Blackrock and JP Morgan. Two companies who have very different types of noises coming out of them about Bitcoin.
BlackRocks’ iShares Bitcoin Trust ETF (IBIT) is arguably the most successful ETF of all time. In its updated prospectus for IBIT, BlackRock mentions quantum computing under its “risk factors” section.
‘…In the past, flaws in the source code for digital assets have been exposed and exploited, including flaws that disabled some functionality for users, exposed users’ personal information and/or resulted in the theft of users’ digital assets.
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The cryptography underlying Bitcoin could prove to be flawed or ineffective, or developments in mathematics and/or technology, including advances in digital computing, algebraic geometry and quantum computing, could result in such cryptography becoming ineffective. In any of these circumstances, a malicious actor may be able to compromise the security of the Bitcoin network or take the Trust’s Bitcoin, which would adversely affect the value of the Shares. Moreover, the functionality of the Bitcoin network may be negatively affected such that it is no longer attractive to users,
thereby dampening demand for Bitcoin.
Even if another digital asset other than bitcoin were affected by similar circumstances, any reduction in confidence in the source code or cryptography underlying digital assets generally could negatively affect the demand for digital assets and therefore adversely affect the value of the Shares.
Moreover, because digital assets, including bitcoin, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of the date of this prospectus.’
BlackRock has been a leader among ‘traditional’ institutions supporting Bitcoin, but here, they seem to be issuing cautious words, and appearing to take a step back.
JP Morgan, on the other hand, seems to be looking for a way to pivot from its long standing criticism and dismissal of Bitcoin.
CEO, Jamie Dimon over the years has made many curious statements :
‘We shouldn’t be stockpiling bitcoin. We should be stockpiling guns, bullets, tanks, planes, drones—you know, rare earths.’
Bitcoin is a ‘public decentralized Ponzi scheme.’
The use cases for Bitcoin are “AML, fraud, sex trafficking and tax avoidance,”
Galaxy Digital head and billionaire Mike Novogratz in response to JPMorgan Dimons’ anti-crypto comments in 2023, said BTC outperformed JP Morgan stock for over any 10 year time frame.
Recently, Dimon said he’s going to reflect Bitcoin as a ‘value instrument’ on clients’ balance sheets. This is the first time he came out making positive noises about Bitcoin. To ‘explain it away’, he said his clients could do what they wished with their money. ‘I don’t think you should smoke, but I defend your right to smoke. I defend your right to buy Bitcoin. Go at it.’ This is like a U turn pretending the ‘U’ is another letter.
Rumours are circulating that the nuanced climb down will lead to a nudge to go for the CEO of 19 years. Mary Erdoes, who is CEO of JPMorgan’s Asset and Wealth Management division, has been tipped as a successor.
SO HOW DO WE RECONCILE THE COOLING OF BITCOINS BIGGEST INSTITUTIONAL ADVOCATE WITH THE SOFTENING OF ITS BIGGEST INSTITUTIONAL CRITIC?
Well, have you ever heard the phrase, not your key, not your coins?
It expresses the belief that investors cannot be certain of their crypto holdings unless they are stored in a wallet for which they personally have the keys. In the FTX fiasco with Sam Bankman-Fried, they held onto users’ wallets and keys for them. Access to funds ran into problems as FTX developed a liquidity crisis.
Seasoned crypto investors are very familiar with the distinction. It is unlikely they will invest in Bitcoin related financial products, such as ‘tracker’ products, spread betting on the fortunes of Bitcoin, secondary business owned products such as $MSTR from Michael Saylors Microstrategy, ETFs, Managed Pools, or anything else.
Why should anybody contribute to any of these which have corporate entities as a point of failure, when they can just hold the Bitcoin directly? Sure, the Bitcoin itself has its own ‘properties’, but corporate products just mimic those ‘properties’ with an added layer of risk, probably a management fee, and no upside.
Institutional, and other BTC product vendors therefore have a huge challenge in hailing the strengths of Bitcoin on the one hand, and explaining why their product is superior to self custody of BTC on the other.
So like a miracle for institutions, enter the ‘Quantum Computing Ruse’.
Blackrock introduced it, other product vendors are replicating it, and some (irresponsible) content creators are scaling the dissemination for online platform traction from clickbait.
On LinkedIn, for Aventix, Wendy Feliu said:
‘At Avestix, we’re not waiting around.
We’re building infrastructure designed to withstand a post-quantum world.
Systems that eliminate the centralized failure points legacy networks still depend on.
Security that moves beyond outdated encryption altogether.
We’re not waiting for the fix. We’re building the solution.’
Veronica Bridgewater, LinkedIn presence for 9ja Cosmos countered:
‘Yeah, repeating again (probably lost count). People like Blackrock will always issue some kind of disclaimer. They are like insurance companies and anything can be made an ‘act of god’
BIP (Bitcoin Improvement Protcol) 360 is on the way.
Before BIP 360 , you will need a few quantum computers to break Bitcoin.
Post BIP 360 you will need a line of quantum computers long enough to stretch around the circumference of the sun.
That was my response on this a week or two ago to both Viktoria Soltesz and Blossom Denwigwe. It’s still my response today!’
People romanticize hacking as someone floating around, untraceable, with a laptop, at a table in an off-beat coffee shop, momentarily making use of the barely capable WiFi…
But compared to a quantum computing farm, a massive Bitcoin mining farm is like the chip on a credit card. The internet pipe needed to feed it is like all of Microsoft, Meta, Google, X and Amazon … and then some!
You want to criminally operate that and hide it in plain sight? Good luck!
The bottom line is Bitcoin is already built, no improvements are needed from external asset managers trying to wrap vapour product around it. Bitcoin already has its own organically evolving core dev community.
Those devs are hard at work on BIP 360.
Invest in BTC… or don’t. No need to be adding extra risk, and paying some fund managers wages in the bargain!
Sources:
https://www.coindesk.com/business/2024/01/17/jamie-dimon-bashes-bitcoin-again-a-pet-rock Alex Richardson – The Daily HODL Time Magazine – The Significance of Jamie Dimon’s Reluctant Bitcoin Surrender. CoinTribune – Why Jamie Dimon’s Capitulation To Bitcoin Changes Everything? JPMorgan Chase CEO Jamie Dimon makes stunning reversal on Bitcoin James Franey – New York Post
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