JPMorgan Chase CEO Jamie Dimon recently called Bitcoin “a fraud” that “will blow up”.
Dimon said he would “fire in a second” any JPMorgan trader who was trading Bitcoin. This was because it is against the company’s rules, and “they are stupid”.
The announcement from Dimon comes at a time when China is placing pressure on the cryptocurrency market.
The move by China saw drastic drops in the price of large coins like Bitcoin and Ethereum, with Bitcoin going from highs of around $5,000 to $3,000 in one week.
Bitcoin is ingenious
Farzam Ehsani, blockchain lead at RMB, has responded to Dimon’s comments, calling Bitcoin an ingenious monetary system.
His column in the Sunday Times states that the confusion surrounding Bitcoin comes from “the lack of understanding of what money truly is”.
“Let’s take the $100 bill. It’s a piece of paper with some security features and a government stamp on it that costs 15.5c to produce,” he said.
Despite this, that “piece of paper” can be exchanged for goods worth a lot more.
Ehsani added that the Federal Reserve in the US creates digital US dollars “out of thin air” to buy financial assets like government bonds.
“In this light, would we say that the US dollar is then a real thing? Or would we classify the US dollar as a fraud?”
Shutting down Bitcoin
With Bitcoin also meeting a prerequisite of any form of money – it can be kept scarce – Ehsani moved onto the prospect of “closing down” the cryptocurrency.
“Bitcoin is a protocol, a distributed and decentralised language that a network of participants has decided to speak,” said Ehsani.
There is no CEO, no headquarters, no owner of the network, and was akin to a spoken language, he said.
This makes it very difficult to close – as difficult as it would be to “close” a language like English.
“The only way to effectively close down a cryptocurrency would be to turn off the Internet. There aren’t many countries I know that are prepared to do this.”
Ehsani recently told MyBroadband that South African banks are collaborating to develop a sovereign blockchain for the country.
The South African Financial Blockchain Consortium’s experiment is called Springblock, and its members include Absa, FirstRand, Standard Bank, Nedbank, and Capitec.