Jamie Dimon, Let Me Tell You About Bitcoin's Intrinsic Value

jamiedimon.png

Jamie Dimon, CEO JPMorgan Chase had something to say about bitcoin again. He has been a long time skeptic of bitcoin and cryptocurrencies, had nothing good to say about them. This time he says bitcoin has no intrinsic value. You may have heard this kind of sentiment many time, I have. I have heard people saying that bitcoin is created out of nothing, out of thin air, and has no intrinsic value whatsoever.

Speaking about bitcoin Jamie Dimon says:

It’s got no intrinsic value, and regulators are going to regulate the hell out of it.
source

If find this statement, especially "no intrinsic value" part very disingenuous coming from somebody who has been in a leading role in the banking and finance industry. If what he says is correct then by the same logic we can conclude that JPMorgan Chase has no intrinsic value? Except for some reason $JPM market cap is $500 billion.

Maybe Jamie sees bitcoin as a competition, and has conflict of interest to say anything truthful about it? But at the same time it would be unethical for an executive officer of a publicly traded company to say something that they know is not true, especially about financial instruments or assets.

But what if Jamie is honest with his statements about bitcoin and truly believes it has nothing good to offer and has no intrinsic value. In that case, in my opinion, he would have to be a hypocrite. Because JPMorgan Chase offers six cryptocurrency investment funds to its clients.

Let me attempt to offer an explanation that bitcoin indeed has an intrinsic value. Topic of intrinsic value is not an easy one. Because it has to do with identifying and/or assigning objective value of something. And it is not an exact science. Just ask yourself what is the intrinsic value of anything? Usually we default to what value market assign to things. But some say that is not always the true value. Hence, we need to figure out the intrinsic value.

Intrinsic value is a measure of what an asset is worth. This measure is arrived at by means of an objective calculation or complex financial model, rather than using the currently trading market price of that asset.
source

So yes, it is mainly used in the trading markets. Sounds like something these bankers came up with. Question is what measure are we going to use. Not all measures and models are the same. For example how do you calculate the intrinsic value of a stock or a company? Some models would considers company's assets, liabilities, revenue, profits, etc. But a lot of them would fail in calculating the networks, and network effects. Even models to calculate network values are different.

Let's start with an easy and the most obvious example. Calculating intrinsic value is done everyday for stock options. Options are traded in the markets just like other financial instruments. We can easily determine what the intrinsic value of a stock option is based on the price of the underlying stock.

Let's say I buy call option for Apple stock. It is a $140 Call option that expires in Dec 17. I paid $7 for each options contract. This gives me a right to buy Apple stocks at $140, anytime before Dec 17, 2021. Right now current market price of the stock is $145. So if I can buy at $140 and sell at $145, I can make $5 profit. But I paid $7 for this privilege, and I end up losing $2. This option has an intrinsic value of $5. The rest of its value is either time value of volatility value.

The points I am trying to make with this example are:

  1. Intrinsic value usually has to do with the underlying assets.
  2. The value of the underlying assets is usually determined by the market.
  3. Intrinsic value is not fixed and increases or decreases in value based on the value of the underlying asset.

Bitcoin crypto coins underlying asset is its network. Its intrinsic value comes from the value of its network. As network grows, participating increases and there is more demand to use the network wether as a store of value, transfer of value, building businesses & apps, etc, the intrinsic value of bitcoin as a network continues to grow as well.

JPMorgan Chase is also a network, a centralized network. It is a network of banking, investing, and financial services. Its $500 market cap is based on the intrinsic value that is derived from its network. Physical assets, cash balance, revenue, proprietary technologies they have also have intrinsic value. But they all depend on its network.

Imagine, the US and other governments decided to ban JPMorgan Chase activities or federal reserve excludes them from their network, what would happen with JPMorgan. It would lose its network. Its building would be valued much lower than what they would be while they are an operational network. These bank buildings have no use for other purposes. They need to be demolished and something new would have to be built.

Its experts and technology would lose value to. Experts would leave, since they are not being paid anymore. Technology would be cheaper since they have no option but to sell. Does Jamie Dimon understand that what JPMorgan built is a network.

Unlike JPMorgan Chase, Bitcoin is a decentralized network. This is one its true powers. It is still a network, but better. Governments can attempt to ban, but really can't. They may slow down the adoption of the network by scare tactics like Jamie Dimon has been doing, but can't shut down the network.

Perhaps, Jamie doesn't like that fact that people do not have to ask for his or his companies permission to conduct financial transaction with each other. That people can enjoy to store and use their properties as they chose, instead of needing to ask for Chase to help. That anybody can join the network and become miners if they choose to and become operators of the network without asking Chase or central banks for license to do so.

Networks are the greatest assets government, people, and companies can have. That's why Amazon, Apple, Google, Facebook, and other are successful. Because they were able to build their networks and dominate the markets. But these too are centralized networks. Alternative decentralized networks are here, and being build by people on voluntary basis.

Being decentralized is the only one aspect of the Bitcoin network. One other features are carefully studied and analyzed, one can no doubt conclude bitcoin indeed has an intrinsic value, which will continue growing as more and more people, businesses, and other entities start taking advantage of this innovation.

Posted Using LeoFinance Beta



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43 comments
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I support this statement

Intrinsic value is a measure of what an asset is worth. This measure is arrived at by means of an objective calculation or complex financial model, rather than using the currently trading market price of that asset.

And in that case, i think JPMorgan Chase is afraid of what may come of Bitcoin and others cryptos

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Yes, but other than hope, I don't see much value in Bitcoin. There are others like Ethereum or Hive here which can truly offer good functionality and have the potential to support a fully functional financial ecosystem.

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His probably secured a fat stack that his changed his tune, if we bagged him, then there's very few else who won't capitualte

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It's a really tough one between centralised and decentralised networks. It will be interesting to see how decentralised networks full take over .

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img_3267.png

🤷🏼‍♂️ Unimpressed by the statements of certain investment bankers, bitcoin is heading for the next resistance zone. If 53k falls, there is room on the chart for 59k. After that comes the all-time high.
🚀 And once we will see the 64k again, sky is the limit.
(Bullish scenario)

What du you think?
#bitcoin #leofinance

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It seems too many people are very bullish for Q4. When too many expect the same thing, it may not play out as expected. If it does it will be great. For this reason I try to stay away from predictions based on time.

All I am convinced of is that bitcoin always reclaims its previous all time highs and goes much higher. It is just a matter of time. How long it will take is always the mystery.

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Jamie meant to say, BITCOIN is not controlled by people I can easily bribe and manipulate, so I hope they regulate the shit out of it.

Joe Biden can't print Bitcoin! And that's why it will gain value.

Posted Using LeoFinance Beta

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Picture a scenario where he praises Bitcoin. The idea alone is crazy. You are correct, it is his competition. However, he is happy to receive transaction fees from doing business with Coinbase. If he truly believed what he said, he would not allow his company to be exposed to a "problematic" asset class. This guy is a joke, plain and simple. On the wrong side of history... historically, a bad place to be!

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Well said. I agree.

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These guys say what they have to say. Extract data and watch their actions to discover their true opinion.

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I think the big powers and big businessmen are seeing how the economy goes from being centralized and manipulated by them , to being an independent economy and not having over them destabilizes them , but how they make this lose value through dismissal , or laws imposed to try to regulate their growth . But even so for them they are not controllable . the future is uncertain but bright

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They do like to keep things under their control.

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I was expecting people to compare Bitcoin with gold again, but there is apparently no gold here :D

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Would you prefer gold over bitcoin as a store of value?

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It depends. BTC is really easy to move around and transact with it. Gold on the other hand has some physical limitations. From an environment point of view mining BTC will always take a lot of resources (which I don't quite like) while others may argur that mining gold is doing a lot more environment damage which is also true, but not for long as we are about to finish extracting it from the ground. It's a grey area :)

How do you see it?

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(Edited)

You misunderstood my question. It is only about store of value.

Let’s say you have $100k, what would you buy as store of value or to preserve the value of your property/wealth?

Other topics like portability and environmental pollutions or solutions, etc are interesting too. But that will take another long discussion.

I would of course choose bitcoin.

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(Edited)

Tou are a bold investor then. I would distribute that 100k into multiple pieces, buy some real estate (some land not houses or flats), a few stocks at promising and log term companies, some part of them divided into cryptocurrencies not only BTC, and I don't know if I would be buying much gold at all, maybe like a couple thousands of dollars, just because it looks nice :))

PS: is this the answer you were expecting? :D

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I wasn’t expecting any specific answer. It depends on personal investment choices.

Based on your initial comment, I thought your were pro gold. It looks like you are neither for gold, nor for bitcoin.

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I could see that. A few years ago if you would have asked me the same thing, I would have gone full crypto. Now things have changed and the market is quite high, at least for my taste :)

So you are willing to pay $100k for 2 BTC at the current prices?

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100%

It is the least risky asset. What bitcoin has proven over and over is that it always goes back to it’s previous all time high given enough time.

Let’s talk again when it gets back to 67k.

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Jamie Diamond and JP Morgan make the rules they fall under. Unfortunately BTC doesn't fall under it so of course he will go against it. As a bank and investment fund, they only want to play in a place where they have an unfair advantage.

Posted Using LeoFinance Beta

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Jamie Diamond and JP Morgan make the rules they fall under.

That is a great point and very accurate. I haven't thought about it that way yet.

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Bitcoin used to have some degree of intrinsic value. As the competition grows bigger and more fierce than ever that intrinsic part has gradually faded into the background we called history

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What a way to explain the value associated
with intrinsic value.
This is the reason #Leofinance with Hive underneath
brings the value with community insight.

!BEER

Posted Using LeoFinance Beta

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Banks are terrified of cryptocurrencies. He has no alternative but to attack them

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There is an alternative. They can embrace the innovation and improve their outdated systems. But too much greed, politics, and bureaucracy serve as obstacles.

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Anyone who says stupid shit like that about bitcoin is either ignorant or evil. Jamie seems to be both.

Posted Using LeoFinance Beta

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Sounds about right. I don't think he is ignorant though.

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I have been hearing likes of him utter these words for over half a decade now. You articulated it pretty well. Seriously, what is intrinsic value of anything, without someone needing and demanding it. Though its funny since the dawn of time mankind have assigned intrinsic value to things they needed the least. Take even gold for example. They didnt eat it, they didnt need it to build tools like iron. But they assigned such a high value to it. They made crowns out of it. If something do have real intrinsic value they are things you really may need in life. Rest is all about creating value for other things so you have something to trade for those real needs of the life.

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I completely agree. You explain it very well. I may need to borrow your thought process in the future to explain bitcoin and its value to others. :)

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