Paul Vigna and
Jamie Dimon has not changed his mind about bitcoin.
Mr. Dimon, the long-time CEO at J.P. Morgan Chase, continued his well-documented criticism of the digital currency bitcoin. Speaking at the Barclays financial services conference on Tuesday, Mr. Dimon was asked whether his bank had a trader who traded bitcoin.
His response? “If we had a trader who traded bitcoin, I’d fire them in a second,” he said. “It’s against our rules” and any trader that deals in them is “stupid.”
Still, he said he wouldn’t advise shorting bitcoin. Given its wildly speculative nature, Mr. Dimon said, it could go to $20,000. Later, at a separate conference, he said it could go to $100,000 and noted his daughter had made some money in bitcoin.
Ultimately though, Mr. Dimon said that he thinks Bitcoin is “a fraud” and it “will eventually blow up.” He referenced approvingly the comments of another titan of the traditional markets, Howard Marks, who recently called bitcoin “an unfounded fad.”
Bitcoin was trading around $4,200 before his comments and fell about 3.5% after his speech started circulating. It was last at $4,092.
This isn’t the first time Mr. Dimon has publicly rapped bitcoin. At a conference in November 2015 - when bitcoin was trading around $330 – he said “no government will ever support a virtual currency that goes around borders.” At the World Economic Forum in January 2016 - when bitcoin was trading around $400 – he said bitcoin “is going to go nowhere.” His rationale was that governments simply will not allow a stateless currency to exist.
Many bankers are skeptical of bitcoin, not only because of the price volatility and illicit actors who have used it, but because a big part of its value proposition is to cut out the middlemen, including banks, from currencies and consumer payments.
Mr. Dimon said bitcoin’s appeal will largely be limited to criminals or others who are trying to hide how they move money around. He did add that he saw use for people in countries like North Korea and Venezuela who might not want to use their government-backed money.
All that said, Mr. Dimon and his bank have a completely different take on the the blockchain technology behind bitcoin. In October 2016 – when bitcoin was at $613 – J.P. Morgan rolled out a project called Quorum, based on bitcoin rival Ethereum, that would act as platform for banks to use. In February 2017 – when bitcoin was trading at $1,245 – a consortium of banks and tech giants formed the Enterprise Ethereum Alliance, which is using Quorom as the starting point of its own explorations into using the technology in the banking sector.
At Tuesday’s conference – with bitcoin trading above $4,000 – Mr. Dimon said blockchain may take decades to roll out since it has to be by use case. Mr. Dimon said that’s because people have to code specific use cases for blockchain and that it’s a “refactoring of existing systems, it will take a while.”
J.P. Morgan is already using blockchain for credit default swaps and loans. “As we get more comfortable, it’ll roll out,” Mr. Dimon said, adding that most banks have experts testing blockchain, learning about it and applying it. “It’s not going to happen overnight,” he said. “It’ll happen piece by piece as we all get comfortable and function with blockchain.”