Cryptocurrencies are like Ponzi schemes, says World Bank chief

There are growing concerns about the legitimacy of bitcoin as a currency. Photo/123RF.

The World Bank chief has compared cryptocurrencies to Ponzi schemes, adding his criticism to a slew of international concern about the potential impact of digital currencies.

"In terms of using Bitcoin or some of the cryptocurrencies, we are also looking at it, but I'm told the vast majority of cryptocurrencies are basically Ponzi schemes," World Bank Group President Jim Yong Kim was quoted by Bloomberg. "It's still not really clear how it's going to work."

Bitcoin transactions continue to take incredibly long and the volatility in the price means that the currency remains unreliable for the vast majority of purchases.

The World Bank's criticism comes off the back of the South Korean government's decision to ban bitcoin trading as well as an expose of significant fraud by Japanese authorities.

The bitcoin price skyrocketed at the end of last year but the currency has since lost two-thirds of its value.

In the local market, interest in cryptocurrency investment peaked in December, with many hoping to capitalise on the rapid growth of the currency.

Google trend data shows New Zealanders have steadily lost interest in the cryptocurrency as the value has declined.

Since reaching its zenith during the week of 17-23 December, interest in bitcoin has steadily declined.

Bitcoin has also gone out of vogue in Sweden, where many amateur investors are now turning their attention to the next big thing: cannabis.

"Out of nowhere, the interest for Canadian cannabis shares has completely exploded in Sweden," said Joakim Bornold, a savings adviser at online broker bank Nordnet.

Two Canadian cannabis companies, Aurora Cannabis and Canopy Growth, were among the top 10 most traded shares on Nordnet in January, he said. That list usually consists of companies such as Investor, Hennes & Mauritz, Nordea Bank and Ericsson.