by Terence Zimwara
A Kenyan communications strategist, Mwotia Ciugu, has told African investors to be wary of investing in bitcoin which he claims is worth zero.
In an op-ed published by The Elephant, Ciugu insists bitcoin (BTC) is structurally incapable of delivering on its promise of becoming an alternative store of value or a hedge against inflation. In addition, the strategist also claims bitcoin fails both as a currency and an investment.
Although he concedes that Africa has one of the highest cryptocurrency adoption rates, Ciugu cautions, however, that the top cryptocurrency’s volatility and scalability issues mean it cannot act as a currency. Ciugu is quoted explaining:
Bitcoin fails as a currency because of two things: volatility and scalability concerns. In its 12 years of existence, bitcoin has maintained extremely high levels of volatility i.e. 60 per cent to 100 per cent annualized.
To further support this point, Ciugu makes reference to the U.S. dollar which he claims “has an annualized volatility of 17 [percent].” Concerning the crypto asset’s scalability problems, Ciugu predictably regurgitates the common arguments about bitcoin’s inefficient use of electricity and how this disqualifies it as a currency for day-to-day transactions.
Meanwhile, the strategist denies that bitcoin is now being used extensively in El Salvador, the first country in the world to declare bitcoin legal tender. According to Ciugu, the U.S. dollar is still the dominant currency in El Salvador. Despite putting forward these arguments, Ciugu surprisingly agrees that sending remittances via bitcoin is more cost-effective than using regular sending channels. He explained:
The use of bitcoin in that country is primarily for remittances by citizens working abroad to their families back home. These citizens rely on bitcoin for cross-border money transfers to avoid the high costs that come with such transactions, and also because most citizens of El Salvador, i.e. 70 [percent], don’t have bank accounts.
On why he thinks the cryptocurrency is worth zero, Ciugu uses billionaire investor Warren Buffet’s past comments about bitcoin to argue his point. In his previous remarks, Buffet had intimated the crypto asset had hallmarks of a pyramid scheme because it produces nothing. Just like Buffet, the strategist also believes bitcoin investors have no expectations of making any future earnings except through engaging in zero-sum games with other speculators.
The strategist also makes reference to how bitcoin crashed when Elon Musk voiced his concerns about the crypto asset’s energy use. Such a reaction according to Ciugu means bitcoin is more susceptible to sentiments than actual fundamentals.
The strategist ends this long article by conceding that bitcoin will probably hit the US$100,000 mark in the near future as some analysts are predicting. However, Ciugu argues that even if bitcoin were to reach such a milestone, this will have “no bearing on the intractable truths” he has articulated.
Do you agree with Ciugu’s views? Tell us what you think in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Austria Plans to Tax Cryptocurrencies Like Stocks, Vows Equal Treatment
As a growing number of governments are looking to tap into crypto profits, authorities in Austria have indicated their intention to tax gains from digital asset investments just like those from stocks and bonds. The move is expected to increase … read more.
US ‘Kidnapped’ Russian Crypto Businessman Denis Dubnikov, Lawyer Says
U.S. law enforcement agents have “kidnapped” crypto entrepreneur Denis Dubnikov in Mexico, before transferring him to the Netherlands where he was arrested, his lawyer told Russian media. Dubnikov is suspected of money laundering and faces up to 20 years in … read more.
Check all the news here
'Bitcoin Is Worth Zero' — Kenyan Communication Strategist Warns African Investors to Be Wary – Featured Bitcoin News – Bitcoin News
