[2017-09-15] JPMorgan's top quant strategist, echoing CEO, compares bitcoin to

[Kanapka]

JPMorgan's top quant strategist, echoing CEO, compares bitcoin to 'pyramid scheme'


Bitcoin supporters fire back at Jamie Dimon after 'fraud' comment   Bitcoin supporters fire back at Jamie Dimon after 'fraud' comment 
18 Hours Ago | 01:21
JPMorgan's top quant strategist backed his boss this week in bashing bitcoin, warning that the cryptocurrency is likely a "pyramid scheme."

Marko Kolanovic, the bank's global head of quantitative and derivatives strategy, said in a note on Wednesday that in addition to being volatile and difficult to value, "another worrying aspect of cryptocurrencies are some parallels to fraudulent pyramid schemes."

Bitcoin needs to be mined, or discovered, by people using computers to solve problems. Its murky origin raises questions, he said. "It is believed that an unknown person (or persons) known as 'Satoshi Nakamoto', before disappearing, mined the first 1-2 million coins or about 10 percent of the coins that will ever exist."

He added, "Mining becomes progressively more difficult, and eventually unprofitable."

Bitcoin surged more than 10 percent on Friday, but was still on track for a big weekly loss during a tumultuous period of trading.

Earlier this week, JPMorgan CEO Jamie Dimon called bitcoin a "fraud," saying that the cryptocurrency "won't end well." Dimon was speak at the Delivering Alpha conference presented by CNBC and Institutional Investor.

Bitcoin plunged about 13 percent Thursday after one of the biggest exchanges in China said it will shut down its operation. BTC China said in a tweet Thursday that it will close down its operations by Sept. 30 as Chinese authorities crack down on cryptocurrencies.

But to be sure, many see bitcoin as a huge opportunity.

Former JPMorgan strategist Tom Lee said the cryptocurrency could surge another 600 percent in five years. "I unequivocally believe bitcoin is your best investment to the end of the year," the Fundstrat co-founder told CNBC, standing by similar remarks he made Aug. 9 on "Fast Money."

"It's not worth it to look at bitcoin two months, two weeks ahead," Lee argued, saying he still believes each bitcoin will be worth $25,000 in five years.

An unconvinced Kolanovic rattled off a number of risks. "There is no organized power behind this currency to e.g. ensure its long term viability, secure trade, enforce its acceptability for goods and services, or provide investor fraud protection," he said.

"If the use of cryptocurrencies were to increase to an extent that they start competing with traditional 'country' currencies they would be quickly regulated or outlawed."

https://www.cnbc.com/2017/09/15/jpmorgans-top-quant-strategist-echoing-ceo-compares-bitcoin-to-pyramid-scheme.html

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1715138354

[buwaytress]

It continues to amaze me how supposedly brainy "strategists" can still go in with such blundering statements. It's perfectly okay to criticise Bitcoin, but if he only took the 5 minutes required to scan the Bitcoin Cliff Notes, as is probably the minimum required of a financial strategist, he might find that all the flaws he points out were already acknowledged long before the network even took off.

And the "risk"? The network already does all the things he says it can't: secure trades, acceptability, fraud protection.

Anyway, if he really did want organised power, there's always Ethereum...

[Kemarit]

Nah, we won't fall on this trap again. Not to another so called strategist. We have seen what they did here. So no, this is just part of another ploy to bring the price down again, and they buying it as a discount. He's argument is flawed in the very beginner and their's no weight whatsover in his premises. I like though their former strategist, he is very bullish about bitcoin, maybe because he understands that bitcoin is really a good invested long term. He doesn't want shorting, it should be for the long haul to maximize profits. Let's see who's next from JP Morgan to claim bitcoin is another bubble waiting to be burst. LOL.

[richardsNY]

The harder JPMorgan keeps hammering on Bitcoin, the more I believe they realize that it won't take long before Bitcoin is coming dangerously close to making them useless. It's actually funny how he threatened to fire people for getting involved in Bitcoin, which will likely stimulate them to talk garbage like this. If someone is better than you in a game, call him a cheater. If someone has a better understanding of something, call him ignorant. If something is threatening your industry, call it a fraud -- at the end of the day, they very well know that they (JPMorgan in this case) are in a losing position.

[1Referee]

at the end of the day, they very well know that they (JPMorgan in this case) are in a losing position.

This is it. Banks didn't take Bitcoin seriously initially, but now it's growing larger and larger, they more and more feel the need to start doing something to discourage Bitcoin usage. JPM's CEO has started this, and soon all muppets working for that criminal bank will do the same - current article is an example of that. It's beyond insane how a bank as JPM dares to call something as Bitcoin a fraud, while they themselves are one of the biggest fraudsters on this planet. Bitcoin doesn't differentiate - even when there is a point where these banksters have to admit defeat, they will be able to make use of Bitcoin to not fall back entirely. I can't wait for the day where people start dumping their worthless fiat savings into Bitcoin as store of value. Banks will be left with massive loads of their mass print garbage, while the people finally get to make use of something that is designed to not depreciate in value.

As we speak, there is just 4.43M BTC left to be minted. If we calculate how many coins will be minted from now till the block halving, which is 1.8M BTC, then there will be just 2.5M BTC left in 2020 at the moment the halving kicks in. Only an utter fool will disregard this. The is only one way for this market, and that is up.

[odolvlobo]

"It is believed that an unknown person (or persons) known as 'Satoshi Nakamoto', before disappearing, mined the first 1-2 million coins or about 10 percent of the coins that will ever exist."

He added, "Mining becomes progressively more difficult, and eventually unprofitable."

Both of these statements are false.

First, the actual estimate is under 800k. That estimate is typically rounded up to 1 million. He goes one step further and doubles it.
Second, mining is, has always been, and will always be, profitable for some and unprofitable for others.

However, there is nothing wrong with comparing Bitcoin to a pyramid scheme. If you only consider it as an investment or a store of value, then it does have many aspects of a pyramid scheme. However, the investment and store of value aspect of Bitcoin is mostly a byproduct of its primary utility, which is as a payment system.

[CryptoBry]

I think the Bitcoin community has already learned not to really listen to these kind of people accusing Bitcoin as a fraud and yet they are actually the real fraud...these are the same people that led to the rise of Bitcoin and we should defeat these people by giving their words and analysis zero value.

[aso118]

It is inevitable that the quant guys echo what their boss says. Their job is at stake if they say anything else! But he has chosen the weakest argument of it being a pyramid scheme to attack it.

[xFiber]

I don't really care what this JP Morgan guy has to say. I know what value bitcoin has and what is at stake here. Morgan also knows what's at stake here (his career) so it's simple logic for him to advise people not to get into bitcoin because it allegedly is a 'pyramid scheme'. Let them talk, we all know bitcoin will come on top eventually.

[Wekkel]

If Bitcoin is a pyramid scheme, the art market and stock market, hell; any market is a pyramid scheme. But somehow I think this little detail was overlooked when making this remark.