The Crypto Kids Are On To Something – And They Shouldn't Listen To Billionaire Bankers Like Jamie Dimon

The Crypto Kids Are On To Something – And They Shouldn’t Listen To Billionaire Bankers Like Jamie Dimon

The loudest critics of the new asset class all seem to have one thing in common: they are among the biggest winners from the legacy financial system and arguably have the most to lose if cryptocurrency becomes the norm.

If a record-holding athlete is campaigning for a rule change that makes it harder for others to break that record, then we will question their motives. It’s time to hold the affluent figures who oppose crypto on the same level. At the same time, there are a number of myths they keep trying to advance that don’t hold up to the evidence.

Let’s start with Charlie Munger, who calls on America to follow China’s lead and ban crypto. Munger is a billionaire whose wealth comes almost entirely from his shares in Berkshire Hathaway, itself a sophisticated investment vehicle. He and his business partner Warren Buffett (who said that Bitcoin is “probably rat poison squared”) are the archetype of the wealth created by America’s free and open capital markets.

Munger, Dimon and Fraser are the beneficiaries of a system that relies on too-big-to-fail intermediaries like JP Morgan, run by Dimon, or Bank of America, a major Berkshire holding company. That these intermediaries require government intervention once a decade is not considered controversial. Now Munger wants America to scrap an entire asset class.

Cryptocurrencies are different. Users do not need intermediaries to transact. In over a decade of operation, the Bitcoin system has never been down or needed a bailout. Unlike some of the biggest names in traditional finance, he has never made a mistake or swindled millions from his own clients.

In his column, Munger compares crypto to a gamble with a guaranteed loss, but Bitcoin has mostly appreciated over the years, as have other blue chip coins. Long-term holders tolerate volatility because it usually resolves to the upside. Other asset classes have also done well over the lifetime of crypto, but investments like real estate, fine art, and startup stocks are not available to the general public. Even Berkshire Hathaway shares can only be owned by a select few given their high price.

Anyone can own crypto in small amounts – and hundreds of millions of people around the world do. Adoption is highest in places like Vietnam, Pakistan, and Nigeria, countries with unreliable banking systems and inflationary local currencies. If your home currency crashes, all a cryptocurrency has to do is bounce back and you still profit. Despite the overall decline in crypto prices over the past year, Bitcoin has still appreciated against the Argentinian peso. Cryptocurrencies use technology to create property rights where none exist.

To be fair, Omaha, where Berkshire Hathaway is headquartered, doesn’t have those issues. But even in the United States, crypto per capita adoption is highest with minorities. Perhaps these communities still remember the discriminatory banking practices of the past or the lack of services of the present. According to official estimates, 40% of black households in America remain unbanked or underbanked. This is real rat death, but don’t expect opinion pieces from industry captains offering a solution. It is Dogecoin that keeps them awake at night.

Yes, there are scams and meltdowns in the crypto ecosystem, and it needs sensible regulation. But there are scams and meltdowns in all industries, especially in the early stages. Tellingly, no reasonable person ever proposes to ban them. Imagine if we banned tech stocks after the dotcom bubble, or banking stocks after the 2008 crisis.

Munger says that “a cryptocurrency is not a currency, not a commodity and not a security” – as if that proclamation proves anything. If semantics were the basis of value, then the English majors would rule Wall Street. Google was neither a telephone company, nor a postal service, nor a television station when it was launched. Gmail and Youtube took over again.

Things change, industries are disrupted and new asset classes appear. Making sausages to build a new financial system isn’t pretty, but it’s a necessary condition for building something better. Billionaire bankers calling for an end to crypto should not be taken seriously. On the contrary, their exaggerated opposition proves that the children are onto something.

Omid Malekan is an adjunct professor at Columbia Business School and author of Re-architecting trust, the curse of history and the crypto cure for money, markets and platforms.

The opinions expressed in comments are solely the opinions of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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