Bitcoin is a fraud that will ultimately blow up, according to JP Morgan boss Jamie Dimon, who said the digital currency was only fit for use by drug dealers, murderers and people living in places such as North Korea.
Speaking at a conference in New York, the boss of America’s biggest bank said he would fire “in a second” anyone at the investment bank found to be trading in bitcoin. “For two reasons: it’s against our rules, and they’re stupid. And both are dangerous.”
He added: “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.
“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. “So there may be a market for that, but it would be a limited market.”
Bitcoin is a virtual currency that emerged in the aftermath of the financial crisis. It allows people to bypass banks and traditional payment processes to pay for goods and services. Banks and other financial institutions have been concerned about bitcoin’s early associations with money laundering and online crime, and it has not been adopted by any government.
It has more than quadrupled in value since December, hitting about $4,700 last month before falling back. It fell by about 5% after Dimon’s comments on Wednesday to below $4,000.
“It is worse than tulip bulbs,” Dimon said, referring to a famous market bubble from the 1600s. He predicted big losses for those investing in bitcoin. “Don’t ask me to short it. 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.”
However, the banker revealed his daughter had bought bitcoin: “It went up and she thinks she’s a genius now.”
Last week, Lady Mone launched a major property development in Dubai, priced in bitcoins, saying the digital currency was a growing market that could not be ignored.
The co-founder of the underwear brand Ultimo is selling the luxury apartments with her businessman boyfriend, Douglas Barrowman, and the £250m scheme will include two apartment blocks and a shopping centre. One-bedroom apartments will be priced at about 54 bitcoins, Barrowman said, while two-bedroom flats are expected to go for about 80 bitcoins.
Yann Quelenn, an analyst at the online bank Swissquote, said bitcoin “still has great potential”.
“We think it is a possible safe haven. Fewer than 0.01% of the world’s population has a bitcoin wallet,” he said. “If this would reach 1%, the demand for bitcoin would skyrocket, because there are only 18m coins available.
“Cryptocurrencies are a new asset class, one at war with fiat [paper] money, and that war will be fought on regulatory issues. Central banks are keen to preserve their monopoly on money, something they will not let go of without a fight.”