Last time Jamie Dimon deigned to comment on bitcoin, he precipitated what eventually became a 20 percent plunge in the cryptocurrency (aided in part by the Chinese government). He also triggered a deluge of protests from the bitcoin world: Jamie Dimon doesn't get it; he's conflicted; he's afraid; etc. The best response, as always, came in the form of lawsuits. By expressing his opinion that bitcoin is a ”fraud” Jamie Dimon committed “market abuse,” per some guy in Sweden. Dimon detractors also found it unfair that while the JPMorgan Chase boss was saying mean things about bitcoin, his bank was buying bitcoin (note: it wasn't).
So having gotten such a heartening response the first time around, of course Jamie would be itching to dive right back in:
"Right now these crypto things are kind of a novelty. People think they're kind of neat. But the bigger they get, the more governments are going to close them down," Dimon said during an interview with CNBC-TV18 in New Delhi, India, on Friday..."It's creating something out of nothing that to me is worth nothing," he said. "It will end badly."
Jamie isn't wrong here – the last time he speculated that governments would put the kibosh on the crypto party, China obliged. Still, he could be a tad overconfident in saying bitcoin will eventually be “worth nothing.” Bitcoin may not be the most effective technology for storing and transferring value, but it is a phenomenally effective technology for storing and transferring crypto-libertarian fantasies – which, aside the standard speculative impulse, are what gives bitcoin its “value.”
Most analysis of Dimon's newest comments will probably on the prediction that Bitcoin Will Go To Nothing. But his more interesting comments come later in the interview:
"With central banks, (the money) says legal tender: you have to take this as payment. It's very cheap to do, it's very easy to move back and forth. JPMorgan moves $6 trillion around the world every day very efficiently, very quietly, very effectively and very cost efficient," he said. "Creating money out of thin air without government backing is very different from money with government backing."
The typical rejoinder to the somewhat ungenerous contention made above, that bitcoin is just concocted out of thin air, is: hey, ever heard of the dollar? Bitcoin isn't controlled by some aloof group of fallible public servants who can just create money at will, they say. It is controlled by The Code.
What is it that backs the dollars that come flowing out of banks, via the Fed, which really can just turn a dial that makes money gush forth? For one thing, the largest police apparatus humanity has ever seen, which is attached to what remains the wealthiest constitutional democracy in existence. That's something. And every contract denominated in dollars is a claim backed up by the world's most powerful and expansive administrative state, which is governed by the rule of law, however imperfectly. That's something, too.
The system isn't perfect, but it works surprisingly well. And at the nexus of state and market is, literally, Jamie Dimon. JPMorgan can be thought of as essentially a franchise of the sovereign issuer, performing the function of transmitting government-sanctioned dollars to those who want and need them. And compared to bitcoin, JPM does so rather efficiently.
So, despite what he may or may not know about the cryptographic technology backing bitcoin, Dimon is pretty well-versed in the governmental technology backing the dollar. He might be trembling in his boots at the prospect of a disruptive technology dislodging him from his extremely favorable and remunerative position at the lip of the national money geyser. That might be why he's dissing bitcoin. But maybe it's also because he knows how money actually works. And also how speculative frenzies end.