The Bank for International Settlements (BIS) believes that cryptocurrencies are not yet ready to come to the forefront for logistical reasons because they do not yet have the characteristics to be a reliable means of payment. If cryptocurrencies were used with the same intensity as fiat money as a means of payment, mobile phones, computers and even the Internet could collapse.
In a large article within its annual economic report, the BIS states that Bitcoin and other such cryptocurrencies suffer from “a number of shortcomings” that would prevent the crypto coins from meeting the ambitious expectations they have generated. However, the BIS recognizes that there is a strong interest in these digital assets, the capitalization of which has soared in percentage terms in recent years.
The Bank for International Settlements (BIS) is an 88-year-old institution based in Basel, Switzerland, which serves as a central bank for other central banks. This prestigious institution believes that cryptocurrencies are too unstable, consumes too much electricity and are subject to too much speculation to ever serve as a reliable means of payment in the global economy.
Also, BIS has identified the decentralized nature of cryptocurrencies as a fundamental disadvantage and not as a key strength, because this type of operation would create logistical problems if crypto coins were to be extended as a method of payment.
Cryptocurrencies will be an environmental problem, Bank for International Settlements thinks
The BIS has analyzed what would happen to the blockchain software if it were to reach the size that traditional payment systems in each country currently handle. Accordingly, Bank for International Settlements believes the cryptos would eventually overwhelm everything from smartphones to servers.
But the problem goes far beyond storage capacity, and extends to processing capacity, as only supercomputers could keep up with the verification of incoming transactions.
The researchers say that the competition between the so-called crypto miners already consumes approximately the same amount of electricity as Switzerland.
“In short, the search for decentralization has quickly turned into an environmental disaster,” economists from the Bank for International Settlements said.