A senior JP Morgan executive and noted bitcoin critic has explained his take on the growing popularity of the world’s most prominent cryptocurrency.
In today’s edition of Bloomberg Surveillance, a televised show hosted by Bloomberg News’ editor-at-large Tom Keene, bitcoin took center stage in the show’s ‘Single Best Chart’ segment. Keene’s show highlighted bitcoin’s all-time chart (as shown below) while marking a particular event in 2014.
At the time, JP Morgan had just published a stinging critique of bitcoin with an 8-page report penned by John Normand, the company’s then global head of foreign exchange (FX) strategy. Titled the ‘Audacity of Bitcoin’, Normand argued that bitcoin was “vastly inferior” to fiat currency and that it performs ‘no better or worse’ than fiat currencies as a medium of exchange.
Over three years later, Normand was asked what had changed with bitcoin since his stinging report. At the time of the report, bitcoin was trading at $668. At the time of publishing, bitcoin’s price is trading at $4,280 to the dollar, after hitting an all-time high above $5,000 in September.
Normand, who is now head of FX and commodities at JP Morgan said:
Probably the only thing that’s changed is its popularity. My view on it in 2014 when I wrote on it is that it was essentially a retail novelty.
In weighing in, Bloomberg’s Keene underlined Normand’s use of ‘retail novelty’ as a ‘comfortable way of saying Ponzi’. “I don’t think it’s a ponzi scheme,” Keene added, stating bitcoin’s very existence is one borne out of “good intentions”.
To this, the JP Morgan Chase executive replied:
There are people who are using [bitcoin] for good intentions, there people who are using it for malevolent intentions. Another analogy – other than ponzi – is maybe air miles because there are lots of things that can be used to acquire goods and services. The same way that air miles can, this cryptocurrency can too. It just has the added dimension of being more globally accepted by a retail community in a wider range of countries and that’s why it’s so popular.
Elaborating on his opinion of seeing bitcoin as a retail novelty, Normand said: “It isn’t something that institutional clients or corporates should become involved with. There are lots of reasons for this, I just never thought it would never attain scale because it’s a currency that no government backs – and that’s really the essential quality in becoming a widely used means of transactions. There were always enough retail clients, libertarians, even criminals who want to become involved in.”
The JP Morgan executive’s admission of bitcoin’s growing gains in popularity comes soon after JP Morgan CEO Jamie Dimon’s much-publicized comments on calling bitcoin “a fraud” before doubling down and claiming the cryptocurrency is “worth nothing.”
Bitcoin is now trading at nearly $4,300, gaining 430% since the turn of the year.