Because the Chinese language authorities continues to have a good time the huge downfall of cryptocurrency markets this yr, a key native blockchain professional has dubbed crypto a Ponzi scheme.
Yifan He, CEO of Crimson Date Know-how — a significant tech firm concerned within the improvement of China’s main blockchain venture referred to as Blockchain Service Community (BSN) — has penned a brand new article coping with various kinds of cryptocurrencies and their alleged Ponzi -like nature.
The article, revealed in native newspaper The Folks’s Day by day on Sunday, referred to as personal cryptocurrencies the “greatest Ponzi scheme in human historical past.”
The creator talked about the collapse of the Terra Community, the place the native token Terra (LUNA) – now often called Luna Basic (LUNC) – crashed by 99% and the algorithmic stablecoin TerraUSD Basic (USTC) misplaced its 1:1 peg value misplaced to the US dollar in Could 2022. He additionally criticized the more and more fashionable digital foreign money idea referred to as X-to-earn, which referred to move-to-earn or play-to-earn tasks, calling the mannequin a “Phishing Technique”.
The BSN chairman additionally talked about some well-known criticisms of Bitcoin (BTC) from Microsoft founder Invoice Gates and legendary investor Warren Buffett.
He himself can also be not a fan of Bitcoin or related cryptocurrencies. “Presently, all unregulated cryptocurrencies, together with Bitcoin, are Ponzi schemes as I perceive them, simply various ranges of threat based mostly on market caps and variety of customers,” he mentioned in a press release to Cointelegraph on Monday.
The BSN chairman added that he has by no means owned a cryptocurrency pockets or any belongings associated to it: “I do not contact them and I will not contact them sooner or later even when they’re regulated as a result of I consider that they haven’t any value in any way.”
In line with He, governments like El Salvador — which have opted to undertake BTC as authorized tender — “critically want primary coaching on funding.” “In any other case, they’re placing complete international locations in danger except their unique intent was to construct state-owned crypto trading platforms and rip-off their residents,” the supervisor instructed Cointelegraph.
Whereas he criticizes Bitcoin and plenty of different crypto tasks, he nonetheless believes that a part of the crypto market might do properly if correctly regulated. Money-backed stablecoins like Tether (USDT) and Circle’s USD Coin (USDC) shouldn’t be considered as Ponzi-like schemes, the BSN chairman mentioned, explaining:
“USDC or USDT are payment-related currencies, not speculative belongings. As soon as they’re absolutely regulated, they’re advantageous.”
Beforehand, he advocated for stablecoins in 2020. The manager as soon as deliberate to combine stablecoin funds into BSN beginning in 2021. The plan was ultimately scrapped as a consequence of China’s hostility in the direction of crypto.
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The information comes amid the Chinese language authorities capitalizing on the continued crypto market crash to justify its a number of bans on the trade. The latest coordinated ban was enacted in September 2021, with a number of Chinese language authorities taking motion to ban all sorts of crypto transactions within the nation.
Regardless of greatest efforts, China remained a dominant bitcoin mining supplier globally. In line with Cambridge Bitcoin Electrical energy Consumption Index knowledge, as of January 2022, China was the second largest producer of BTC mining hash charges after the US.