While the rest of the world is racing to invest in cryptocurrencies such as Bitcoin and Ethereum, the boss of America’s largest bank believes that Bitcoin is a scam that is doomed to fail.
“For two reasons: it’s against our rules, and they’re stupid," he said. "And both are dangerous. 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.”
Dimon’s opinion that Bitcoin will fail may be an unpopular one, but the CEO continued, saying:
“If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that, of if you were a drug dealer, a murderer, stuff like that, you are better of doing it in bitcoin than US dollars.”
There may be some truth in Dimon’s words as Bitcoin did initially gain popularity in dealing with money laundering and online crime and for this reason no government has officially adopted the digital currency.
The declaration from one of America's biggest banks had a significant negative effect on the value of Bitcoin, which fell by six per cent on Wednesday.
Dimon's statement has unsurprisingly caused waves in the wider finance industry, with David Coker, lecturer in accounting, finance and governance at Westminster Business School, wondering whether Jamie Dimon’s criticism of the cryptocurrency will apply to JP Morgan’s own proprietary crypto ledger Quorum.
“Jamie Dimon’s recent comments regarding Bitcoin were particularly ironic – a financial intermediary criticising and predicting doom for an innovation that removes intermediaries from financial transactions? Hardly surprising," he noted.
“What is surprising however is that even as Mr Dimon openly criticises Bitcoin, JP Morgan is quietly advancing its own, proprietary crypto ledger, Quorum. Quorum is based on Ethereum, a blockchain project broadly similar to but somewhat different than Blockchain, which backs Bitcoin. So one can’t help but wonder if Mr Dimon’s comments regarding cryptocurrencies would apply to JP Morgan’s own offerings, should they come to market?"