As of this moment the entire crypto market is worth about the same as McDonalds and Disney combined -$350 billion. Not to diminish the importance of them but if they both disappeared tomorrow I am sure capitalism and the free world would recover in due time.
Bloomberg reports on Feb 8, World Bank Group President Jim Yong Kim stating “the vast majority of cryptocurrencies are Ponzi schemes.”
Taking it an entire step further, Finance MagNates reports on Feb 6, Agustín Carstens, the General Manager of the Bank of International Settlements, exclaiming “cryptocurrency is a threat to the entire financial system.”
Really? The greatest Ponzi scheme in world history is now a threat to the financial stability of the entire world? Is the world financial system that fragile?
I have a very hard time believing that if the entire cryptocurrency market evaporated tomorrow, just like if McDonalds and Disney disappeared, the entire world’s financial system would become unstable.
On Nov 29, 2009 the LA Times reported $5 Trillion was destroyed in the dot-com implosion. Jobs were lost. Fortunes were lost. The world continued. The financial system was certainly rocked, but it survived.
There is a huge difference between $350 billion and $5 trillion. So what we really need to ask ourselves is what do they - bankers - find so threatening about cryptocurrency? Is it possible that the bankers are desperately trying to slow down the advancement of crypto so they can catch up? Or are they really worried about existential threats to their very existence?
One more perspective, the stock market dropped over $1 trillion in market cap this past Friday. What difference did it make in your life? The system looks pretty stable to me today.
The motives behind these statements are unclear, but I think we can all agree on a couple of things:
Crypto is not currently nor for the next few years a threat to the world’s financial system.
The bankers are worried about something and it is certainly not the threat of crypto turning out to be a Ponzi scheme.
If the financial system is indeed so fragile than the argument for cryptocurrency is even stronger.
As the crypto market cap crosses $1 trillion in the not too distant future we can expect more comments like this by bankers.