Ilan Goldfajn of Brazil's Central Bank: Bitcoin is a Pyramid Scheme


via CoinTelegraph

TL;DR:

Ilan Goldfajn, president of Brazil’s central bank, compared bitcoin to a pyramid scheme. Goldfajn argued that people who invest in digital currencies are interested in the same kind of returns being chased by investors in pyramid fraud. “The Bitcoin is a financial asset with no ballast,” he said. The central bank has no interest in bitcoin, he added, and the bank does not encourage financial activities involving digital currencies. The bank issued a notice in 2014 about the risk of investing in virtual currencies and published a research note about the possible use of cases of blockchain.


Brazilian central bank President Ilan Goldfajn has compared the leading cryptocurrency Bitcoin to a pyramid scheme. He thus joins the ranks of numerous financial luminaries who apparently don’t understand Bitcoin, from billionaire investors to megabank CEOs like Jamie Dimon.

Based on a report by RttNews, Goldfajn has claimed that Bitcoin is similar to a pyramid scheme. He argued that people who are investing in digital currencies are interested in the same kind of returns being chased by investors in pyramid fraud.

“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].”

What is a pyramid scheme?

Under a pyramid scam, the organizers try to attract investors to invest in a product. The organizers then encourage investors to find new buyers or investors in the product. However, the returns promised to earlier investors will come from investments made by new investors rather than the sales from the underlying product. Eventually such a scheme collapses upon itself, bankrupting the later investors while heavily rewarding early ones.

Central bank’s position

According to Goldfajn, the central bank has no interest whatsoever in ”bubbles or illegal payments,” and the bank is not encouraging financial activities involving digital currencies. In 2014, the central bank already issued a notice about the possible risks of investing in virtual currencies. It also published a research note about the possible use cases of Blockchain, the underlying technology behind cryptocurrencies.

Meanwhile, Brazilian lawmakers are creating rules and regulations covering virtual currency activities in the country. It remains to be seen, however, if the comments made by Goldfajn will have an impact on the legislative process.

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Personal interests create metal blockers.

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What currency is not a pyramid scheme? At least with crypto, we have innovators at the top.

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Brazilian crypto market has been growing a lot lately

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BTC is the one that has no interest in Brazil’s Central Bank.

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I love watching these bankers react in fear.

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Brasil is fucked up!
I am from Brasil …(but living in US - San Francisco) Too much corruption there.
Be safe and don’t go to Brasil! It is not a safe place.
The president is a thief and almost all the congress and senate. It is a fucked up country unfortunately.

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Yes, Brazil is very fucked up in every possible way.

Don’t know exactly why almost every investor, banker, business people and others have this kind of mindset. Entrepreneurs and every one who don’t have a 8 AM to 6 PM job are called lazy because don’t want work “for real” and other critics. So you can imagine what happens when someone talks about disruptive business in general and cryptocurrencies.

I talked about bitcoin/blockchain/cryptocurrency with investors that call themselves open minded and liberals and I can’t change their view that bitcoin is a scheme, fraud or the “brazilian way” to deceive others for profit.

This is one of the reasons that I want to leave this country, looks like we are way back in time.

The company I work for is a little more open to bitcoin. Next week I’ll publish a post in the company blog talking and demystifying bitcoin. (lots of people think that bitcoin is a illegal thing for drugs and guns) :smiley:

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They need people like you to stay and fight. Eventually people will understand, and those that saw it coming, will benefit from it!

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I’m brazilian too.
And have to agree with u. So sad.

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If it’s not made if soccer balls they don’t understand it.

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