JP Morgan Chase chief executive, Jamie Dimon, ironically claims that crypto-currency, BitCoin, is a “fraud” that should only be invested in by murderers, drug dealers and people living in North Korea, Ecuador and Venezuela. And it would know. The financial services giant has spent decades defrauding its customers, and it didn’t need a new currency to do it. Not that it has stopped them from trying to develop one anyway.

He’s right, in a sense. BitCoin will not be our saviour. But not for the reasons Dimon claims.

Illustration by Rachael Bolton.

BitCoin will not be our saviour. But not for the reasons JP Morgan chief, Jamie Dimon claims.

In a stunning – but not surprising – act of irony, Dimon condemned the validity of crypto-currency, Bitcoin, claiming it was a “fraud” that should only be invested in by murderers, drug dealers, and people living in North Korea, Ecuador and Venezuela.

“If we had a trader who traded bitcoin I’d fire him in a second for two reasons,” the bank boss told the Barclays’ financial conference in New York last week. “One, it’s against our rules. Two, it’s stupid. You can’t have a business where people are going to invent a currency out of thin air. It won’t end well… someone is going to get killed and then the government is going to come down on it.

“The value of a single bitcoin is around $4,200. The crypto-currency, which can be manufactured using computing power and is then stored on servers, was valued at less than $250 per unit at the end of 2015. Don’t ask me to short it, it could be at $20,000 before this happens but it will eventually blow up. It’s a fraud and honestly I’m just shocked anyone can’t see it for what it is,” Mr Dimon said, describing Bitcoin as “worse than tulip bulbs”.

“The only good argument I’ve ever heard … is that if you were in Venezuela or Ecuador or North Korea.. or if you were a drug dealer, a murderer, stuff like that, you are better off dealing in BitCoin than in US dollars. You are better off bypassing the system of your country even if what I just said is true. There may be a market for that but it’s a limited market.”

This despite Dimon himself having been charged with 48 violations of banking and securities fraud worth $28,675,456,874.00 in fines.

Dimon seems to have changed his tune since 2013, when he was denied patents for a BitCoin equivalent 175 times. He has spent the following four years talking down the validity and veracity of BitCoin as a currency solution.

Meanwhile, JP Morgan Chase paid a $13 billion fine to end a criminal probe into its and Dimon’s role in the Global Financial Crisis.

JP Morgan Chase chief executive Jamie Dilon claims BitCoin is a “fraud”. And he would know. He & the company have spent decades doing just that.

So let’s go through Dimon’s claims one-by-one

“You can’t have a business where people are going to invent a currency out of thin air.”

Actually you can. It’s called central banking and it has operated this way since 1667.

Dimon, his colleagues and conspirators within the banking sector and Federal Governments in the US, UK, Australia and most other developed nations want you to believe that your taxes pay for everything.

This is, in fact, not the case. Every cent that is spent on building schools and roads, bailing out banks, providing subsidies to mining, electricity and gas companies, paying government salaries, funding health care, the police force, firefighters and defence are new dollars pumped into the economy via… that’s right, the central bank. With the permission and administration of… the treasury.

Taxes are recouped after the money has been spent but they only pay for a fraction of spending. And they didn’t need your taxes in the first place to pay for it. Taxes address inflation. Not spending.

#howmoneyworks

“It won’t end well… someone is going to get killed and then the government is going to come down on it.”

Plenty of people have died due to economic hardship. This hasn’t prevented governments from launching ahead with demonetisation programs, currency ‘innovations’ or being forced by banks, the IMF or World Bank to enact austerity, causing even more hardship, poverty and fatalities.

More than 100 people died last year after the Indian government scrapped the 500 and 1000 rupee notes.

In Greece infant mortalities increased by 43% between 2008-2010, while birth rates dropped by 22.5%. Stillbirths rose by 21% due to cuts in prenatal health services, chronic diseases increased by 24% and more than 3000 deaths were attributed to fatal hospital infections. And according to research from the University of Portsmouth, Greek austerity caused 500 male suicides, a 0.43% increase for every 1% cut  in government spending.

More than 822,000 people died in Argentina during its Great Depression between 1988-2002, according to UN estimates.

More than 10,000 suicides were tied to the economic crisis JP Morgan was responsible for causing, according to researchers from the University of Oxford.

Cuts to the UK’s National Health Service is predicted to have caused 30,000 deaths.

The banks and financial services firms are complicit in each and every one of these deaths. JP Morgan and its other financial partners helped wield the scythe. Taking the high moral ground now, because of a digital currency it cannot control, is hubris to say the least.

“The only good argument I’’e ever heard … is that if you were in Venezuela or Ecuador or North Korea.. or if you were a drug dealer, a murderer, stuff like that, you are better off dealing in BitCoin than in US dollars, you are better off bypassing the system of your country even if what I just said is true.”

Drug dealers use cash too. Should we get rid of money altogether then?

JP Morgan Chase, Goldman Sachs, Fannie Mae, Freddie Mac and company didn’t even need cash to commit frauds of a scale so massive it caused the biggest financial meltdown since 1929. They had computers for that. No one has gone to jail for these crimes, but should we ban computers anyway, while we’re at it?

BitCoin attracts ‘Dumb Money’

Jackson Palmer, founder of the open-source, peer-to-peer crypto-currency, Dogecoin, told Renegade Inc that while there are legitimate use cases for blockchain and digital currency technology, the world is many years away from having a viable alternative to even basic payment networks like Square, Venmo or Facebook’s built-in money sending feature.

“Because of the high barrier of entry in understanding how this technology all works, the industry has recently been overrun by charming sociopaths who can tell a really good, buzzword-laden story and attract a lot of ‘dumb money’, as I like to call it,” he said.

“This money is coming in from investors who don’t understand the technology or its current limitations, but fear they’ll miss out if they don’t blindly participate at this very second – due to the recent price increases.”

To make matters worse, many of these “investors” are not experienced in investing in companies as the crypto investment space is almost entirely unregulated. So you have thousands of average people throwing money they likely can’t afford to lose at something they believe will get them rich, quick.

“It’s a recipe for disaster and there’s sadly no telling how long it might go on,” Palmer said. “It could be months or years before the bubble finally pops. I think everyone needs to take a step back and reassess how far the technology has actually progressed.

“Most technical people in the field will willingly tell you that this is beta software which doesn’t yet scale, but because these people aren’t especially talented in marketing or amplifying their voices, those sociopathic multi-level marketing types are drowning out the very valid warnings of this tech being a good three-to-five years away from being ready for the primetime.”

The problems with BitCoin in a nutshell

We don’t know who created it, it has no central oversight, it can be mined, it is neither anonymous, nor secure, and though it has been regulated in some countries, it barely has a legal structure to rely on.

BitCoin is not anonymous, it is pseudonymous. Just because you can hide behind a screen name, don’t think for one second your transactions can’t be tracked. BlockChain is the world’s longest receipt. It is probably more traceable than physical cash. It is likely the last technology in the world drug-dealers would want to use.

The way to obtain BitCoin is to mine for it. That is, use an awful lot of computing power to solve complex equations which, when solved, rewards you by releasing a block of the digital currency into your digital wallet or hard-drive. It is simply too technologically complicated to be worth most people’s time.

Like we don’t already spend enough time protecting our bank accounts from hackers, thieves, skimmers and scammers, now we have to worry that our wealth could disappear overnight because someone got a hold of an algorithm that works faster and better than ours?

Regardless, Dilon and his JP Morgan colleagues have spent the better part of three decades (longer even) defrauding the public with little – if any – accountability, while trying to prevent the development of cryptocurrencies that threaten their dominance over the financial system.

He and his colleagues have reaped as many millions as any drug dealer – more even – and has been central in the economic crisis plaguing countries like Greece, Venezuela and Ecuador. And he didn’t need a cryptocurrency to do it.

That said, while BitCoin and other developing digital currencies like Ethereum have been developing to provide more transparency, accountability and regulatory controls, Dilon and JP Morgan Chase was trying to patent its own currency ‘Quorum’ which provides less accountability and transparency while creating the potential for even further control over the global economy.

BitCoin will not be our saviour. Nor will any other digital currency.

What we need is for governments to recognise publicly their ability to create money out of thin air and build economies of scale that suit the needs of the citizens they represent and increase or decrease taxation accordingly.

You don’t have to tax the rich to pay for the poor. You could cut taxes across the board and the economy would still improve.

The wealth of the economy is, funnily enough, relative to the amount of dollars in circulation.

The ability to issue currency is alone the greatest tool governments have against insolvency.

A healthy economy is one where governments spend and tax in correct measure, so that people can work and earn a wage that supports the cost of living, and keep consumer confidence at a balanced high.

Inflation is being used to justify the continuation of the status-quo, where the working poor and the unemployed are deliberately kept out of reach of employment, creating a buffer stock against wage demands.

BitCoin won’t solve any of these problems. It will likely only make them worse.

Claire Connelly

Claire Connelly

Claire Connelly is the editor-in-chief of Renegade Inc. An award-winning freelance journalist,speaker, and founder of Hello Humans. https://www.patreon.com/hello_humans

Specialising in economics, technology and policy, Connelly is working on her first book due out in 2018.

With more than a decade of experience under her belt, Claire has written for leading publications including The Australian Financial Review, The Saturday Paper, ABC, SBS, Crikey, New Matilda, VICE & others. She is the co-host of The Week In Start-Ups Australia, and features regularly as a commentator on TV and radio shows including Radio National's Download This Show, ABC's The Drum, Ten's The Project, and more.
Claire Connelly

3 thoughts on “BitCoin will not be our saviour

  1. You are absolutely right that the complicated nature of bitcoin will ensure it has a niche market.

    On other matters . . looking at your biog you list 4 (instead of 3) major problems. I would like to suggest that numbers 2 and 3 on the list are merely parts of item 1 – Neoliberalism!

  2. Dear Claire, while I enjoyed your analysis of Jamie Dimon’s silly statements on bitcoin, both you and surprisingly Jackson Palmer couldn’t be more wrong about cryptocurrencies (the application) and blockchain (the technology). Payment systems have been embedded in most cryptocurrencies since the very beginning. It’s what allows for bitcoin and other cryptocurrencies to be used as a means of payment and exchange. In fact, you can get debit cards as well as use RFID on your smartphones to make payments already since quite a while. That was part of stage two of cryptocurrencies. Stage three was the linking of assets such as real estate, commodities, debt, illiquid assets, etc. Just the market for asset back cryptocurrencies is expected to be worth $5 trillion in 5-7 years according to LAT Research. The stage we are at now is where all the cryptocurrencies are being tied together seamlessly. An early example of this being ShapeShift and a more recent example being Metronome designed by Jeff Garzik one of the original contributors to bitcoin. As for the impact of cryptocurrencies in general and bitcoin in general, as I said before you are completely wrong. Consider that your bank will be your wallet. Banks know that cryptocurrencies are an extinction level event the same as smartphones were for say Kodak. Plus all those people who up until now have not been allowed to have a bank account will have their bank account on their smart phone and be able to have all the facilities of banking available to them! Finally as to your view as to what actually needs to happen. I find it really surprising that you believe that government is the answer to the problem. Government in its present form is not the answer. What we presently have is fascism (i.e. Governments and corporations working together for their mutual self benefit). What we need is direct democracy which interestingly enough can be enabled by blockchain technologies! This includes allow for people to decide for which programs they pay in taxes as well as being able to hold binding referendums. If you want to see a working example of this, look at Switzerland. Look at how little power is held by politicians there since most of the power rest with individual citizens. Blockchain can enable direct democracy by making sure that citizens are able to vote once and to be able to easily validate the results of any vote. After the banks are eliminated (that’s assured) and hopefully people wake up to the importance of deciding for themselves what sort of society we live in, including on what they pay taxes for, on what type of chemicals we expose ourselves and our children to, on whether we have real competition across different forms of healthcare (allopathic, naturopathy, homeopathy, electric medicine, etc) and real choice in this area. When we get to the point where we citizens are deciding these things and not “government”, we will all be better off.

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