In mid September Jamie Dimon, CEO of JP Morgan, made waves when he called Bitcoin, a cryptocurrency, a “fraud.” But what’s the real story?

In mid September Jamie Dimon, CEO of JP Morgan, made waves when he called Bitcoin, a cryptocurrency, a “fraud.” He also said it was “just not a real thing,” and predicted that eventually it would be closed. This all happened at the Delivering Alpha conference that CNBC and Institutional Investor presented. Dimon said many negative things about the cryptocurrency, comparing it to the tulip craze of the 1600s. His comments impacted Bitcoin, and the cryptocurrency plunged in value.

If you have been watching Bitcoin over the past few years, your first reaction may have been “of course Dimon doesn’t want Bitcoin to be successful; it has the power to drastically disrupt  traditional financial institutions. Blockchain, the software Bitcoin utilizes, may very well do to banking what Uber did to the taxi industry. It stands to reason that Dimon wants it to be a mirage, and his statements certainly frightened investors. He is prophesying something he has the power to help make real; the demise of Bitcoin.

Or is he? Investopia reported that “JP Morgan reportedly bought up XBT shares for exchange-traded notes that track the price of Bitcoin.” So, after Damon ridicules Bitcoin from his position of power, JPMorgan bought XBT shares on September 15.

Dillon Isn’t The Only Drag on Bitcoin

Bitcoin has been valued based on supply and demand. There was a huge rush of investors early on, and the cryptocurrency has seen spikes periodically. Dimon may have had an impact on Bitcoin’s value, but there’s a lot more that is pressing the cryptocurrency’s value down. The Wall Street Journal reported that Chinese authorities are set to ban trading of cryptocurrencies. Bitcoin dropped 20 percent in September.

One can certainly question the motives of Dimon and the Chinese government. Investment in Bitcoin protects investors in volatile economies. Some in China have concerns about the Yen failing, and areas of Southeast Asia that have long struggled with untrustworthy currency see Bitcoin as a safer alternative than the financial institutions they don’t trust.

Also read: After China, South Korea bans fundraising through ICO

What Other Experts Say

Other financial experts didn’t waste time calling Dimon out for his statements on Bitcoin. Laura Shin, the Forbes Senior Editor for Crypto and Blockchain Technology, wrote an excoriating “open letter” to Dimon. In it, she describes the “depth of ignorance” Dimon expressed. Shin laughs at the idea that Bitcoin could be “closed,” and calls the idea “absurd.” Shin points out that Bitcoin is running on 9,000 nodes all over the world, with myriad governmental oversight, making it close to impossible that all of those governments would “close” Bitcoin down simultaneously. She closes by pointing out the hypocrisy of JPMorgan buying $350,000 work of XBT shares.

On Bloomberg View Aaron Brown described the beginning of Bitcoin in 2009 and why it grew in popularity by solving the “problems of the existing money and banking system: inflation, expropriation, taxes, use restrictions, financial repression and fees, especially for small and cross-border transactions.” He describes the monetization of Bitcoin and how its value is based on projections of future problems it will solve. He states “If this be fraud, all money is fraud.”

Ari Paul,co-founder of BlockTower Capital, told CNBC that Bitcoin has the potential to replace offshore Swiss and Cayman bank accounts. JPMorgan and other institutions that have opened these accounts for their clients stand to lose trillions of dollars.

No financial expert can predict the future of Bitcoin or other crypto-currencies, but when a CEO of a traditional financial institution rails against it, taking it with a healthy dose of skepticism is not unwise.

It’s Blockchain, Not Bitcoin, That Really Matters

Blockchain, the software that makes Bitcoin possible, is the technology that stands to transform the financial industry. Commonly called a public ledger, blockchain has the real potential to transform banking in regions where banks are not fully trusted and where currency value is volatile. It was created in 2008 by Satoshi Nakamoto and functions as a distributed database of ordered records called “blocks.” Each block has a timestamp and links to a previous block. Once data is recorded, the data in a block cannot be altered retroactively.

Blockchain serves as a distributed ledger that records transactions between two parties in an verifiable and permanent way. It is hosted by millions of computers and is accessible to anyone on the internet. With no central server or need for “access control,” hackers cannot access a central version of the data since the blockchain database isn’t stored in one place. It is an extremely secure public ledger, and in regions like Southeast Asia and Subsaharan Africa where banks are not fully trusted, the potential to create a trustworthy, impenetrable banking system can transform the industry.

Also read: Bitcoin, Blockchain, and why it makes sense for Southeast Asia

Interestingly, JP is building its own blockchain, called Quorum, built on the crypto-network Ethereum. A primary and important difference is that not just anyone can join Quorum; it is permission based. Financial institutions hold up blockchain as a way to cut costs, but it is clear that they understand the potential for transformation blockchain possesses. People don’t like change, no matter their industry, but when you head a financial institution that is one of the largest and most powerful in the world, it’s understandable why disruption might concern you. The financial sector will be watching the continued journey of Bitcoin and Blockchain closely, and trying to ensure their place in the future of cryptocurrency.

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Stew Langille is an entrepreneur and angel investor from San Francisco (currently in Singapore). He was VP Marketing at Mint.com, CEO & Co-Founder at Visual.ly, invests through Tallboy.vc and is an EIR at SeedPlus-Jungle Ventures.

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