SoylentNews is people
SoylentNews
In a recent Reuters story http://www.reuters.com/article/us-usa-banks-conference-jpmorgan/jpmorgans-dimon-says-bitcoin-is-a-fraud-idUSKCN1BN2KP, JPMorgan's Jamie Dimon threw a bomb at the emerging cryptocurrency.
In the story he states, "The currency isn't going to work. You can't have a business where people can invent a currency out of thin air and think that people who are buying it are really smart."
He goes on to compare Bitcoin to the 17th-century Dutch tulip bulb situation.
Is he right, or is he just shilling for the present system of imaginary-value fiat currencies?
[Separately, according to Bloomberg, Bitcoin has been on a five-day decline: Bitcoin Crashes After Chinese Exchange Says It Will Halt Trading. --Ed.].
This discussion has been archived.
No new comments can be posted.
JPMorgan's Jamie Dimon Says Cryptocurrency a Fraud, Bound to Fail
|
Log In/Create an Account
| Top
| 69 comments
| Search Discussion
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
Endless Loop, n.:
see Loop, Endless.
Loop, Endless, n.:
see Endless Loop.
-- Random Shack Data Processing Dictionary
(Score: 2) by MichaelDavidCrawford on Friday September 15 2017, @04:48AM (27 children)
Where does its ability to purchase goods and services come from?
I've got a new kind of cryptocurrency, the MikeCoin. Each unit of MikeCoin is backed by a very special number. Here have a 3, now give me a gallon of gasoline.
At least with banknotes you can burn them on a cold night to stay warm.
Yes I Have No Bananas. [gofundme.com]
(Score: 2, Insightful) by Anonymous Coward on Friday September 15 2017, @05:06AM (9 children)
You do seem to understand it. It is nerd religion that convinces somebody to give you a gallon of gasoline, combined with outright greed thinking that a number one generated by wasting power through his computer is going to be worth twice as much tomorrow, as long as he can continue to hype up anti-{statist, fiat money, big bank} sentiment.
In reality, buttcoins are backed with waste CO2. Banknotes in the absolute worst case can be burnt or used as wallpaper. A tulip could at least still be eaten.
You and your doge could create a new block chain right now (how many different ones are there already that have minimal recognition?). Some scarcity there.
(Score: 2) by n1 on Friday September 15 2017, @05:25AM (8 children)
By that measure banknotes in transactional terms are worth much more than their face value, since there is far less physical currency in circulation than there is M1 money supply.
Also where does this leave us when banknotes are phased out, as is being attempted in most major economies by phasing out high denomination notes and encouraging the idea that anyone who would want them, or holds large amounts of cash is likely engaged in criminal activity?
Even my 80 year old, very traditional grandfather thinks contactless payments (no auth) for small transactions with his debit card is the best thing since sliced bread, because it's so easy and quick. In the UK, basically no one I know uses physical currency anymore.
The biggest difference that remains between Bitcoin and fiat is that you can't pay your taxes in bitcoin or other crypto, except in the Swiss municipality of Chiasso.
I am not a fan of bitcoin but it has become more practical as time goes on, as noted in another comment, i bought this laptop from newegg with bitcoin, because it was the easiest way to pay as a non-US customer. And as someone who's money is held in GBP£, sudden drops and volatility of the currency used in normal transactions is part of life now.
http://uk.reuters.com/article/us-global-economy-cash/cashless-society-getting-closer-survey-finds-idUKKBN17S001 [reuters.com]
And then there's the other BTC
https://en.wikipedia.org/wiki/Better_Than_Cash_Alliance [wikipedia.org]
(Score: 2) by Grishnakh on Friday September 15 2017, @02:06PM (1 child)
By that measure banknotes in transactional terms are worth much more than their face value, since there is far less physical currency in circulation than there is M1 money supply.
Physical currency doesn't need to match the M1 money supply; most financial transactions are done electronically now. Physical currency ("cash") is just used for transactions which aren't done electronically. The difference between fiat currencies and cryptocurrencies is that the electronic fiat currency transactions go through central banks.
(Score: 2) by n1 on Friday September 15 2017, @07:29PM
The comment i replied to was directly comparing fiat banknotes with bitcoin as if banknotes are the only form of fiat, and the physical manifestation is what gives it value.
The central bank part is right, but bitcoin has the ledger/blockchain. Right now central banks (BoJ, ECB, SNB) are 'printing' M1 money that are not bank notes and directly buying privately issued bonds and stocks, on top of how money is 'created' in fractional reserve banking by private banks and not the central banks.
Also worth remembering the majority of central banks in the world are hybrid public-private institutions held accountable to absolutely no one for any of their policy decisions, including how much money they print and where they allocate/spend/distribute it.
(Score: 3, Insightful) by JoeMerchant on Friday September 15 2017, @02:57PM (3 children)
There's "rarely using cash" and then there's "cash free" - just survived 5 days without electricity post-hurricane, cash is a very good thing to have as an option when "the system" is down.
🌻🌻 [google.com]
(Score: 2) by n1 on Friday September 15 2017, @07:19PM (2 children)
I completely agree, cash is extremely valuable to me as someone who travels internationally.
I am not looking forward to cashfree society, but it does seem to be where we're headed, banks, governments and other institutions have it in their long game. They are not known for seeking public consent in these matters, like when fractional reserve banking and the end of the gold standard came into play. They were not democratically endorsed shifts in how we used money, they were necessary actions to save 'the system'... The next necessary action to save the system will be to reduce to a level where physical currency is effectively removed from circulation.
The comment i replied to was comparing bitcoin to banknotes, in an attempt to demonstrate the value of fiat currency and to apparently explain why Dimon is right and bitcoin is a fraud and cult. Bitcoin is used in many different ways, it seems the most common use is to make financial transactions across the world. Something you can't do reliably or cost effectively with banknotes. If you've made a bank transfer or Western Union transfer overseas into a different currency for any reason, you'll be aware it takes time and the costs are usually very high. Bitcoin removes this, as a currency, not as an investment.
As I stated already, I am not a fan of bitcoin, but I can understand the utility just as much as banknotes, if in different situations. Not to be conspiratorial, but it wouldn't surprise me if bitcoin is actually part of the larger campaign to go 'cashfree' ... It is being used right now in emerging markets for individuals to protect their assets and pay for goods and services, without having to deal with a slow and corrupt bureaucracy, or risk demonetization. See China and India. The civilian populations in countries that have been primarily cash based have now been given an international currency option that their omnipresent government/cb has less direct control over, and they seem to be taking advantage of it.
(Score: 2) by JoeMerchant on Friday September 15 2017, @08:11PM
It is cool that BTC is an accessible option to escape some really bad monetary systems. People I know from unstable countries used to keep over half of their savings in gold jewelry.
🌻🌻 [google.com]
(Score: 0) by Anonymous Coward on Friday September 15 2017, @11:37PM
Interesting. As a volunteer I receive international payments (worldwide to me in USA) from university student teams, $500 to join a consortium. I started out 10 years ago and accepted bank-2-bank transfers (wires, direct transfers using SWIFT numbers, etc) and they were mostly awful. Often an intermediate bank would take a fee with no documentation, there was no tracking, arbitrary delays, etc.
So I started requesting Western Union and then PayPal. At present, I think the PayPal option is the cheapest. Both WU and PP fix the exchange rate at the time of initiation--I can wait to redeem for a week and if there have been changes in the exchange rate I'll still get the USD 500. Because both ends of the transaction are by one company, they usually work OK.
Q. what are Bitcoin exchange fees for this size of transfer -- buying in the non-USA country and then selling (convert to USD) once it gets here. Can this be as automated and easy as PayPal? Will I always receive exactly $500, or could I lose/gain during the time between purchase and sale of the Bitcoins? Maybe I need to find a large bitcoin exchange that has many international branches, so both ends are through one company?
(Score: 2) by tibman on Friday September 15 2017, @08:48PM (1 child)
Last time i was in the UK (last april) i always needed some cash on me. No cash? Then you can't use the bathroom! Train changes are pretty quick so i tried to always have a few pound coins and assorted change. That just lead to me paying for most things with cash. Fast food and convenience store stuff mostly. Train tickets and nice restaurants i'd use card. No idea how'd you'd survive London without a pocket full of change.
SN won't survive on lurkers alone. Write comments.
(Score: 2) by n1 on Friday September 15 2017, @09:10PM
It can certainly be helpful if you're stopping by an independent shop to buy a can of drink, or use a public toilet. Most people I know still in the UK get most of their convenient shopping done in Tesco Express, use a self-service checkout and pay with contactless debit cards.
Personally, even though i lived in London for a very long time, I never used a pay toilet.
A pocket full of change doesn't help you take a bus in London anymore.
https://tfl.gov.uk/modes/buses/cash-free-buses#on-this-page-0 [tfl.gov.uk]
(Score: 4, Insightful) by Anonymous Coward on Friday September 15 2017, @05:48AM (3 children)
Money is used to keep track of resources, including who gets to decide how resources should be allocated.
Cryptocurrencies are the most advanced such technology ever created; it's called programmable money. It's so advanced, it's nascent implementation (Bitcoin) enabled a know-nothing 20-something-year-old to run a multi-hundred-million dollar drug market through a web page.
A currency is just a very liquid money; it's virtually guaranteed that other people will find it acceptable to use that money to do their logistical accounting.
When you say "I still don't understand cryptocurrency", it's not cryptocurrency that is being insulted.
(Score: 2) by cubancigar11 on Friday September 15 2017, @04:40PM (2 children)
Close. Money is used to barter power.
(Score: 0) by Anonymous Coward on Friday September 15 2017, @07:38PM
Your use-case for money is subsumed by the OP's description of money; your comment is a subset of OP's.
(Score: 2) by JoeMerchant on Saturday September 16 2017, @02:37AM
Only in large quantities.
The top 0.1% of society's wealthiest absolutely do barter power with money.
The bottom 90%, not so much individually, though they can attempt to barter a little power through collective efforts.
🌻🌻 [google.com]
(Score: 4, Interesting) by Anonymous Coward on Friday September 15 2017, @06:02AM
Hmmm, what would I rather have, the heat of a burning plastic banknote or that of a decent 'mining' rig?
But yes, the whole 'cryptocurrency' thing stinks, the thing is, so does the whole 'currency' thing.
As an example, in England there is the infamous 'promise to pay the bearer on demand' bit on the banknote, where, in theory, at some point in the past you could have exchanged the note for its equivalent value in gold. Nowadays, you present them with, say, a £20 note, what you'll get is the value of the £20 note in smaller denominations..the currency 'backed by gold' bit seemingly went the way of the Dodo back in the 1930's, since then it's been effectively a state backed 'funny money' scheme.
In the UK, we also have an 'even funnier money' scheme in operation with the Scottish and Irish banks which issue their own notes. At one point, in the not too distant past, ISTR the Scottish banks used to have to 'cover' the value of their issued notes in circulation by having the equivalent amount of silver squirrelled away in dark,dank caves deep under Edinburgh guarded well by wild and woolly Aberdonians (well, maybe not in caves...) and the amounts verified to a nanogram on a weekly basis (otherwise the Bank of England got rather pissy about things...). Nowadays, they can 'cover' the value of currency they've issued by holding the equivalent in Bank of England notes in their coffers...Scottish Monopoly money backed by English monopoly money...and the Bank of England currency issue is now backed by, rather than something nice, shiny and tangible like gold, yet another set of intangible (but no doubt, full of beautiful calligraphy and laden with such intricate guilloché work that you would require an electron microscope to fully appreciate the detail) notes in the form of 'securities'.
Of course, IANAGOZ, so Feh!, what do I know?....
(Score: 5, Insightful) by anubi on Friday September 15 2017, @06:37AM
Mike:
It was about 40 years ago for me. I got invited to a "pyramid" meeting. The person inviting me was all jizzed up about him going up another level if he could just get me to sign in. I sat there for several hours watching people shoveling cash into each others hands. Lots of squeals and shouts like an old-timey revival meeting. Lots of upbeat music on the sound system.... one in particular kept going over and over... "I've got the Powah!"
He stressed how secret these things were, as all of this was illegal, and by invite only. So, I wasn't allowed to know who the other people on the pyramid were. But it sure did not look like I stood the faintest chance of getting to the top square. $1000 a pop. $500 to my "friend", and $500 to the Top Guy, who would then be replaced with the guys under him when the bottom row filled up and the pyramid split. Of course, the rules said I had to start at the bottom. Geez.
I asked my friend to get me a piece of paper. I drew another pyramid. I put myself at the top. I told him I had a super deal for everyone at the meeting. This is a free night! I put him and his other friend on tier 2, right below me. I asked them to circulate this one - high level placements on the pyramid... Free! Just for being here tonight. Just put your initials in the box. No charge whatsoever! We will fill this thing all the way up to just the bottom row tonight! Now, next week, let's go invite a bunch of suckers to fill the bottom row just like we are doing tonight, but remember, this time we've gotta get the new guys, and ONLY the new guys, to pay $1000.
I never got invited to another one of those things.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 2, Informative) by Anonymous Coward on Friday September 15 2017, @09:04AM (2 children)
There is where you go wrong. Cryptos aren't backed by "a number". It's their security, just like the security marks on cash (it prevents that someone can buy a gallon of gasoline with a blank piece of paper written "One Dollar" on it).
Fiat is backed by the promise of governments to pay you "something" (used to be gold... but now?) back for the note if you don't want it any more. Cryptos are backed by what someone is willing to pay for it (value determined by the market instead of a promise by a central authority). This is why the cryptos are also so volatile, most people are easily influenced in changed perception of its value.
Despite the volatility people are willing to accept it as payment, as they trust it that someone will pay back the exchanged value for it (eventually).
(Score: 4, Informative) by shrewdsheep on Friday September 15 2017, @09:27AM (1 child)
No, fiat money comes without any promise whatsoever (that is the difference between fiat and gold standard). There is only the trust that the bank of banks (federal reserve, central bank, however it's called at your place) manages the amount of money responsibly.
(Score: 2, Insightful) by Anonymous Coward on Friday September 15 2017, @04:22PM
Fiat money (at least in the US) is backed by one thing:
It is against the law not to accept money to pay off a debt.
(Score: 1, Insightful) by Anonymous Coward on Friday September 15 2017, @10:50AM
You have to keep in mind that money inherently has no value. Why do you give a dollar value? You might say because the government says it has value, yet that doesn't answer the question so much as kick the can onto another group which is just a collection of individuals anyhow. The only reason money has value is because we assign it value. And the reason we assign it value is as a proxy to "real" things. We might say, for instance, that a pig is worth a dozen chickens. But imagine you want 4 chickens but all you have is a pig to trade. Well that's kind of hard. You'd end up having to agree what the other 8 chickens are worth and it all becomes very complex very rapidly.
Currency answers all these questions by breaking things down into convenient tradeable numbers that we collectively agree upon the value of. But the paper itself has no value. Even the notion of the US dollar has no inherent value. Did you know that the total amount of US currency increased by about 500% [stlouisfed.org] under Obama? We're not even printing money. Instead it is all created digitally. Like using a cheat program to add a trillion points to your score in a video game. This is, fundamentally, what "quantitative easing" is.
If you get a gas station to agree that 3 MikeCoins are worth a gallon of gas then you'd be in business. In fact that would, in a way, set a baseline price. If 3 Mike Coins can be converted to a gallon of gasoline and a gallon of gasoline is worth about $2.40 then we can safely say that MikeCoins are worth about $0.80. If anybody was selling them for less then you could buy them up, trade them for gas, and sell that. So the price reaches an equilibrium. The issue of course is that nobody would want a MikeCoin. The reason is that you presumably would have exclusive control over its creation and distribution. When "you" go from being Mike to "massive country with lots of big guns" then your currency, now called the USD, would be something more people would be inclined to accept.
So why do people accept bitcoin? The big thing about Bitcoin is that nobody controls it. There's nobody to say "hey, I think our currency's value is a little too high, so the next block of bitcoin is going to be worth 10,000,000 coins instead of 20". If you think our government is fair, reasonable, and judicious in their execution of monetary policy then this would be a bad thing. If you think our government is unfair, biased, and reckless in their monetary policy this would be a good thing. Another way of putting that is that it's completely decentralized. Even the creation of bitcoin is completely decentralized, and always will be. It also comes with various other perks, but the decentralization is -by far- the biggest one and this isn't necessarily the right to go on as a bitcoin cheerleader.
(Score: 3, Insightful) by Grishnakh on Friday September 15 2017, @02:03PM
Where does its ability to purchase goods and services come from?
From the same place any other currency's ability to purchase goods and services comes from: people agree the currency holds value, and are willing to trade based on that perception of value. It's a lot easier to trade currency than to barter with other things (e.g., I want to buy the piece of furniture you're selling on Craigslist, and I think it's worth 35% of the refrigerator I'm selling. How do I give you 35% of my refrigerator for it, and what if you don't want my fridge anyway?).
The big difference is that normal currencies are backed by nation-states, while cryptocurrencies are backed by nothing more than a bunch of computer geeks agreeing it has value, plus the fact that generating the currency requires significant computation (which prevents you from just "printing" it willy-nilly like nation-states can with their currencies). So if people decide BitCoin is worthless, its value plummets, though this is also true of regular currency. But regular currency has a nation-state and its whole economy backing its claim to value, and is managed by that nation-state's central bank, so the nation-state has every incentive to maintain its currency's value (it may devalue it some to pay back debt easier, but it won't go too far because then they won't be able to trade effectively).
(Score: 1, Insightful) by Anonymous Coward on Friday September 15 2017, @02:13PM (3 children)
No current currencies are linked to any tangible thing except violence, USD. GBP etc all have the appearance of transaction by mutual agreement but the thing that actually gives them value is that they are the only method of payment accepted by the state, if you want to pay your taxes you must pay them in the approved currency if you have gold or chickens or whatever tangible asset you must convert it ie find some one to give you currency to then pay your taxes, and since the state exists because it holds a monopoly on violence the true backing of all modern currency is violence. Bitcoin is a casino but it is actually a transaction of mutual agreement
(Score: 3, Flamebait) by Azuma Hazuki on Friday September 15 2017, @04:05PM (2 children)
Just curious, are you ever going to get a job, or does mommy subsidize you with free basement lodging and cheesy poofs?
I am "that girl" your mother warned you about...
(Score: 0) by Anonymous Coward on Saturday September 16 2017, @05:39PM (1 child)
what kind of stupid fucking slave defends the state?
(Score: 0) by Anonymous Coward on Sunday September 17 2017, @12:41AM
One who realises bad is not the same as worst.
(Score: 2) by JoeMerchant on Friday September 15 2017, @02:55PM
It has value because people believe it has value - much like securities and most national currencies.
Even the "gold standard" - so, you can exchange your paper for gold - well, what, exactly, can an ordinary human being do with gold that might be considered valuable? Food, shelter, clothing, tools, pleasurable company, these are all of rather direct intrinsic value to the animal that is bartering for them - but gold? Not so much.
So, to me, the genius of BTC lies in the incentive system for the miners - now you have a community of dedicated believers in its value - it has value to them because they "worked" to obtain it, they won't just discard it. The scaling difficulty system and fixed supply aspects are also rather genius in that they have created this atmosphere of inflating value - a bit lucky there that there is enough interest in BTC to keep it inflating overall, would be nice if the system had some kind of tweak in it to stabilize the value a little bit, long term hyper-inflation of the value of a currency isn't really good for its long term utility. Anyway, just like Apple stock, the Nigerian Naira, and the U.S. dollar - BTC has value because people are willing to trade value for it. More or less end of story.
Mike Coin? Not so much. Maybe if you could spin up a little pyramid scheme or something to get a base of believers, then you might have something.
🌻🌻 [google.com]
(Score: 1) by khallow on Friday September 15 2017, @11:24PM
Someone's willingness to trade bitcoins for real objects of value. That's all it is and that's all it has to be. I gather the real draw of bitcoins are that they're quite flexible for a variety of online trading activities across the world, some legal, some not.