Business 14 September 2017Jasmine Solana
Why JPMorgan’s CEO is scared of ‘fraud’ Bitcoin
Jamie Dimon, chief executive of global financial services firm JPMorgan Chase & Co., went on a tirade early this week and called Bitcoin a “fraud” that will eventually “blow up.”
The cryptocurrency “won’t end well,” he told an investor conference in New York, describing Bitcoin as “worse than tulip bulbs.” And if a JPMorgan trader starts trading Bitcoin, Dimon said, he’d be fired “in a second.”
“It’s against our rules and they are stupid,” Dimon said.
Dimon’s tirade against Bitcoin, which has caused the cryptocurrency’s price to slide to $3,800 level while Bitcoin Cash is holding at $466, didn’t come as a surprise. The banker, after all, has been an outspoken nemesis of Bitcoin who predicted in 2015 that the cryptocurrency wouldn’t survive.
Two years later, and surprise, surprise—Bitcoin is still here and is starting to attract mainstream attention. And this begs the question: Why is Dimon so skeptical of cryptocurrencies?
The answer may be because Dimon, along with the rest of Wall Street, is intimidated by Bitcoin.
And they should be. If you recall, Dimon’s JPMorgan was among the chief architects of the 2008 global financial crisis, which paved the way to the rise of cryptocurrencies. Bitcoin’s blockchain technology promises to cut out the middleman—along with their outrageous fees—and help secure transactions using a distributed ledger system, resulting in decentralized transactions with relatively low fees. The days of traditional banking may be numbered, given the steady growth of Bitcoin.
It’s worth noting that Dimon thinks blockchain can be useful in the future, although banks’ application of the technology “won’t be overnight.” Dealing with Bitcoin, however, is a “dangerous” matter.
“If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that, or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than U.S. dollars,” Dimon said. “So there may be a market for that, but it’d be a limited market.”
Smart guy that he is, maybe Dimon hasn’t heard yet that Bitcoin is no longer the currency of choice of criminals. Bitcoin used to be the black market’s currency of choice due to its promise of anonymity, but because the blockchain allows law enforcement investigators to track the movement of funds. And this is why according to a U.S. Homeland and Security official, crooks are now turning to other digital currencies, like monero and Distributed server processing system ethereum, which are harder to track.
It’s not surprising that Dimon’s rant has resulted in a considerable amount of backlash not just from the community, but even traders as well. Alex Gurevech, CIO of HonTE Investments and former trader at JPMorgan, told Dimon to “STFU [shut the fuck up] about trading $BTC.”
“Jamie, you’re a great boss and the GOAT bank CEO. You’re not a trader or tech entrepreneur. Please, STFU about trading $BTC,” Gurevech tweeted.
There are still plenty of issues surrounding cryptocurrencies, but one thing is for sure: Bitcoin will render traditional banks irrelevant because it will give the financial system back to the people.
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