Wall Street investment firm, Wedbush Securities, recently announced that it would be forming a partnership with the Bitcoin trading service company, Buttercoin.
Wedbush Securities operates as a privately held financial services and investment firm that provides services such as brokerage, both private and institutional, fixed income, public finance, equity research, correspondent clearing and asset management.
The firm announced that it would be forming a new partnership with Buttercoin, a private American Bitcoin start-up that provides Bitcoin trading services. Buttercoin provides a white-labeled trading platform that allows users to create local Bitcoin marketplaces and also acts as a source of liquidity for Bitcoin companies.
The partnership is the first time a Wall Street firm partnered with a Bitcoin start-up and would seem to be encouraging for the future. However, one statement made by Sheri raises an important concern for the financial services industry:
"We are impressed with Buttercoin in many regards notably that it provides reliable, trustworthy and excellent trade execution, and most importantly that it has a US banking relationship. We see cryptocurrency technology as disruptive to the financial services industry as the internet was to communications."
Wedbush Securities was founded in 1955 and is headquartered in Los Angeles, California. Wedbush is hardly a small company with more than 100 offices and nearly 1,000 employees. A company that is this well established in the financial industry showing this level of interest in Bitcoin is certainly a sign that we may have reached a critical point on the adoption curve. However, while Wedbush is showing interest in a Bitcoin company, it may not be interested in supporting Bitcoin, the currency, in the long term.
On December 1, 2013, Gil Luria, Wedbush Managing Director published a research report entitled "Bitcoin: Intrinsic Value as Conduit for Disruptive Payment Network Technology", in which he said:
“Among other facets, we believe Bitcoin and its associated technology represent a potentially game-changing disruption to our covered payments companies.”
He followed this paper up a month later, on January 2, 2014, with a paper entitled “Digitizing Trust: Leveraging the Bitcoin Protocol beyond the Coin,” where he reinforced his previous statement:
“We believe Bitcoin and its associated technology represent a potential disruption to our covered companies. Furthermore, we believe Bitcoin’s potential lies beyond the ‘coin’ as the underlying blockchain protocol can be used to replace traditional intermediaries by acting as an exchange mechanism for a multitude of transactions.”
It would seem evident that Wedbush is not interested in propping up Bitcoin but seems to be more interested in controlling, or at least adopting the Bitcoin protocol for profit and any aspect of Bitcoin outside of the control of the financial industry seems to be anathema. Of course, we can all rejoice that Bitcoin seems to be making its way into the heart of finance, but at the same time decentralization is probably Bitcoin’s most important feature and, by its very nature, the financial industry is starting to feel threatened by the very idea.
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