CEO Lloyd Blankfein attacks cryptocurrency after value dives 20% in a day, saying bank will not get involved until it becomes less volatile

The boss of Goldman Sachs became the latest high-profile critic of bitcoin, claiming it was a vehicle to commit fraud as the value of the cryptocurrency plunged 20% in less than 24 hours.

Lloyd Blankfein, chief executive of the US investment bank, said: “Something that moves 20% [overnight] does not feel like a currency. It is a vehicle to perpetrate fraud.”

Q&A What is bitcoin? Show Hide Bitcoin is the first, and the biggest, 'cryptocurrency' – a decentralised tradeable digital asset. The lack of any central authority oversight is one of the attraction. Cryptocurrencies can be used to send transactions between two parties via the use of private and public keys. These transfers can be done with minimal processing cost, allowing users to avoid the fees charged by traditional financial institutions - as well as the oversight and regulation that entails. This means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is hard (but not impossible) to trace a bitcoin transaction back to a physical person. The exchange rate has been volatile, making it a risky investment. Whether it is a bad investment is yet to be seen. In practice it has been far more important for the dark economy than it has for most legitimate uses, but with Facebook's announcement that it is launching a new digital currency - Libra - mainstream interest in bitcoin has surged.



His comments came during another wildly volatile trading session for the digital currency, which plunged by over $2,000 in a 24-hour period. Having topped $11,000 to reach a new record high of $11,395 on Wednesday, it fell to a low of $9,000 on Thursday, before picking up slightly later in the day.

Blankfein said Goldman did not need to have a bitcoin strategy, adding the digital currency would need to be a lot less volatile and a lot more liquid to justify closer attention.

“When do I have to have a bitcoin strategy? Not today. Life must be really rosy if that is what we are talking about,” he said. “Bitcoin is not for me. A lot of things that have not been for me in the past 20 years have worked out, but I am not guessing that this will work out.”

Don’t let the bankers fool you: bitcoin is here to stay | Dominic Frisby Read more

Blankfein is the latest boss of a major bank to voice scepticism about bitcoin, after JP Morgan’s chief executive, Jamie Dimon, described it as fraud that would ultimately blow up and said it was only fit for use by drug dealers, murderers and people living in places such as North Korea.



On Wednesday, Sir Jon Cunliffe, a deputy governor of the Bank of England, said the digital currency was too small to pose a systemic threat to the global economy. He also cautioned that bitcoin investors needed “to do their homework”.

Despite the fall in bitcoin’s value on Thursday, it remained far higher than it was at the start of 2017, when it was trading at $998. It is the biggest gainer of all asset classes this year, prompting sceptics to declare it a classic speculative bubble that could burst.

Banks and other financial institutions remain concerned about bitcoin’s early associations with money laundering and online crime. Unlike traditional currencies, bitcoin is not issued or regulated by a central bank or government.

Lee Wild, head of equity strategy at online trading company Interactive Investor, said the volatility in bitcoin trading was “wild west stuff”.

“Cryptocurrency land’s extreme volatility is like catnip to high-risk traders, and even traditional investors are dipping their toe. Given there’s no logical way to value them with any accuracy, this remains wild west stuff.”

Analysts at the spread betting firm, City Index, said: “While traditional assets are experiencing historically low levels of volatility, the whipsaw action of the bitcoin is drawing the attention of traditional traders. Meanwhile existing traders and newcomers are increasingly interested in fear of missing out.”

