This is an entry in CoinDesk’s Most Influential in Blockchain 2017 series.
Any publicity is good publicity, the saying goes.
And with a disruptive technology like cryptocurrency, sometimes even negative comments from a powerful incumbent can be bullish signals … particularly if they’re coming out of the right mouth, like the big one belonging to Jamie Dimon, CEO of JPMorgan Chase, the largest bank in the U.S.
A banker lionized in the business press for his leadership during the 2008 global financial crisis; the personification of the Wall Street elite; the bellwether of the Davoisie, with a Queens accent like President Trump’s (and a similar penchant for making provocative, headline-grabbing statements), Dimon regularly talked smack about bitcoin in public appearances throughout the fall of 2017.
It all started on September 12, when Dimon called bitcoin a “fraud.”
Yet, while bitcoin’s price dipped right after he dropped that f-bomb (part of a one-two punch to the market, along with China’s crackdowns on initial coin offerings and exchanges), the largest cryptocurrency by market cap quickly resumed its climb.
In subsequent talks, Dimon called bitcoin “worthless.” He warned that the run-up “will end badly,” and that “stupid” buyers (including his daughter) would “pay the price.” And, he predicted, governments will eventually shut bitcoin down.
All while, of course, paying the obligatory lip service to blockchain technology as something separable from the currency.
Still, the bitcoin price kept rising into five-digit territory, where it remained even after a sharp late-December correction.
For some, this confluence of events was a classic example of the Streisand effect – the phenomenon where attempts to suppress something only bring it more attention.
“I don’t think there was much of a better advertisement for bitcoin than for Jamie Dimon to be denigrating it on public television,” says Daniel Masters, a former JPMorgan commodities trader who defected to the crypto space and now runs Global Advisors Bitcoin Investment Fund PLC in the U.K.
Masters added:
“If he was aiming to undermine the digital asset world, he actually effected the exact opposite.”
Conversation starter
To be sure, correlation is not the same thing as causation, so it’s hard to draw a straight line from Dimon’s remarks to the rally of late 2017.
“I assume that most of the institutional traders involved in cryptocurrency trading today, in late December, were already well aware of what cryptocurrencies were before, during and after his comments,” says Tim Swanson, director of research at Post Oak Labs. “But since none of the exchanges publish any public data on the demographics of their users, it’s really going to be guesswork as to proving his comments brought in new buyers.”
But this much is clear: Dimon got Wall Street talking about crypto this year.
“It made everybody research bitcoin over their weekend, and I think they realized that there’s something here,” says Matthew Roszak, co-founder of the tech startup Bloq and founding partner at Tally Capital, adding:
“Bitcoin and crypto, just by its nature, is this shiny new object that lends itself well to speculation and trading and all the form factors that Wall Street loves.”
And among Dimon’s C-level peers, not all the talk was reflexively negative.
For example, Lloyd Blankfein, Dimon’s counterpart at Goldman Sachs (another surviving icon of the 2008 crisis), expressed a more open-minded view in early October on Twitter.
“Still thinking about #Bitcoin,” he wrote. “No conclusion – not endorsing/rejecting. Know that folks also were skeptical when paper money displaced gold.”
Curious Lloyd
For Caitlin Long, who, like Masters, is a bitcoin aficionado and Wall Street escapee, such a nuanced response was a reassuring sign.
“Lloyd was publicly saying, ‘hey, don’t dismiss this so quickly,'” Long, the president and chairman of Symbiont Inc., a vendor of enterprise blockchain technology, says.
Dimon’s comments “touched a nerve for me, personally,” she continued. Four years earlier, when she was running the pension business at Morgan Stanley – but dabbling in bitcoin on the side – “I had to keep my head down because I was afraid I would get fired. I knew there were a lot of people within the compliance department of the bank who were steadfastly opposed to this.”
So when Dimon said he’d fire a JPMorgan employee “in a second” for trading bitcoin, her worst fears about Wall Street’s stance toward crypto were confirmed.
“When Jamie Dimon slammed that door shut and threatened to fire people, what message was he sending to employees about curiosity and innovation?” Long contends.
In that light, for Blankfein to merely refrain from judgment was “quite a statement from Goldman,” she says. It was “a signal to employees that it’s okay to explore the new and different.”
Supporting that take – although Blankfein later indicated unease with bitcoin’s volatility – by late December rumors had resurfaced that Goldman was forming a bitcoin trading desk.
This time is different?
Of course, Dimon has made similar remarks in prior years, but conditions have changed since, for instance, the time he predicted bitcoin’s demise in November 2015.
For one thing, the price of bitcoin had climbed more than tenfold since then, to over $4,000 the day of the “fraud” remark. And the entire market capitalization (admittedly, an imperfect indicator) of all cryptocurrencies had swelled from $5 billion to $141 billion over the same period, according to CoinMarketCap.
But perhaps more importantly, the worldwide cryptocurrency community had blossomed, volatile as ever but resilient and, some say, increasingly self-reliant.
“You’ve created thousands of bitcoin and ethereum millionaires. When they do what they’ve done in the digital asset universe, they do not go back,” Masters says. “People are not cashing out these digital assets back into fiat money,” but rather investing in new blockchain projects through initial coin offerings (ICOs).
“We have this incredible richness and diversity now in the digital asset space,” Masters continues. “This space is jettisoning from the legacy system completely.”
To Masters, it is unsurprising that Dimon would be so hostile to a technology designed to make the legacy financial system redundant.
“This guy is a dinosaur living in the old world,” Masters says of his onetime boss, adding:
“He has a very large walled garden, he’s paid [tens of billions] in fines to maintain his walled garden and he does not want anyone to remake the financial industry, and that’s what’s happening.”
In this interpretation (no doubt shared by many bitcoiners), Dimon and the other “Masters of the Universe” who cast doubt on cryptocurrency, such as Allianz’s Mohamed El-Erian, are the financial services industry’s equivalent of cab drivers lobbying their local governments to ban Uber.
“These people have made and continue to make a lot of money from a captive audience in a very clunky old system,” Masters says.
The enterprise strikes back
But perhaps this is uncharitable. Because, for a centuries-old institution with sprawling global operations cobbled together from countless mergers, JPMorgan Chase is fairly innovative.
From partnering with nimbler fintech startups to using APIs to share data more securely, to embracing public cloud computing, JPMorgan has taken bold steps on Dimon’s watch – again, “bold” by the standards of lumbering, heavily regulated megabanks.
And of course it’s building Quorum, a private blockchain for smart contracts, in a project led by another of CoinDesk’s Most Influential People in Blockchain of 2017, Amber Baldet.
“It’s not as if Chase doesn’t hedge their bets incredibly well,” says Sam Maule, the managing partner for North America at the fintech consulting firm 11FS.
Granted, none of this is likely to impress cryptocurrency users, whose minds are continually blown by truly next-gen fintech advances like ring signatures, atomic cross-chain swaps and time-locked contracts.
But there may be a simpler explanation for Dimon’s bitcoin-bashing than simple reactionary Luddism or rent-seeking.
‘Triggered’
At the Money2020 conference in October, Baldet, JPMorgan’s blockchain program lead, was asked about her CEO’s constant disparaging of the same currency that spawned the technology she’s working on.
She explained it in very human terms.
“What Jamie’s responding to is people on panels who continually ask him, ‘what do you think of bitcoin?’ at an outsized rate to what else is happening out there in the macroeconomic world of finance,” Baldet says. “It can just be a little triggering to be asked the same thing over and over.”
And speaking of triggering, the apoplectic reactions on social media and online forums of some in the bitcoin community to Dimon’s remarks suggest that even trolls can get trolled.
It “shows how much bitcoiners really do care about outside perception, especially from large banks,” Swanson says. “Because deep down bitcoiners want external validation for their worldview, and they can only rely on retail investors for so long. The big surge, to come, is if/when regulated [financial institutions] start trading coins like they trade other wares.”
JPMorgan would not make Dimon available for interviews for this report, but he gets the last word here. Because lost in all the lapel-grabbing, black-and-white headlines were a couple surprisingly nuanced and (for him) appreciative comments about bitcoin.
At the Delivering Alpha conference in September, just before saying that the currency was good for nothing but speculation for people living the U.S., he admitted:
“If you were in Venezuela or Ecuador or North Korea, you’re better off, probably, using bitcoin than using their currency.”
Wait, what was that? Digital currency empowering people living under oppressive regimes?
Not since Citicorp’s Walter Wriston predicted the twilight of sovereignty has a gray-haired New York banker sounded so cypherpunk … even if only for a few seconds.
Original artwork by Luis Buenaventura II, creator of the CryptoPop website. Click here to view more by the artist, and to check out the official CoinDesk Most Influential T-shirt.