It seems that the Bank of International Settlements (BIS) has sparked off a new debate between crypto critics and the crypto advocates over cryptocurrencies.
In a 24-page report published on its website asserted that the virtual currencies cannot be trusted. It also dubbed the cryptocurrencies as “a poor substitute for the solid institutional backing of money”.
The BIS is a Switzerland-based organization which consists of 60 of world’s central banks and is often regarded as the central bank for central banks. Its latest warning might trigger some more swirls and sways in the crypto market.
Pointing out three key shortcomings, the BIS reports pointed out that “scalability, the stability of value and fragility of the decentralized consensus through which transactions are recorded” would prevent cryptocurrencies from replacing money.
“Trust can evaporate at any moment because of the instability of the decentralized consensus through which transactions are recorded,” the report said.
The report pointed to the case of the Silk Road underground marketplace for drugs and other contraband which had used virtual currencies like Bitcoin to prevent customers from detection. It was later shut down by the Federal Bureau of Investigation.
Crypto advocates say BIS misses the point:
The crypto advocates find the report shallow. Jeremy Allaire, the CEO of Goldman Sachs-backed crypto company Circle said in an interview that the report was very shallow.
“They are looking at the things that are year’s old, they have forgotten to take note of the R&D going on in this space. I would call it a poor research,” he added.
Allaire also said, “I am a technical person and I cannot up. There’s so much happening. I have never seen anything like it, all of this is happening at a great pace.”
Matthew Newton, an analyst at eToro said, “Cryptocurrencies are emerging and the blockchain technology is evolving at a rapid pace.”
Notably, 98 per cent of Bitcoin’s original code base has been rewritten since its inception in 2009 and developers around the world are trying to come up with new ideas and solutions.