• 24 Jan 2014 at 1:38 PM

Bitcoin In Jamie Dimon’s 2014 Death Pool

Bitcoin has been tossed into the virtual gutter at the World Economic Forum in Davos this week, as top US financial leaders warned the vitrual currency could be used to fund terrorism and predicted that regulation would put it out of business. Jack Lew, US Treasury secretary, said: “From the government’s point of view, we have to make sure it does not become an avenue to funding illegal activities or to funding activities that have malign purposes like terrorist activities. High quality global journalism requires investment. “It is an anonymous form of transaction and it offers places for people to hide,” Mr Lew said in an interview with CNBC at Davos. Jamie Dimon, JPMorgan chairman and chief executive, told the same channel: “The question isn’t whether we accept it. The question is do we even participate with people who facilitate Bitcoin?” Ultimately, Mr Dimon said, Bitcoin would be subjected to the same regulatory standards as other payment systems and “that will probably be the end of them”. [FT]

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Comments (11)

  1. Posted by Chuck Schwab | January 24, 2014 at 2:16 PM

    Shazar In Fat Chick's 2014 Dutch Oven

  2. Posted by Guest | January 24, 2014 at 2:35 PM

    So Al Qaeda's accepting bitcoin now?

  3. Posted by Guest | January 24, 2014 at 2:38 PM

    How can it be used to fund terrorist activities when there appears to be no mechanism for people to cash out of bitcoins? They are roach motel investments.

  4. Posted by Guest | January 24, 2014 at 3:19 PM

    Cashing out of a bitcoin position is as straightforward as arranging for a wire transfer, or for someone to write a check. It's like buying junk on e-Bay and then reselling it, only you don't need a garage to store it and Meg Whitman and UPS don't make any money in the process, but it's otherwise the same – you buy the bitcoins and wire the seller the money, then when you want to sell it, the buyer wires you the money.

    I don't see how the banks can shut it down on their own. How are they going to know that a given wire transfer or check is related to a bitcoin transaction and not somebody buying useless junk in an online auction site? They don't.

    The government obviously has more options, but even then I don't know how much they can do. For other substitute stores of value, there often is an expert serving as a middleman that also doubles as an agent for enforcing anti-money laundering restrictions. The art auction houses, pawn shops, jewelers etc. who do the appraisal also keep records on transactions that can be used by authorities to track money flows.

    But with bitcoin, transactions can be verified by anyone with even a reasonable level of tech know-how, so there does not have to be a middleman involved. Again, it's just a set of wire transfers and checks (or in some cases, hard cash) that are difficult to distinguish from money flows related to other private transactions.

  5. Posted by Guest | January 24, 2014 at 3:23 PM

    Oh, so like a Ponzi scheme. You can only get your money out when the greater fool comes along and buys them off you.

  6. Posted by Alices Restaurant | January 24, 2014 at 3:35 PM

    Clear indication I don't care about your opinion – using the phrase "Ponzi scheme" to describe anything money related you don't like/understand.

  7. Posted by Guest | January 24, 2014 at 4:31 PM

    That's true of everything that does not have real world utility.

    It's the difference between bitcoins, baseball cards, gold, and cash on the one hand; and rice, gasoline, ammunition, and computers on the other. With the first class of goods, you only get value out of it if you can convince someone to exchange it for something of value; with the second class, you are guaranteed to get utility out of it, whether it has any exchange value in the marketplace or not.

    (Disclosure relative to my original post: no position in bitcoin or gold or whatever Zero Hedge is crazy about today. I just don't think the government or the banking system has any realistic way of keeping the virtual currency market under control.)

  8. Posted by M Toma | January 24, 2014 at 5:50 PM

    " it's just a set of wire transfers and checks (or in some cases, hard cash) that are difficult to distinguish from money flows related to other private transactions."

    Can someone tell me a bit about money laundering again, what is that and how do people do it?

    - Two Times Compliance Class Attendant

  9. Posted by برنامج تسريع التحميل | January 24, 2014 at 7:02 PM

    using the phrase "Ponzi scheme"

  10. Posted by OWS | January 25, 2014 at 5:13 PM

    I thought the headline was about online gambling and was meant to go as Bitcoin for "Jamie Dimon’s 2014 Death" pool.

    - I click on any headline announcing Dimon's demise.

  11. Posted by JP shareholder | January 26, 2014 at 7:54 AM

    It's worth $20m in comp from me (sarcasm off)