Bank of International Settlements Releases Doomsday Report on Cryptocurrency

Isaac Cain
June 20, 2018

In a withering 24-page article released Sunday as part of its annual economic report, the BIS said Bitcoin and its ilk suffered from "a range of shortcomings" that would prevent cryptocurrencies from ever fulfilling the lofty expectations that prompted an explosion of interest - and investment - in the would-be asset class.

Today's cryptocurrencies become more cumbersome to use as the number of users increases, suggest the BIS, in contrast to conventional money, which works better the more people use it and trust it.

Only supercomputers will be able to process cryptocurrencies in neare future, and transactions can lead to an internet collapse, according to a recent report by Swiss-based Bank for International Settlements (BIS).

Furthermore, the amount of energy that is needed to power bitcoin transactions is phenomenal.

The uncontrollable consumption of electricity and internet bandwidth by crypto miners may bring the internet down and may end up as an environmental disaster.

The BIS is weighing in at pivotal moment in the cryptocurrency story.

On the other hand, hackers took the opportunity on the incomplete infrastructure of the crypto exchanges and they are hacking them regularly.

BIS Says Bitcoin Unstable, Has Design Flaws, High Energy Costs & Fraud Problems

Bitcoin fell about 0.9% to the level of $6.439 on Monday. In a speech last week, an official of the US Securities and Exchange Commission said the Authority decided that Ethereum - a famous digital currency - cannot be recognized as a premium.

It has issued a series of warnings this year after an explosive rise in cryptocurrency values attracted a wave of followers. "They are also actively testing the distributed ledger technology underlying cryptocurrencies - not as a substitute for the current system, but to build on it".

Furthermore, the BIS pointed to the "unstable value" of currencies such as bitcoin. For example, one proposal is the Lighning Network, a "second layer" payment protocol operating on top of the Bitcoin blockchain, that is very fast, very scalable, and very low cost. And trade finance, the business of exports and imports that still relies on faxes and letters of credit, was indeed ripe for the improvements offered by Blockchain-related programs.

However, the toughest fall out of loss of trust, is not only the finality in the individual payment, but also the fact that the technology may simply stop functioning.

Headquartered in Switzerland, BIS stated that these challenges could be overwhelming and the fragility of the decentralized transaction ecosystem could result in a 'loss of trust.' The backbone of blockchain technology is the absence of a central authority which tracks the transactions.

Form for signing up for free newsletter.

More news: Egypt defender scores calamitous own goal against Russian Federation

Other reports by LeisureTravelAid

Discuss This Article

FOLLOW OUR NEWSPAPER