Rainer Michael Preiss’ comments on bitcoin came shortly after that of JPMorgan CEO Jamie Dimon, who earlier this month, doubled down on his past criticisms of bitcoin, declaring it a “fraud” and saying he would fire any trader known to be trading the cryptocurrency:
Bitcoin will eventually blow up. It’s a fraud. It’s worse than tulip bulbs and won’t end well. I would fire them in a second, for two reasons: It is against our rules and they are stupid, and both are dangerous.
The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart.
Ray Dalio, the founder of Bridgewater Associates, also commented on the topic quite negatively, stating that bitcoin is “a bubble”, “a highly speculative market”, and a weak store of value:
Bitcoin today, you can’t make much transactions of int. You can’t spend it very easily. It’s a shame. It could be a currency. It could work conceptually, but the amount of speculation that is going on and the lack of transactions [hurts it].
Now Rainer Michael Preiss, executive director at Taurus Wealth Advisors, states that some financiers are quite afraid of Bitcoin, believing that cryptocurrency is an unwise investment due to its volatility and weak store of value:
Of course, if you run a very large U.S. bank, most probably you are afraid of blockchain and bitcoin.
However, Mr. Preiss believes in the Bitcoin as an alternate way to store wealth given the uncertainty from banking’s lack of transparency:
The concerns are about the fractional reserve banking system, and the balance sheet of the Federal Reserve at $4.5 trillion, where the Fed officially refuses an audit.
On the other hand, on the Bitcoin blockchain, you have an audit everyday because it’s open-sourced.
And that’s obviously true: blockchain technology, used by bitcoin, records every single transaction that is made, allowing its users to get full and real information on the digital ledger at each point of time.
Another positive aspect of Bitcoin, according to Mr Preiss, is that cryptocurrencies have the potential to serve as a ‘systematic hedge’ against the risk of asset price inflation such as an increase in the prices of assets, for example, which central banks may have helped to create.
All in all, quite eventful first half of the month, which saw ICOs’ ban and cryptocurrency exchanges’ shut-down in China, bitcoin price shock and mostly unconstructive criticism on the token, illustrated:
- the gap in acceptance for cryptocurrencies still exists today;
- bitcoin and other cryptocurrencies are vulnerable to governments’ decisions;
- bitcoin’s price, which, in the course of few days last week, fell by about 40 percent and then recovered more than 25 percent off the lows, for sure may be highly volatile.