Wall Street Still Favors Cryptocurrency Amid Bitcoin Drama

Bitcoin has shown tremendous growth in the few years of its existence. Major global financial institutions are increasingly taking interest in the digital currency and trying to understand its implications.

Amid all this positivity, however, there have been several such instances when the bitcoin ecosystem came under fire – various scams, ponzi schemes and frauds have time and again shaken the confidence of the people.

And then came the biggest shocker of them all – reports surfaced earlier this week that Craig Steven Wright, a 44-year-old Australian, is the person behind the Bitcoin creator Satoshi Nakamoto. BTC/USD jumped from 388.33 levels to 418.87 levels on the day when the news broke and continuing its upward trend, it now trades at 433.00 levels (at the time of writing).

The reports have pointed out that the Bitcoin creator allegedly sits on 1.1 million bitcoins, which San Francisco Chronicle says “if it were to move all at once, could crash the valuation of the already volatile currency.”

However, such upheavals have not been able to shake the confidence of Wall Street, which has slowly and steadily opened its arms to the bitcoin ecosystem.

Earlier this year, the New York Stock Exchange invested $75 million in series C funding round of Coinbase, a bitcoin wallet and exchange company. In yet another instance, Goldman Sachs supported Circle Internet Financial, a bitcoin financial services startup. 

Also, CoinDesk reported last month that Goldman Sachs has filed a patent application for “Cryptographic Currency For Securities Settlement”. The system is based on a new cryptocurrency called "SETLcoin" and will allow settling securities in financial markets using distributed, peer-to-peer, and cryptographic techniques.

However, despite the progress made, questions still remain regarding the legality of bitcoin transactions. These transactions are recorded on the blockchain - a publicly shared ledger which is maintained by several participants in the network in the form of identical copies.

The global financial sector sees great potential in the blockchain technology and expects it to revolutionize the traditional banking system.

“Blockchain technology is not restricted to transferring virtual currencies like Bitcoin. Rather, it represents an innovative way to register and transfer any digitally represented value in a secure and decentralized manner”, said Heike Mai, Deutsche Bank.

Wall Street giants such as Visa, Nasdaq and Citi Ventures have invested $30 million in Chain.Com, a San Francisco-based blockchain developer platform that works with financial institutions to develop ways to trade and transfer financial assets using blockchain technology.

Also, nine of the world's leading banks announced in September the formation of a partnership to design and deliver advanced distributed/shared ledger technologies to global financial markets, spearheaded by R3. The number of banks in the blockchain consortium grew eventually, totalling to 25 in October with the addition of Mizuho Financial, Nordea and UniCredit and reaching 30 with the latest addition of 5 more banks - BNP Paribas, Canadian Imperial Bank of Commerce, ING Bank, Macquarie Bank, and Wells Fargo & Co.