Is there a future for cryptocurrencies in a world dominated by fiat money?
Not necessarily, if you ask Jamie Dimon, chief executive officer at JPMorgan Chase.
Dimon has been a frequent critic of cryptocurrencies like bitcoin and etherium, although he's rather bullish on blockchain, the decentralized ledger platform that actually runs the cryptocurrency market, and JPMorgan recently created an executive position called Head of Crypto-Assets Strategy.
Even so, in the past two years, Dimon has made his views on cryptocurrencies known, loud and clear:
July, 2018 (interview with Harvard Business Review) – “I probably shouldn't say any more about cryptocurrency. But it's not the same as gold or fiat currencies. Those are supported by law, police, courts. They're not replicable, and there are strictures on them. Blockchain, on the other hand, is real. We're testing it and will use it for a whole lot of things."
August, 2018 (speech given by Dimon at the Aspen Institute's 25th Annual Summer Celebration Gala) – Cryptocurrencies are a “scam" and “governments may move to shut down the currencies [cryptocurrencies], because of an inability to control them."
October, 2017 (speech at the Institute of International Finance Conference) – “If you're stupid enough to buy it, you'll pay the price for it one day ... The only value of bitcoin is what the other guy' will pay for it. ... Honestly, I think there's a good chance of the buyers out there are out there jazzing it up every day so that maybe you'll buy it too, and take them out."
A bright future, with or without Jamie Dimon
At this stage, cryptocurrencies are no threat to replace fiat money, as there is $80 trillion of fiat currency around the world, compared to about $240 billion for bitcoin, the world's leading cryptocurrency.
That said, there are financial experts who believe that cryptocurrencies will one day supplant fiat money as the world's most widely used currency.
Take Tim Draper, a venture capitalist and entrepreneur who, in 2014, correctly predicted that Bitcoin would reach $10,000 within three years. Now he's saying that cryptocurrencies will replace fiat money in the next 15 years.
“People are going to be able to spend cryptocurrencies, like bitcoin, in mainstream situations," Draper told Forbes magazine. “Cryptocurrencies will eventually replace credit cards and will be something you can access on your phone. I actually think cryptocurrency will replace fiat currencies entirely."
“For instance, right now there is about $80 trillion worth of fiat currency in the world," Draper noted. “I believe that cryptocurrencies will expand that market. I think that cryptocurrencies will eventually grow to maybe $100 trillion and fiat currencies will fall from $80 trillion to $30 trillion."
Younger millennials flocking to cryptos
Cryptocurrency backers point to demographics in making their case for cryptos to supplant fiat money in the coming years.
A case in point—data from YouGov reveals that about half of millennials prefer cryptocurrencies over fiat.
“Millennials also lead in the category of crypto mass adoption, as 44% believe it will become a prevalent, legal medium of exchange within the next decade," YouGov reports. “Nearly one-third (36%) of people surveyed said they would be interested in primarily using cryptocurrencies rather than the U.S. dollar.
A separate study from London-based Imperial College and eToro, a financial trading platform, states that while new currency models can take a long time to develop, cryptocurrencies could replace paper money within the next decade, as the “natural next step in its evolution."
A currency with “no value"
Jamie Dimon may not share that outlook, but the JPMorgan CEO is hedging his bets on cryptocurrencies, creating a trading element with the banking giant's new Head of Crypto-Assets Strategy position and pouring millions into blockchain technologies.
“Blockchain is a good technology," Dimon says. “We actually use it. It will be useful in a lot of different things. Cryptocurrencies and digital currencies are also fine. JPMorgan moves $6 trillion around the world every day, and we don't do it in cash, it's done digitally. If it can be done digitally with the blockchain, so be it. But it will still be a dollar cryptocurrency."
Where Dimon does take issue is the notion of a non-fiat cryptocurrency. “I don't personally understand the value of something that has no actual value," he said.
Harvard Business Review (July/August 2018) Managers Don't Have All the Answers
Cointelegraph (August 6, 2018) JPMorgan CEO Jamie Dimon Returns to Bitcoin Bashing, Calls Cryptocurrency a 'Scam'
CNBC (October 13, 2017) https://www.cnbc.com/2017/10/13/jamie-dimon-says-people-who-buy-bitcoin-are-stupid.html
AMB Crypto, (May 19, 2018) https://ambcrypto.com/cryptocurrency-replace-fiat-currency-future-says-famous-venture-capitalist/
Statista (December 11, 2018) https://www.statista.com/statistics/377382/bitcoin-market-capitalization
Cryptoslate.com, (September 7, 2018) https://cryptoslate.com/research-nearly-half-of-millennials-prefer-crypto-over-fiat/
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