Head of Bank for International Settlements (BIS) calls bitcoin a Ponzi scheme and an "environmental disaster"
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Agustin Carstens, the general manager of the Bank for International Settlements (BIS) has slammed bitcoin and called it a "combination of a bubble, a Ponzi scheme" and, due to the energy consumption required for mining it, an "environmental disaster".
In a lecture given in Frankfurt, Germany, on Tuesday (February 06), Carstens questioned bitcoin's and other cryptocurrencies' sustainability and claimed that authorities had a duty to clamp down on the payment technology. He said there were cracks appearing in the "house of bitcoin" as too many copycat currencies, such as bitcoin gold and bitcoin cash, had forked off the technology. The banker argued this replication could only lead to debasement of cryptocurrencies to the point where they held no economic value at all.
The BIS is where the major banks such as the Federal Reserve and Bank of England hold accounts, earning it the name "central bank's bank". Carstens cited trust as another problem for cryptocurrencies as they would never be governed or supported by such institutional infrastructure.
Carstens then called into question bitcoin's efficiency and legality.
"While perhaps intended as an alternative payment system with no government involvement, it has become a combination of a bubble, a Ponzi scheme and an environmental disaster," he said. "The volatility of bitcoin renders it a poor means of payment and a crazy way to store value."
Carstens said the current fascination with cryptocurrencies seemed to have more to do with "speculative mania" and that their only true function appeared to relate to illegal activities. He said authorities should act to protect consumers and ensure that cryptocurrencies could not be used to evade tax, launder money or finance criminal activities.
Sentiment for virtual coins has taken a hammering in 2018 with over $550 billion of value wiped off the entire cryptocurrency market in just under a month. Bitcoin is down around 70 percent from its all-time high in mid-December and its market capitalization has fallen $233.5 billion since then.
*Featured Image via Wall Street Journal
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