An international financial institution, the Bank for international settlements (BIS) has criticized the cryptocurrencies and blockchain technology published on 17 June, the Chapter titled “Cryptocurrencies: looking beyond the hype” its annual economic report.
The Chapter describes the history of technology and the analysis of whether she can contribute to the creation of “bestoverall” forms of money. BIS concludes that while the blockchain technology underlying the work of cryptocurrencies, even the most advanced, cannot substitute for a well-established institutional support of conventional money. This is due to the fact that now in the cryptocurrency field, there are a lot of unhealthy symptoms and the concentration of mining in the hands of the elite, and an increase in the number of new cryptocurrencies, and the volatility of the markets, and scalability issues, and hard-forks (introduction to the network of the new rules incompatible with the old SOFTWARE).
In addition, BIS believes that the use of blockchain technology for processing large quantities of transactions from retail can lead to a stop of work of the world wide web.
“To handle the number of operations that manage the individual retail payment systems, even the most optimistic projections require huge power, which is not able to provide a typical modern smartphones, PCs, and servers” — explained in the report.
The authors suggest that only supercomputers can handle in order to hold each retail transaction on the blockchain. However, according to the report, even if the world existed a sufficient number of supercomputers to create a decentralized network of this scale, millions of users would have to send each other the file sizes in the terabytes. According to the authors, this huge amount of data could lead to failures in the operation of the Internet.
Despite the criticism, the BIS indicated that the blockchain technology might be promising in other areas. To illustrate, the cross-border transfers and a variety of niche industries, where the maintenance of multiple copies of logbooks spent significant funds. The report also says that the organization conducts research and other technologies that can solve the same problems as the blockchain, however, the question is which one is more effective is still open.
Recall that in September last year the Bank devoted digital currencies quarterly report, which urged Central banks to pay special attention to potential risks that are cryptocurrency for the global financial system and the economy.
comments powered by HyperComments