Rainer Michael Preiss, the executive director at Taurus Wealth Advisors, stated in an interview with CNBC that US-based banks and their CEOs feel threatened by the growing adoption and popularity of bitcoin.
Earlier this month, Jamie Dimon, the CEO of JPMorgan, the world’s largest investment bank with a $332 billion market cap, was criticized by both the banking industry and cryptocurrency sector for his baseless condemnation of bitcoin. At a banking conference hosted by Barclays, Dimon claimed that bitcoin is a fraud and that the government must close down the bitcoin network.
However, shortly after his statement, CNBC analyst and trader Brian Kelly criticized Dimon for his lack of knowledge in the structure of bitcoin and the contradiction of his own arguments on bitcoin. At the conference, Dimon explained that bitcoin has only been proven to be useful in regions like Venezuela that have poor banking infrastructures because people can use bitcoin and its decentralized network to circumvent governments.
Kelly noted that Dimon directly contradicted his comments on the possibility of governments shutting down bitcoin because as Dimon himself admitted, bitcoin is being used to circumvent governments and existing banking systems.
On CNBC’s Fast Money, Kelly explained:
“I think Jamie Dimon is wrong. One, the genie is out of the bottle here. And also, Dimon talked about how governments are going to shut it down. Bitcoin is designed to go around governments. That is exactly what it was designed for and you are starting to see that. Jamie even said in his comments that if you are in Venezuela, it might be good to use bitcoin to go around the government, which is exactly the point.”
Banks and executives of leading financial institutions fear bitcoin because it has the potential to operate as an alternative system to the global financial network which a small group of banks control. Unlike fiat money or conventional assets, bitcoin cannot be regulated, censored and manipulated. The decentralized nature of bitcoin renders the very existence of banks and financial institutions useless through its peer-to-peer protocol.
"Of course, if you run a very large U.S. bank, most probably you are afraid of blockchain and bitcoin. 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,” said Preiss.
It is important to acknowledge the argument presented by Preiss on the open-sourced ecosystem of bitcoin because as security expert John McAfee stated in a response to Jamie Dimon, bitcoin cannot be a fraud if every piece of information and data about bitcoin can be easily accessed through its blockchain network. “It costs $1000 to mine 1 bitcoin. What does it cost to print US dollar? which one is the fraud?,” said McAfee.