Jamie Dimon: Bitcoin is Stupid

Photo by Steve Jurvetson. Licensed under Creative Commons CC-A 2.0 License.

Jamie Dimon is not someone who minces words. For some time now, he has been vocal in his criticism regarding increased financial regulation following the financial crisis.

Now, he is freely sharing his thoughts on virtual currencies and the supporters of those currencies are not going to like what he has to say. Potentially the most powerful banker in the world, Dimon, believes that bitcoin is literally a “fraud” and warns that it will eventually burst. “It’s pure speculation,” he says. So he says it will not take “a second” to dismiss any employee who makes investment operations on behalf of the bank with the currency: “It’s stupid and very dangerous.”

His explanation is very simple: currencies have a legal basis for the governments that create them. “To control it, they create a central bank and they know who has it, where it is and where it goes. There are governments that see Bitcoin as a novelty,” he says, referring to the technology that supports it, similar to that used by entities such as JPMorgan itself to cut costs in its transactions.

Not everyone on Wall Street shares Dimon’s sentiments. Tom Lee, of Fundstrat, sees Bitcoin going as high as $6,000. While Dimon believes that it might make sense to adopt a virtual currency in countries like Venezuela, Ecuador or North Korea, he says, “There is no way it could be needed in the U.S.”

Bitcoin has appreciated 335% in value this year. This Tuesday the price was little changed at almost $4,200 before Dimon made his comments. Following those comments, it lost 2.5% of its value.

That price, claims Dimon, “is not real.” What is more, he considers that bubble greater than the famous tulip bubble in Amsterdam as well as a more fraudulent one. “This can not end well,” he concluded. Dimon made these comments within the framework of two conferences held in New York.

It is the biggest attack against virtual currencies to date. Bitcoin’s big rivals, such as Ether, also fell on comments from Dimon, who linked those virtual currencies with criminal activities.

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