There have been a lot of discussions around Bitcoin’s potential of basically changing finance, but according to a report released by the Bank for International Settlements, the cryptocurrency world is not actually ready for prime time. Also, as far as mainstream financial services go, this could never happen, says Bloomberg.
Released this Sunday, the report is part of an annual economic report, claiming that Bitcoin suffered from “a range of shortcomings” which would eventually prevent cryptocurrencies from fulfilling a lot of expectations that prompted a huge interest and investments in Bitcoin.
So, are cryptocurrencies worth it?
The Bank for International Settlements is an 88-year-old institution, based in Switzerland, serving as a central bank for other central banks, and declared that cryptocurrencies are too unstable. Besides this, they consume a lot of electricity, not to mention that they are subject to manipulation and fraud.
Considering this, the bank believes that it’s currently not possible for digital assets to serve as bona fide mediums of exchange in the global economy.
Citing the decentralized nature of cryptocurrencies, they reached the conclusion that this is actually a fundamental flaw rather than a core strength.
The BIS also analyzed what it would take for the entire blockchain software underpinning Bitcoin to process digital retail transactions, currently handled by a network of national payment systems. Keeping it short, considering that the size of so many ledgers is swelling, it would overwhelm everything, starting with individual smartphones and ending with servers.
“The associated communication volumes could bring the Internet to a halt,” the report concluded.
Miners are becoming competitive
Researchers also talked about the race between miners. Currently, they’re competing to be the first ones to process transactions, a process which consumes a lot of electricity. As a comparison, mining takes now the same amount of power as Switzerland consumers.
“Put in the simplest terms, the quest for decentralized trust has quickly become an environmental disaster,” the report also says.
Finally, they admitted that blockchain and its distributed ledger technology has its benefits, like making sending cross-border payments more efficient. Still, it’s still not enough to see Bitcoin finally breaking the Internet as we know it.