JPMorgan CEO Jamie Dimon says Bitcoin is a fraud that will eventually blow up
cnbc.com
cnbc.com
Let's go over some of the things that make up bitcoin's price:
-You can make legal retail transactions -- a very small portion of transfers, but legitimate. This is a 'regular money' use.
-Make large 'wire' transfers for less than it would cost through your bank. Totally legitimate and valuable in my opinion. This is a 'Regular money' use.
-There are future expectations of bitcoin expanding the above two points. Supports the 'regular money' points above.
-You can use bitcoin to (illegally) move money out of countries like China, which is now being cracked down on. This is a black market money / money laundering use.
-Use as a speculation instrument. Valuable in a way, but only bullish on net because it is supported by the above services. This can be done with 'regular money', but speculative financial instruments are primarily assets and not regular money.
There are many others, but those are the big ones I know about. The issue is that it appears the price is 80%+ speculation, 15% capital flight, and maybe only 5% of the demand for the asset is based on the traditional 'regular money' uses... What this means is that once the speculative support moves from net positive, to net negative (meaning, once Bitcoin gets a widespread reputation as being a dog) things start to go downhill hard.
Of course my estimates above are very loose, and in the future the expansion of bitcoin into a far larger mainstream uses case could overpower all of them, but either my estimates above need to be off (and they may be) or we need to see large scale adoption of bitcoin for legitimate uses at some point (also a maybe).
Can you show some price comparisons for transfers?
Your other points are worthless without those two being true.
Paypal seller fees are quite steep, that is true, but I assume mainly that is when they are accepting credit cards. Sometimes that is simply pushed to consumers. Paying your rent by credit card always costs extra, but that is because of the risk of default.
But you can always pay your rent online by ACH without a fee.
And Lord help you if the amount is 'too large' or if they think it's actually a business transaction or if any other of their fraud filters are triggered. It could be 6 months before either of you see that money again.
People in different countries use different currencies. Even if the Euro is a stronger currency than the Nigerian naira, you're still going to want to use the naira in Nigeria.
Why? Because that is what people use to pay their taxes, and that huge entrenched demand creates a de facto common currency even without de jure legal tender laws.
No, but exchanging Bitcoin for fiat is a lot cheaper in my experience than fiat-fiat. 0% - 0.5% vs 1.4% - 3.0%.
I'm not sure what the rest of your post has to do with Bitcoin vs. PayPal for personal remittance. I don't think Bitcoin is a good currency, but it's great at medium value and cross-border remittance applications and I've used it successfully many times in that capacity (I used to be a digital nomad).
And thus, relatedly, that currency exchanges would still be needed constantly under any circumstance.
If it is cheaper to exchange from bitcoin to fiat than from fiat to fiat, that would be interesting. I would tend to question whether it is a tax issue.
Ordering from Amazon used to be much cheaper too, but nowadays it has been collecting sales tax.
My understanding is that, for Bitcoin, this process of being made to play by the same rules has already begun.
You can definitely argue that people shouldn't keep all their wealth stashed as dollar bills under their mattress, and that they should diversify.
Indeed, absolutely nobody advocates doing that. Everyone says to diversify, except for goldbugs and bitcoin extremists.
The question of whether it would be a good idea diversifying in that direction is still unanswered, as there's plenty of real productive assets to invest in that contribute tangible goods and services to the world.
When people are in a frenzy bidding up the prices of things that aren't providing goods and services to anyone, then you should worry.
While in theory it is probable that btc growth will never be as astronomic as it has been in the past, you can't time the market, and there's no telling where the true ceiling is because this market is so inneficient.
Aside: the inneficiency I think comes from ignorance and manipulation of btc, not a flaw in btc itself.
Worth considering, especially now that there are better alternative blockchains.
That "bitcoin" is what we call blocks, and blocks have value because they take effort to get, doesn't mean that's a robust currency. I can go dig gold out of the ground, or speculate on wireless frequencies, or whatever.
Bitcoin may make it harder to track who is paying for what, but it's not like it brought on a drug-buying renaissance.
Assuming both the sender and the recipient want to use BTC as a store of value. Otherwise there's a commission involved from BTC-to-fiat conversion at both ends of the transaction.
Also, banks tend to have a flat fee on wire transfers. Assuming a $25 fee on both the sender and the recipient, sending $51 will likely be more efficient in BTC. But at some point ($5,100? $51,000? $5,100,000?) the wire transfer becomes the preferred choice.
Further, while the transfer via the bank is usually a flat fee the bank also make a cut on the exchange rate that they charge the user, so there is a % element to consider on larger transfers.
Diamond reminds me of a bartender warning his patrons not to smoke pot. (Because alcohol is mostly legal, while pot is mostly illegal.)
Also, fiat currencies need to maintain public confidence, part of which comes from a legal code. The remainder comes from management of the currency and its underlying domestic economy. I suspect a great deal of the value of Bitcoin may come from an eroding confidence of the U.S. dollar; especially after the events of '08 and the ongoing weak economy.
If cigarettes became a more attractive medium of exchange, is it illegal to use that medium between two private, consenting parties?
https://en.wikipedia.org/wiki/Legal_tender
It doesn't prevent you from accepting other means of exchange (though in some countries it does), but it does force you to accept it, even if you don't like it.
Tim DeChristopher spent 21 months in prison despite how he "had raised sufficient funds for an initial payment to the BLM (which the BLM refused to accept)."
https://en.wikipedia.org/wiki/Tim_DeChristopher#Trial
(I bring this up because I'd always wondered about how why that case fell out that way, and apparently it can't, per the common meaning of the terms, so my understanding of legal tender seems correct?)
Last year, I tried a bitcoin payment card. It was not practical because of bitcoin volatility, but there was something super cool about it : it was a prepaid rechargeable card that I could recharge in the hour, by sending bitcoins to it. I always knew how much I could use on the card and could basically use everything that was on it, without fearing to hit some obscure limit.
This was the perfect payment method for me. I hope we'll have something similar to this but with non volatile currency soon (I know this exists for fiat, but I have to wait like 2 days for a wire transfer to happen, this is not practical).
Surely, new technologies influence decisions, and enable new ways of interaction, and laws can be outdated. But ignoring that sphere altogether and claiming since we've got new technology old laws of how money works does not apply anymore is dangerous. A lot of it still does apply. If we ignore that, we get what happened at dotcom boom and then crash - people claimed old rules of economics, supply and demand, scarcity, etc. do not apply anymore - turns out they largely still do.
Yes, we've got some new ways to do things, but fundamentally it's still the same story. And it seems to be, the same story with Bitcoin - money do need legal support. Some people - mostly those who live outside the mainstream community - can be ok without it, but vast majority would not be.
Major banks, investment houses and hedge funds regularly publish [sometimes strongly-worded] opinions on their vision of the specific asset or asset class.
If Jamie Dimon made a statement that oil will remain stable, or that aluminum is overpriced and no JP Morgan trader should touch it, would it be viewed through the same lens of grand conspiracy?
(Sorry, but someone had to say it...)
If it were a binary decision, I wouldn't put him in the bad guy camp. At least based on what I know about the guy.
Even in Ye Olden Daze, banks would send deposits of things like gold and silver right back out the door as loans.
What percentage of bitcoin users actually use it often for its practical value, as opposed to hoarding and speculating? How to estimate this?
Regarding use, one of the interesting metrics is "Bitcoin-days destroyed", which gives insight into how often the coins change hands.
Additionally, there is a floor to the fractionality of Bitcoin, of 100 000 000 Satoshi. If Bitcoin ever reaches $1,000,000, then it could only be divided into $0.01 denominations, and not further. If it reaches $2,000,000, then 1 Satoshi would be worth 2 cents.
There is no such thing unless you are in a hurry.
Even using his previous examples, withdrawing $20 or buying lunch, you can't wait hours or days- you usually want them immediately.
I think this is easy to say because we don't have to wait hours every time we use cash or our debit or credit cards.
It's reminiscent of using checks for everything. Businesses would have to factor in the possibility of checks bouncing or Bitcoin transactions being rejected after the POS transaction.
The word hoarding is often used to cast ordinary and prudent saving of stable, non-speculative currencies like US Dollars and Euros in a negative light. Economists and central bankers often want the inflation rate to be higher - to reduce debt loads, among other reasons - so they want people (other people, of course) to stop saving so much and start spending more.
[0] https://www.bloomberg.com/news/articles/2017-05-16/rich-reti...
edit: grammar
So, I'd argue that holding onto large quantities of money in lieu of allowing it to circulate due to fears does qualify as "hoarding", insofar as the money could be put to better, more productive use while the person holding onto the cash may be losing out on potential upside.
The term is particularly apt when there are concerns of a deflationary spiral, as cash hoarding truly does become a problem in that circumstance.
Saving is setting aside money for future use.
Hoarding is setting aside money expecting the value of money to increase, thus treating it like an investment instrument, which is not the purpose of money.
If Bitcoin is a commodity then "hoarding" is normal.
If Bitcoin is money, it's not.
Ratio of actual purchases on sites compared to the number of "please let people pay with bitcoin" requests they got before adding it?
I've seen varying reports ranging from low to super low.
Old but e.g. https://fundraising.mozilla.org/bitcoin-donations-to-mozilla...
Strange separate standard to create for bitcoin since it is functioning as intended, under that standard. So congratulations bitcoin is full of speculators? How do people come to the opposite conclusion with the same information.
https://it.slashdot.org/story/02/11/06/2154224/weak-elliptic...
Much of the work I've seen has been more ledger/private chain oriented.
This is one of the problems with bitcoin right now. As a currency its variability AND value is high, which leads to people not wanting to spend it.
This ironically leads to a problem with the currency not being used.
There are other problems, but for its wide spread acceptance and use to buy pizza, I sure don't want to spend something that is worth 1$ today, but might be worth 100$ tomorrow.
Not attacking your main point, but questioning the correct application of this principle. It seems like it originally was meant to talk about the same resource (a coin made of metal, metal becoming higher price than the coin). It doesn't seem like Bitcoins are intrinsically made of dollars.
This is not a problem for most of us.
To prevent it they will be forced to do call in the national armies, use lethal violence to force their currencies on people and keep order. Then establish central banks to control the supply of currency. Or in other words convert bitcoin to fiat money.
Mining has already created an incentive for people to in a way make money without any productive activity or trade, but through ledger keeping. It will be hard to convince people in the future to start skint poor in an economic system where there are 1% rich people who made all their money through non productive enterprise. And expect them to continue to suffer through it.
Finally the inevitable will happen.
It seems that his staff feel ambivalent about his comments:
JPM Blockchain Lead: "¯\_(ツ)_/¯"
https://twitter.com/AmberBaldet/status/907675559492288512
Former JPM Director of Global Macro: "Jamie, you're a great boss and the GOAT bank CEO. You're not a trader or tech entrepreneur. Please, STFU about trading $BTC."
https://twitter.com/agurevich23/status/907692985424371712
Got these sources from Fortune's Term Sheet:
Who's actually buying it with cash at a $4k+ valuation? Is anybody in their right mind doing that or is it a completely theoretical number?
The thing about Bitcoin is that it's 100% transparent, except for where it's not.
Look at the 24 hour volume column to answer your question (yes, it is a robust market with many buyers and sellers). There are a few foreign exchanges with zero fees, so those volumes must be heavily discounted, but the majority of the listed volume is legitimate.
Capital and it's masters can change institutions like a hermit crab does shells.