World Bank Chief Says Cryptocurrencies Are "Ponzi Schemes"

In the latest swipe at bitcoin's credibility from a prominent member of the global financial and economic establishment, World Bank Group President Jim Yong Kim said Wednesday at a dinner in Washington that "the vast majority of cryptocurrencies" are essentially "Ponzi schemes", Bloomberg reported.

World

The plunge in the valuation of bitcoin and most of the hundreds of other digital tokens that were inspired by the virtual currency has appeared to validate criticisms from financial luminaries like Bridgewater's Ray Dalio, who famously called it a bubble late last year. He was one-upped this past week by NYU Economist Nouriel Roubini, who claimed that bitcoin is quite possibly "the biggest bubble of all time".

“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,” World Bank Group President Jim Yong Kim said Wednesday at an event in Washington. “It’s still not really clear how it’s going to work.”

The development lender is “looking really carefully” at blockchain technology, a platform that uses so-called distributed ledgers to allow digital assets to be traded securely. There’s hope the technology could be used in developing countries to “follow the money more effectively” and reduce corruption, Kim said.

Crypto traders appeared to shrug off Kim's comments as valuations climbed Thursday, erasing some of the precipitous selloff that has sent the price of a single bitcoin down more than 60% since its late-2017 peak.

btc

While cryptocurrency technology has the potential to reshape global finance, concerns have been raised about its volatility and the potential for money laundering or other crimes.

Earlier this week, Bank of International Settlements chief Agustin Carstens  - the former Governor of the Bank of Mexico - said there’s a “strong case” for authorities to rein in digital currencies because their links to the established financial system could cause disruptions. The desire to protect against this significant, undiversified risk is why credit-card lenders including Capital One, Bank of America, JP Morgan Chase & Co. and others prohibiting users from buying virtual currencies with their credit cards

Federal Reserve Chair Jerome Powell recently said that “governance and risk management will be critical” for cryptocurrencies. Yesterday, the heads of the SEC and CFTC appeared before the Senate Banking Committee to talk about the bitcoin and digital-token ecosystem, and their plans for overseeing a market that has been criticized for being rampant with fraud and abuse.

 

 

Comments

Buckaroo Banzai Hoffman Lenz Fri, 02/09/2018 - 14:00 Permalink

"They really don't want people to leave their ponzi scheme for another ponzi scheme"

Actually, they probably wouldn't mind it if people left their ponzi scheme for another ponzi scheme, because then they would just get control of that ponzi scheme too.

But what would REALLY terrify them, is people leaving their ponzi scheme for the 21st century version of real, honest money.

The fact that they are in such a blind panic tells you everything you need to know.

In reply to by Hoffman Lenz

Hoffman Lenz Buckaroo Banzai Fri, 02/09/2018 - 14:16 Permalink

I do like cryptocurrencies. I'm just finishing a program so that a raspberry pi does the trading for me (might as well make some moolah while I can). My program to pick stocks worked fine until stoopid level QE screwed that up.
But I think it's gonna be a few years until we're left with the 'honest' cryptos.
BTC seems to be too 'power' demanding to survive.
Other ICO's are clearly just true ponzi schemes and will eventually fall by the wayside.
As long as there are a sufficient number of 'honest' cryptos left that they can't be taken over by 'them', I think we'll be okay.

 

Peace x

In reply to by Buckaroo Banzai

Buckaroo Banzai Hoffman Lenz Fri, 02/09/2018 - 14:34 Permalink

Yep. Bitconnect is a great example of a crypto ponzi scheme. Obviously you can use crypto to make ponzi schemes, but they are pretty obvious (Bitconnect was glaringly obvious) and the fact is, there are always people who want to be in a ponzi scheme.

There's room for hundreds of quality coins in the international financial marketplace, but it's going to take a while for them to rise to the surface, and many of them haven't even been invented yet.

In reply to by Hoffman Lenz

HRClinton Hoffman Lenz Fri, 02/09/2018 - 20:52 Permalink

Peeps, in deciding IF to speculate in some new flavor of CC, use the same business decision criteria as for any new business. E.g.

> What is the Value Proposition?

> Who is the target Clientelle?

> What is it doing, that others are not doing, and that matters to paying customers?

> Will others be able to change, to mimic or beat you?

...

In reply to by Hoffman Lenz

Hoffman Lenz lookslikecraptome Fri, 02/09/2018 - 17:36 Permalink

It's strange that you dig up this article, where anyone can learn the buzz-phrases to become a 'crypto-financial-guru'.
If you've been on this site for any length of time, you'll realise that the phrases presented in the article are very similar to the phrases used by the worlds leading economists.
And those phrases that get used by the worlds leading economists are one BIG FUCKING CIRCLE JERK where they back up each others broken monetary theories.
And those are the economic theories that have made 99% of the worlds people a lot poorer than they should be.
So, youlooklikecraptome, piss off for now and try to get a decent, original thought in your head.

In reply to by lookslikecraptome

Radical Marijuana Hoffman Lenz Fri, 02/09/2018 - 15:54 Permalink

Yes, the mainstream forms of electronic money are enormous "Ponzi Schemes," while alternative forms of electronic money are relatively small "Ponzi Schemes." Hence, cryptocurrencies are tiny parasites riding on top of huge parasites.

The underlying situation is that money is measurement backed by murder, because groups of human beings live as reproducing gangs of robbers in their environment. The public discussions of these phenomena manifest sets of consistent contradictions due to the long history of the biggest and best organized gangsters dominating Civilization.

The mainstream forms of electronic money are controlled by the international bankers, also known as the banksters, and therefore, the banksters' bullshit-based world views dominate the public discussions of monetary systems.

So far, there is no doubt that the ownership of cryptocurrencies is recapitulating the overall structure of social pyramid systems, within the context of the different varieties of cryptocurrencies.

It is an understatement to refer to the already established systems as merely being "Ponzi Schemes." But nevertheless, it is quite correct to assert that the currently dominate Schemes do not like alternative Schemes, but rather, are interested in developing the underlying cryptocurrency technologies in ways which would enable the dominate Schemes to become even more dominate.

Meanwhile, most of those who publicly propose and promote various alternative forms of cryptocurrencies continue to do so while still staying within the same frame of reference of the banksters' bullshit regarding "what money should be."

Ironically, those who are most socially successful at making money are those who are the best available professional liars and immaculate hypocrites, and that continues to be the case with respect to the development of making and maintaining ownership over emerging cryptocurrencies.

Since Civilization necessarily operates according to the principles and methods of organized crime, some of the necessary corollaries are the degrees of social successfulness based on enforcing frauds being achieved by the best available professional hypocrites, with respect to bullshit-based assertions of the sets of impossible ideals regarding "what money should be."

Globalized Neolithic Civilization has become almost totally based on being able to make money out of nothing as debts, in order to pay for strip-mining the natural resources of a fresh planet. Inside that context, relatively small proportions of the tens of trillions of units of mainstream electronic currencies being created out of almost nothing are flowing into the alternative units of electric currencies also being created out of almost nothing.

The social successfulness of the symbolic robberies achieved by the banksters through the mainstream electronic money has depended upon the majority of people not understanding that, as well as being conditioned to not want to understand that. Similarly, the various alternative cyptocurrencies were able to emerge within being able to take for granted the overall political economy that the banksters made and maintained, so that alternative cryptocurrencies could become alternative forms of symbolic robberies.

The dominate electronic money is based upon deliberately ignoring the principle of the conservation of energy, as well as misunderstanding the concept of entropy in the most absurdly backward ways possible, while alternative forms of money are mostly based upon continuing to do similar things.

In reply to by Hoffman Lenz

Hoffman Lenz Radical Marijuana Fri, 02/09/2018 - 16:41 Permalink

@Medical Marijuana.
I both agree and disagree with your (rather long) post (It's Friday and there's been quite a lot of alcohol consumed). There are parts that are obviously correct (as society currently stands), and parts that are clearly wrong (If society changed, to get away from the current financial system).

I think that where you are correct, you are undoubtedly correct. But there are many parts of your post where the grey area is far too broad to accept your propositions.

(vodka is taking a hold, so please excuse spelling/grammar mistakes).

You say that cryptos are ponzi schemes (tiny parasites). But they don't conform to the definition of a ponzi scheme (whereas the current monetary scheme does). Yes, some do, obvious fakes. But most are introduced to become part of the defacto currency of a part of a market economy.

There is a cc that is aiming to be used as the currency of 'skins'. That's how gamers make themselves out as individuals in computer games. Skins. So there is a cc that wants to be the cc used when someone buys a skin. If it works out, that's going to be how people buy their skins. It's not important to me and probably won't be important to you or most people, which means that the ultimate value of GameSkinCoin will be low.

That may be of little utility to you so: What if there were a cryptocurrency for vegetables or meat or shoes at your local market. I'm trying to get you to somewhere you're more comfortable. You would have to exchange the currency used in your line of business (eng-tech, in my case) to that of your local market. The exchange rate would settle down to a value that would reflect your skills.

If you were in a profession that was highly sought (lets say DoctorOfMedicineCoin), the value of your coin would be quite high. If your profession awarded you with StreetSweeperCoin, it would probably not have such a high value. Left to their own devices and without interference these coins would find their own value.

I've quickly tried to point out where the possibilities lie outside the current corrupt system. And now I'm getting too drunk to carry on thinking rationally. All I ask is that you try to think outside of the box that you have been placed in.

Have a great weekend x

In reply to by Radical Marijuana

Radical Marijuana Hoffman Lenz Fri, 02/09/2018 - 18:36 Permalink

"What if there were a cryptocurrency for vegetables or meat or shoes at your local market."

Food does not voluntarily jump into one's mouth. Human beings live by killing and eating other organisms (within which context was the long history of some human beings killing other human beings.)

That human beings live as nested toroidal vortices engaged in entropic pumping of environmental energy flows is a general way to express the essential facts that human beings live by killing and eating other organisms, which is the basic reason that money is measurement backed by murder, since the development of Civilization was more complicated ways of killing and eating other organisms. Globalized Neolithic Civilization was primarily the development of social slavery systems, i.e., the domestication of human beings, along with the domestication of other animals and plants.

If some cryptocurrency was being used to buy food, then the ultimate source of that food would be killing other organisms (while the struggle over the resources in order to do that resulted in some human beings killing other human beings.)

The dominate systems have been enabled by about exponentially advancing technologies to become about exponentially more corrupt. However, all of those developments were originally based on the innate animal nature of human beings, while Civilization deliberately buried that nature under the maximum possible bullshit-based social stories.

As I loosely indicated by stating it was an understatement to refer to the established systems as "Ponzi Schemes," I agree that a better analysis is consistent with clarifying statements that:

You say that cryptos are ponzi schemes (tiny parasites). But they don't conform to the definition of a ponzi scheme (whereas the current monetary scheme does).

Idealized cryptocurrencies may not be literal Ponzi Schemes, however, the money that is invested into cryptocurrencies ultimately comes from the vast deluge of about exponentially more electronic money being created out of nothing as debts.

 

P.S.

Your reply did not seem to be in the least way impaired by vodka!

In reply to by Hoffman Lenz

Hoffman Lenz Radical Marijuana Sat, 02/10/2018 - 02:43 Permalink

Good morning RM (cue hangover, more coffee needed),

I think I understand what your saying, though "...human beings live as nested toroidal vortices engaged in entropic pumping of environmental energy flows..." would have been too much for me last night. I was on vodka, not magic mushrooms.

Yes, human beings live by killing and eating other organisms. That's life. Any of the more complex organisms consumes less complex organisms to sustain themselves.

Where humans are different is that I don't have to go out and hunt/gather for myself. There is a token system where I can ultimately exchange my skills for food and other necessities. Currently I help keep a pharmaceutical plant running correctly. That benefits humans and other organisms indirectly, and I receive tokens that allow me to obtain what I need. All humans are different (a fact that the PC brigade seem to deny) as are all organisms. Some people can run fast, I'm good with electronics and computers, among other things.

I don't care what those tokens are, as long as I can exchange them. The fact that the current token systems, USD, EUR, GBP, etc. are imposed on humans by other humans is not in itself a problem for me. I can still exchange them.

I don't like the fact that my 'government' demands many of my tokens, with a threat of violence. I wouldn't mind so much if the 'government' spent those tokens on things that either directly or indirectly benefit me, but the waste and corruption are at incredible levels.

However, what really pisses me off is the way those tokens are produced. If it was my 'government' producing and controlling the number and value of those tokens, then as long as the 'government' is careful the token system can sustain itself indefinitely. But as we know, through corruption the 'government' has shifted responsibility to a group of humans who have psychopathic/sociopathic tendendencies.

That's where cryptocurrencies come in. As long as a cc requires work to sustain it, whether it be mining or some other production/administrative function, and can be limited in number, it can be used as a token. Some cc's fit into this category, whilst others fit into the ponzi category, or as is the case with some, require too much energy to sustain themselves as tokens (think BitCoin).
Time will sort them out, and in the end, if they are tokens that I can use, I will use them.

 

p.s. it takes a lot of alcohol to impair my spelling. And for me, one of the benefits of alcohol is that it allows me to put my mind to one thing only. I've normally got anywhere between 3 and 10 things going on in my head.

In reply to by Radical Marijuana

Radical Marijuana Hoffman Lenz Sat, 02/10/2018 - 16:00 Permalink

"... but the waste and corruption are at incredible levels. ... what really pisses me off is the way those tokens are produced. ... through corruption the 'government' has shifted responsibility to a group of humans who have psychopathic/sociopathic tendencies."

YES!

The real issues are how and WHY did the actually existing systems end up being made and maintained by the best organized gangsters, the banksters, who were able to capture control over the public powers of governments ???

The primary answers are due to the vicious feedback spirals of the funding of the political processes. In that context, it is relatively facile to come up with a list of impossible ideals regarding "what money should be." However, there are no practical ways to implement those, especially because those idealized notions regarding "what money should be" are themselves mostly still based upon the banksters' bullshit which buries what money IS.

 

P.S.

My collection of Excellent Videos on Money Systems which links through to my collection of Some Monetary System Articles.

In reply to by Hoffman Lenz

Hoffman Lenz Radical Marijuana Sun, 02/11/2018 - 02:14 Permalink

Good morning RM,

The current, captured financial system was established before I was born, so for me the real issue is how do we break out of it? Many of the countries that were outside their sphere of influence have now been 'aligned' to their system (as I see it, the main reason for 'the War on Terror' and some of the colour revolutions), so in a sense we are losing battles, we are losing ground and we are losing the war.

How and why are only important in an historical context. If we ever break out from the death grip of the bankers, the how and the why need to be analysed (plus a few more questions). As the saying goes, those that don't learn by history are doomed to repeat it. Once the how, the why, the when and the who have been learned, the knowledge needs to be taught to EVERYONE so that the same situation can never be allowed to arise again. Our greatest weapon is, and always has been, education.

First we have to break their grip. How?

 

 

p.s. Thanks for the links. Bookmarked. When I get some spare time I'll take a proper look.

In reply to by Radical Marijuana

Radical Marijuana Hoffman Lenz Sun, 02/11/2018 - 14:04 Permalink

My current conclusions are the only realistically possible ways to "break out from the death grip of the bankers" are for the entrenched systems to drive themselves through self-destruction.

The maximum leverage comes from the funding of the political processes, which have become about 99% corrupt, as well as have been so for generation after generation. For all of those alive today:

"The current, captured financial system was established before I was born ..."

I spent a few decades working on the issues related to the funding of registered political parties in the Canadian context, and continue to do so by enabling Canadians toRegister Electoral District Associations.

I had two court cases against the Canadian government over issues related to the laws controlling the funding of registered political parties. In the first, I finally won, but then the government changed the election laws to make their previous lies become the legal truth. In the second, I finally lost on appeal, although won at trial. The combination of both events effectively wiped out everything I had been working on for a few decades, due to the changes in the Canadian election laws made in 2004 burning my political party to the ground and bulldozing the ruins.

Every day, I continue to demonstrate that more than 99% of Canadian taxpayers act like incompetent political idiots. However, because that is the case, demonstrating those social facts makes no material difference. (IF that were not the case, then I would not be posting comments on Zero Hedge to pass the time.)

The funding of the political processes in the USA are orders of magnitude worse than in Canada. It is politically impossible for people who CANNOT legally make the public money supplies out of nothing as debts to compete with those who already CAN do that.

My overview is that natural selection pressures drove the development of the artificial selection systems of Civilization to become as dishonest as possible. Indeed, those artificial selection systems, based on the powers of governments enforcing frauds by private banks, are actually becoming about exponentially more fraudulent.

In my view, there is practically nothing which can actually be done but to wait and watch as the condition of Civilization automatically gets worse, faster. The most important issues in the background are that the money made out of almost nothing as debts is being used to strip-mine the natural resources of a fresh planet. Hence, it will be the diminishing returns from being able to continue to strip-mine the planet which will provoke the exponentially increasing enforced frauds to go through series of crazy collapses into chaos (although that may not matter to those people who are old and rich, as much as it will matter to those you are younger and poorer.)

It used to be correct to assert that less than one in a million people understood what the banksters were doing. Perhaps now it is one in a hundred that superficially understand. However, it would take at least one in ten to sufficiently understand to begin to make any material difference.

The underlying issues are that by the time enough people "wake up" the nightmares that were created by exponentially increasing enforced frauds will have become too far gone to cope with by any return to some old-fashioned ideals. However, most of the so-called "opposition" to the banksters is effectively controlled by the ways that they think and communicate, using the dominate natural languages and philosophy of science. Hence, most of the people who engage in superficially correct analysis of what the banksters have been doing then tend to collapse back to nostalgic nonsense about "what money should be," as their bogus "solutions."

"The death grip of the bankers" is literally true, because the debt controls are backed by the death controls. There must necessarily be some death control systems, with the murder systems as the most extreme forms of those. Hence, to change the money system must also mean to change the murder system that backs that up.

To "break out from the death grip of the bankers" would actually be for there to develop some radically different "death grip." However, the established systems are based on thousands of years of the most socially successful murder systems becoming as deceitful and treacherous as possible, within which context the only publicly significant "opposition" to those actually existing systems were controlled to stay within the same frame of reference of profound deceitfulness regarding the death control systems.

For several decades I have been developing a radical political philosophy which attempts to go through sufficient intellectual scientific revolutions and profound paradigm shifts in political science, which then could be applied to the combined money/murder systems, in order to have a language which can think and communicate about those in sufficiently different ways, in order to perhaps sufficiently change those systems.

What actually exists are globalized electronic monkey money frauds, backed by the threat of force from apes with atomic weapons. What is theoretically required would be for those monkeys and apes to think and communicate about themselves in radically different ways, which were more consistent with the radically different conceptualization of "reality" which has been developed by the prodigious progress in physical science, enabling about exponentially advancing technologies to empower the banksters' enforced frauds to become about exponentially more fraudulent.

To "break out from the death grip of the bankers" would actually be driven to occur in the context of the longer term consequences of that exponentially increasing fraudulence having driven irreconcilable social polarization and irreparable destruction of the natural world. Natural selection pressures would still be channeled through artificial selection systems, which would likely manifest as Globalized Neolithic Civilization's PEAK INSANITIES.

https://www.zerohedge.com/comment/11113193#comment-11113193

The bankers who can create the public money supplies out of nothing as debts are now doing so in the order of magnitude of TRILLIONS. That is AF IF the bankers were able to create another New Zealand every few months, or a new Canada every year.

That cascade of TRILLIONS is flowing through the social pyramid systems from the top down, and therefore, those who are positioned more toward the top of that pyramid system are receiving billions of units of currency to use to influence the political processes. Hence, those vicious spirals of the funding of politics based on the history of enforced frauds enabling symbolic robberies has already become almost inconceivably crazy and corrupt. The pyramidion people ALREADY CAN create apparently endless amounts of money out of nothing as debts for everyone else. 

Nobody that I am aware of has any practical ways to either prevent or even effectively prepare for the longer term consequences of such exponentially increasing fraudulence manifesting as social psychoses. The only thing that my decades of working on those issues has actually done is demonstrate those social facts that the ruling classes are becoming increasingly psychotic psychopaths, while those they rule over are becoming increasingly incompetent political idiots.

While I WISH that I could come to better conclusions, at the present time, and for the foreseeable finite future, I see NO good ways to "break out from the death grip of the bankers."

In reply to by Hoffman Lenz

Hongcha Hoffman Lenz Fri, 02/09/2018 - 16:04 Permalink

Kim is confused. It's a mania but it's not a Ponzi. A ponzi is when you are using the proceeds from new investors to pay off earlier investors - all without any actual production or profit. Ponzi himself did it with a postal arbitrage that never existed. People believed him, he paid a handsome premium and off they went.

In the case of the cryptos, new investors can turn around and sell at a profit at a moment's notice; while an earlier investor has no particular position in line and can get wiped as long as he's holding.

In reply to by Hoffman Lenz