Bitcoin is "worthless" says Bank for International Settlements

Joanna Estrada
June 21, 2018

The Bank of International Settlements (BIS) has leased a chapter from its forthcoming annual report that delivers a critical appraisal of bitcoin and cryptocurrency. The BIS is based in Switzerland and is considered the central bank for other central banks.

As a part of its yearly economic report, which the BIS released on Sunday, the bank stated that Bitcoin and other cryptocurrencies suffered from a variety of flaws which would stop them from ever fulfilling expectations that the world had in them.

For instance, the BIS believes that cryptocurrencies are way too unstable and electricity-consuming as well as subject to manipulation and various scams and fraud. Furthermore, the BIS stated that the decentralized nature of cryptocurrencies is actually a negative in their eyes, not a strength.

BIS said: "To process the number of digital retail transactions now 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". The report by the BIS comes at a time when Wall Street has been opening up to the cryptocurrency market. "Without users, it would simply be a useless token". The New York Stock Exchange, Goldman Sachs, and other institutions have been working on new products that would provide customers with access to the cryptocurrency market. "Put in the simplest terms, the quest for decentralised trust has quickly become an environmental disaster". This is because fraudsters have been using initial coin offerings (ICOs) as opportunities to steal millions. It also didn't help that a report published recently accused Bitfinex and its native cryptocurrency Tether of having manipulated the prices of in the crypto market previous year, which is why the prices of the digital assets skyrocketed.

Thanks to all the negativity in the cryptocurrency market, the value of the market has fallen 53% since its all-time high in December of 2017.

BIS first attacks the notion of cryptocurrencies comprising an effective form of money, arguing that stability in value is a requisite quality for the facilitation of exchange. For example, cross-border or global payments are much faster and cheaper to make using Blockchain technology than traditional money wire transfers.

This technology also has helped the supply chain industry tremendously.

At the same time, the BIS did include what they thought to be some of the benefits of the Bitcoin network in their report as well.

Moreover, the BIS is not impressed with the fact that BTC transactions are super fast and believes it to be its Achilles heel, "It's simply too risky on a number of levels to try and run the global economy on a network with no center".

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