Cryptocurrencies Are Like Ponzi Schemes, World Bank Chief Says

The head of the World Bank in comparison cryptocurrencies to “ Ponzi techniques, ” the latest financial voice to boost questions about the legitimacy of electronic currencies such as Bitcoin.

“ When it comes to using Bitcoin or some of the cryptocurrencies, we are also looking at it, yet I’ m told the vast majority of cryptocurrencies are basically Ponzi schemes, ” World Bank Group President Rick Yong Kim said Wednesday in a event in Washington. “ It’ s still not really clear just how it’ s going to work. ”

The development lender is “ looking really carefully” at blockchain technology, a platform that utilizes so-called distributed ledgers to allow electronic assets to be traded securely. There’ s hope the technology might be used in developing countries to “ follow the money more effectively” and minimize corruption, Kim said.

The value of cryptocurrencies soared in 2017 before slumping, with Bitcoin dropping nearly two-thirds of its value considering that mid-December.

While cryptocurrency technology has got the potential to reshape global financial, concerns have been raised about the volatility and the potential for money washing or other crimes.

In a speech this week, Bank associated with International Settlements chief Agustin Carstens said there’ s a “ strong case” for authorities in order to rein in digital currencies since their links to the established economic climate could cause disruptions. Federal Reserve Seat Jerome Powell has said that “ governance and risk management will be critical” for cryptocurrencies.