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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.].
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JPMorgan's Jamie Dimon Says Cryptocurrency a Fraud, Bound to Fail
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If you stand on your head, you will get footprints in your hair.
(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.