Experts warn Crypto world that the pursuit for decentralization may end up in an environmental disaster
An 88-year-old institution Bank for International Settlements (BIS) which is based in Switzerland and serves as a central bank of other central banks stated that cryptocurrencies consume too much energy, they are unstable, and they are subject to much manipulation.
Their fundamental flaw in their creation is basically the uncontrolled network of computers and their imitators that are contributed to more electricity consumption with a fast growth rate.
The Bank for International Settlements told the crypto world more or less that they are not ready to enter the financial world as far as professional services and they may not ever be ready.
On their 24-page article which was released on Sunday, they report that bitcoin and their mimic coins are suffering from a “range of shortcomings”
Those shortcomings will probably prevent cryptos for achieving there high expectations that have been created from the spark of interest last year.
The uncontrollable consumption of electricity and internet bandwidth by crypto miners may bring the internet down and we may end up with an environmental disaster.
One major find in the BIS report is the analysis that the blockchain technology will need very robust software to handle the enormous transactions on a national scale. As the size of the ledgers keeps growing, probably in the end will overwhelm everything from individual smartphones to servers.
Base on the report: “The associated communication volumes could bring the Internet to a halt”
A very interesting statement by Researchers said that the bitcoin miners which are the first to process transactions, are the major electricity consumers and based on their research those miners are consuming about the same amount as Switzerland does.
They Said: “Put in the simplest terms, the quest for decentralized trust has quickly become an environmental disaster”
One the other hand hackers took the opportunity on the incomplete infrastructure of the crypto exchanges and they are hacking them regularly. For example, last week bitcoin fell after a South Korean exchange reported that they have been hacked.
Bitcoin fell about 0.9% to the level of $6.439 on Monday.
Now the BIS also stated some of the advantages of using the blockchain technology by saying that the technology offers quick cross-border payments with more efficient way.
They also stated that even the technology offers faster transactions between the sender and the receiver with ease of an email that may be also the weak spot of the technology due to the risks on a number of factors to try and run a massive global economy with no center to control it.
The report concluded: “Trust can evaporate at any time because of the fragility of the decentralized consensus through which transactions are recorded.”
About the Author:
Marios Athinodorou is TeleTrade’s market analyst and commentator. Apart from being an experienced trader, Marios is an advanced technical analyst and is interested in trading psychology. He has 7 years of trading expertise in Forex and CFDs, providing insights to share with all kinds of traders, from beginners to experts. Among others, Marios is delivering weekly trading webinars. Sign up for upcoming webinars, here.
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