Jamie Dimon made waves recently when he called bitcoin a “fraud,” and said “it’s just not a real thing, eventually it will be closed.” Since then, the markets have fallen—although that has far more to do with China vowing to “regulate” the industry (whatever that means), than anything that one of the architects of the 2008 financial crisis told a bunch of people at a conference sponsored by a cable TV channel. Because I am a millennial and I have never written an open letter, I must eventually answer the call for duty, lest I be shunned by my generation. Here goes.
Dear Jamie Dimon,
You said a lot of things about bitcoin these past two weeks. Some of them true. Many of them not. I won’t parry every single one back, but there is a line that I want to address which particularly got under my skin.
“It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed. Currencies have legal support. It will blow up.”
Maybe it’s because I’m the son of a finance guy who went to school with finance guys, and so I guess I kinda am a finance guy, and I’ve had to listen to this stupid fucking analogy every single time the topic of a bubble comes up, but I just can’t keep it in any longer. I’m sorry Jamie, this isn’t solely directed at you.
EVERY BUBBLE IS NOT JUST LIKE FUCKING TULIPS!!!!!
Just in case you were uncertain of what you and every other finance guy over 40 are constantly referring to every time there’s a financial bubble: it’s an absurd but true story from the Dutch Golden Age. Prices for tulips reached extraordinarily insane highs—at one point, 12 acres of land netted you one Semper Augustus bulb. To compare that to present day America, that same amount of land would be worth $36,240.
For one tulip.
In 1637, this bubble popped, and the financial calamity in its wake was documented in the famed book, Extraordinary Popular Delusions and the Madness of Crowds that apparently every single baby boomer read.
So Jamie, back to your “bitcoin is tulips” assertion. It’s hard to tell if that statement is more naive, cynical or loony. The argument behind your analogy is that back then, there were fewer people exchanging this thing that had value (like bitcoin now)—thus creating more volatility (because it takes fewer transactions to tank the market)—and it finally blew up because people just kept planting tulips thinking that prices and demand would keep up with their inflated supply. So why is cryptocurrency any different?
The simpler way to ask that question is: I have no clue how cryptocurrency works, can you please teach me?
First off, blockchain technology is what you should be excited about. Cryptocurrency is just the token that makes the blockchain platform run. Secondly, you can’t just go plant more “tulips” whenever you want in a blockchain. The mining system to create new coins is impossibly complex and time consuming. It’s seemingly designed with the lessons of the tulip craze in mind, because the central point behind mining isn’t to create new coins, but to verify pending transactions. Supply and demand are literally linked together by code in a blockchain economy. It ensures that no one can just print more money whenever the hell they feel like it. Not to mention the fact that there is a cap on the amount of bitcoins that can ever exist (21 million). To compare protocols that dictate how an entire digital ecosystem can interact to planting fucking tulips is so stupid that I’m going blind with rage right now.
Mr. Dimon, what you have just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.
In fact, why the hell did you even open your mouth Jamie? Why is every major finance guy dogpiling on cryptocurrency right now? (including a big time gold investor who definitely isn’t scared shitless by bitcoin acting like a digital version of gold) It can’t be because the People’s Bank of China just understood how big of a threat a decentralized monetary system is to their economic prowess, and you realized that you may be directly in its crosshairs too, right? (PS: you totally are)
You’re not dumb Jamie. Your point was stupid. But it was deliberately stupid. So why would you come out of nowhere and declare bitcoin to be a fraud at a time when its price was wavering, thanks to uncertainty about the impending decision coming from the Chinese government? Definitely doesn’t sound like a long-term investment opportunity where a whale could come in and crash the price in order to get value for themselves, right?
Welcome to crypto land Jamie, where transactions are far easier to track than they are in our byzantine fiat system. As a former sales guy—I gotta say—I respect the hustle Jamie. Even though you and all your cronies decided to launch a full-scale offensive on the largest existential threat ever to your economic dominance, you still gotta make some scratch off that existential threat. As a great man once said: “I got the shotgun. You got the briefcase. It’s all in the game though right?”
Oh, and remember that time you patented a “bitcoin-like” payment system? You’re a funny man Jamie. Blockchain has a way of resonating with those who work with numbers, doesn’t it?
Talk all you want, but blockchain technology isn’t going anywhere. You know this, otherwise your company wouldn’t have bought some bitcoin, and you wouldn’t have been one of the first businesses to join the Ethereum Enterprise Alliance. The nature of automation is such that it should create scarcity in the crypto markets once it really gets going, and you understand that better than anyone given that 50-70% of all Wall Street trades are automated by computers. You’re a smart man Jamie, and I thank you for kicking off the Great Crypto War of 2017. I’ll write you again in five years when bitcoin is trading around $25,000, and see if you still feel that it’s a “fraud.”
Jacob Weindling is a staff writer for Paste politics. Follow him on Twitter at @Jakeweindling.