World Bank: Cryptocurrencies are basically Ponzi schemes

Jim Yong Kim, World Bank president, says cryptocurrencies are like Ponzi schemes.

Kim joined other experts who have warned against investing in it.

In recent times, Bitcoin, a type of cryptocurrency, has become popular across the world.

“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. It’s still not really clear how it’s going to work,” Bloomberg quoted him to have said.

He said he is “looking really carefully” at blockchain technology, a platform that allows secured trading of digital assets.

The World Bank president also said that there is hope that technology can help developing countries “follow the money effectively and reduce corruption”.

There have been concerns about the volatility of cryptocurrency and its criminal potential.

“Bitcoin was less than $1000 at the start of the year and now it has hit $10,000, that’s over 900 percent year-to-date and that is a super-normal gain,” Lukman Otunuga, a financial analyst with FXTM, told TheCable in an interview.

“Naturally in Nigeria, when investors see that, they want to be a part. It is this kind of mentality that drives bitcoin higher. Everybody wants to be part of it because there is no fundamental driver in bitcoin and it is only investors trying to get a slice of the pie. My only concern is that it has no intrinsic value, it’s been made out of nothing,” he had said.

“It might just be a speculative bubble and like all bubbles, it will eventually burst. I don’t think $10,000 will be the limit with the way things are going.

“Right now there is so much positivity about bitcoin and it’s a fling, everybody wants to be part of it. If you’re in it, you’re winning it. I won’t go into it myself so I won’t advise anyone to go into it. If I was in it earlier, it would probably be a different story.”