- Sonja Davidovic has warned banks not to get involved with blockchain technology and first analyse it further before any steps are taken.
- Davidovic claims that central banks face huge risks with these technologies.
At the end of last week, three cryptocurrency experts talked about the challenges and prospects of central-bank issued digital currencies at the Massachusetts Institute of Technology (MIT) Bitcoin Expo 2020.
The experts in question were very well aware that distributed ledger technology could improve the existing level of the monetary system and argued that there will be significant challenges ahead in regards to privacy and scalability of blockchains.
An Economist with the International Monetary Fund (IMF), Sonja Davidovic has warned central banks not to get quickly involved with blockchain technology and first analyse it further before any steps are taken.
She said, “What we've seen a lot is that there's a hype out there and people are quickly jumping to choosing that technology just because it's popular."
She further went on to say:
"That certainly happened with blockchain. The result of that is that we've seen central banks that are directly engaging with it without going through the proper process of testing the technology in a proof of concept, selecting vendors through an open bidding process, and having a request for proposals."
Davidovic claims that central banks face huge risks with these technologies. This is because they typically outsource work to third-party companies.
"It's about the weakest link. You can have a secure system, but if the people who're operating the system click on a phishing email or allow a security breach, your most robust system is not going to help with security."
It will be interesting to see how this plays out. For more news on this and other crypto updates, keep it with CryptoDaily!