September 25, 2018 487By Marvin Dumont
"While cryptocurrencies are often thought to operate out of the reach of national regulation, in fact their valuations, transaction volumes and user bases react substantially to news about regulatory actions," according to BIS's authors. "Because they rely on regulated financial institutions to operate and markets are (still) segmented across jurisdictions, cryptocurrencies are within the reach of national regulation."It should be pointed out that many crypto enthusiasts view Bank for International Settlements with a skeptical eye because of what it represents: traditional, old-world finance. BIS is comprised of 60 of the world's central banks hailing from countries that have 95% of global GDP. Its June 2018 report "Cryptocurrencies: looking beyond the hype" argued that cryptocurrencies cannot act as new form of money.
"[There are] economic limitations inherent in the decentralised creation of trust which they entail. For the trust to be maintained, honest network participants need to control the vast majority of computing power, each and every user needs to verify the history of transactions and the supply of the cryptocurrency needs to be predetermined by its protocol," according to BIS's authors. "Trust can evaporate at any time because of the fragility of the decentralised consensus through which transactions are recorded. Not only does this call into question the finality of individual payments, it also means that a cryptocurrency can simply stop functioning, resulting in a complete loss of value."BIS also contends that cryptos are inefficient and require vast energy. Moreover, digital coins cannot scale with transaction demand, are prone to congestion and greatly fluctuate in value.
"Overall, the decentralised technology of cryptocurrencies, however sophisticated, is a poor substitute for the solid institutional backing of money."Articles by Marvin Dumont: $300M Bitcoin Ponzi Scheme: Indian Scammers Face Justice Bitcoin Flaw Discovered: Inflation Attack Creates Bogus BTCs Experts Warn SEC And Congress: Bad Rules Will Harm Bitcoin Investors Bitcoin Is Replacing Bolivar As Venezuelan Economy Crashes U.S. Regulators Move Towards Guidance On Cryptos