World Bank Chief Compares Cryptocurrencies To 'Ponzi Schemes'

Kim noted the World Bank was "looking really carefully" at blockchain technology as there was a hope it could be used in developing countries to "follow the money more effectively" and reduce corruption, according to Bloomberg.

"In terms of using Bitcoin or some of the cryptocurrencies, we are also looking at it, but I am told the vast majority of cryptocurrencies are basically Ponzi schemes," Kim said. "It is still not really clear how it is going to work."

Bitcoin's meteoric rise last year has come to somewhat of a halt in 2018 with the cryptocurrency losing $44.2bn of its $200bn market value in January after the US derivatives regulator called for exchanges listing new futures on virtual currencies to prove they have consulted brokers and trading firms.

Furthermore, South Korea, which is the third largest trader of Bitcoin, has signalled plans to close cryptocurrency exchanges completely while Chinese regulators want to expand restrictions on over-the-counter (OTC) and peer-to-peer platforms.

Bitcoin rose over 1,500% in 2017 from under $1,000 to finish the year at $14,156. However, since then it has fallen dramatically and is currently trading at $8,097.

Kim is not the first industry expert to highlight issues with the space after Bank of England governor Mark Carney said Bitcoin's rapid rise would prompt regulators to scrutinise the currency more closely.

"This is not a currency in the accepted sense," Carney said. "There is no central bank that stands behind it. For me it is much more like a commodity.

"This is not at a size where it is a macroeconomic risk to the global economy, but when prices are moving like that, my view would be investors need to do their homework."

Furthermore, Wall Street bear and former director of the Office of Management for President Ronald Regan David Stockman said the cryptocurrency boom would end disastrously.

"It is basically a class of really stupid speculators who have convinced themselves that trees grow to the sky.

"It will burn out in a spectacular crash. All of these latter-day speculators will have their hands burned to a crisp, and they will learn the proper lesson."

However, blockchain has found some support with JP Morgan Chase CEO Jamie Dimon claiming he "regretted" comments that Bitcoin "was worse than tulip bulbs" amid labelling it a "fraud" back in September.

Dimon said: "The blockchain is real. You can have cryptodollars in yen and stuff like that."