World Bank Group president Jim Yong Kim said cryptocurrencies including Bitcoin are Ponzi schemes.
“In terms of using Bitcoin or some of the cryptocurrencies, we are also looking at it, but I’m told the vast majority of cryptocurrencies are basically Ponzi schemes,” Kim was cited as saying at an event held in Washington on Wednesday by a Bloomberg report. “It’s still not really clear how it’s going to work.”
He was not the first person who compared Bitcoin to Ponzi schemes.
Hong Kong-based independent stock commentator and shareholder activist David Webb said last December that Bitcoin is the world’s first decentralized Ponzi scheme without any operator.
While Kim frowns upon cryptocurrencies, he is hopeful about the blockchain technology behind them. “There’s hope the technology could be used in developing countries to “follow the money more effectively” and reduce corruption,” Kim was cited as saying in the report.
The value of Bitcoin soared in 2017 before its dramatic plunge, losing almost two-thirds of its value since mid-December.
Goldman Sachs’ global head of investment research Steven Strongin warns in a report dated Feb 5 that investors should prepare for values of cryptocurrencies to crash to zero.
“Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero,” he noted.
The Goldman report came after a violent sell-off in the cryptocurrency market over the past few days, which at its lowest point on Tuesday, saw more than US$550 billion of value wiped off the market.