19 Jun 2018
The Bank of International Settlements BIS releases negative cryptocurrency report, claiming that " the decentralized technology of cryptocurrencies is a poor substitute for the solid institutional backing of money."
19 June, AtoZ Markets – The financial institution that is operated by global central banks has released a document that is called “Cryptocurrencies: looking beyond the hype.” In this document, the authority reportedly is taking aim at the cryptocurrency market.
The document from the Bank of International Settlements (BIS) outlined the history behind the technology. It also examines whether cryptocurrencies can really create a trustless form of money. The release of this document is coming ahead of the BIS’s full annual economic report. The latter will be published next week.
The BIS has mentioned hard forks, the volatility and scalability of the markets, and the mining concentration as issues that are related to crypto market at the moment. This list has also included the proliferation of new cryptocurrencies. The bank’s report has concluded that " the decentralized technology of cryptocurrencies, however sophisticated, is a poor substitute for the solid institutional backing of money."
Moreover, the BIS has stated that using a Blockchain to manage the volume of retail payment on a daily basis "could bring the internet to a halt."
The report reads:
"To process the number of digital retail transactions currently handled by selected national retail payment systems, even under optimistic assumptions, the size of the ledger would swell well beyond the storage capacity of a typical smartphone in a matter of days, beyond that of a typical personal computer in a matter of weeks and beyond that of servers in a matter of months."
Following on this, the BIS report claims that “only supercomputers” are able to carry out every retail transaction on a Blockchain. In fact, BIS states, even if there were sufficient supercomputers to do that, "millions of users [would] exchange files on the order of a magnitude of a terabyte." Such power-consuming communication is what would eventually impact the internet, the report states.
BIS’s document also addresses miners’ issue, stating that "delivering ... hinges on a set of assumptions: that honest miners control the vast network of computing power, that users verify the history of all transactions and that the supply of the currency is predetermined by a protocol."
Nevertheless, the authority has also recognized the potential of the Blockchain technology and wrote that "the underlying technology may have promise in other fields."
Think we missed something? Let us know in the comment section below.