What is the opinion of the head of BIS about Bitcoin

What is the opinion of the head of BIS about Bitcoin?

  • 2 March 2021
  • 442 View

In an interview with the Hoover Institute on 27 January, Agustin Carstens, President of the Bank for International Settlement (BIS), commented on Bitcoin. Agustin Carstens said bitcoin would not last long. He said it may take time, but an attack of 51 percent would eventually cause the world’s major cryptocurrency to fall.

He stated that bitcoin, as a currency, an intermediary of exchange, and a mechanism for storing value, has failed. This currency remains merely a “speculative asset” and not a currency. He also warned those who may be considering investing in Bitcoin. He said bitcoin would fall apart. Most importantly, investors need to be aware that bitcoin may collapse completely. Scarcity and cryptography alone are not enough to guarantee an exchange.

Bank for International Settlement

Bank for International Settlement

What is his opinion on Bitcoin production factors?

Carstens then turned his attention to the factors with which Bitcoin survives. He said bitcoin is so dependent on electricity consumption more than the entire country of Switzerland. According to him, at present, the mechanism of proving the work of Bitcoin with a large amount of energy remains clear.

The head of the International Settlement Bank on the nature of bitcoin scarcity said that this is the inevitable breaking point of the system, which has a supply ceiling of 21 million units in bitcoin units. He said the introduction of fewer coins meant fewer miners processing transactions. The waiting time for confirmation would increase. As a result, Bitcoin’s vulnerability to a “majority or 51% attack” would increase. Carstens added:

If digital money is to be sustainable, the central bank must play a pivotal role in three cases, ensuring value stability, ensuring the supply of all this money, and monitoring the overall security of the system.

BTC electricity consumption

BTC electricity consumption

What was the response of Bitcoin promoters?

Jameson Lopp, chief technical officer of Casa Bitcoin Storage Startup, said in an interview that Carstens’ arguments were inconsistent with the technical realities of Bitcoin. He wrote in an email:

It is unlikely that Bitcoin will attack like any other network. Because providing the necessary hardware for this work requires huge investments that must prepare in advance. This is only possible when another secure network with the SHA256 algorithm is created. And its extraction is much more expensive than bitcoin extraction.

Nic Carter, a senior executive at Castle Island Ventures, said in response to Carstens’ argument that bitcoin vulnerability does not mean it is not money. It does not matter if bitcoin is money or not, because bitcoin is “a tool to store value beyond time and space”. According to Carter, bitcoin is better than gold in this category. Carter also spoke about the Bitcoin network’s dependence on energy: Regardless, the cost of energy is well worth it. Because the existence of a non-governmental monetary commodity is valuable to the world.

BTC as non-governmental monetary

 BTC as non-governmental monetary

How can Bitcoin participate in the payment system?

According to Cryptonews, Alfred Kelly, CEO of Visa, devoted much of his talk to digital currencies at the Visa Revenue Meeting. He said in part that some digital currencies, such as Bitcoin, represent a new asset. And some digital currencies, such as stable coins, backed by Fiat currencies.

He said: We see all digital currencies as digital gold. They are widely held as assets that do not currently play a significant role in the form of a payment system. Our strategy is to work with wallets and exchange offices. So our users can buy digital currencies with Visa cards or deposit their currencies into their Visa accounts. Then use them to make purchases in common currencies.

2 responses to “What is the opinion of the head of BIS about Bitcoin?”

  1. Herve Fodouop says:

    Good to know

  2. Yanga Jili says:

    Interesting article and useful too

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