Bitcoin (BTC) has its share of haters. One of the most prominent is JPMorgan’s Chairman and Chief Executive Officer, Jamie Dimon. He has been a Bitcoin critic for years and even described the top cryptocurrency project as fool’s gold and a hyped-up fraud.
Dimon joined CNBC’s “Squawk Box” to share his thoughts on cryptocurrency and blockchain technology. In the interview, he compared Bitcoin to a pet rock. The figure of speech refers to a 1975 collectible toy that started as a joke.
He was also asked to comment about Bitcoin’s scarcity due to its finite supply. JPMorgan’s CEO replied by saying that nobody knows that the minting of new Bitcoin tokens will stop at 21 Million. He even said that Satoshi’s (BTC’s creator) picture might appear after the last token is produced and laugh at all of us.
Is Bitcoin Digital Gold or Fool’s Gold?
Being a banker and billionaire makes Jamie Dimon somebody who commands authority in financial discussions. But is he always correct? Is his pessimism toward Bitcoin warranted or fueled by his traditional bias?
One of BTC’s selling points is its scarcity which is comparable if not better than gold. Bitcoin is designed to have a finite supply of 21 million coins, which is hard-coded in its protocol. The rate at which new bitcoins are created and added to circulation is called the “block reward.” This block reward is halved every 210,000 blocks or approximately every four years. This is called the “halving” and it is the mechanism to control the inflation rate of BTC. As a result, the rate at which new BTC are minted will lessen over time, and eventually, no new bitcoins will be created after all 21 million coins have been created.
The source code for Bitcoin is open-source and publicly available. This means that anybody can review and modify the code as long as they comply with the terms of the license. This allows for transparency and collaboration with the community. This will also protect users from the so-called “Satoshi picture” laughing at deceived investors.
If Bitcoin is Trash, then Why are Banks offering Digital Assets?
JPMorgan’s top executive’s disdain over Bitcoin is puzzling because JPMorgan and other banks are invested in the crypto space. In 2021, JPMorgan encouraged institutions to buy bitcoin. In the same year, the company also started to offer crypto funds to its wealth management clients.
BNY Mellon, the world’s largest custodian bank, is already accepting Bitcoin and Ethereum deposits from its clients. For sure a big financial institution would have done its research before offering crypto accounts.
Where Does the Dislike Come From?
There are indeed a lot of failed and fraudulent crypto projects, but that does mean that the whole crypto industry is just one big Ponzi scheme. Even the mature world of traditional finance is not immune to fraud and scandals. Some of these scandals include the 2016 Wells Fargo Scandal and the 2008 Lehman Brothers Scandal. We have to remember that contemporary banking started in the 17th century.
The internet was once called a passing pad. That prediction did not come to fruition and the internet is now the backbone of modern society. Cryptocurrency is going through the same ridicule. Bitcoin and crypto were created to solve issues associated with fiat and traditional finance, but the uninformed are calling it magic internet money.
Satoshi Nakamoto created a digital asset that does not need a bank or government. It takes the power from traditional institutions and gives it to the common person. With this in mind, it will be much clearer why some persons and entities are wary of it.
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