an asset based on the following reasons:
- Bitcoin does not generate cash flow like bonds.
- Bitcoin does not generate any earnings through exposure to global economic growth.
- Bitcoin does not provide consistent diversification benefits given its unstable correlations.
- Bitcoin does not dampen volatility given historical volatility of 76%.
- Bitcoin does not show evidence of hedging against inflation.
These are interesting perspectives indeed. We, the team of MCS, want to point out that your rationale for the declaration is weak. Google, Facebook, Netflix, Tesla, and Amazon: these listed companies do not pay dividends to shareholders. Are these stocks not assets because they do not generate cash flow? Greenpro Capital, a company listed on Nasdaq, had a daily return of 212% on May 27, 2020, and the stock price skyrocketed by nearly 700% from May 21 to 27. Are these corporate stocks not assets because of the volatility? US Treasury Yield was 0.69% as of May 27. German, French, Dutch, Swiss, and Japanese government bond yields have turned negative. Bonds in these countries are unable to protect their value from inflation. Are the government bonds of those countries not assets?
Is artwork an asset? It is not uncommon for modern art pieces, which many would acknowledge rubbish works, to be traded at astronomical prices, and to even higher level over time. Nevertheless, it is possible to classify a work of art as an asset because it is valued among the trading partners. Once a transaction has taken place, the following question should be how many people will appreciate it.
It is the same for Bitcoin, and thus it is an asset. It is just a new "digital asset" based on digital information. The fact that Bitcoin does not generate cash flow on its own; the fact that Bitcoin is highly volatile and does not preserve value from inflation; these reasons regardless of their correctness do not define whether Bitcoin is an asset or not. It is important to note that there are people who appreciate the value of Bitcoin.
We are very impressed with your remarkable insights about the blockchain industry posted on your website. Your company concluded this insight as follows:
"It's a transformation that's already begun. And organizations—both the ones that it can help, and the middlemen at risk of disintermediation —will need to be prepared as the technology matures."
We, the team of MCS, fully agree with you. The change led by blockchain has already begun and has become an unstoppable trend. We believe that cryptocurrency and blockchain technology can contribute to improving the global economic structure. We believe that it is possible to reduce the inability of individuals to be swept away by the storm of national and large corporations. The cryptocurrency industry is still immature and has a long way to go, but MCS is speeding it up and we are proud of it. MCS hopes that Goldman Sachs who have been revolutionizing the financial industry so far can lead the changes that blockchain will bring in the future.