By Simon Black – Soverign Man.
On Tuesday afternoon, Jamie Dimon, the CEO of banking giant JP Morgan, let loose on Bitcoin.
He was speaking at the Barclays Financial Services conference, and when asked whether his bank employs any Bitcoin traders, he responded-
“If we had a trader who traded Bitcoin, I’d fire them in a second,” calling any trader who deals in the cryptocurrency “stupid”.
He went on to say that Bitcoin is a “fraud” and “won’t end well”.
Now, Dimon is a brilliant executive and banker. He knows his stuff. But… fraud? Really?
My dictionary defines fraud as “wrongful or criminal deception intended to result in financial or personal gain.”
That term seems to more aptly describe the banking industry that Dimon represents.
From Wells Fargo’s illegal opening of fake customer accounts to the constant manipulation of interest rates, exchange rates, and asset prices, outright FRAUD is standard practice among big banks.
Dimon also stated that Bitcoin is primarily appealing for criminals– “if you were a drug dealer, a murderer, stuff like that. . .”
Again, this is a totally baseless and confounding statement. 10+ million Bitcoin users are drawn to the cryptocurrency for a multitude of reasons.
For some, the fact that it is decentralized is a major factor. For others, it’s the low transaction cost.
Sending an international wire transfer through the banking system, for example, can take three days and cost $100. With Bitcoin it takes an hour and costs less than a dollar.
Sure, criminals might use Bitcoin. They also use Amazon.com gift cards and government bonds.
Ironically for Jamie Dimon, criminals even use JP Morgan bank accounts to launder their money, considering that the bank has paid BILLIONS in fines over the last few years for failing to detect their customers’ illegal activities.
To be fair, Dimon does raise a valid point about Bitcoin’s (and most major cryptocurrencies’) unbelievable price runups.
Bitcoin is up nearly 4x since the beginning of this year, and nearly 30x over the past four years.
That’s not supposed to happen. And it’s always precarious to buy or speculate in anything that’s at its all-time high.
Speculation is, after all, what’s driving most of this boom.
The original Bitcoin ‘White Paper’ from 2008 described the concept as a “peer-to-peer version of electronic cash” to “allow online payments to be sent directly from one party to another without going through a financial institution.”
In other words, Bitcoin was intended to be a medium of exchange for the digital world. Send money. Receive money. Buy things online. E-commerce.
That was a hell of an idea that makes a lot of sense.
But that’s not what Bitcoin is primarily being used for today.
Instead, Bitcoin is a source of speculation– people are buying something they don’t understand based purely on an expectation that the price will increase, at a time when the price is already near a record high.
Clearly such irrational behavior will create wild, violent, emotional price swings.
And that’s exactly what’s been going on over the last year. In fact Bitcoin’s price has fallen more than $1,000 (nearly 25%) just in the last few days.
Again, that’s not supposed to happen… not in an orderly market.