October- 22, 2018 | AtoZMarkets
The Bank for International Settlements (BIS) has revealed in its report today, that cryptocurrencies like Bitcoin and Ethereum would break the internet if they are used at a national scale in their current form, considering the currencies mentioned as “poor substitute for state-backed currencies.
BIS said in the report as well, that the lack of a central institution backed cryptocurrencies risks breaking the value of the market and prove the currencies to be worthless for traders.
“Trust can evaporate at any time because of the fragility of the decentralised consensus through which transactions are recorded,” the report said.
The need of a decentralised blockchain ledger to record transactions to be updated eventually by every user resulted in congestion as cryptos have become increasingly popular.
Smartphones May Fail to Store Blockchain as Storage Capacity Being Occupied
With the entire bitcoin blockchain forming around 170 gigabytes of data, the average smartphone is said to be unable to store the blockchain with “a matter of days” if it started to handle all of a country’s retail transactions, as per BIS’s said.
“The associated communication volumes could bring the internet to a halt, as millions of users exchanged files on the order of magnitude of a terabyte,” the BIS stated.
The last year witnessed a significant rise of the bitcoin’s value, the thing that drew the regulators’ attention, as well as that of economists around the world, while the Bank of England reported examined the effects of a central bank-backed version, which has not been planned, with the arguments around such a version of crypto still “have have not produced a strong case for immediate issuance”, as per the report.
The bank had expressed a negative stance toward digital currencies, describing them as “lacking trust” in stability, even though economists tend to believe that cryptos could retransform the monetary system.
BIS added that the blockchain technology could be used in “financial settlement”, the BIS said, reminding of warnings International Monetary Fund boss Christine Lagarde made about the clearing industry being likely to see significant upheavals in the coming years.
BIS referred as well to that “Cryptopayment” systems based on sovereign currencies may have a future.