Bitcoin is much more threatening than a speculative bubble

Cryptocurrencies are qualified as scams, bubbles, speculation.In reality, they are much more dangerous ... for those who hold the currency monopoly.

It has been several years since bankers and CEOs of large companies qualify bitcoin scam or speculative bubble.Is this a logical response for worried corporations, which actively try to protect their market against external threats?Or is it a common sense warning?

Jamie Dimon is one of the most influential bankers in Wall Street, he is the CEO of the JP Morgan Chase bank.At a conference in New York on September 12, 2017, he launched a virulent attack on Bitcoin by calling the cryptocurrency of "fraud", in French: D'Arnaque.

Who is the crook?

"This currency will not work," he said."We cannot have a system where people create a currency with wind and think that the people who buy it are really clever".He added that he "dismissed in the second" a trader that would exchange cryptocurrency.According to him, bitcoin "will explode in flight" as a new "tulip crisis", the first great financial crash in history in 1637.In November 2015, the same Jamie Dimon had already declared that Bitcoin would not "survive" while the price fluctuated around $ 400.

Let's start by recalling a fact.A few years ago, the American authorities claimed from Bank JP Morgan Chase six billion dollars for fraud during the sale of risky real estate credits (so-called subprime) leading to the 2007-2008 crash and leading to the massive bailout of banksby the US State.

At the time, JP Morgan had sold between 2005 and 2007 for $ 33 billion in rotten real estate credits to public agencies Fannie Mae and Freddie Mac, concealing that these financial products were in fine on insolvent borrowers.

Has not the 2007 financial crisis showed the great fragility of a global banking system entirely based on the hegemony of the dollar?We will come back.

John McAfee responds to Jamie Dimon

John Mcafee, creator of the famous anti-virus and today CEO of MGT Capital in New York retaliated the next day in the attack by Jamie Dimon.

In a television interview, he explained that minors invest "massive" sums in intensive calculation and electricity in the creation of Bitcoins.This is called "proof of work".This is why there is real value in the creation of a bitcoin.

In comparison, the dollar costs only paper to print or zeros to be added to a Central Bank computer.

"I am a bitcoin minor" explained McAfee."We create bitcoins and it costs more than $ 1,000 to create a bitcoin.What is the cost to create an American dollar?Which of these two monetary creations is a scam?"We could add that it goes exactly with the euro.

It is not enough to create currencies, you must also make them accept.However, the dollar as the euro are legal currencies in forced course.People are forced to use them to pay taxes and taxes.

Bitcoin is a free currency, which works according to the law of supply and demand.Given its rarity and the difficulty of extracting it, its course will increase with the increase in demand.It is the realization of an immutable economic law.And against that, Jamie Dimon can do nothing.

The stake of cryptocurrencies: "be your own bank"

In reality, cryptocurrencies represent a much more important issue than simple speculations on the price of bitcoin.They are an expanding ecosystem.

There is a real need everywhere in the world for competitive and decentralized currencies.Bitcoin can work as a "Swiss bank in his pocket".This is why he is so successful.It was designed in 2008 by its creator to be safe from the next sovereign debt crisis.

It is a digital currency that evolves outside the banking system and therefore outside government.Like gold, available in limited quantity, its value increases when the dollar falls.In hyper inflationary savings like Venezuela and Zimbabwe, it is an irreplaceable means of exchange.Finally, Bitcoin will probably not suffer during the next sovereign debt crisis.

This is one of the reasons why comparisons with the tulip crisis are fundamentally absurd.Critics that focus on the dramatic increase in the price of bitcoin, or on its fatal fall, miss what is happening behind the scenes: Bitcoin is not a bubble.It is a technological revolution but also economic and political: you now control your money, without the permission of the government!Better: you become your own banker.

Growth pain

Of course, the integration of Bitcoin is not without drawbacks.Many private investors have, unfortunately, have invested or will invest a significant percentage of their cash in Bitcoin without a good understanding of technology and markets and without a clear investment strategy.

Many current cryptocurrency investors-perhaps the majority at this stage-have never experienced a real bearish cycle and at present they suffer.These are investors who buy at record levels, and who sell in panic in the first sign of decline, thus eraing the value of their investments suddenly.Hence the great volatility we observe.

This behavior is not specific to cryptocurrencies and should not be attributed to the assets itself either.The same phenomenon occurred at each major stock market crisis.Investors who sold to the highest have lost almost everything, while those who let the crisis follow its course saw the market bounce back at its level before the Krach in a relatively short period of time.

Critics who see Bitcoin as a bubble ignore that the network itself gains in value and utility because more and more users integrate the ecosystem.To date, less than 2% of the world's population uses Bitcoin, but this number has increased in 2017 due to the network effect and services providing better user experience.

But remember, in 1994, with the birth of the Internet.In television news we feared the worst: "Internet: the network of all dangers," it was said."It is possible to learn to make bombs", or "anyone can publish anything".

At the same time, Jeff Bezos launched Amazon.Then the number of websites exploded and the massive adoption of the Internet began, despite the speculative bubble of the early days.

Damien Theillier