What Jamie Dimon Got Wrong About Bitcoin and Tulips
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon made news last week by criticizing bitcoin. Asking a bank CEO what he thinks of bitcoin is like asking the head of the post office what he thinks of e-mail. In a perfect world, Dimon would note the reasons why people use the cryptocurrency along with the dangers, and explain how JPMorgan is working to provide its customers with the advantages that come with bitcoin in safer forms. Instead, he denounces innovation as fraud and threatens to fire any employee who trades in bitcoin. 1
Dimon compared bitcoin to tulips, which is accurate, though not in the way he intended. Popular notions of the 17th century Dutch Tulipmania are derived from an 1841 book “Extraordinary Popular Delusions and the Madness of Crowds,” by a fact- and logic-challenged journalist named Charles Mackay. 2 Mackay confused two distinct eras. He reports stories3 from around 1610 about high prices paid for individual bulbs. What he failed to realize is that people were not paying for single flowers, but for the entire breeding stock -- or a significant portion of it -- of popular new tulip varieties. People have continued to pay higher inflation-adjusted prices for new tulip and lily bulbs to this day. 4
A quarter century later, a futures market grew up around fractional interests in low-priced, ordinary tulip bulbs. In premodern Europe investment returns were very high, 20 percent or 30 percent per year on low risk investments, but laws and customs prevented anyone not in the merchant class from taking advantage. 5
Holland accidentally created a loophole by allowing contracts for fractional interests in tulip bulbs for the convenience of the industry. These were needed because the price of popular new bulbs was higher than even rich individuals could afford. In the early 1630s ordinary people discovered that these contracts could serve as money to support business and investment. These contracts then became “monetized,” as happens to all assets used as bases for monetary activity. That means their value decoupled from the use value of the underlying asset and became determined by demand for money services.
Full story at https://bloom.bg/2w5X75N
Source: Bloomberg
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Like I said before he is just jealous
Oh my god, more news to dump bitcoin, they will never succeed, they are just making it more famous in the world :)
this post has increase my knowledge about cryptocurrency, nice to read @sydesjokes
Nice discussion about cryptocurrency. Upvoted & Resteemed!
Bankers are so untrustworthy! Great discussion of crypto vs tulips :)
First of all thank you again for your help. Secondly too bad crypocurrency couldn't be at a fixed value with being interest bearing. That would make it so much easier to use. Say you wanted to buy a car and the dealer accepted Steem as payment. You agreed on a set amount and paid it. Tomorrow the price of Steem dropped way down. Now the seller lost out. On the other hand if the price spiked then you lost out. This makes it very hard to use cryptocurrency as fiat and you have to go through a long conversian process. Just thoughts from a dog.
Merchants usually have cryptocurrency converted directly to fiat currency at the point of sale and deposited directly to their bank accounts so this avoids this type of issue.
I did not know this, thank you for telling me.
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Maybe he wants investors to sell their coins so that he can buy them.
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Wow, this is somehow a dream come true after all these years envisioning it coming to our everyday world.
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Thanks a lot for sharing, great job as always,
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Thank you
It was al set up by him. He missed the cryptoboat and was jealous, after his speach the coin dropped and he bought massively. Now it's rising again...
I'm still curious why people even listen to bank directors? They are responsible for every crash of fiat money. Cryptocoins belong to the people and not the banks.