Bitcoin

Jamie Dimon's infamous 2017 bitcoin takedown still serves as a warning as the decade winds down

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Jamie Dimon: Governments look at bitcoin as a novelty

As we get ready to say goodbye to the 2010s, CNBC.com is taking a look back at the key players, events and transformations from Wall Street to Silicon Valley to corporate America to the White House that shaped a "Decade of Disruption." In the lead-up to New Year's Day 2020, CNBC's online journalists will be exploring the moments that defined the past 10 years for your money and set the table for the next decade and beyond.

This decade marked the mainstream emergence of bitcoin. Proponents bid up the world's biggest cryptocurrency to dizzying heights and endured periodic crashes on the belief that it will one day replace gold as a store of value and actual money for purchases. Critics believe that bitcoin will do neither and call it a dangerous, modern day bubble like Holland's tulip bulb mania in the 1630s.

Jamie Dimon, chairman and CEO of Wall Street banking powerhouse J.P. Morgan Chase, can be counted in the latter camp. In September 2017, about three months before bitcoin hit an all-time high of nearly $20,000 per unit and crashed shortly thereafter, Dimon dropped a bomb on the crypto world. He called bitcoin a "fraud."

Appearing at the CNBC-Institutional Investor Delivering Alpha conference, Dimon said at the time: "It's worse than tulip bulbs. It won't end well. Someone is going to get killed." He also contended, "It's just not a real thing, eventually it will be closed."

It's worse than tulip bulbs. It won't end well. Someone is going to get killed.
Jamie Dimon
J.P. Morgan Chairman & CEO

Centuries ago, tulips had became such a prized commodity that in 1636 they were being traded on many Dutch stock exchanges and many people traded or sold possessions to get in on the action, according to Investopedia. The bubble came to an end in 1637, which resulted in the bulbs trading at a fraction of their previous price, leaving many people in financial ruin.

Dimon's comments about bitcoin touched off an explosive global debate among backers and haters. The J.P. Morgan CEO found himself being asked about bitcoin everywhere he went. Less than five months later, he threw in the towel, saying, "I regret making" those bitcoin remarks.

"I'm not interested that much in the subject at all," Dimon added, though he did acknowledge that "blockchain is real." Blockchain is the secure online ledger technology underlying bitcoin. J.P. Morgan and other major financial institutions are pursuing blockchain-related projects.

Rise and fall of bitcoin

The first bitcoins were mined in a block of 50 coins called the "genesis block" in January 2009. However, it wasn't until 2010 that bitcoin gained public attention with the launch of the first exchange that allowed investors to trade it. Back then, it was priced at pennies per unit.

Bitcoin momentum really started to build in early 2017, when the price crossed $1,000. More investors, seeking a safe haven investment similar to gold, bought into the idea of a decentralized currency. To meet growing demand, two U.S. exchanges, the CME and Cboe, created platforms for customers to trade bitcoin futures.

As the cryptocurrency went mainstream, the price of a bitcoin surged from around $2,000 in July 2017 to nearly $20,000 five months later near the end of that year. But that euphoria did not last.

Bitcoin billionaires vs. haters

Cameron Winklevoss and Tyler Winklevoss.
Getty Images

In early December, with bitcoin on a roll and sporting an over $300 billion market value, Cameron Winklevoss predicted on CNBC that the cryptocurrency could one day be a "multitrillion-dollar asset."

Winklevoss and his twin brother Tyler, who famously settled with Facebook founder Mark Zuckerberg in 2008 over the claim he stole their idea for the social network, were among the world's first bitcoin billionaires.

One month later — ironically, a day after Dimon backpedaled on bitcoin — billionaire investor Warren Buffett told CNBC that the craze over bitcoin and other cryptocurrencies would not last. "I can say with almost certainty that they will come to a bad ending." The Berkshire Hathaway chairman and CEO would go on describe bitcoin as "probably rat poison squared."

Throughout 2018, bitcoin plunged and closed the year at around $4,000. In the first half of 2019, bitcoin staged a comeback, trading almost as high as $14,000 in June and sparking all kinds of bullish predictions that the cryptocurrency would break above all-time highs. However, since then, those highs were cut just about in half. Bitcoin currently has a market value of a little more than $120 billion.

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Warren Buffett: Cryptocurrency will come to a bad ending