As director of trading at an exchange for Bitcoin, Silverman, 25, joined a bevy of Wall Street brokers, analysts hedge funds and other speculators taking a gamble on the new currency. They are drawn to Bitcoin’s soaring value — up about 50-fold the past year — as well as the novelty of pioneering a new realm of finance.
“I think Bitcoin will be the first and oldest crypto-currency but not the last,” Silverman said in an interview. “It’ll be a premier safe-haven asset.”
For now Bitcoin, a volatile and ill-understood invention, is anything but safe. A regulatory crackdown on Wall Street risk-taking and reductions in jobs and pay across the industry since the 2008 credit crisis have heightened the virtual currency’s appeal to bankers looking to profit elsewhere.
Some Bitcoin enthusiasts are buying and holding the currency, betting that it will hit new heights. Others are starting businesses for trading, exchanging or storing Bitcoin. Still others are pooling venture capital from Silicon Valley and elsewhere with an eye to investing in Bitcoin-related businesses. For the most part, they are individuals, not large firms.
“They are front-running the rest of Wall Street,” said Barry Silbert, the founder and head of SecondMarket Inc., a New York brokerage that runs a virtual currency fund. “They are excited about Bitcoin.”