Earlier this week, the Bank of International Settlements (BIS) in Switzerland issued a new document as part of its annual economic report that warns citizens of the dangers of digital currencies.
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Since the report’s publication, many leaders in the crypto community have argued that the BIS is incorrect in much of what it seems to state as fact.
CEO and co-founder of Circle Jeremy Allaire commented that the report[2] was “very shallow,” and added, “They haven’t done much research at all. They’re looking back at stuff that’s years old. They’re not looking at what’s going on in terms of the real R&D in this space. It’s just really poor research.”
This research appears to treat each coin as interchangeable with the next, and the findings claim that they “all [tend] to be very closely substitutable with one another.” Throughout the report, the author tacitly references the operations of Bitcoin’s blockchain and assumes that all cryptocurrencies function in a similar vein. These assumptions are fallacious in their logic and are hallmarks of the same “shallow,” narrow-scoped research that Allaire criticizes.
The document does acknowledge some benefits to blockchain technology. For example, sections point out that the blockchain can make cross-border payments easier and more efficient, along with the business of both importing and exporting goods.
However, the authors also claim that the blockchain will be too expensive to secure, and that it could “bring the internet to a halt,” as implementing it into digital retail transactions handled by national payment systems will overwhelm “everything from individual smartphones to servers.”
According to the text, cryptocurrencies are “not scalable” and are more likely to “suffer a breakdown in trust and efficiency” the more people use them. Most cryptocurrencies operate via decentralized platforms, which BIS says
