Central Banks Say The Funniest Things
It’s like they’re not even trying anymore but don’t ever expect them to change their tune. But there’s a reason Bitcoin is considered rat poison to the central banks and their ilk, and they know this:
India’s Central Bank Likens Cryptocurrencies To Ponzi Schemes
A top official at India’s central bank recently reiterated warnings to Prime Minister Modi’s government about the risks cryptocurrencies pose to the country’s financial system. This time, he compared digital assets to “Ponzi schemes”, mirroring some investors’ long-held criticisms of the asset class.
Crypto Is A Ponzi, Says RBI
Governor T. Rabi Sankar of the Reserve Bank of India (RBI) offered his criticisms during a banking conference speech on Monday. As reported by Bloomberg, the governor claimed that cryptocurrencies undermine both financial sovereignty and integrity, given that they lack “intrinsic value”.
“We have also seen that cryptocurrencies are not amenable to definition as a currency, asset or commodity; they have no underlying cash flows, they have no intrinsic value; that they are akin to Ponzi schemes, and may even be worse,” said Sankar.
A Ponzi -scheme is a type of fraudulent investment scheme whereby investors’ returns are funded primarily through money collected by new investors. Lacking a foundational business model, these schemes tend to fall apart when new investors stop piling into the “business”. At this point, the organizer flees with investors’ funds.
Warren Buffet has levied similar comparisons to Ponzi schemes, deeming Bitcoin and cryptocurrencies as ‘untrue’ investments. He says that investors are not putting their money towards useful production, but simply “hoping that the next guy pays more” for their holdings.