JPMorgan CEO Jamie Dimon Calls Bitcoin ‘Fraud Of The Century’

The Chief Executive of banking major JP Morgan Jamie Dimon has expressed skepticism regarding the viability of the bitcoin – cryptocurrency.

Calling the cryptocurrency a fraud, Dimon said that it was bound to blow up in time. He noted that it was suitable only for those not working within the formal banking structure.

In a statement Dimon said

The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart. If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that, or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than US dollar.

Addressing a conference in New York, Dimon said that he would fire anyone found in the investment bank to be trading in bitcoin as it was against the rules and moreover a stupid decision. He compared the current popularity of the bitcoin to the notorious tulip bulb craze of the 17th century.

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His remarks come against a backdrop of the rising acceptance of bitcoin as a currency and its soaring value. Bitcoin has grown four times this year jumping from $1,000 in January to over $4,000 recently. Dimon said that the current growth was a bubble and not real, adding that it would eventually collapse even though it may happen after bitcoin hits the $20,000 mark.

Bitcoin is a virtual currency which bypasses traditional payment processes. It operates on blockchain technology which features a decentralized ledger system. Over the years, bitcoins have become mainstream with many merchants and organizations accepting bitcoin payments.

Central banks and banking institutions have also initiated a number of projects seeking to leverage blockchain technology for processes like trading and settlement. The technology offers a number of advantages such as increased security, lower costs, faster processing and better transparency. Even JPMorgan is reported to be working on a trial project for trading based on blockchain technology.

Dimon’s vocal criticism follows a warning from the UK’s financial regulator on Initial Coin Offerings (ICOs) which enables investors to use cryptocurrencies to fund start ups.

Yann Quelenn, an analyst at the online bank Swissquote stated that bitcoin had potential as a currency and could possibly become a safe haven. He noted that cryptocurrencies such as bitcoin were a new asset class challenging traditional fiat money causing central banks to battle for their monopoly.

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