Good shout out to Civic in this response to JPMorgan saying bitcoin is a fraud
September 14, 2017 by Ric Merrifield 2 Comments
When the CEO of one of the biggest and most respected financial services companies in the world says that a new form of currency, in this case bitcoin – which is in the larger class of cryptocurrencies, is a fraud, people will listen. So when Jamie Dimon, the often polarizing CEO of JPMorgan Chase said it – a lot of people started talking. This piece from CNBC covers the key points.
Why did he say it? Well, for one thing, when his child invested in something and got a cartoonish return, better than anything he could deliver, in a way they didn’t really understand and can’t explain – it invites a lot of skepticism. It is an extremely risky and volatile market – and the trend has been that most people have made a lot of money so far.
A number of things are going on here:There is a cryptocurrency bubble at the moment. The frenzy around cryptocurrencies and “Initial Coin Offerings” or ICOs has many similarities to the internet bubble that burst in March of 2000. ICOs are strange because most of them are not selling stock/equity in companies, they more closely resemble Kickstarter efforts where people are pre-buying a product before it is available (a digital token that unlike a stock certificate can actually be used to do something) that can increase in value. There is a bubble because many of the ICOs are just clear fraud (which is why China banned them entirely last week), and many are great ideas in the hands of totally inexperienced teams – so they are as likely to fail as most dot com companies in 2000. Like most bubbles, this will burst, but what survives will grow back even stronger (like a forest fire). Some think it is already happening, but the fact is that it is going to burst just like the internet bubble burst. But just like as the internet is alive and well today (just ask dot com bubble bursting survivor Jeff Bezos who is now the wealthiest person on earth). The bursting killed the businesses that should have died – as well as some that probably should not have. There is (almost) zero regulation – so Jamie Dimon CAN’T get into this even if he wanted to. The SEC issued a statement about ICOs that makes it very clear, using something called the Howey Test, which ICOs are, and are not, securities – and the ones that are will be regulated by the SEC. This is a $100 billion market right now, so it’s driving the banks crazy that they can’t get a piece of it (it’s rumored Goldman Sachs has figured out a way) – banks are like big sharks and this ICOs money is blood in the water to them. This is a HUGE threat to banks. Blockchain and cryptocurrencies are actually still pretty complicated. William Mougayar’s The Business Blockchain is a very dense but thorough explanation of why blockchain is so different, so important, and thus so valuable an innovation. Two of the core elements of blockchain are that it is distributed and decentralized – big banks are all about centralization. On page 14 Mougayar, talking about banks says “When you open a bank account, you have really abdicated authority to your bank on that ‘account’. In reality they provided you the illusion of access and activity visibility on it. Every time you want to move money, pay someone, or deposit money, the bank is giving you explicit access because you gave them the implicit trust over your affairs. But that ‘access’ is another illusion. It is really an access to a data base record that says you have such amount of money. Again, they fooled you by giving you the illusion that you ‘own’ that money.” In short – blockchain gives users back trust and this most basic control and this seemingly simple change in structure is set to totally transform most industries, including healthcare and financial services. For it to become sane, more regulation is needed. One of the reasons there is so much risk and volatility in the market is that the participants in blockchain are totally anonymous. And one of the reasons banks and healthcare companies can’t touch these things is because they have to know who their customers are (Know Your Customer – KYC is a specific set of rules they have to comply with) and they need to have some trust in where their money came from (AML is the Anti-Money Laundering rule behind that). Healthcare has HIPAA which is similarly motivated – though more for protection of the patient. When you have a distributed/decentralized model in blockchain people could be anywhere on earth where they can get an internet connection – it’s hard for someone to show you a government ID like a driver’s license or passport (which is how banks start the KYC process when they are face-to-face today) and trust that they are who they say they are. Civic is one company that is aiming to help banks solve part of this problem – and AuthenticID is going the farthest to do all of the KYC/AML process in under 10 seconds. Civic already had a hugely successful ICO and AuthenticID has a token offering that starts next month and it’s looking as though once those offerings are live – this whole thing can take a much more stable pace.
Some people are saying Jamie Dimon is crazy for saying bitcoin is a fraud. He’s not. He’s just as smart as he has always been. So once you understand what’s going on right now – you could say that someone in his position would be crazy not to say what he said given that there is so much money flowing right now and he can’t get his hands on any of that money (and it probably drives him nuts that his kid got a 300% return on it).
AuthenticID is positioned to be the game changer in all of this. See below for more information.
On Steemit – it’s authenticid
Visit the Reddit Site – https://www.reddit.com/r/AuthenticID/
Token Sale Site – http://tokens.authenticid.co