Kenyan insurance executive Julius Kipng’etich compared cryptocurrencies like bitcoin to Ponzi schemes and urged his compatriots not to “touch it”. Additionally, Kipng’etich warned those already involved in cryptocurrency trading to prepare for the consequences as it “always ends in tears.”
Bitcoin as a medium of exchange
Interestingly, when addressing participants in a corporate seminar, Kipng’etich recognizes that bitcoin already fulfills one of the conditions for it to be treated as a currency. He said:
Money represents two main things; it is a medium of exchange and a store of value. So all currency is average, I give you for you to give something.
Kipng’etich’s view on cryptocurrencies seems to be consistent with that of some central banks. For example, in his 2019 consultation document on crypto assets, the South African Reserve Bank (SARB) also recognizes that “crypto assets have the capacity to be used for payments (exchange of such value) and for investment purposes by users cryptographic assets “.
Cryptocurrency is not a store of value
However, in terms of bitcoin being a store of value, Kipng’etich argues that since it is not supported by governments, it therefore cannot be considered a true store of value. According to the executive, only governments are empowered to issue currencies by virtue of their positions. The executive explained:
The government is the gatekeeper to regulate the value that has been given. This is why they issue money because it represents a production… Then, the central bank represents this production in money.
Therefore, when measured against this standard, cryptocurrencies like bitcoin are worthless or “hot air” as Kipng’etich puts it.
Do you agree with Kipng’etich’s characterization of cryptocurrencies as Ponzi schemes? Let us know what you think in the comments section below.
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