The Bank for International Settlements believes Bitcoin does not, and will not work as money, coming up with a long list of shortcomings for the first digital coin and similar digital assets. The BIS, which serves as “a central bank for central banks“, later met with some criticism.
Weiss Cryptocurrency Ratings, an offshoot of Weiss Ratings, believes not all criticisms against Bitcoin and altcoins are justified. According to the ratings agency, cryptocurrencies may survive into the future, and make a change:
“Don’t get hung up on Bitcoin,” says Weiss Ratings crypto analyst Juan Villaverde, addressing the BIS.
“Instead, seek an up-to-date understanding of the fundamental building blocks of other, more advanced Distributed Ledger Technology. Never underestimate the capacity of talented developers. And open your eyes to the benefits of a more inclusive, democratic monetary system.If you do, a transition to crypto technology can be smooth and evolutionary. If you don’t, you risk a transition that’s disruptive and revolutionary.”
Weiss Cryptocurrency Ratings agrees that the crypto market is extremely volatile right now, but this is due to low volumes. If it matures, it would lead to smoother price movements.
One of the BIS criticisms is that the permissionless nature of Bitcoin makes it too cumbersome. Weiss concedes this may be possible, and points to consensus systems like NEO, or Cardano, or others, where there is a level of consensus based on pre-agreed rules.
The BIS also mis-represents the value, stating that no crypto asset has intrinsic value. This is refuted, according to Weiss, by the example of Ethereum, which serves as a utility coin and without which a dApp ecosystem, or even transactions, could not exist.
The BIS also notes the high energy use of Bitcoin:
“Individual facilities operated by miners can host computing power equivalent to that of millions of personal computers. At the time of writing, the total electricity use of bitcoin mining equalled that of mid-sized economies such as Switzerland, and other cryptocurrencies also use ample electricity. Put in the simplest terms, the quest for decentralised trust has quickly become an environmental disaster.”
Weiss concedes that, but also notes there are proof-of-stake coins that may be used in Bitcoin’s place.
While some of the flaws are legitimate, there are crypto assets that are seeking, and finding ways to build a better protocol. Governance chains are being tested, with various levels of success. However, the report stresses too much the limitations of Bitcoin, which is still the most influential crypto asset.
This article appeared first on Cryptovest
