Chinese state-sponsored blockchain organization knocks out crypto • The Register
Leaders of China’s Blockchain-based service network (BSN) – a state-sponsored initiative aimed at commercial use of blockchain technology – branded cryptocurrency as “the largest Ponzi scheme in human history” in state-sponsored media on Sunday.
“The author of this article believes that virtual currency is becoming the largest Ponzi scheme in human history, and to perpetuate this fraud, the currency circle has tried to take on different guises for it,” Shan Zhiguang and He Yifan wrote in Folkets Dagblad.
He Yifan is the CEO of startup Red Date Technology – a founding member and architect behind BSN – where he serves as CEO. Co-author Zhiguang Shan is the leader of the BSN Development Alliance.
Launched in 2020, BSN offers a Beijing-backed infrastructure for blockchain developers in the Middle Kingdom – without cryptocurrency, as it is illegal in the country. The framework is intended to be interoperable globally, but has separate international and national versions to comply with rules in China.
He and Zhiguang reasoned that cryptocurrency is a Ponzi scheme because it requires a continuous flow of new investors to remain stable, with early investors earning the most.
“But this condition is actually based on an extremely fragile balance,” the duo wrote. “When there are malicious short sales, no successors, tight funds or regulatory changes that affect participants’ confidence or the determination of latecomers, it will cause this seemingly exquisite cycle to collapse instantly and the value to be zero.”
The authors also protested against the move-to-earn and play-to-earn models often used in Web3 applications, comparing them to phishing schemes. In these models, participants who perform an activity – such as walking – can “earn” blockchain-based assets.
Within the commentary, He and Zhiguang strengthened their anti-crypto comments with similar comments from Bill Gates, Warren Buffet and Charles Munger. They also quoted Karl Marx and quoted Elon Musk’s ability to manipulate Dogecoin with a tweet as to why the alterna money is deeply defective.
Cryptocurrency is currently going through a unique crash. Investors have even begun to target it with short-trade products.
The decline was partly triggered by the meltdown of TerraUSD’s “stablecoin” – a cryptocurrency allegedly linked to the US dollar. The associated token, Luna, wiped out $ 40 billion from the system when it crashed. With global economic conditions dangerous, investors have turned to more conventional instruments for comfort.
“There are many insights into why LUNA and UST collapsed in an instant, but one thing few people mention is that they combine two Ponzi schemes, cash and equity, and are interconnected,” said He and Zhiguang.
Although the warm footage from BSN executives reflects Beijing’s general disapproval of cryptocurrency, China is not the only Asian country to have such an attitude.
Last week, Chief Fintech officer Sopnendu Mohanty of the Singapore Monetary Authority (MAS) said the city-state would be “brutal and incessantly harsh” against dubious crypto players.
At the end of May, the country’s Deputy Prime Minister Heng Swee Keat told conference participants that retail investors should not buy cryptocurrency.
Thailand has restricted the use of cryptocurrency this year by banning it as a means of payment.
El Salvador, on the other hand, took a completely different approach by becoming the first country in the world to use Bitcoin as a legal tender in September last year – a move that sparked criticism from the World Bank. ®
