A Kenyan insurance executive, Julius Kipng’etich has compared cryptocurrencies like bitcoin to Ponzi schemes and has urged his countrymen not “touch this.” In addition, Kipng’etich warned those already involved in crypto trading to be prepared for the consequences as this always “ends in tears.”

Bitcoin is a Medium of Exchange

Interestingly, when addressing attendees of a business seminar, Kipng’etich does acknowledge that bitcoin already meets one of the conditions for it to be treated as currency. He stated:

Currency represents two primary things; it is a medium of exchange and a store of value. Any currency can be described as medium. I will give you something if you are willing to exchange it.

Kipng’etich’s view on cryptocurrencies seems to be in line with some central banks. For instance, in its 2019 consultation paper on crypto assets, the South African Reserve Bank (SARB) similarly acknowledges that “crypto-assets have the ability to be used for payments (exchange of such value) and for investment purposes by crypto-asset users.”

Cryptocurrency Not a Store of Value

However, Kipng’etich claims that bitcoin is not a store-of-value because it is not backed government. The executive stated that only governments have the authority to issue currency based on their position. The executive stated:

Government is the custodian to regulate how much value has been given. Because currency represents an output, they issue it. The central bank then represents that output in currency.

Therefore, cryptocurrencies such as bitcoin, when compared to this standard, are either worthless or “hot air”, as Kipng’etich put it.

Do you agree with Kipng’etich’s characterization of cryptocurrencies as Ponzi schemes? Let us know what you think below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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