Jamie Dimon you're right, Bitcoin will eat your lunch
This past Tuesday as many already know, the CEO of JP Morgan, Jamie Dimon, came out and called Bitcoin a fraud, stating "you can't create a currency out of thin air." The whole news surrounding Jamie's statement sent Bitcoin's price and the rest of the cryptocurrency market cap spiraling down to low of $97 billion, a low we haven't seen since late July. As much as Jamie calls it a fraud, he's hypocrite because on Friday, September 15th, JP Morgan was buying the dip at $3,000 as many continued to sell do to all the FUD (Fear, Uncertainty, Doubt).
For those who have not seen the market the past few days, Bitcoin has rallied back up to $3,600 levels as of writing this since it's low Friday morning.
Dimon has been relating Bitcoin to the Dutch Tulip bubble of the 17th century. For those who don't know the Tulip bubble happened when tulip bulbs started to have extreme speculation on their value as they were different colors and had their inherent beauty. At the peak of the Tulip bubble, a single bulb was being exchanged for a plot of land.
Venture capitalist and hedge fund managers that have jumped on the crypto train state that Dimon's stance on Bitcoin reflects much of Wall Street's view on the digital currency. Fred Wilson of Union Square Ventures stated:
"You have to have an open mind to be able to see the future."
The close mindedness of Wall Street will continue to hurt them if they don't take this cryptocurrency seriously. Bitcoin is giving people, especially the unbanked (Sub-Saharan Africa, South America, South East Asia, and other places that don't have strong traditional financial structure) a chance to join the e-commerce revolution. The biggest part that banks are down playing here, is it gives people a chance to control their money, it has no borders, and you can send it anywhere around the world in a matter of minutes (depending on the cryptocurrency you use).
"Bitcoin is a bit like flood water," stated Union Square's Wilson. "It's hard to keep out of your society." The way most cryptocurrency enthusiast see it, Dimon, nor anyone else can stop Bitcoin.
Balaji Srinivasan, the CEO of bitcoin startup 21.co, said:
" Dimon is ignoring the functionality of bitcoin. While it doesn't have day-to-day price stability, lacks regulation and isn't accepted at the corner store, the currency works across borders, can be programmed to track transactions in a more secure way and doesn't require a bank account."
Doesn't require a bank account, is the most overlooked part. As I said earlier, there are billions of people around the world that lack access to traditional financing and banking. Cryptocurrency jumps this necessary infrastructure, by giving people control of their own money without a bank or government. We saw this same thing happen with Africa during the 2000's with telecommunications. Instead of setting up landlines like most of the modern world had established in their countries over the 19th and 20th century, many African's bought cellphones. The infrastructure is cheaper (cell towers versus setting up land lines) and it is a better system do to mobility a cellphone gives the user over a land line.
What JP Morgan does for people, Bitcoin does the same, except much faster and cheaper. Ari Paul, the Co-founder of the newly formed BlockTower Capital spoke upon this existential threat banks are downplaying.
"He sees bitcoin eventually displacing offshore Swiss and Cayman bank accounts that JPMorgan and other banks have opened for their wealthy clients. Trillions of dollars are held in such accounts."
Why go through the hassle as a wealthy millionaire of setting up an offshore account that could be shut down, when you can put it in Bitcoin or other altcoins, that you have control of and can access from anywhere in the world with an internet connection.
Paul went on suspect that Dimon recognizes that cryptocurrency serves the order of banks, just at a much better magnitude than the current banking system. Paul stated this may be the reason why Dimon is trying to disparage Bitcoin, and trying to delay the inevitable.
"I'm a bitcoin miner. We create bitcoins. It costs over $1,000 per coin to create a bitcoin. What does it cost to create a U.S. dollar? Which one is the fraud? Because it costs whatever the paper costs, but it costs me and other miners over $1,000 per coin. It's called proof of work."
For Proof of Work, miners use lots of computing power and electricity to solve hard math equations to validate transactions and get paid for validation.
For those who don't know, McAfee is the founder of McAfee Associates, the security software company. McAfee has been a strong backer of Bitcoin now for a few years and on his own website openly promotes the use of bitcoin with various articles and tabs to teach people what Bitcoin is.
Dimon and other bank executives seem to keep pushing cryptocurrency off as a fad, but the run this year is proving otherwise. And if you have the ability to stay open minded on the subject it is easy to see where banks will get hit hard as more people adopt cryptocurrency as a form of payment. The more large retailers that begin to accept it will cause a trickle effect downstream and upstream from payment providers to smaller local mom and pop shops who will start to accept various cryptocurrencies as they begin to see their benefits. At the rate e-commerce is growing, it will help crypto become a more viable option to businesses as they will own the money right away with small transaction fees versus waiting a few business days with higher transaction fees of a credit card.
Tell me what you guys think about Jamie Dimon and the future of banks in the comments below.
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Disclaimer: This is not investment advice, always do your own research. It is very important to do your own analysis before making any investment based on your own personal circumstances.