The bank of international standards has brought to light, The Annual Economic Report, which is indicative of the following headline, “Crypto currencies: Looking beyond the hype”.
What is the reason?
- This global phenomenon, also debatable as whether it is the 21st century unicorn or money in the future, had promised to solve the problem of digital cash, but has failed to fulfill it. Since it has fallen short on its virtues of being trustless, decentralized and stable in terms of technology with no faux pas, no liability, it cannot be considered as a national currency.
What does the report put forward?
- The BIS report whisks off the history of money, in pure brevity. It says that Currency, in its printed form is nothing but a trust system and the history of currency is littered with doom and gloom of failed currency tokens.
- The notion of having a stable currency is not a criterion or convention, it is an exception.
- The report states that the surface of the price of this decentralized system of trust in cryptocurrency is very much equivalent in comparison to the amount of electricity consumed by an entire nation. This cost will soon manifest as a drifting obligation.
- There are discussions about stability, scalability and trust in finality of this system. Since the volume of trade determines the value, it ultimately results in volatility.
- The transactions are irreversible and pseudonymous and though it is secure and without a gatekeeper, it has been established that the finality of payment is “probabilistic”.
- Also, the value of cryptocurrency can be unfairly manipulated by miners who are the significant holders in companies conducting the transaction, known as 51% attacker.
“It is that narrative of human development under which we now have other fights to fight, and I would say in the realm of Bitcoin, it is mainly the separation of money and state.” — Erik Voorhees, cryptocurrency entrepreneur
Cryptocurrency was/is considered to be the dawn of a new economy, and the report’s suggestions of interoperability of cryptocurrency and redrawing of boundaries can help.