We’ve never met, and I never expected to find myself in the position of writing you an open letter. But this weekend, days after your observations on Bitcoin, strangers all over the world, plus old friends like my high school best friend’s younger brother, were still tweeting or messaging me about your comments, so here goes.
When I first heard about your comments on Bitcoin last week, I paid barely any attention. Though I cover Bitcoin and crypto assets day in and day out (and full disclosure, own some bitcoin and ether), your remarks seemed to be spoken by someone who has no understanding of cryptocurrencies, and so I ignored them. Later on, I read a full article detailing your comments that day — replete with video — and truly understood the depth of your ignorance.
You said of Bitcoin, “eventually, it will be closed,” which, to anyone who knows anything about the technology, is an incredibly absurd statement. The idea that Bitcoin could be “closed” is ridiculous — hilarious, even.
Leaving aside attacks on the Bitcoin network which aren’t implied in your word choice, “closed” assumes that there is a place you can go to shut something down or an entity you can approach to force them to shutter it. Bitcoin is a network run on more than 9,000 nodes all over the world. Being geographically dispersed, they are in different legal jurisdictions. The scenario you outline would require all the governments around the world to agree that they should try to shut down every single node. While this is not impossible, governments around the world have not even come together around the objective of keeping the earth’s climate within the bounds of temperature fit for human life. So given that our world leaders can’t even unite to ensure that there are people left to govern generations hence, I rate the chance that all governments agree to try to shut down every last Bitcoin node close to zero.
As one of my Twitter followers pointed out, the only way to shut down Bitcoin would be to shut down the internet.
You also called Bitcoin “a fraud.” While I agree that shady goings-on are happening in crypto and that, unfortunately, some speculators aren’t doing enough due diligence, the idea that Bitcoin itself is a fraud again makes no sense. If it’s a fraud, that presumes it’s perpetrated by someone or some group of people. Who would that be? Even the people closest to being in charge of Bitcoin can’t get their way with it. The most powerful people in Bitcoin right now are locked in a civil war with each other (which I’ve written about here and here, and podcasted about here and here). Not a single one of them or group of them can force their way with what is, at its core, a decentralized network. So who exactly do you think might be perpetrating the fraud of Bitcoin?
It’s not the core developers. They are a disperse group of programmers all over the world who contribute to the open source code database. Not even everyone knows who all the contributors are to this open source code. Plus, they don’t get directly paid for their efforts. If they are perpetrating this fraud, how are they profiting from it? Finally, I think they would laugh bitterly at the idea that they control Bitcoin. For years, they have been trying to get miners to do one thing, and the miners have other ideas.
It’s not Satoshi Nakamoto. He/she/they completely stepped away from Bitcoin several years ago and hasn’t even touched their coins. Again, if this is Satoshi’s fraud, they’re not making any money from it. And they certainly aren’t in charge of Bitcoin anymore.
Finally, it’s not the miners. The miners who run the network are, like the developers, a group dispersed around the world, not a collaborative team. And considering that they can’t get the core developers to do what they want to do, it’s clear that they also don’t run Bitcoin.
The only group that really, truly controls Bitcoin in the end are the users, and even then, the only way they “control” it is indirectly, with their economic power. But they are obviously 1) not working in concert together, nor 2) perpetrating a fraud against themselves.
You also said that Bitcoin is a better choice than fiat currency only for people in Venezuela, Ecuador or North Korea. (This is a small point, but this statement was also ludicrous because North Koreans don’t have access to the global internet.) However, overall, your statement is partially true. It would be 100% true if you said cryptocurrencies are better than fiat currencies, full stop. They move near-instantaneously as opposed to the day or week that it takes money to get transferred within your bank or to other banks. Transactions occur with almost no cost, compared to the fees we pay for international wire transfers — charges that aren’t even predictable but only known after the money has moved. And they are transparent, unlike the mortgage-backed securities of the financial crisis that obfuscated exactly which banks’ balance sheets held bad mortgages.
I’m not saying that Bitcoin will definitely succeed. As I’ve written about before, there are many ways in which it could fail. But I would be surprised if cryptocurrencies, with their many advantages, don’t prevail over the long-term — especially at a time when everyday people are still angry about paying for the economic crisis caused by financial institutions while bankers made off with bonuses.
Since the triumph of cryptocurrencies is the fact that they cut out the middle man — the Bitcoin white paper is subtitled “a peer-to-peer electronic cash system” — I could understand if you wanted Bitcoin shut down or hoped it was a fraud. I mean, if I were you and if I really understood the disruption crypto assets could bring to financial services, I’d be very scared.
After the Bitcoin price fell last week, most likely on the news that China was shuttering its Bitcoin exchanges but also perhaps your unfounded allegations that it is a fraud, your wealth management arm, JP Morgan Chase Securities, appears to have bought $350,000 worth of Bitcoin tracker XBT, which is listed on Nasdaq Nordic in Stockholm. My guess is that it did so following requests from your private clients. It just remains to be seen how much longer people who want to buy crypto assets — or engage in any financial transaction, for that matter — will do so through a middleman like JPMorgan Chase.