All posts by noor arora

JPMorgan’s Dimon says bitcoin ‘is a fraud’ and will blow up

Bitcoin “is a fraud” and will blow up, Jamie Dimon, chief executive of JPMorgan Chase & Co, said on Tuesday.

Speaking at a bank investor conference in New York, Dimon said, “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.”

Dimon said that if any JPMorgan traders were trading the crypto-currency, “I would fire them in a second, for two reasons: It is against our rules and they are stupid, and both are dangerous.”

Dimon’s comments come as the bitcoin, a virtual currency not backed by any government, has more than quadrupled in value since December to more than $4,100.

Bitcoin is a digital currency that enables individuals to transfer value to each other and pay for goods and services bypassing banks and the mainstream financial system.

While banks have largely steered clear of bitcoin since it emerged following the financial crisis, the virtual currency has a range of people who support it, including technololgy enthusiasts, liberterians skeptical of government monetary policy and speculators attracted by its price swings.

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Bitcoin’s central appeal could also be its biggest weakness

Bitcoin reached a huge new peak in value in June 2017, when one unit of the virtual currency was worth US$2,851 (£2,208), up from around US$600 just a year earlier. More than 10m people worldwide are now thought to own bitcoin and more than 100,000 merchants accept it for goods (not counting all those using it to sell drugs and other illegal items on the black market).

Part of bitcoin’s appeal for many of its users is the lack of centralised control or regulation by any government or bank. Instead it relies on a technology known as blockchain to underpin and secure transactions. But research my colleagues and I have conducted suggests that the lack of any social trust in the way blockchain operates poses a challenge for bitcoin’s further spread.

Blockchain is a public database that records digital transactions. These are validated by computers working within a worldwide network that solve complex coded problems. Whereas traditional bank transactions are authorised by financial institutions and controlled by governments through taxation and contracts between parties with known identities, blockchain is decentralised, unregulated and anonymous.

In our studies of blockchain’s users we found that these features appeal to bitcoin users because of increasing distrust of financial institutions and governments. The technology empowers people to regain control over their money, with no restrictions over where and when they can send it.

But our findings also indicate that two core aspects of blockchain’s design — the fact that transactions are anonymous and irreversible — pose significant challenges to the social trust among its users. Anonymity has an obvious appeal for people looking to avoid government control. And irreversible transactions were built into blockchain’s original design as a positive feature to address banks’ privilege of reversing transactions, even when the contract states that they were final.

READ MORE

Bitcoin’s central appeal could also be its biggest weakness

Bitcoin reached a huge new peak in value in June 2017, when one unit of the virtual currency was worth US$2,851 (£2,208), up from around US$600 just a year earlier. More than 10m people worldwide are now thought to own bitcoin and more than 100,000 merchants accept it for goods (not counting all those using it to sell drugs and other illegal items on the black market).

Part of bitcoin’s appeal for many of its users is the lack of centralised control or regulation by any government or bank. Instead it relies on a technology known as blockchain to underpin and secure transactions. But research my colleagues and I have conducted suggests that the lack of any social trust in the way blockchain operates poses a challenge for bitcoin’s further spread.

Blockchain is a public database that records digital transactions. These are validated by computers working within a worldwide network that solve complex coded problems. Whereas traditional bank transactions are authorised by financial institutions and controlled by governments through taxation and contracts between parties with known identities, blockchain is decentralised, unregulated and anonymous.

In our studies of blockchain’s users we found that these features appeal to bitcoin users because of increasing distrust of financial institutions and governments. The technology empowers people to regain control over their money, with no restrictions over where and when they can send it.

But our findings also indicate that two core aspects of blockchain’s design — the fact that transactions are anonymous and irreversible — pose significant challenges to the social trust among its users. Anonymity has an obvious appeal for people looking to avoid government control. And irreversible transactions were built into blockchain’s original design as a positive feature to address banks’ privilege of reversing transactions, even when the contract states that they were final.

READ MORE