Every instinct as an investor tells me to stay away from bitcoin, the online crypto currency invented by some mystery man and criticized by JPMorgan Chase chief executive Jamie Dimon on Tuesday as a fraud.
Dimon, one of the most powerful voices on Wall Street, said he would fire anyone trading in it because its stupid.
Its worse than tulip bulbs, said Dimon, referring to the 17th-century mania that ended in collapse. It wont end well. It will blow up.
Like most American investors, I am into vanilla savings like mutual funds, stocks, bonds and cold, hard cash. I dont buy gold. I dont trade in options. No derivatives for me. I dont know how to trade in currencies. I dont even buy lottery tickets.
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I dont know what to make of bitcoin. You cant eat it, wash in it, wear it, drive it. But you definitely can spend it. The price had risen 300 percent this year to more than $4,000, but bitcoins value slipped Wednesday following Dimons comments.
A bitcoin sign in Toronto. (Mark Blinch/Reuters)
Its quite speculative, said Arthur Levitt, former commissioner of the U.S. Securities and Exchange Commission. I would consider investing in companies that use bitcoin, or trade in bitcoin. Im not sure I would invest in bitcoin itself. It fluctuates for reasons that are hard to understand.
But cryptocurrency is with us for the future, he said. I dont know whether it will be bitcoin or ethereum, to name just two. But its here to stay because of the disparity between countries where a monetary system is robust and countries where there is virtually no monetary system. This comes up as an alternative currency.
It was created by an unknown person in 2009 under the alias of Satoshi Nakamoto. Bitcoins can be used to buy merchandise anonymously, involving lower or no fees and no banks.