By Jonathan Vanian
April 18, 2018

 

Cryptocurrencies like Bitcoin are the new “counterculture” while Silicon Valley and its wealthy tech companies have become the establishment, according to Chain CEO Adam Ludwin.

His comments at Fortune’s annual Brainstorm Tech dinner in San Francisco on Tuesday highlight the huge shift in the tech industry over the past few years. Big Internet companies have evolved into the new power centers in the U.S. economy, much like the industrial giants before them, while digital currencies have emerged as the brash upstarts.

Ludwin, whose company creates blockchain software for app developers and the financial industry, caused a stir in the insular tech world for a memo he wrote last fall to JPMorgan Chase CEO Jaime Dimon, who once questioned the value of much-hyped cryptocurrencies. Ludwin said that digital currencies give “people ownership over money and transactions” in contrast to traditional currencies that can be inflated by governments.

Cryptocurrencies, Ludwin said, represent a “new asset class” that software developers can use to build apps that can do things like store digital files. Those apps reward users by paying them digital tokens that implicitly encourage them to support the app.

It’s a sort of libertarian ideal that, in theory, makes people want to participate in a new economy.

Still, Ludwin acknowledged that the lack of regulation has led to “a lot of hucksters, fraud, and manipulation” in the cryptocurrency space. He didn’t mention any specifics, but many people are concerned about initial coin offerings, or ICOS, that many fly-by-night companies hold to raise money without disclosing much information to investors.

Ludwin’s memo to the JPMorgan CEO pointed out many of these kinds of problems while also explaining that digital currencies represent an optimistic future. Dimon has publicly criticized the Bitcoin digital currency and called it a “fraud,” raising a cacophony of criticism from digital currency supporters.

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Ludwin said that Dimon had quietly responded to his memo. He described JPMorgan’s CEO as “super gracious” when they met later during the annual World Economic Forum in Davos this year and praised the bank’s research into Ethereum, one of the hottest cryptocurrency networks.

“They have the most real investment in this among any of the major banks,” Ludwin said regarding JPMorgan’s Ethereum play.

 

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