On Wednesday, while speaking at an event in Washington D.C., the head of the World Bank compared some cryptocurrencies to Ponzi schemes.
Jim Yong Kim, who is the president of the World Bank Group, said that while the bank was considering using bitcoin and some other forms of cryptocurrency, he thinks that most cryptocurrencies are essentially Ponzi schemes, with no clear means of successfully functioning.
Kim’s comments are just the latest in a long line of recent critical remarks made by leading financial figures in reaction to the worldwide cryptocurrency craze. Agustin Carstens, who heads the Bank of International Settlements, said in a speech this week that there is a strong argument to be made in favor of having government bodies regulate digital currencies, because of the havoc they could cause to the financial system. Also, Jerome Powell, who is the chairman of the Federal Reserve, said that it is of critical importance for the government to regulate cryptocurrencies.
The one thing Kim does like about cryptocurrencies are their underlying technology: the blockchain, which is a distributed ledger that facilitates the secure trading of various digital assets. Kim said that his bank is very carefully looking at this technology, which he says could be used in the developing world to help stamp out corruption. He specifically noted that the technology could let countries better follow the flow of money.
The cryptocurrency craze led to an unprecedented surge in prices for many digital currencies last year. Though prices of most of them have plummeted in recent months. Bitcoin, in particular, has lost almost 67% of the value it had attained back in December.
Not only has the volatile pricing of cryptocurrencies concerned many, but so has its potential for misuse in aiding money laundering and other types of financial crimes. These concerns have offset what almost everyone agrees is useful technology, which could positively change the financial world forever.
Dil Bole Oberoi
