Jamie Dimon: “Buy Bitcoin, folks.”

Comment by Jamie Dimon on Paul Krugman’s weekly column on Bitcoin

Jamie Dimon
New York
Technobabble? “The Times They Are a Changin’,” (not the NY “Times”) As intelligent as Krugman is, his intellect may be stuck in the legacy financial system. Buy Bitcoin, folks. But like with any investment, only invest what you are willing to lose. Krugman’s negativity probably stems from a lack of understanding Bitcoin’s technology. Or he is closely associated with the Fed, banks and other financial institutions, all which hope to dissuade as they buy Bitcoin at suppressed prices. Or… he’s just “blocking up the hall.” 

I haven’t posted since May, 2018 because I didn’t have anything to say.  Bitcoin hit bottom (around $6k) three times since then and seems to be ever so gradually beginning to find a new footing.  Paul Krugman, an intellect I admire and trust, has unfortunately been unable to understand Bitcoin.  He almost systematically refuses to comprehend the advantages of a Bitcoin economy.  In his column, Transaction Costs and Tethers: Why I’m a Crypto Skeptic, NY Times, July 31, he continues to expound upon his misunderstandings.  Lo and behold, the first of the column’s comments comes from Jamie Dimon, CEO of J.P. Morgan, whom you might recall vehemently shouted “Bitcoin was a fraud.” less than a year ago.  His very visible “BUY” is important.  It goes along with other evidence that the cryptocurrency world is about to explode.

We’ve been waiting for the banks to build out the infrastructure they need to be able to profit from crypto.  Until the banks figure out how they can profit from crypto, Bitcoin isn’t moving anywhere, soon.  We’re almost there, now.  For banks to profit from the handling, holding and hawking of Bitcoin several utilities must be put in place.

There needs to be a good, strong, secure, easy-to-manage place for banks to keep customer accounts.  The software that does that is now readily available.  There needs to be ways for brokers to buy and sell cryptocurrencies for their customers profitably.  Speculation also requires additional instruments such as options and futures.  These are now in place, too.  There has to be a general consensus that crypto makes a good investment.  Here, the banks may have done such a good job of putting down crypto that it is not easily undone, at least not  quickly.  That’s where Jamie Dimon’s words become so significant.

Dimon says, in a Paul Krugman blog comment, “Buy Bitcoin, folks.” Krugman is not known for his crypto enthusiasm; quite the contrary to be sure.  He wasn’t asked or pushed to say anything.  Why bother?  Dimon has to undo years of negativity to launch this new banking endeavor.  I read another investment bankers recommendation telling customers, “You should have seven per cent of your portfolio in cryptocurrency.” Times are a changin’.  These are the signs I’ve been waiting to see.  I’ll be writing more about further developments in crypto in the coming days.

171031 CNBC Recommendation

There will be a quantum leap in the speed and size of Bitcoin investments when big money Wall Street investors decide to invest.  However, as of yet, no big bank has declared a willingness to trade in Bitcoin using client money.  There have been no Wall Street investment firms buying or selling Bitcoin for customers.  Fidelity has started a Bitcoin mining operation but that is a far cry from trading bitcoin.  Quite the contrary, Jamie Dimon, CEO of JP Morgan Chase declared that bitcoin is a “fraud,” and, he would fire anyone in his firm that traded bitcoin.  Other big bank CEO’s are not as negative but remain on the sidelines and are cautiously optimistic about Bitcoin’s prospects.  This might change very shortly.

Along with Chicago Mercantile Exchange’s (CME) announcement that they would begin trading bitcoin futures by the end of the year, CNBC’s Brian Kelly, who has been a cryptocurrency advocate for several years, today recommended Bitcoin as an investment.  This is huge. This could open the floodgates.

171017 Good For Bitcoin vs. Bad For Bitcoin

Screen Shot 2017-10-18 at 9.37.48 AMThe big question on everyone’s mind is will Bitcoin succeed or fail.  If it rises to $100,000 per Bitcoin, as Jamie Dimon says it might, then crashes and burns, even if that should take five years, that would be considered a failure.  On the other hand, if it succeeds by fundamentally transforming the banking industry, as well as the rest of the financial sector, it will be invaluable and last forever.  How are we to know in which direction it’s headed?

Good for Bitcoin

  • Regulatory agencies assert their oversight on Bitcoin — It didn’t take long for the regulatory agents in the U.S. to begin asserting themselves into everything Bitcoin.  Both the U.S. Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission said that Bitcoin would fall under their oversight.  The news affected the price of Bitcoin adversely and immediately.  However, the fallout was a little larger than -5%.  This seems reasonable and to be expected, yet small by comparison.

Bad For Bitcoin

  • Regulatory agencies assert their oversight on Bitcoin — It didn’t take long for the regulatory agents in the U.S. to begin asserting themselves into everything Bitcoin.  Both the U.S. Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission said that Bitcoin would fall under their oversight.  The news affected the price of Bitcoin adversely and immediately.  However, the fallout was a little larger than -5%.  This seems reasonable and to be expected, yet small by comparison.

171015 Russia Introduces the CryptoRuble

Vladimir Putin himself made the announcement that Russia would issue its own cryptocurrency — the CryptoRuble.  What’s more, he said there would be no mining of CryptoRubles, that CryptoRubles could be exchanged for rubles at any time and there would be a 13% tax if the owner could not explain where they came from.  An odd set of rules to be sure but there is no secret about what the intention is: strict government control.

Is this good for Bitcoin or bad? Obviously, there will not be a strong Bitcoin market in Russia.  There will be none at all.  But they will have their own brand of cryptocurrency.  It’s difficult to see how this turn of events could help Bitcoin.  In effect, this just proves the potential power Jamie Dimon’s latest statement regarding Bitcoin was speaking of, that governments will crush Bitcoin. People fight to obtain and hold power and wealth.  Bitcoin, for those who understand the power cryptocurrencies offers, threatens to redistribute wealth in some fundamental ways.  Governments have always reserved the right to oversee the currency of the land.  Vladimir Putin and Jamie Dimon know this.  Putin has taken the direct approach.  Dimon has to take a more nuanced approach to conserving power for himself and for his.

171006 Jamie Dimon: Bitcoin Is Fake

Jamie Dimon, as de facto head of the banking industry, like Big Oil and Big Tobacco before them, hopes to perpetuate his industry’s success by calling Bitcoin a fraud. This is very much like Rex Tillerson, ex-CEO of Exxon-Mobil and now Secretary of State, famously denying climate change in order to perpetuate the myth that there was nothing wrong with the use of fossil fuels.  Or, in 1994, when seven CEO’s of the largest cigarette companies testified before Congress that they personally believed nicotine was not addictive.

Rex Tillerson doesn’t say climate change is a myth anymore.  But for more than twenty years, long after he knew better, he was espousing such lies.  What else could he say and remain head of the largest oil company on earth?  He knew that if climate change existed then responsible adults everywhere would stop using fossil fuels and start using renewables immediately.

Jamie Dimon HAS to call Bitcoin a fraud.  To do otherwise is to give an opening to cryptocurrencies and he dare not do that.   Eighteen months ago Dimon was quoted as saying, “Bitcoin will eat your lunch” to a room full of bankers.   Dimon knew it then and he knows it now.

170929 Jamie Dimon Yells “FAKE!”

When Jamie Dimon said Bitcoin was a FAKE, the market paused and many took notice. In fact, the fall in the price of Bitcoin for the next two weeks could be directly attributed to his comments.  But, think about it.  What else could he say?  Just eighteen months earlier he was quoted at a meeting of bankers as saying “Bitcoin will eat your lunch.”  He is not naive regarding Bitcoin’s potential.  As the de facto chairman of the banking industry, today he must defend the realm.  Of course, he is going to call Bitcoin a fraud.

Do you believe the CEO of Exxon Mobil when he says there’s no such thing as global warming?

No, but we watch our coastal cities sink beneath the waves, while these thieves pursue the all-mighty dollar.

Our global commerce is hourglass shaped and banks are at the neck of the funnel taking their toll on everything that passes through.  We are moving to a cashless society and MasterCard and Visa are positioned to take their fees on every single financial transaction everywhere, all the time.  The transfer of funds, bearer instruments, the international exchange rates, the currency exchange, loans, certificates of deposit, savings accounts, stocks and bonds, all must pay the banks a fee simply for being.  Of course, Jamie Dimon warns Bitcoin is to be feared. He knows Bitcoin will eat his lunch.

170923 Interesting Times ($3756)

Jamie Dimon criticized Bitcoin once again yesterday, telling CNBC cryptocurrencies were a “novelty” and said they are “worth nothing.” Soon after, a Swedish company filed a market abuse complaint saying that he knowingly spread false information to influence the marketplace.  Jamie Dimon is not being ignorant about Bitcoin and cryptocurrencies; he knows all too well what Bitcoin will mean for his business.  As head of JPMorgan Chase, Jamie Dimon oversees seven trillion dollars in trade daily.  JP Morgan Chase provides security and ease-of-use for its customers doing that much business each and every day.  Jamie Dimon recognizes that Bitcoin can do the same thing without cost.  Of course he is concerned.

After his first Bitcoin bashing, the price fell from a high of $4325 to a low of $2976 in just a few days.  His statement coupled with the Chinese government announced that they would put a stop to all new cryptocurrency IPO’s and end trading altogether in Bitcoin soon was a double whammy for the Bitcoin marketplace.  Bitcoin soon recovered to a short-term high of $4036 and is now currently at $3756.  There has been no appreciable change in price since Dimon’s second interview.

These are very interesting times for Bitcoin.  Everyone wants to know where Bitcoin will wind up.  Will it take off like a rocket on its way to $10,000 by years’ end and $100,000 by the end of 2018 as some are predicting?  Will it crash and burn as Dimon suggests?  Will the banking industry do what it can to slow the relentless progress and inevitability? The banks are not going to go down without a fight.  You can bet on that.  For the banks, all of the money they invested in getting support for credit card legislation, mortgage loan failures and protections, the bankruptcy laws, Glass-Steagall repeal, and the aftermath of the recession of 2009, means they know how to spend money to get things done  in Congress.  I would not be surprised if the Congress votes to shut down cryptocurrencies as did China.  But it’s actually too late for that.  Japan just voted to make cryptocurrency legal tender.  Countries around the world are already using it.  There have been rumors that Amazon will start accepting Bitcoin by end of October 2017.  The good news is that we’re going to see how this all plays out in short order.

170914 Not For the Faint-Hearted

jamie dimon

Not for people who like safe and familiar things, investing in Bitcoin can be a nerve-racking, scary experience.  As of this writing, Bitcoin in $3387.86, down $1226.17 from twenty-four hours ago.  It’s no fun watching 25% of your investment vanish in less time than it takes for a check to clear.

But if you’re a believer, this is a time to buy.  Bitcoin has only ever fallen this far, this fast, a couple of times in its nine-year history.  News of the Chinese government cracking down on new cryptocurrency IPO’s and threatening to stop the trade in bitcoin all together, coupled with Jamie Dimon’s, CEO of JP Morgan Chase, a pronouncement on CNBC that bitcoin is a fraud, there’s no wonder that bitcoin will react violently.  This is a good test of its vitality.  Any investments made here are going to be fruitful.  With blinders on, you just have to dive in.

170914 One More Brick in the Foundation

stencil-Brick-Wall-Sq

Unlike other paradigm shifts brought about by technological change, Bitcoin was invented by one person, Satochi Nakamoto, but it thrives all on its own.  Bitcoin has no person(s) or company behind it that rise or fall with Bitcoin success or failure.  It has no government body nor state championing its cause.  There are many people who, at this point, have a vested interest in it, but should it falter, it is Bitcoin’s own intrinsic nature that fosters its survival.  ($3350) Is it time to sell and buy back in at a lower price?  It’s hard to know.  China has just put the brakes on Bitcoin at a time when 25% of the total investment in Bitcoin is by the Chinese.  There are also huge Bitcoin mining operations in China.  So the Chinese would be reluctant to walk away from the technology altogether. But China does not like anything going on within its border that is not under its strict control.

Bitcoin represents one of the finest examples of decentralized, distributed, democratic technologies.  The original Bitcoin design was set up to have a governing body but only to deal with matters of the technology itself.  The governing body, if it can be called that, has nothing to do with politics.  Jamie Dimon is wrong when he says that Bitcoin is a fraud and he will rue the day that he forbid JP Morgan Chase employees from investing in it.

Every day that goes by is one more brick in the foundation of Bitcoin.  There are now so many businesses and people invested in Bitcoin that it would be hard to imagine Bitcoin failing or going away altogether. If you would like to get some inkling of the size of the Bitcoin community today, Google “Bitcoin visualizations”. Since all of the transactions are public through the blockchain, coders take that data and create some beautiful constructions to demonstrate the frequency, size, and geography of the Bitcoin trading community.

170915 Bitcoin Rollercoaster Ride

Steep Climb Yellow Road Sign

Following Jamie Dimon’s statement in which he called Bitcoin a fraud and the Chinese crackdown on new cryptocurrency ICO’s, the price of Bitcoin paused, then went into free fall Thursday night (170915). From Tuesday’s $4354 price Bitcoin fell steadily to last night’s low of $2989, more than a 30% drop.  It seemed that everyone was waiting to see where this would go.  Was Bitcoin broken? Was Jamie Dimon prescient in his condemnation?  Was this the beginning of the end?  True believers, however, were just waiting for a logical entry point to buy more.  Were people selling to get out permanently, or with the intent of buying back in at a lower price?  Where was the army of Bitcoin fanatics who have been screaming since the run-up this summer from $2400 to $4000 that they wish Bitcoin would retrench and give them one last opportunity to invest before it left a vapor trail in its wake into the stratosphere?

Well, Jamie Dimon, it appears, is not calling the shots here.  And, the Chinese will not sit idly by while the rest of the world is profiting mightily with Bitcoin.  Bitcoin, as soon as its prices started to show signs of life, started bidding up again like crazy.  At 2:23 am EST heading-up-a-hill1Bitcoin was $2989.  By 10:00 am EST Bitcoin was $3683.  A 23% recovery.