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 as 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 said:
Currency represents two primary things; it is a medium of exchange and a store of value. So any currency is medium, I give you so that you give something.
Kipng’etich’s view of cryptocurrencies appears to be consistent with that of 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, in terms of bitcoin being a store of value, Kipng’etich argues that since this is not backed by governments it, therefore, cannot be seen as a true store of value. According to the executive, only governments are mandated to issue currency by virtue of their positions. The executive explained:
Government is the custodian to regulate how much value has been given. That’s why they issue currency because it represents an output…Then the central bank represents that output in currency.
Therefore, when measured against this standard, cryptocurrencies like bitcoin are valueless or “hot air” as Kipng’etich puts it.