People began using Bitcoin in 2009 because it solved problems of the existing money and banking system: inflation, expropriation, taxes, use restrictions, financial repression and fees, especially for small and cross-border transactions. The economic value of these services serves as the underlying base of value, just like the value of tulip bulbs supported the tulip futures contracts. But bitcoin became monetized and its value far exceeds the current use value in transactions.
Its value is now based on projected future need for protection against the problems it solves. If this be fraud, all money is fraud.Asking a bank CEO what he thinks of bitcoin is like asking the head of the post office what he thinks of e-mail.
Dimon compared bitcoin to tulips, which is accurate, though not in the way he intended. What he failed to realize is that people were not paying for single flowers, but for the entire breeding stock -- or a significant portion of it -- of popular new tulip varieties. People have continued to pay higher inflation-adjusted prices for new tulip and lily bulbs to this day.
Dimon went on to claim that governments would suppress bitcoin because they like to control their own monetary policy. This is a strange objection. It seems to assume bitcoin will increase dramatically in value, because it would have to in order to be significant in global money supply.
A better reason for governments to suppress cryptocurrencies is that they make it easier for people to evade taxes and regulations. Many of the advantages of a cryptocurrency from a user’s standpoint are disadvantages to people who want to control users. Cash is a far better tool for evasion, and no government has yet outlawed cash -- or even stopped printing it. The most financially repressive governments have not taken effective action against cryptocurrencies. Any efforts to suppress simultaneously make cryptocurrencies more valuable.
Bitcoin values may well collapse the way tulip futures did, either on their own or due to government efforts. But the problems cryptocurrencies address will not disappear with that collapse. People will continue to pursue technological innovations to improve financial services. The eventual winners may be traditional financial institutions that innovate or new entrants. But it’s a safe bet they will not be financial institutions that fire employees who take bitcoin seriously and ridicule customers who try to help themselves without waiting for JPMorgan to take notice of their problems.
https://www.bloomberg.com/view/articles/2017-09-18/what-jamie-dimon-got-wrong-about-bitcoin-and-tulips