Jamie Dimon has been famously against Bitcoin, calling it “worse than tulip bulbs”. So, when hearing of his two very opposite quotes – one on a “Decentralized Ponzi” scheme, and one on how he is excited about the investment opportunities blockchain offers – investors are left with more questions.
Who is Jaime Dimon and What’s His Issue
Jamie Dimon is the chairman and CEO of JPMorgan Chase, one of the Big Four American banks. He was also a member of the Board of Directors of the Federal Reserve Bank of New York. In September 2013, Dimon was named Financial Times Person of the Year, thus when he speaks, people tend to listen.
Dimon recently called Crypto tokens “Decentralized Ponzi’s” at a recent Institute for International Finance (IIF) event in Washington, DC as per Coinbase
What is interesting though, is on January 9, 2018, Dimon announced that JPMorgan Chase would begin using blockchain technology to settle transactions and is using its Onyx platform.
Let’s first look at what a Ponzi Scheme is and then at the relationship between Crypto and Blockchain so every investor can make an educated and informed decision.
What is a Ponzi Scheme?
A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operator by new investors, rather than from profit earned through legitimate means. Ponzi schemes typically involve promising high, unsustainable rates of return with little or no risk. When investments in a Ponzi scheme mature, new investors are required to bring in fresh funds to keep the scheme going.
Ponzi schemes often take on a pyramid structure, with a small number of initial investors at the top and an ever-increasing number of lower-level investors below them. The initial investors can receive their promised returns early on, while later investors may never see any return on their investment.
Blockchain and Cryptocurrencies – The Difference
It is important to understand the difference between blockchain and cryptocurrencies. Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and control the creation of new units. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control.
Blockchain, on the other hand, is the underlying technology that powers cryptocurrencies. A blockchain is a distributed database that maintains a record of all transactions that have taken place on the network. Blockchain technology is incredibly secure and provides a tamper-proof record of all transactions. Bitcoin’s blockchain is public, meaning anyone can view all the transaction history for the currency.
While blockchain and cryptocurrencies are often used interchangeably, it is important to understand that they are two distinct technologies.
The Benefits of Blockchain
There are many benefits of blockchain, including the fact that it is secure, transparent, and decentralized. These characteristics make it ideal for a variety of applications, such as banking and finance, supply chain management, and healthcare.
Secure: Blockchain technology is highly secure thanks to its decentralized nature. Transactions are verified by a network of computers, making it nearly impossible to hack.
Transparent: Blockchain is a transparent platform, meaning that all transactions are visible to everyone on the network. This transparency builds trust and confidence in the system.
Decentralized: Unlike traditional systems which are centrally controlled, blockchain is decentralized. This means that no single entity can control or manipulate the data.
The Relationship Between Blockchain and Cryptocurrency
Blockchain is the underlying technology of cryptocurrency. It is a distributed database that allows for secure, transparent, and immutable transactions. Cryptocurrency is built on top of blockchain and uses it as a means of exchange. Cryptocurrency is also decentralized, meaning it is not subject to regulations or control by any central authority.
We Will See
It’s hard to know what to make of JPMorgan Chase Chairman and CEO Jamie Dimon. On the one hand, he’s a highly respected figure in the business world, having successfully steered JPMorgan through the financial crisis. On the other hand, he has a history of making brash comments that often come back to bite him. In any case, it’s clear that Dimon is a complex figure, and one who isn’t afraid to speak his mind, but can we see a Blockchain future without Crypto?
Rocco Strydom is the Founder of SGM Holdings – finance, energy and media and is the host of the
SGM podcast based in South Africa