‘Bitcoin is worth zero’ – Kenyan communications strategist warns African investors to beware

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Kenyan communications strategist Mwotia Ciugu has told African investors to be wary of investing in bitcoin which he says is worth zero.

Bitcoin structurally unable to keep its promise

In an editorial published by The Elephant, Ciugu insists that bitcoin (BTC) is structurally unable to deliver on its promise of becoming an alternative store of value or a hedge against inflation. In addition, the strategist also claims that bitcoin is failing both as a currency and as an investment.

Although he concedes that Africa has one of the highest cryptocurrency adoption rates, Ciugu cautions, however, that issues with the highest cryptocurrency’s volatility and scalability mean that it cannot act like a currency. Ciugu is quoted explaining:

Bitcoin fails as a currency because of two things: volatility and scalability issues. During its 12 years of existence, bitcoin has maintained extremely high levels of volatility, i.e. 60 to 100% annualized.

To further substantiate this point, Ciugu refers to the US dollar which he says “has an annualized volatility of 17 [percent]. “When it comes to crypto asset scalability issues, Ciugu predictably regurgitates common arguments about bitcoin’s inefficient use of electricity and how this disqualifies it as a currency for transactions. daily.

Bitcoin useful for cross-border remittances

Meanwhile, the strategist denies that bitcoin is now widely used in El Salvador, the first country in the world to declare bitcoin legal tender. According to Ciugu, the US dollar is still the dominant currency in El Salvador. Despite these arguments, Ciugu surprisingly agrees that sending funds via bitcoin is more profitable than using regular sending channels. He explained:

The use of bitcoin in this country is primarily intended for remittances by citizens working abroad to their families back home. These citizens rely on bitcoin for cross-border money transfers in order to avoid the high costs associated with such transactions, and also because most of the citizens of El Salvador i.e. 70 [percent], you don’t have a bank account.

To explain why he thinks cryptocurrency is worth zero, Ciugu uses billionaire investor Warren Buffet’s past comments on bitcoin to argue his point. In his previous remarks, Buffet had hinted that the crypto asset had the characteristics of a pyramid scheme because it produced nothing. Much like Buffet, the strategist also believes that bitcoin investors have no expectation of making future profits except by engaging in zero-sum games with other speculators.

The strategist also refers to how bitcoin crashed when Elon Musk raised concerns about the crypto asset’s energy consumption. Such a reaction according to Ciugu means that bitcoin is more sensitive to sentiment than actual fundamentals.

The strategist ends this long article by conceding that bitcoin will likely hit the US $ 100,000 mark in the near future, as some analysts predict. However, Ciugu argues that even if bitcoin reached such a milestone, it would “have no bearing on the inextricable truths” that he articulated.

Do you agree with Ciugu’s views? Let us know what you think in the comments section below.

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