There was something deeply ironic about Jamie Dimon calling bitcoin a fraud, and then doubling down to say governments would eventually ban cryptocurrencies outright.

First were the reports of J.P. Morgan, the venerable Wall Street bank Mr. Dimon helms, moving shares of Bitcoin XBT immediately after he made his initial comments Sept. 12.

J.P. Morgan representatives made clear in the aftermath that the bank was only trading on behalf of its customers, who were placing orders for Bitcoin XBT through its system. They were presumably doing so to take advantage of the dip in bitcoin valuations Mr. Dimon’s comments caused.

But aside from the apparent hypocrisy between Mr. Dimon’s comments and his firm’s actions—not to mention his threat to fire any employee who trades bitcoin—there’s a deeper point that was missed. Namely, Dimon has failed to hear—or is simply ignoring—what his own clients are trying to tell him.

He also is completely out of touch with what his own firm is doing. There was more than just a little irony, bewilderment—and I would think, embarrassment—at the cryptocurrency breakfast and discussion that J.P. Morgan Private Bank hosted Sept. 12 in San Francisco for its high net worth clients.

As economists, venture capitalists and blockchain investors who are friendly with the bank discussed the wild atmosphere of cryptocurrencies in the summer of 2017, Mr. Dimon’s face came on the screen to tell them the topic they had gathered for was a fraud. You have to wonder what the high net worth individuals, who were invited by the bank to discuss the topic, thought of the disconnect.

But that was just at one, local event. What really caused an uproar was the screenshot of J.P. Morgan’s Bitcoin XBT trades that was re-tweeted more than 2,000 times. It showed J.P. Morgan as the fourth-largest buyer of Bitcoin XBT in the market. So, while Mr. Dimon sees bitcoin as a fraud, the clients he’s bound to serve, and the ones his San Francisco branch was catering to at that breakfast, apparently don’t. In fact, they dove in with even more zeal after he issued his decree.


That zeal has continued to play out over the last two weeks, as bitcoin itself recovered from a low of $2,981.05 following Mr. Dimon’s rant to trade above $4,000. To be sure, there has been more volatility; the price seems to have consolidated in the $3,700 range over the last few days.

To me, the reactions from both the main stream media—there are good, representative examples here and here—and J.P. Morgan’s own customers signify an underlying aspect of cryptocurrency that is just now emerging, and will continue to become clearer in the coming years. Namely, crypto has broader, more widespread support, from a more diverse user base, than is at first apparent.

I’m referring here not only to the blockchain developer community that mine tokens daily, and may have up to 90 percent of their assets in crypto. Those types of people aren’t going to jump in and out of their crypto positions on a daily basis.

But beyond these early adopters, there’s a broader class of crypto consumers that’s taking shape, and it’s made up of people who might not even know they’re a part of this trend.

I’m talking about places like Kenya, where 1 in 3 people have a bitcoin wallet, and Estonia, where an entire infrastructure based on blockchain technology is being developed for the launch of Estcoin, which could become the world’s first government-backed cryptocurrency.

While residents in developed countries tend not to think about how the money in their bank accounts gets from here to there, the fact is that globally, more than two billion people are unbanked – companies such as J.P. Morgan simply don’t serve them.

Those people don’t have access to a stable financial system, but they almost always have access to the Internet, which makes crypto a logical and easy choice for them when they want to engage in commerce. It’s also why bitcoin and other cryptocurrencies have seen widespread adoption under totalitarian regimes or inflation-plagued parts of the world—because it gives people the freedom their financial and governmental systems do not.

These types of developments have been happening around the globe, as the overall value of cryptocurrencies has climbed, over the last 7 or 8 years. Yes, there have been huge run ups, followed by steep declines. But the general trajectory, like that of the overall stock market, has been up. The reason why is because a good number of people around the world have faith in these currencies, and only a small percentage of them are drug dealers and money launderers.

That’s why, even after this crazy summer of crypto, when many ICOs have gone to the moon and back, and the U.S., Canada and China have all—rightfully—hit the regulatory pause button on the space, these currencies have endured.

The “blocks” in the blockchain have continued building upon one another and have continued to be mined, as the inherently viral nature of the underlying technology simply does what it was designed to do—grow. It has kept expanding, without any central authority controlling it, all around the world.

As we like to say in Silicon Valley, the toothpaste is already out of the tube.

It also shows how absurd Mr. Dimon’s prognostications are that world governments will close cryptocurrencies down. After all, how do you shut something down that isn’t run from a central node and spans a multitude of jurisdictions? You might as well try to shut down the Internet.

And yet, as remarkable as Mr. Dimon’s sweeping dismissal of cryptocurrencies was—along with his tone-deafness to his own customers’ wants—he missed an even bigger point about this emerging market: opportunity.

There was a time when bricks-and-mortar retailers bemoaned the advent of online commerce, declaring that online business models would never work. Fifteen years later, you have the market dominance of Amazon. But you also have big moves by traditional retailers like Walmart, who’s giving the e-commerce giant a run for its money by unveiling its own offering of free, two-day shipping. Talk about throwing bricks at the upstart competition.

While many of us in the late 1990s and early 2000s didn’t know exactly how the Internet and e-commerce would change things, we still knew – with the exception, perhaps, of companies like Blockbuster Video—that things were
In a similar way, I sometimes feel, given where the state of traditional finance is today, that the blockchain is the exact right technology to come along at the exact right time.

Think again, about Mr. Dimon’s firm. Cryptocurrencies and decentralized, blockchain technology will cause great disruption for vertically-integrated organizations like J.P. Morgan. It’s understandable, then, that Mr. Dimon—like those brick and mortar retailers of the past—would defame it.

Indeed, one of the ways my own firm, Swarm Fund, plans to create value is to connect institutional fund managers directly to investors, without the high cost of a third-party middleman such as an investment bank, which J.P. Morgan is.

But within this green field of possibility for re-shaping the investment landscape, there’s also a lot of infrastructure that needs to get built to help cryptocurrency and the blockchain take off. Not only in the legal and regulatory realms, but in the area of interfacing with the blockchain itself.

I’ll draw an analogy again to the early Internet, when the absence of broadband access really hampered the growth of streaming video. Ten years later, we’re all going “over the top.”

Today, what cryptocurrency and the blockchain need are tools for adoption. In the world of finance, that might mean something akin to the ubiquitous Bloomberg Terminal, but one that’s built specifically for the blockchain and crypto. Or, think about card readers at points-of-sale that instead of pinging a centralized database, validate a user on the spot when the code inside the reader agrees with the one on the card. In the world of decentralized technology, it will be the interface, not the centralized registry, that will make all the difference.

Wouldn’t Mr. Dimon’s firm, with its global reach, deep pockets and technological and marketing prowess, be in the perfect position to help develop and invest in infrastructure exactly along those lines, and capitalize on this undeniable trend?

First, though, he would have to acknowledge crypto’s underlying value, as so many traders—and his own customers—already do. When the world changes again—as we’ve seen it do so many times since the advent of the Internet—will he and his firm be able to take advantage?

Not without seeing the legitimacy and value of this highly disruptive technology first. That may be the biggest irony of all.