In the latest interview with CNBC, Jamie Dimon, the CEO of JP Morgan, called Bitcoin many names, but praised blockchain. His clear pessimism on crypto is almost suspicious. It appears that rivalry is heating up in the asset and payment processing industries. Are traditional banks in trouble?
Bitcoin is a “decentralized Ponzi scheme”
— Investro.com (@investrocom) January 20, 2023
He called Bitcoin many names and none of them are positive. Dimon is not the only one as Peter Zeihan, a geopolitical analyst, was also very negative towards crypto on a Joe Rogan show. Dimon called Bitcoin a “hyped-up fraud” as well, criticizing regulators for not stopping crypto a long time ago. He even called crypto a “decentralized Ponzi scheme.”
Jamie Dimon is a well-known sceptic of cryptocurrencies for a good reason. As a leader of one of the largest banks in the world, crypto represents competition for traditional banking where he got rich. Times are, however, changing with the rising popularity of Web3.
In fact, there are now more than 425 million crypto owners globally, a 39% increase in 2022 despite a tough crypto winter. Crypto naysayers will do anything to slash this industry, but it seems to be booming regardless of what anyone does or thinks.
“I think all that’s been a waste of time and why you guys waste any breath on it, it is totally beyond me. Bitcoin itself is a hyped-up fraud, it’s a Pet Rock (fad dreamed up in 1975 advertising by Gary Dahl). It doesn’t do anything,” he said on CNBC’s Squawk Box on January 19th.
The reporter mentioned how BlackRock, the largest asset manager in the world, supports crypto by offering custody and trading services to its clients. It’s evident that most major players adopt crypto technology, but there are people like Jamie Dimon, Peter Zeihan, or Peter Schiff, who won’t ever leave their negative stance.
Jamie Dimon’s negative stance toward crypto since 2017
Moreover, this is not the first time this has happened. Dimon has been a heavy critic of cryptocurrencies since 2017. He called Bitcoin “worthless” or even a “fraud.” In the meantime, Bitcoin is worth around $23,000 at the moment, having a bigger market cap than JP Morgan itself.
You can’t and shouldn’t expect anything else from rich bankers as Bitcoin is their competition. He even doubted the math behind Bitcoin, not believing the max supply will stop at 21 million. If it were to happen, he would definitely have to live much longer as the expected mining of all bitcoins is anticipated for 2140. That’s more than a century to go!
“How do you know it’s gonna stop at 21 million? Everyone says that well, maybe it’s gonna get to 21 million and Satoshi’s picture is going to come up and laugh at you all,” Dimon said in the interview.
When the topic of FTX came up, Dimon told “I’m not surprised at all,” stating the hype around this was spectacular. The view of a Wall Street banker is to put a stop to crypto and let it die, so they can earn even more than now. However, more and more people choose crypto over time, which is slowly eating into their pockets.
Blockchain and CBDCs
Nevertheless, Dimon praised blockchain, saying it is great, as the ledger technology system is useful in moving money. He also said it’s a technology they are likely to deploy in the future. This is what central banks have already been doing for some time, using the original technology behind Bitcoin for inventing Central Bank Digital Currencies (CBDCs).
Bitcoin is the origin of blockchain. All the other cryptocurrencies, also called altcoins, DeFi, NFTs – all come from BTC. But most of these tokens operate on a public blockchain. However, central banks use this technology and will most likely run their CBDCs on a private ledger.
Logically, central banks and large commercial banks will rather work together and develop their own blockchain technologies than use decentralized ones, which give power to the low and middle class. They want to keep getting richer. That is why the success of Bitcoin is dangerous for bankers like Dimon.
Dimon hasn’t been shy about how much he hates and doesn’t care about Bitcoin for a long time. Yet, people should not care about his opinion so much, as he is wrong about crypto on many points. The most popular sceptics of cryptocurrencies have one thing in common.
They got rich through traditional finance and always claim that crypto is a fraud, scam, or a Ponzi scheme without diving deep and rationalizing their opinions. But crypto is definitely much more than just a “hyped-up fraud,” as the market cap of all cryptocurrencies is currently around $1 trillion.
Nevertheless, traditional banks should have nothing to worry about, although cryptocurrencies represent a new class of finance. They will play an important role in finance but won’t necessarily replace traditional finance. Cryptocurrencies will rather be an additional layer to the financial world.