Last week Chase’s CEO slammed bitcoin. He’s “skeptical authorities will allow a currency to exist without state oversight.”
Dimon said he’d fire anyone who traded bitcoin.
If a JPMorgan trader began trading in bitcoin, he said, “I’d fire them in a second. For two reasons: It’s against our rules, and they’re stupid. And both are dangerous.”
After Jamie Dimon’s remarks the price of bitcoin fell. Oh by the way JP Morgan reportedly bought bitcoin after his comments.
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The idea of private currencies shouldn’t surprise Dimon, though. After all, he already has his own.
Frequent flyer miles are hardly new, and bitcoin can’t inflate like American, Delta, and United can. And Chase has demonstrated a trustworthiness is maintaining the value of Ultimate Rewards points.
Naturally, most people have more trust in the “full faith and credit of the United States” than in an anonymous distributed group of miners and traders. But trust in digital currency is clearly building over time and is a self-reinforcing network. And one of the advantages of Bitcoin is that its total supply is fixed. A fiat currency, on the other hand, can be devalued by centralized monetary policy.
…Mr. Dimon is also too modest about JPMorgan’s own achievements in this arena. His firm conjured up its own currency: Chase Ultimate Reward points, its credit card loyalty program. Millions of customers have accumulated billions of points, trusting in Chase’s promise that this currency can be converted into cash or used for travel and other delights. And they hope that Chase won’t unilaterally choose to devalue them, while living with the risk that, unlike their bank accounts, the Federal Deposit Insurance Corporation provides no insurance for this valuable currency.
Of course in November 2014 Chase began to limit the ability of cardmembers to transfer Ultimate Rewards points to other people. It was a medium of exchange as people both transferred points to others and transferred points to others’ frequent flyer accounts. Still Chase transfer partner Hyatt still lets people move points to others’ accounts without restriction.