JPMorgan's Dimon says bitcoin 'is a fraud'

NEW YORK (Reuters) – Bitcoin “is a fraud” and will blow up, Jamie Dimon, chief executive of JPMorgan Chase & Co (JPM.N), said on Tuesday.

Speaking at an 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.

Dimon said that if the supply were actually limited to 21 million bitcoins, it might be useful to drug dealers and murderers and people in countries with exceptionally unstable currencies.

FILE PHOTO: A Bitcoin (virtual currency) coin is seen in an illustration picture taken at La Maison du Bitcoin in Paris, France, June 23, 2017. REUTERS/Benoit Tessier/Illustration/File Photo

That would be “a limited market,” he said. “It is worse than tulips bulbs.”

Banks and other financial institutions have largely steered clear of bitcoin since it emerged following the financial crisis. They are also concerned over its early association with online crime and money laundering.

JPMorgan and many other banks have, however, invested in blockchain, the technology that tracks bitcoin transactions. Blockchain is a shared ledger of transactions maintained by a network of computers on the internet.

Dimon said such uses will roll out over coming years as it is adapted to different business lines.

Financial institutions are hoping blockchain can be adapted to simplify and lower the costs of processes such as securities settlement, loan trading and international money transfers.

Dimon predicted big losses for bitcoin buyers. “Don’t ask me to short it. It could be at $20,000 before this happens, but it will eventually blow up.” Dimon said.

“Honestly, I am just shocked that anyone can’t see it for what it is.”

Reporting by David Henry and Anna Irrera in New York; Editing by Steve Orlofsky

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