In an interview with Yahoo Finance Thursday, JPMorgan Chase CEO Jamie Dimon was asked about Facebook’s “cryptocurrency” Libra coin. The Wall Street royal brushed it off along with other cryptocurrencies. He pointed out that competition is inevitable in business.
Dimon assured anyone listening that JPMorgan Chase is going nowhere and then rattled off a list of his company’s new initiatives and products. With a straight face, Dimon listed free trading like he invented it or something. That’s audacious and pathetic. Robinhood has built a $7 billion business in six years off of executing that idea. The least Jamie Dimon could do is keep it real.
Jamie Dimon: “Blockchain Is Real”
Here’s the first half of Dimon’s answer about Facebook’s Libra coin:
“Well blockchain is real. We have the JPMorgan Coin blockchain. And competition is real. I think there are serious issues around money, and how you can use money and send money. But they’re government issues.”
This interview about Facebook Libra vs. JP Morgan Coin is textbook mainstream media programming. It doesn’t matter what your answer is so long as you accept the form of the question. Embedded in the question is the premise that these are cryptocurrencies.
Q: How many legs does a sheep have if you call its tail a leg?
A: Four. Calling its tail a leg doesn’t make it a leg.
This riddle first appeared in the Massachusetts Spy of Worcester in 1825. It perfectly illustrates the ancient Chinese adage from The Analects of Confucius that the beginning of wisdom is to call things by their proper name. Blockchain is not the proper name for these corporate databases.
Libra and JPM Coin Are Not Cryptos
Could it be true that in 2019, after the decade we just had, that the CEO of one of the world’s largest banks still doesn’t get the joke? Does Jamie Dimon himself still not fundamentally understand what bitcoin is and what it’s going to do to his business?
Or is it like sky-rise buildings in Las Vegas that don’t put the number 13 on their 13th floor? Everyone still knows it’s the 13th floor, but calling it something other than what it is as a form of denial gives them comfort. If that’s the case, one has to wonder if Jamie Dimon is comforting himself or investors and customers. Is that 14th floor placard for him or the rubes?
When asked by Yahoo Finance’s editor-in-chief whether crypto is an existential threat to JPMorgan’s core business, Jamie Dimon answered:
“I don’t think so. We move $6 trillion a day around the world. It’s very cheap. Very secure. It works.”
Again, the question groups in Libra with bitcoin, though they are fundamentally different creatures. Bitcoin was not made to compete with banks. It was made to create a fundamentally different financial paradigm that banks do not and cannot compete with.
But Dimon went on to say:
“We’re going to have competitors. Whether it’s a cryptocurrency competitor or another fintech competitor, we’re going to have competitors. I tell our people don’t guess. You know they’re there. You know they’re coming. You know they want to eat your lunch.”
Libra is JPMorgan’s competition, although its CEO is likely correct that it’s no existential threat. The market between them is something on the spectrum of the economists’ perfect competition models. But bitcoin competes with these companies like TCP/IP competed with Xerox and IBM. It didn’t compete with them. It created something fundamentally different that Xerox and IBM couldn’t compete with, something they live on today.