BIS: Cryptocurrencies are an environmental disaster that could break the Internet
18 June 2018 | 10162 views | 3
In a scathing take-down of cryptocurrencies, the Bank for International Settlements says the replacement of retail payments by virtual money would break the Internet and lead to an environmental catastrophe.
In its Annual Economic Report, the Basle-based central banker's bank argues that the decentralised technology underpinning private digital tokens is no substitute for tried and trusted fiat money.
The paper calculated what it would take for the blockchain software underpinning bitcoin to process the trillions of retail transaction currently swirling through national payment systems.
"To process the number of digital retail transactions currently handled by selected national retail payment systems, even under optimistic assumptions, the size of the ledger would swell well beyond the storage capacity of a typical smartphone in a matter of days, beyond that of a typical personal computer in a matter of weeks and beyond that of servers in a matter of months."
With multiple ledgers operating at full throttle, "the associated communication volumes could bring the Internet to a halt", the report warns.
It also pointed to the electricity consumption used by miners to generate new tokens, billing the quest for decentralised trust as an "environmental disaster".
Today's cryptocurrencies become more cumbersome to use as the number of users increases, suggest the BIS, in contrast to conventional money, which works better the more people use it and trust it.
"Money has value because it has users," says Hyun Song Shin, economic adviser and head of research. "Without users, it would simply be a useless token. That's true whether it's a piece of paper with a face on it, or a digital token."