Yves Merch, an executive board member of the European Central Bank, claims that cryptocurrencies “are not money”. He also sees digital currencies as Ponzi schemes. However, he also acknowledges the benefits of the technological advances that it utilizes. He explained, “Virtual currencies (VCs) are not money, nor will they be for the foreseeable future.” He cites the costly transaction process, the slow speed of bitcoin network transactions, and bitcoin’s value fluctuations as characteristics that makes the digital currency a non-traditional type of money. He added, “At these speeds, if you bought a bunch of tulips with Bitcoin they may well have wilted by the time the transaction was confirmed.” Merch stated that cryptocurrency transactions at times lasted for an hour.
Merch also highlighted how digital currencies can be likened to Ponzi schemes. He declared,
“Like in Mr Ponzi’s schemes, those investors hope for future price gains and believe they will find a greater fool to sell to before the inevitable crash. Under these conditions, VCs exhibit wild fluctuations in value, meaning that they cannot be trusted as a store of value.” Besides Merch, the World Bank President as well as the head of the Bank for International Settlements similarly described cryptocurrencies as a Ponzi scheme.
Mersch does not want to acknowledge the idea that central banks will soon issue its own cryptocurrency. He calls for all to not be easily taken by digital coins’ novelty. He declared,
“It is important to avoid being beguiled by the flashing lights of novelty and assuming that, just because a technology is new, it is also better.” He also claims that creating digital currencies are not necessary. He advised, “Overall, there is currently no convincing motivation for the Eurosystem to issue DBM [digital base money] to the general public. It is unnecessary at present and, when the likely negative impacts on the financial system are taken into account, such a move appears disproportionate to the aims put forward by its proponents. There is no need to fix something that is not broken.”