Cryptocurrencies are 'Ponzi schemes,' World Bank president says

By CurrenciesFOXBusiness

World Bank Group President Jim Yong Kim this week joined other business leaders in expressing skepticism about cryptocurrencies, likening digital currencies to “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 said Wednesday during an event in Washington, according to Bloomberg. “It’s still not really clear how it’s going to work.”

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Top cryptocurrencies, including bitcoin, ethereum and litecoin, saw their values soar in recent months amid increased interest from the public and some business leaders. Bitcoin rose from below $1,000 last February to a peak of more than $19,200 last December, only to plunge below $9,000 as of Friday.

Kim added that the World Bank is “looking really carefully” at blockchain technology, the platform through which cryptocurrency transactions are tracked and legitimized.

Cryptocurrencies allow users to transfer value and make secure transactions without use of banks or other centralized institutions. The digital currency marketplace is not regulated by any government or central bank, though some countries, including China, have imposed restrictions on their usage.

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Critics argue that digital currencies are a bubble prone to volatility and susceptible to hackers and other types of fraud. JPMorgan Chase CEO Jamie Dimon called bitcoin a “fraud” last September, only to clarify his stance on cryptocurrencies in an interview with FOX Business.

“The blockchain is real. You can have crypto yen and dollars and stuff like that,” Dimon said.

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