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US bank CEOs are afraid of the power of bitcoin
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Loading...CEOs of U.S. banks are likely "very afraid" of bitcoin, according to a wealth advisor.
Some financiers have said the cryptocurrency is an unwise investment because of its volatility or supposedly weak store of value, but bank chiefs have another reason to dislike bitcoin, said Rainer Michael Preiss, executive director at Taurus Wealth Advisors.
"Of course, if you run a very large U.S. bank, most probably you are afraid of blockchain and bitcoin," said Rainer Michael Preiss, executive director at Taurus Wealth Advisors.
His comments came after JPMorgan CEO Jamie Dimon called bitcoin a "fraud" last Tuesday.
Preiss countered, however, that cryptocurrencies could present investors with a viable alternative given the uncertainty from banking's lack of transparency.
"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," he said. "On the other hand, on the bitcoin blockchain, you have an audit everyday because it's open-sourced."
The digital currency uses blockchain technology to record every transaction that occurs, granting all users full view of the digital ledger.
Cryptocurrencies could also be a "systemic hedge" against the risk of asset price inflation — an increase in the prices of assets that are not everyday items — which central banks have potentially helped to create, Preiss added.
Bitcoin's price has jumped from $700 to $4,000 since Jan. 2014, he said, adding that the hike has signalled "a good store of value" for some. He noted that Dimon had claimed the exact opposite about currency's value store in a 2014 interview.
The digital currency was priced at about $3,900 Wednesday afternoon in Asia. It had rebounded nearly $1,000 after a huge plunge last week following announcements by major bitcoin exchanges in China that they planned to close by month-end.
Source: Bloomberg Pro Terminal
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