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Why You Shouldn't Trust Banks

Why You Shouldn’t Trust Banks

Updated 9/22/17 – to address additional comments from Jamie Dimon

Early Tuesday, the Chief Executive of JP Morgan, Jamie Dimon, called Bitcoin “a fraud” and “worse than tulip bulbs.” However, as TechCrunch reports, the criticism is ironic considering the fraudulent and immoral actions of JP Morgan and other financial institutions which lead to the 2008 financial crisis.

In fact, Bitcoin was created in response to those substandard practices which crashed the market and started the Great Recession. At its core, Bitcoin eliminates the middleman, the bank, by providing a means to safely transfer money directly from one individual to another.

Bitcoin is a currency free of control by banks and governments. At first, these institutions gave it no credence, figuring Bitcoin to be a technology fad similar to the dot com bubble of the 1990’s. But to their surprise, adoption of the digital currency grew and spread across the world. What was once merely an annoyance had become a real threat. Decentralized currency threatened the strangle-hold banks and governments had on the value of currency and transfer of assets. Thus, the criticisms of people like Jamie Dimon merely reflects their fear of a currency that can’t be controlled or profited from. Simply put, it’s in their best interest to “refute” Bitcoin as they try to protect their monopoly.

If you’re not convinced that the motivations of financial institutions are self-serving, here are just a few reasons to illustrate why they are not to be trusted and how Bitcoin is changing the world.

Banks Exist to Make a Profit, While Bitcoin is the People’s Currency

Every dollar held in a checking or savings account is a vehicle for profit for banks. Account holders entrust their precious savings to banks and in return, the banks invest that money and make high-interest loans. The greatest source of profit for a bank is to lend money at rates higher than the cost of the money they lend. That’s why a checking or savings account comes at nearly no cost to the account holder – to the bank, your funds are their funds and they are going to use that money to bilk others with loans at high interest rates and astronomical fees.

As a false benefit, many banks will offer a 1-2% interest rate on savings accounts. You’ve likely heard advertisements for “cash back” and “rewards” for opening an account or holding a credit card with them. However, the math of such “benefits” can’t possibly offset the amount of money account holders pay in interest for loans. The house always wins and the math currency controlled by banks always works out in their favor.

Bitcoin removes the middleman and lets currency be exchanged person to person. Fees are limited to transactions at a minimal rate. Best of all, your funds will never be used in high interest loans to other people for profit. In the world of digital currency, your money belongs to you. Bitcoin operates on Blockchain technology, which is a system built on transparency. Every transaction is recorded on the public ledger. It’s an open-source system with honesty as its tenant, while still providing anonymity and security to users. The Blockchain ledger ensures that Bitcoin will always be a currency free from Wall Street corruption that brought about events like the subprime mortgage housing bubble.

“Comments like Jamie’s show a failure to grasp the significance of the blockchain and the power of brand in a fundamental sea of change,” said Scott Nelson, chairman and CEO of blockchain firm Sweetbridge.

Banks Cry Bubble Because They Are Threatened

A bubble is described as an asset driven by unwarranted market behavior, where an upsurge in price has occurred because of a false truth about an asset.

If there is a “false truth” to be found, it’s that digital currency is a bubble or passing fad. That’s the truth that traditional financial institutions want the world to believe. A successful digital currency means they will lose the ability to handle money and manipulate it to create profit. Bitcoin is a decentralized currency, which gives governments reason to fear it as well. If governments lose the ability to print money, they lose seigniorage income (benefits from printing money). Once they lose the ability to control money and manipulate its value, they lose control over the economy.

Bitcoin flies in the face of traditional economy. Decentralization means that currency and transactions belongs to the people. The more adoption of digital currency grows, the more people are taking control away from financial institutions.

Is it any wonder Jamie Dimon and other Wall Street people are spewing vitriol at Bitcoin? Of course they are, because their entire system of profit is being threatened.

Financial Institutions Have Acted Fraudulently

JP Morgan invested in subprime mortgages they knew to be faulty and likely to turn foul.  When their fraudulent investments and actions came home to roost, it was the American people who had to foot the bill. Jamie Dimon’s company, JP Morgan, received a $13 Billion government bailout. The bailout makes Dimon’s cries of “fraud” fall flat. To the Bitcoin community, Dimon’s criticism simply misses the point of a decentralized currency.

For all of that,  even a character like Dimon can recognize the revolutionary nature of blockchain technology.

“Blockchain is a technology that can be used for multiple things, including cryptocurrency. It could be used for digital dollars, and there are digital dollars already; a lot of the dollars held in our bank are digital,” Dimon said.

Bitcoin’s price has been volatile, reaching record breaking highs last month and then dipping down again recently amid fears on China’s ruling. But many experts see this as a great buying opportunity.

Bottom line: Regardless of fluctuation, nothing will change the foundation and true value of Bitcoin, transparency and decentralization. And that makes Wall Street nervous.

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Goldman Sachs Files Blockchain Patent for Foreign Exchange Trading

With the launch of bitcoin and blockchain technology, it is evident that the world is open to adopting disruptive technologies. Major financial institutions are adopting the ledger based technology for simplifying their financial operations. Let’s look into how these organizations are leveraging blockchain for their operations:

Goldman Sachs’s Patent Application:

Goldman Sachs has submitted a patent application focusing on how blockchain could cut out the middle man with transaction costs. The patent claims that the technology could change the current process.  U.S. Patent and Trademark Office (USPTO) published the patent on September 8th. Filed in March 2015,  it was Goldman Sach’s first blockchain focused patent.

The patent said:

“These systems suffer from significant disadvantages in terms of privacy, because they maintain balances and transaction records in publicly accessible ledgers  on distributed servers.”

This means that if a bank blockchain is transparent, it gives competitors the ability to place opposing suitable trades. This thereby reduces the competitive nature of foreign exchange trading. By submitting the patent, Goldman Sachs is aiming to combine the advantages of blockchain with technologies. These technologies primarily focus on delivering security, privacy, and comply with regulations.

Financial Firms back Blockchain for Data Management:

Axoni has integrated the financial firms for the blockchain trial
Axoni has integrated the financial firms for the blockchain trial

Blockchain firms Axoni and R3CEV have announced a Blockchain Trial to test Data Management of the ledger system. Among the major financial firms to participate in the trial Credit Suisse, Citi and HSBC are prominent ones.

Featuring buy-side and sell-side firms, the effort envisioned how a distributed ledger prototype helps the industry. Key factors taken into consideration are to enhance risk management, cost and efficiency issues when managing financial reference data. Also involved was the Securities Industry and Financial Markets Association (SIFMA), a trade group representing US securities firms.

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According to the companies involved, the project demonstrated how regulators and network participants can use the technology. It shows how one can see which parties on a ledger created, issued and proposed amendments to a data record.



JP Morgan seeks faster settlement time through Blockchain:


In spite of massive investment in financial technology, JPMorgan still has some distance ahead to meet its blockchain objectives. Abhijit Gupta, multinational bank’s head of science and technology told he had concerns about “speed” of blockchain settlement. The details come months after the bank first began disclosing its blockchain work. In February, JPMorgan conducted internal test moving money between London and Tokyo as part of a trial. This trial involved 2,200 of its clients, according to a Wall Street Journal report. A month later JPMorgan unveiled its work on Juno, a distributed ledger project published with the Linux Foundation-led Hyperledger initiative.

If JPMorgan still has long way to go before meeting its blockchain objectives, reports show the bank is financially committed to the course, along with other areas of technology.

Bitcoin is Money: Federal Judge in US trial

Bitcoin had a strong opening this week making it third week in a row with the price over $600 level. But the support broke on 20th September plummeting Bitcoin prices to late $590 level. Whether the fall in prices happened fundamentally or just a test of lower bands is non-conclusive. While the market speculation remains confusing, Federal Judge has ruled that Bitcoin is Money in case. Let’s look into the details of the ruling:

JP Morgan’s hack tied to case:

JP Morgan hack ring tied to
JP Morgan hack ring tied to

A federal judge in New York has ruled that bitcoin constitutes a form of money. The ruling comes from the ongoing case involving the now-defunct Florida bitcoin exchange One of the former operators of the exchange, Anthony Murgio got indicted for alleged money laundering charges in July.  He sought to dismiss two of the charges against him by arguing that bitcoins don’t count as “funds” in US.

However,Judge Alison Nathan of the Southern District Court of New York rejected that bid. She moved that bitcoin is money by virtue of its usage.

Nathan wrote in her ruling:

“Bitcoins are funds within the plain meaning of that term. Bitcoins can be accepted as a payment for goods and services or bought directly from an exchange with a bank account. They therefore function as pecuniary resources and are used as a medium of exchange and a means of payment.”

The case links to a broader investigation by the US government into an alleged cybercrime ring. This ring ties to a series of hacks on major companies and financial institutions, including Wall Street giant JPMorgan Chase. According to prosecutors, was a conduit for laundering proceeds from the purported operation.

Purse and Unocoin partner to increase adoption in India:


Bitcoin shopping platform today announced a partnership with leading Indian cryptocurrency exchange Unocoin. Bitcoin use in India is growing rapidly, so Purse wants Indian residents to take advantage of its e-commerce platform. By the same notion, the company is trying to provide a seamless shopping experience for bitcoin users.

Amazon is steadily becoming one of the largest online marketplaces in India. The company also recently announced it would comply with Indian e-commerce rules. This allows greater foreign investment but restricts the discounts merchants can offer directly.

punoPurse leverages unspent gift card liquidity to provide Amazon discounts. The platform matches buyers with individuals who have illiquid gift card balances, then orders items at a discounted rate. The card holders receive bitcoin, which they can then exchange for rupees using Unocoin. This way Bitcoiners can get 15-22% discount on Amazon.