“Digital currency is only fit for use by drug dealers, murderers and people living in places such as Venezuela, Ecuador and North Korea,” said Jamie Dimon, chairman, president and chief executive office of JP Morgan.
He was speaking at a conference in New York, who added that bitcoin is a fraud that will ultimately blow up.
In his views, the currency isn’t going to work. He believes that one 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.
Bitcoin had emerged in the aftermath of the financial crisis. The virtual currency transaction has been controversial as it allows people to bypass banks and traditional payment processes to pay for goods and services.
Banks and other financial institutions have registered their concerns as bitcoins have been used for money laundering and online crime. Besides, the currency is yet to be adopted by any government.
Bubble will burst
The value of bitcoin has been growing continuously, hitting about $4,700 last month, which is more than quadrupled in value since December. However, it fell back to $4000, falling by about 5 per cent after Dimon’s comments today.
Dimon likened it to a famous market bubble from the 1600s and said, “It is worse than tulip bulbs.”
He added that the bitcoin investors will witness big losses. “Don’t ask me to short it. It could be at $20,000 before this happens, but it will eventually blow up,” he said. “Honestly, I am just shocked that anyone can’t see it for what it is.”
Dimon’s criticism of the currency coincided with a warning from the UK financial regulator against a speculative frenzy in initial coin offerings (ICOs), where internet start-ups are funded by investors using cryptocurrencies such as bitcoin.
In an ICO, an investor pays in bitcoins in return for a “coin” or “token” that is in effect their share in the firm.
The FCA said anyone investing in ICOs should be prepared to lose all their money.
Recently, security researcher FireEye released a report and said that In the past few months, North Korean hackers have launched online attacks on at least three South Korean cryptocurrency exchanges.
According to security experts, in order to obtain funds and keep the economy afloat, Pyongyang is stealing bitcoins through cyber-attacks on South Korea.
A few days, The Wall Street reported that China is planning to shut down domestic Bitcoin exchanges.