A Kenyan insurance executive, Julius Kipingetich, has compared cryptocurrencies like bitcoin to Ponzi schemes and urged his countrymen not to “touch it”. Furthermore, Kipng’etich warned those already involved in crypto trading to be prepared for the consequences as it always “ends in tears.”
bitcoin as a medium of exchange
interesting when Addressing Attending a trade symposium, Kippang’etich acknowledges that bitcoin already fulfills one of the conditions for it to be treated as a currency. He said:
Currency represents two primary things; It is a medium of exchange and a store of value. So any currency is medium, I give it to you so that you give something.
Kippang’etich’s view of cryptocurrencies appears to be in line with some central banks. For example, its 2019. In consultation paper On crypto assets, the South African Reserve Bank (SARB) likewise acknowledges that “crypto-assets have the potential to be used for payment (such an exchange of value) and for investment purposes by crypto-asset users.”
Cryptocurrency is not a store of value
However, in the context of bitcoin being a store of value, Kipping’Etich argues that since it is not backed by governments, it cannot be seen as a true store of value. According to the executive, only governments are required to issue currency on the basis of their positions. The executive explained:
The government is the custodian to regulate how much is paid. So they issue currency because it represents an output… then the central bank represents that output in currency.
Therefore, when measured against this standard, cryptocurrencies such as bitcoin are worthless or “hot air”, as Kipung’Etich puts it.
Do you agree with Keeping’Etic’s characterization of cryptocurrencies as Ponzi schemes? Tell us what you think in the comment section below.
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