Bankers’ mistrust of bitcoin is still the greatest argument for it

Earlier on Tuesday, at different conferences around New York, JPMorgan Chase chief executive Jamie Dimon took aim at bitcoin, calling the cryptocurrency “a fraud” and “worse than tulip bulbs.”

This skepticism by one of Wall Street’s titans, and its reflection in many offices and hallways in top financial services companies, is perhaps one of the strongest cases for bitcoin’s lasting importance.

Let’s be clear, Dimon’s firm is one of the chief architects of the global financial crisis that led to the interest in a somewhat arcane cryptocurrency in the first place. There would be no bitcoin without Jamie Dimon — and in some ways he’s right to fear its rise.

As a Vanity Fair piece revealed last week, JPMorgan Chase paid out $13 billion (with a “b”) to the U.S. government because of its role in the financial crisis and the mortgage security fiasco that almost destroyed the U.S. economy.

The story quotes an unfiled complaint that was sealed as part of the settlement with the Department of Justice.
Whatever irrational exuberance may be attributed to bitcoin’s current froth, it’s hardly a fraud. What it does is get rid of the need for potentially unscrupulous middlemen who thrive and profit on asymmetric information.

Bitcoin does away with this by presenting an immutable ledger. The value of things are recorded, agreed upon, and irrefutable. Which means that shenanigans of the kind that brought down the housing bubble are less likely to occur.

Perhaps bitcoin itself is overvalued, but it’s not the house of cards that Dimon’s employees blew over in 2008.

While the near sacramental disputes in the cryptocurrency community over bitcoin and bitcoin cash or ethereum vs. ethereum classic do the entire industry no favors, they’re the arguments of individuals who want to untether financial services from the chicanery of misanthropic sociopaths who thrive on their ability to cheat systems.

The favorite refrain of Wall St. may be “it’s only illegal if I get caught”… and while cryptocurrencies are unregulated, they are — for the most part — transparent.

Again, the Vanity Fair report is illustrative.

Dimon may say that he’s not advising anyone to ‘go short’ on bitcoin, but if Wall Street keeps up its criticism, my advice may be to go long.