JP Morgan executive compares bitcoin to air miles

Despite bitcoin’s massive success, prominent JP Morgan executive still remains critical. John Normand, head of FX and commodities at JP Morgan, recently explained his negative view of bitcoin on national television.

In the latest edition of Bloomberg Surveillance, a television show hosted by Bloomberg News’ editor-at-large, Tom Keene, bitcoin was the main topic of discussion. In the show's segment, "Single Best Chart", Keene highlighted bitcoin's all-time chart and focused on a particular event in 2014.

In 2014, JP Morgan published an eight-page critique of bitcoin, authored by Normand. At the time, Normand served as JP Morgan's global head of foreign exchange strategy. The critique, titled "Audacity of Bitcoin", argues that bitcoin is far inferior to traditional currency. It continues to state that bitcoin's performance is neither better nor worse than traditional currencies on the global exchange market.

Three years after publishing this report, Bloomberg News asked Normand what changed with bitcoin since his critique. At the time of publishing, bitcoin traded at $668. Currently, bitcoin is trading at $4,280 to the dollar after having reached a record high of over $5,000 during the third quarter of 2017. According to Normand, the biggest thing that changed was bitcoin’s popularity. At the time of writing the report, Normand disregarded it as nothing more than a retail novelty.

Keene challenged this statement by noting that the terms “retail novelty” is a more comfortable way of saying Ponzi scheme. To which he added that he does not consider bitcoin to be a Ponzi scheme, since it is clearly created with good intentions.

Normand, in turn, responded to this that bitcoin has been used with both good and bad intentions. From here on Normand used another more familiar comparison, that of air miles. According to Normand, bitcoin is like air miles in that it can be used to acquire certain goods and services. However, unlike air miles, bitcoins are more widely accepted by the retail community and therefore have become more popular.

When asked to elaborate on his opinion regarding bitcoin being nothing more than a retail novelty, Normand stated that institutional clients and corporations should not become involved with bitcoin.  Normand expressed his shock of the bitcoin attaining the scale that it did, especially since it's a currency not backed by a government. According to Normand, government-backed currency is the essential quality needed for a currency to become widely used.

Normand's recent admission of bitcoin’s growing popularity and value goes directly against JP Morgan CEO, Jamie Dimon, who recently called bitcoin fraudulent and worthless.

Bitcoin experienced a growth rate of 430% in 2017, and is expected to reach a high of $6,000 per BTC before the end of the year.