Brazil’s Central Bank Calls Bitcoin a ‘Pyramid Scheme’

THE BITCOIN IS A FINANCIAL ASSET WITH NO BALLAST THAT PEOPLE BUY BECAUSE THEY BELIEVE IT WILL APPRECIATE. THAT IS A TYPICAL BUBBLE OR PYRAMID [SCHEME]"

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Brazil’s central bank president, Ilan Goldfajn, criticized bitcoin earlier this week, equating the cryptocurrency to a “pyramid scheme.”

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“The bitcoin is a financial asset with no ballast that people buy because they believe it will appreciate. That is a typical bubble or pyramid [scheme],” Goldfajn said.

Ben Bernanke, former Federal Reserve chairman, publically applauded blockchain technology at Ripple’s Swell conference in Toronto earlier this week.

Goldfjn continued that bitcoin expedites illegal payments over the internet and that the “central bank is not interested in bubbles or illicit payments,” adding that these actions are “not something the central bank would like to encourage.”

Goldfjn’s comments are significant because lawmakers are currently drafting regulations for cryptocurrency transactions in the country.

In 2014, the central bank published a warning concerning the dangers involved with investing in cryptocurrencies.

“Virtual coins are not issued or guaranteed by a monetary authority. Some are issued and brokered by non-financial entities and [others do] not even have a responsible authority for its issuance. In both cases, entities and persons who make or issue these virtual assets are not regulated or supervised by the monetary authorities of any country.”

As far as blockchain technology is concerned, the bank has stated in early September that they “could make possible to create a unique shared view of a large variety of information fed and replicated across institutions.”

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