JPMorgan calls Bitcoin "fraud" only for use by criminals and North Koreans
File PhotoBitcoin is little more than a "fraud" which will eventually blow up in the faces of traders, according to JPMorgan Chase CEO Jamie Dimon.
Speaking to attendees at a banking conference in New York this week, the executive blasted the cryptocurrency industry, saying it "isn't going to work."
"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 dollars," he said, according to The Guardian. "So there may be a market for that, but it would be a limited market."
Bitcoin is a type of cryptocurrency, and perhaps the most well-known, which can be used to make purchases, trade on Bitcoin exchanges, and is considered as an asset by some, a currency by others.
At the time of writing, one Bitcoin is valued at $3,886, having hit a $5,000 all-time high on 2 September.
Dimon believes Bitcoin is only fit for those who need to circumvent traditional, traceable banking systems, and said that at the financial institution, trading in Bitcoin is against the rules. Should he find out that any JPMorgan employees were dabbling in the cryptocurrency, he would fire them "in a second."
While referring to Tulip Mania, a market bubble and crash from the 1600s, Dimon dubbed Bitcoin a "tulip" which eventually will crash and burn.
"It could be at $20,000 before this happens, but it will eventually blow up," he said. "Honestly, I am just shocked that anyone can't see it for what it is."
The CEO's claims concerning the cryptocurrency come as both the UK and China have issued warnings about trading, namely speculations called Initial Coin Offerings (ICOs).
This month, China announced a ban on ICOs based in the country, calling the events a "disruption" to financial order -- an attitude seemingly reflected by the JPMorgan CEO.
ICOs allow investors to trade cryptocurrency coins for a "share" in a company or project. This setup confuses current financial and company systems due to their being no black-and-white line between shareholders, owners, and investor rights, but should an ICO and a project be successful, traders can benefit.
However, ICOs do hold risk. Not only are they speculative, but cyberattackers have also bombarded the events in order to fraudulently acquire investor funds.
In July, the CoinDash ICO became chaotic when a hacker made off with $7.4 million in digital currency, and Veritaseum has also lost $8.4 million through an ICO.
In response to Dimon's speech, John McAfee, McAfee security firm founder and current company owner of MGT Capital Investments which mines the cryptocurrency, retaliated.
Speaking to CNBC, the executive said there is value in creating and trading Bitcoin, as its current popularity and usage shows.
"I'm a Bitcoin miner," McAfee said on CNBC's Fast Money show on Wednesday. "We create bitcoins. It costs over $1,000 per coin to create a bitcoin. What does it cost to create a US dollar? Which one is the fraud? Because it costs whatever the paper costs, but it costs me and other miners over $1,000 per coin. It's called proof of work."
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