This week, the Bank of International Settlements (BIS), a membership group of over 60 of the worlds central banks, based in Switzerland have recently published a report that explores cryptocurrencies
from both a financial and sociological/cultural perspective. Within this report, the BIS have paid heavy attention to the idea of cryptocurrency adoption and thus believe that as it stands, technology is not ready for mass cryptocurrency adoption on the premise that if the current volume of FIAT transactions moved over to the blockchain (a dream for adoption enthusiasts) payment systems would not be able to keep up with the demand.
In essence, Bitcoin
might break the internet.
According to Tech Wire (Asia) the report by the BIS states:
“Only supercomputers could keep up with verification of the incoming transactions. The associated communication volumes could bring the internet to a halt.”
“Transactions have at times remained in a queue for several hours, interrupting the payment process. This limits cryptocurrencies’ usefulness for day-to-day transactions such as paying for a coffee or a conference fee, not to mention for wholesale payments.”
See the full report for yourself, here-
The BIS believe that realistically, our current technologies could not cope with cryptocurrency
adoption simply because the demand for transactions would be so high. Moreover, if the network went down or something broke, it would mass to absolute chaos. I suppose within this, the BIS are recognising that yes, there are many advantages that cryptocurrencies have over FIAT currencies but at the end of the day, if our digital banking systems go down (card payments, online banking etc) under FIAT rule we still have cash, a valuable asset that can’t be hacked (really) and that can’t, go down so to speak.
Of course, the BIS do refer to the blockchain as having other intrinsic technological benefits, but they don’t believe that cryptocurrency adoption is the best thing for the blockchain. According to Tech Wire, a researcher from the BIS has discussed one such advantage being within Distributed Ledger Technology, stating that DLTs:
“Can be efficient in niche settings where the benefits of decentralized access exceed the higher operating cost of maintaining multiple copies of the ledger.”
Overall, the BIS do talk with a great level of authority, but I do think adoption activists are already aware of this issue. We must consider that technology is always advancing and that one of the main reasons cryptocurrencies aren’t already adopted, is that the technology isn’t fully ready just yet.
This however doesn’t mean that the technology won’t be ready, eventually.