Jack Dorsey Loves Bitcoin, So Does Jay-Z, But Others Are Raising Red Flags … Who Should You Trust? (UPDATE)

Last Updated on July 12, 2021

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Jack Dorsey, patriarch of Twitter and Square, has often spoken out about bitcoin, the matriarch of the cryptocurrencies. He is an enthusiast. Along with Shawn “Jay-Z” Carter, Dorsey has created a multi-million dollar fund intended to advance Bitcoin use in Africa and India.

That fund with Jay-Z is the key to why Dorsey is so bullish on a currency that has others waving red caution flags. He believes, as he explained at the Bitcoin 2021 conference, that bitcoin is crucial to the creation of a new and improved financial infrastructure that can assist communities underserved by the old one. Among other benefits: he sees it protecting against emerging economies currency devaluation and expediting the transfer of funds across national boundaries. “I don’t think there is anything more enabling for people around the world.”

Voices of Caution

Bitcoin, and the cryptos in general, have long been at the center of a debate in the finance world. Back in 2018, Tidjane Thiam, then the CEO of Credit Suisse Group AG, said that bitcoin is the “very definition of a bubble,” i.e. a speculative frenzy headed for a burst. But only months later, speaking at Davos, Thiam backtracked, saying that “digital currencies have a future” and pronouncing himself a “fan” of the blockchain technology that, though first developed for bitcoin, has proven to have many other applications.

Others have echoed the “bubble” warning. Warren Buffett, a billionaire investor with a cult-like following, said a little more than a year ago that bitcoins “basically have no value.” One can do anything productive with them, one can only sell them to someone else, and then “that person’s got the problem.”

Bill Gates and Bitcoin
Gates began bullish but changed to a bearish stance by 2018, when he warned that bitcoin is overly helpful for criminals and their launderers. Photo credit: Shutterstock.com

Others prominent figures in the business and financial world have changed their tune, too. Bill Gates, in particular, changed in the opposite direction from Thiam. Gates began bullish (in 2014 he said flatly “bitcoin is better than currency,”) but changed to a bearish stance by 2018, when he warned that bitcoin is overly helpful for criminals and their launderers.

That issue, money laundering, is raised with great regularity by those warning of the risks of the new currencies.

What is Personal, What is Business

Jamie Dimon, who has been the chairman and CEO of JPMorgan Chase for 16 years, called bitcoin a “fraud” in 2017 at the Delivering Alpha conference. By January 2018, though, he had moved from opposition to apathy. He said he regretted the “fraud” comment, and “I’m not interested that much in the subject at all.”

Whatever his personal view, Dorsey heads a company that came out with its own crypto (JPM Coin) in 2019, and that created a new unit for blockchain projects last year.

This year, at an event sponsored by The Wall Street Journal, Dimon reiterated his personal apathy. “I don’t care about bitcoin. I have no interest in it.”

Jay Z and Bitcoin
Shawn “Jay Z” Carter, Dorsey has created a multi-million dollar fund intended to advance Bitcoin use in Africa and India. Photo credit: Shutterstock.com

Risky for the Ecosystem

Aside from the the question of illicit use, one of the concerns most often raised of late has been that they are risky for the ecosystem: the creation of new coins (“mining”) requires computers that can  solve complex mathematical equations. This is a process with a large carbon footprint. As Janet Yellen, the US Secretary of the treasury, put it recently, “It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.”

Hackers and Online Thieves

Another common concern about bitcoin is that its owners can find themselves the victim of hackers and online thieves.  The Bitfinex hack in August 2016, which resulted in the loss of nearly 120,000 bitcoins from customers’ accounts, has acquired almost the stature of a legend, inspiring people to be very careful. Indeed, (returning to the man with whom we began) Dorsey stands to profit off of that care. His card reading company, Square Inc., is said to be working on a non-custodial hardware wallet for Bitcoin, allowing owners to take the security of their holdings “to the next level,” as Dorsey says.