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JPMorgan’s CEO slams bitcoin as a ‘fraud’

Dimon compares bitcoin to tulip mania, predicting a collapse.

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he would fire any employee trading bitcoin for being “stupid.”

The cryptocurrency “won’t end well,” he told an investor conference in New York on Tuesday, predicting it will eventually blow up. “It’s a fraud” and “worse than tulip bulbs.”

If a JPMorgan trader began trading in bitcoin, he said, “I’d fire them in a second. For two reasons: It’s against our rules, and they’re stupid. And both are dangerous.”

Bitcoin has soared in recent months, spurred by greater acceptance of the blockchain technology that underpins the exchange method and optimism that faster transaction times will encourage broader use of the cryptocurrency. Prices have climbed more than four-fold this year — a run that has drawn debate over whether that’s a bubble.

Bitcoin slipped after Dimon’s remarks. It was down 1 percent as of 4 p.m. in New York. Last week, it slumped after reports that China plans to ban trading of virtual currencies on domestic exchanges, dealing another blow to the $150 billion cryptocurrency market.

Tulips are a reference to the mania that swept Holland in the 17th century, with speculators driving up prices of virtually worthless tulip bulbs to exorbitant levels. That didn’t end well.

In bitcoin’s case, Dimon said he’s skeptical authorities will allow a currency to exist without state oversight, especially if something goes wrong. “Someone’s going to get killed and then the government’s going to come down,” he said. “You just saw in China, governments like to control their money supply.”

Dimon differentiated between the bitcoin currency and the underlying blockchain technology, which he said can be useful. Still, he said banks’ application of blockchain “won’t be overnight.”

The bank chief said he wouldn’t short bitcoin because there’s no telling how high it will go before it collapses. The best argument he’s heard, he said, is that it can be useful to people in places with no other options — so long as the supply of coins doesn’t surge.

“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 US dollars,” he said. “So there may be a market for that, but it’d be a limited market.”

To be sure, Dimon later noted that his daughter purchased some bitcoin.

One place where cryptocurrencies and traditional finance are coming together is at CBOE Holdings Inc., the owner of the Chicago Board Options Exchange. Last month, the firm teamed up with Gemini Trust Co. — the startup created by the Winklevoss twins made famous by the 2010 Facebook film “The Social Network” — with a plan to offer bitcoin futures.

CBOE’s chairman and CEO, Ed Tilly, defended such efforts after Dimon’s remarks.

“Like it or not, people want exposure to bitcoin,” Tilly said. Believers can bet on its rise, and Dimon is welcome to take the other side, he said. “We’re happy to be the ones in the middle.”

© 2017 Bloomberg

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Dimon warning about Bitcoin being fraud is like Zuma speaking out against fraud and corruption. Banking in essence, is legalized fraud. They create money out of nothing because they have a mandate from the state to do so.

Bitcoin developed because banking is a fraud and because bankers are criminals protected by law. That still does not make bitcoin an investment though.

@Sensei You raised two interesting points, banking being legalized fraud and the reason for BitCoin’s existence. Banks offer a service for a fee just like many other industries or professions. The reasons for BitCoin’s existence may have noble intentions, but you cannot argue that criminals have adopted the technology. There are numerous articles that prove the fact. It needs work.

Banks do provide a crucial service I agree. I am very grateful for the service of banks because I use financial gearing to the full extent. I am also grateful for the service of the grain-silo operator who stores my grain, keeps it safe, and issues me a receipt as proof of my deposit. The fact that the legal standards for these 2 institutions differ, is the root cause for the perpetual cycle of economic boom and bust and financial crises.

The grain silo commits the crime of fraud if it issues more silo certificates than the amount of grain it has in storage. The bank on the other hand issues at least 10 times more “receipts” than the money it has in deposit. We have got a fractional reserve banking system. Why do we not also have a “fractional reserve” grain-silo system? Both institutions take into custody stuff of a certain value. The silo operator is not allowed to lend the same grain to 10 people, While as soon as I sell that grain and deposit the money at the bank, the bank is allowed to lend out 10 times that amount.

What is fraud for every other institution in the economy, is called banking for those who have the license from the state to commit fraud.

Criminals use all technology, mobile phones, cars, email, ATMs, whatsapp, etc. They even use Internet banking.
The preferred currency of criminals is USD, not bitcoin. Some criminals may use bitcoin, but most criminals use Fiat currency. The biggest percentage of crime in the world is with USD.
If criminals use technology, does that make the technology bad?

A currency is backed up by a sovereign government. Call it fiat all you want – and it is exactly that – but at least it is backed up by a country, taxes, sovereignty, trust, an economy, legal frameworks; an entire system.

Bitcoins are being dreamt up in new garages daily (google how many there actually are), creating supposed value backed by… absolutely nothing, other than hype at the moment. Blockchain has a future and will develop to maturity. Bitcoins? I’m not so sure. Time will tell. But when uber drivers become multi-millionaires by clicking a mouse seven times and not doing anything else (not adding value), things start smelling funny to me.

Exactly.

What it comes down to is that taking Bitcoin or blockchain out of the universe isn’t going to destroy anything.

But try removing a country currency from anywhere in the world and see what happens.

Bitcoin is the original blockchain, the biggest and most secure, the most tested, the most used, the most trusted, and the only one proven to work with proven utility at scale. In operation since 2009.
The bitcoin blockchain is the only one who far that has succeeded in any meaningful way. The only working commercial application of blockchain technology is the bitcoin blockchain.
The bitcoin blockchain uses bitcoin. As the bitcoin blockchain continues to advance, so will the amount of bitcoin users, demand for bitcoin, and maybe its price. You can’t have the bitcoin blockading without bitcoin.

“They create money out of nothing …”

How else do you think one could create money? All money is created out of nothing.

Wrong money is created out of debt not nothing.

You do not need be banker to know Bitcoin is just a big Ponzi scheme waiting to collapse. Little bit of common sense is enough. Like the Y2K myth.

Do you know how the bitcoin blockchain works?

Why do groupies continue to use the two terms as if it is the same thing?

Blockchain will probably survive.
(I think) Bitcoin will probably survive too…

But the question is/should be: At what price level?

Undoubtedly very volatile, but too early to call the top. These things could go a lot higher and, unlike dollar bills, euros etc., there is a finite supply.

The supply is infinite, if you start applying fractions

except I can create an infinite number of alternatives.
And bitcoin recently split into two, so now we already have double.. which one of the two is the real bitcoin?
And the miners were pushing to increase the number of coints with the main proponent owning bitcoin.com – which one is he incentived to push.
The technology is great – actual value? only if you can find a greater fool.

A store of value should not fluctuate by 30%+ up and down, in the space of a week or month.

It’s up a couple hundred percent in 6 months, extreme volatility on an upwards trajectory

Thank god that Bitcoin can only be purchased by the rich. At least the poor will not be affected if it crashes.

I love reading these comments at the end of Bitcoin articles. I started investing in 2016, but unlike most investors I haven’t just poured money into Bitcoin I researched blockchain technology in general. And the more I read the more I wish I started earlier (not just Bitcoin).

Bitcoin has “popped” many times and has recovered higher time and time again. Reading these comments and seeing how people reference tulip bubbles, ponzi schemes, magic money etc gives me comfort because I realize Bitcoin still has so much scope to grow into mainstream acceptance.

I challenge all the negative people to revisit your comments in 10 years. My bet is all of you will have some sort of blockchain technology in your lives. Do yourself a favor and go read what World Economic Forum has to say about Bitcoin and Blockchain technology.

http://www3.weforum.org/docs/WEF_Realizing_Potential_Blockchain.pdf

Your welcome 🙂

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