Cryptocurrency will not be able to threaten the economic power of Central banks, that is the conclusion reached by the authors of the report to the European Parliament.
In the document entitled “Virtual currencies and monetary policy of Central banks: future goals” says that while cryptocurrencies can potentially make financial transactions relatively safe, transparent, and quick, they pose no threat to major sovereign currencies.
In the analysis conducted by the Centre for social and economic research in Warsaw, emphasized that the emergence of crypto-currencies was caused by the real market demand for safe money, aggravated during the global financial crisis of 2008.
The researchers analyzed the advantages and disadvantages of virtual currencies. Among the first, they noted the transboundary nature of cheap and quick transaction, the best protection of all personal data.
Among the disadvantages of the cryptocurrency intelligence Center noted the risks of hacker break-ins; the use of money laundering and other illegal schemes; the complexity of understanding of the technology to users, provoking the emergence of fraudulent schemes and high price volatility.
The researchers also noted the high energy intensity of the cryptocurrency ecosystem.
“According to the assessment Digiconomist from may 7, 2018, the annual electricity consumption of the bitcoin network is 65,26 billion kWh, which coincides with the 65,26 billion kWh consumption of the Czech Republic — countries with a population of over 10.5 million people. Interpreting this number, you need to take into consideration that the bitcoin network processes the share of payments equal to traditional payment systems in the Czech Republic”, — said the scientists.
In their opinion, from an economic and environmental point of view this efficiency is questionable.
In the near future, the authors see no real competition to a sovereign currency from cryptocurrency:
“Seems most likely the answer is “no”, despite the relative market success of bitcoin and the possibility for similar success to his followers. A decade later with their creation and despite the adoption of some digital platforms and visible to the market value of the role of cryptocurrencies is extremely small”.
The researchers noticed that the virtual currency can become an alternative to sovereign currencies in countries with weak monetary system. As an example, they have led Venezuela, with its massive inflation and economic collapse.
“We can not exclude the progress in the field of information technology, which can bring even more transparent, safe and easy the use of virtual currencies. This can increase their ability to compete effectively with sovereign currencies, including major,” concluded the report’s authors.