I have received some emails from friends and family linking me to articles regarding Jamie Dimon’s recent statements on Bitcoin. Here is one of my responses to a specific article published by the Wall Street Journal:
Mr. JJ | September 19th 2017
99% of the computer scientists and cryptologists I know firmly believe that Bitcoin is a monumental achievement. It is a new chapter in our understanding of computer science. It has the magnitude of importance comparable to TCP/IP (the protocols of the internet) and the ensuing protocols that makeup the world wide web.
Bitcoin is the first and most popular decentralized general ledger which issues a currency when audited and requires payment for logging entries. It is stateless and functionally impossible to dismantle — as no central organization governs it (akin to the Internet). It is public, transparent, and its governing rule-set can be amended only with public consensus. Transactions do not require a trusted intermediary. Settlement finality is atomic, irreversible, and capable of bearing no counter party risks.
Comparing that to the Visa network, or Fedwire, or any other extant system as a basis for academic argument is very much like comparing apples and oranges.
I can (right now) make an entry to that ledger using 0.0000002 BTC (equiv. $0.0008) in order to transmit an asset from myself to another party. I could send $1,000,000,000 worth of bitcoin to someone in China. It would take 10 minutes or less for them to have settlement finality. The transaction requires no human intermediary (in an existential sense my intermediary is the internet itself). My overhead for that transaction is a 8/1000s of a penny. The transaction is logged publicly and exists as a permanent record. It cannot be modified after settlement.
Right now the market is telling me that the cost of conducting that example transaction should be $3920 if I send roughly 5 million of those transactions. Perhaps the author is right and 5 million of those transactions should cost me $0. Maybe the speculators are right and it should cost me more than $3920.
Another use case is that if I am a Chinese or Venezuelan national, I could convert my Yuan or my Bolivar to BTC locally. I could store that BTC on my phone or by memorizing a 12-word passphrase. I can then cross the border and maintain my wealth. I’m sure that Jamie Dimon, the sponsors of the banking lobby, or the TSA are not thrilled by the notion of the future generations storing their net worth in their brain by memorizing a 12-word passphrase (a bitcoin private key). This notion is anathema to their existing systems.
People like Bill Gates, Eric Schmidt, Richard Branson, Peter Thiel, Ed Moy, Marc Andreessen and many other well respected investors have made statements contrary to Jamie Dimon’s. Saying that Bitcoin is worth $0, from a computer science standpoint alone, is utter nonsense.