I was reading a Reuters piece on Bitcoin (which for the record I think is a combination of sci-fi fueled fantasy and scam ponzi scheme) when I saw this interesting revelation:
Workers at Morgan Stanley (MS.N) and Goldman Sachs (GS.N) in London and New York have been visiting online Bitcoin exchanges as often as 30 times a day, according to documents seen by Reuters. Neither bank wanted to comment.
Employees at almost all the major international banks and numerous trading and investment firms have shown interest.
Bitcoin has become the Wild West of finance, with a proliferation of websites offering loosely regulated replicas of the services familiar to those in the financial industry.
There is a Bitcoin stock exchange, where companies can make initial public offerings and pay dividends in Bitcoin.
One website offering Bitcoin options trading was ‘listed’ this month for an implied valuation of half a million dollars.
Perhaps the most notorious is Bitcoinica, a platform offering margin trading, short selling and stop orders run by 17-year-old Chinese high school student Zhou Tong.
Users can leverage their bets up to a ratio of 10:1 on Bitcoinica, meaning they can lose more than their initial investment.
Zhou Tong, who is professionally advised by a forex trader and the head of a Singapore-based algorithmic trading firm, now lends his name to international slang.
To be “Zhou Tonged” is to be wiped out financially.
The chorus of a YouTube rap laments a Bitcoin day trader rash enough to hold a position with no stop loss protection: “It’s so silly, how come you just lost funds? You got Zhou Tonged!”
Sounds like Bitcoin is seen as yet another way banks can keep themselves afloat using
“exotic financial instruments” to separate suckers from hard earned cash. I guarantee you people who got “Zhou Tonged” have to cover their losses in non-bitcoin.
Let’s be honest, Bitcoins are just another attempt by people to create “creds” they can trade on the “Matrix” ala 90s cult phenomenon Shadowrun. That franchise, (now devolved into an Earth First! inspired morality tale) still influences transhumanism, neo-primativism and the remnants of the cyberpunk culture today and with Bitcoin and other online currency movements you can see the influence just as clearly. It’s interesting to note that Bitcoins are often used on sites to make illegal purchases – like drugs and illegal firearms. This is a fad based on late 90s cyberpunk pretensions not a sound investment.
Which makes Morgan Stanly and Goldman Sachs looking into this troubling. Either they see the potential to rob more people in an effort to prop up institutions that should have been bankrupt long ago or they are even less astute with money than we assume. Either way if you deal with them or Bitcoin you should be worried.