The CFA Institute, which is a recognized professional association for financial markets, has termed bitcoin as ‘a pyramid scheme.’ The institute does not believe that the digital currency could be branded as an asset at all since it is ‘inefficient to be a currency.’ This is a significant comment that came at a time when the overall cryptocurrency market is struggling to recover from the continuous dip in prices.
No Plans to Use
The CFA Institute said that no government has any plans to use bitcoin as a currency. The professional association thinks that if at all the digital coin is used for any transaction; it is mainly to keep it away from the purview of the legal authorities.
This included evading anti-money laundering laws or capital constraints. The recent comments come in the wake of supporters favoring the virtual asset claiming it to be representing ‘storing value.’ However, the institute did not find any reasoning in this argument.
The professional association believes that the theory of storing value only for those who are trying to liquidate their holdings as new buyers enter to support them. This is termed as nothing but a pyramid scheme where there is no guarantee for any higher returns. None-the-less, the institute thinks that it is not a genuine investment for investors to venture into it. Its viewpoint is that if an investor owns a stock, then it has the potential to deliver increasing profits.
Referring to the commodities , the CFA Institute thinks that it is more than a store value while indicating that governments needed fiat currencies for use. The professional association pointed out that the government does not indulge in selling the currencies to the general public as a form of speculative investments.
However, it is a different issue that governments try to stabilize their currencies. The institute thinks that at best, bitcoin and gold could share some characteristics if the ownership is stabilized, i.e., both are volatile with poor returns for long-term.
The CFA Institute believes that bitcoin could only help people dodge the restrictions on domestic currency or capital. However, it does not support this practice even as it termed that it is not different from any pyramid schemes. The only difference is the record-keeping method due to the blockchain platform.
A contributor of the institute said,
“Most of those who invest in bitcoin are effectively participating in a pyramid scheme either as a future victim or a perpetrator. Some no doubt truly believe that bitcoin will function as a currency for enabling transactions, rather than a “store of value.”
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The post CFA Institute Terms Bitcoin as “A Pyramid Scheme” appeared first on Cryptovibes.com – Daily Cryptocurrency News .
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