The Truth About What Jamie Dimon Said About Bitcoin, An Analysis

Elias Orbon

9/14/2017

Meet Jamie Dimon, the chief executive officer of one of the most influential companies the world has ever seen, JPMorgan Chase & Co. Yesterday, Mr. Dimon commented on Bitcoin and Blockchain technology forecasting that the end of Bitcoin will come when government regulation is solidified and that the Bitcoin craze is similar to 'tulipomania,' what is known to be the first recorded incident of an economic bubble, that occured in Europe in the 17th Century. We'll need a little background on Jamie Dimon to properly assess his own assessment of Bitcoin and Blockchain technology fairly.

Jamie Dimon is widely known as one of the most effective CEO's in the world of business, previously served on the Board of Directors of the Federal Reserve Bank of New York, and has been named in Time magazine's 2006, 2008, 2009, and 2011 lists of the world's 100 most influential people. Mr. Dimon is also one of the few bank chief executives to actually become a billionaire through what seemed to be successful financial management, as if claiming the title of CEO of JPMorgan Chase Co. wasn't enough. One could speculate on Mr. Dimon's ego, that it may be relatively large, as he has secured the largest pay package of any bank CEO in the United States. Though if we are to speculate on Mr. Dimon's ego, we cannot forget that it is backed up by an enormous amount of success and respect in the traditional business and banking world.

Please refrain from throwing stones at me, I promise I haven't finished yet.

We can analyze a few quick historical snapshots of Dimon's family to get a better understanding of his mindset. His paternal grandfather was a Greek immigrant who decided to change his family name from Papademetriou to Dimon in an attempt to secure a better first impression in the new world. A French sounding surname would be treated with more respect and would be considered more cultured at that time. One can already see the great length Dimon's ancestor took to secure financial and political success in the New World, really a clever decision. Changing one's name may be to some as 'going to far' to try to consent to the social norm of America, but Dimon's grandfather was not keen on wasting any time with that. Dimon's father and gradfather were stockbrokers at Shearson, a series of investment banking and retail brokerage firms that ended in 1994 after being sold to Primerica, a predecessor of Citigroup.

Dimon himself majored in psychology and economics at Tufts University in Mass. and worked at Shearson with his family during one summer break. He later attended Harvard Business School and during the summer worked at Goldman Sachs. After graduation, Dimon turned down job offers from Goldman sachs, Morgan Stanley, and Lehman Brothers to work as an assistant at American Express as he was promised the job would be "more fun." Dimons father was, at that time, an executive vice president at American Express. Rumor has it that there was family-friend drama with his friend and colleague Sandy Weill, and that after the incident Dimon was fired from the company by Weill and moved to JP Morgan Chase via becoming the CEO of Bank One which was purchase by JP Morgan Chase.

There are a few things one can derive from Dimon's story that can give us a better understanding of his mindset. Dimon's family stay close, help each other out, and were essentially put into positions of power by his paternal grandfather from Greece. The sacrifices made by his grandfather were probably immense and likely shaped the Dimon boys in a way that gave them the tools to succeed in New World. His grandfather knew that if he secured a position of power in this New World, his family would become the new aristocrats of this new democracy. A very clever and forward-thinking man he probably was. It is likely that Jamie Dimon's grandfather was an innovator of sorts, learning and adapting quickly to the world around him. That, however, is not a trait easily passed down as creativity and innovation often sprout out of witnessing and experiencing struggle.

The Dimon boys likely were taught how to work within the system that their grandfather figured out so well, but do not possess the ability to think outside of that system. Time and time again, history has proven that free association of ideas is the antithesis of drilling down and becoming extremely successful within a system. In this case, the traditional banking and business system in the United States is what the Dimon family has become so expert at. Time and time again, history has shown that traditional established systems eventually face disruption through technology and that those connected with the previous systems are the most hostile to a new, widely adopted change in society. When one looks at the rise of modern science from Alchemy it is readily apparent that the Aristotelian philosophers were so caught up in their own understanding of the world that when Galileo proposed that the Earth was not the center of the Universe there he endured utter outrage and hostility from all sides.

What were those philosophers so afraid of? The Copernican ideas that Galileo (a mere mathematician which was a title considered far less important than a philosopher at that time) was certain to be true, challenged these philosopher's assumption that they were certainly correct and ordained by God with correctness. Galileo, in his letter to Grand Duchess of Christina, stated that the assumption of correctness these philosophers were using against him were actually going against God's word and humanity's understanding of the natural world as God intended. One can draw a parallel here to Jamie Dimon's perspective on Bitcoin and other cryptocurrencies. Jamie Dimon's assertion are simply as much based on his understanding of the traditional banking system as the Aristotelian's faith that Aristotle's view of the world is correct. While Aristotle wasn't wrong in that the Earth may be the center of the Universe in his eyes, mathematics proved a simpler understanding of the various movements of the heavenly bodies.

Aristotle's understanding of the movement of the heavenly bodies included complex mathematical concepts that were doing unnecessary work to prove that the Earth was the center of the Universe. It included things like looping motions, epicycles, deferent, and an equant that allowed the earth to not actually be the center of each plant's deferent. If you want the details, please look it up. The general point I'm trying to make is that any system can be designed to prove a point, but that doesn't me the system is the simplest and most efficient model. Currently, there is no reason to believe that our traditional financial system is the most efficient or simplest means to have a working economy. We have financial equivalents to equants, epicycles, and deferents that are creating unnecessary complexity. Who is going to deal with all of this unnecessary complexity? I would argue that this is exactly where modern banks find their purpose. While finance and economics will always be the same, cryptocurrency is allowing us to enter a new paradigm of economics. Banks will still exist, but they will need to provide a new role to society as cryptocurrency cuts out a good portion of the complexity of the old system.

Kind of makes you wonder, if Satoshi Nakamoto is the Copernicus of our generation, who is going to be the Galileo? Who is going to convince the state that everything we know about finance will need to be re-evaluated from this new, modern perspective?

I'm a student at NC State University studying Science, Technology, and Society. I lead a life riddle with migraines, all-nighters, and Chinese FUD. Much love to all, lets make the crypto world a better place by spreading realistic and positive information and inciting constructive conversation and contention.