The head of the Bank for International Settlements believes Bitcoin could collapse altogether. Agustín Carstens, the general manager of the BIS, criticized the use of Bitcoin as a currency as “it has no added value”. He believes that a central bank digital currency is the future for digital payments.
Carstens spoke at a political seminar at the Hoover Institute where he discussed the future of the monetary system. While he acknowledged that the future will be determined by digital payment systems, he doubted that Bitcoin is suitable for this role. He sees Bitcoin as “more of a speculative good than money”.
He doubled his criticism of Bitcoin, describing it as “Tesla without cars – watchers are intrigued by it, but the actual value added is missing.”
He added, “Perhaps the Bitcoin network should be seen more as a community of online gamblers exchanging real money for items that only exist in cyberspace. Bitcoin presents itself as its own unit of account, but fluctuations in value mean that it is unrealistic to set prices for Bitcoin. This also undermines its usefulness as a medium of exchange and makes it a poor store of value. “
Most importantly, investors need to be aware that Bitcoin “can definitely collapse,” he added.
Carstens, who previously acted as governor of the Bank of Mexico, went further into Bitcoin’s “energy-intensive protocol”, in which miners ensure the security of the system.
“A sad side effect is that the system uses more electricity than all of Switzerland. As Bitcoin approaches its maximum supply of 21 million coins in the future, the “seigniorage” for miners will decline. As a result, waiting times increase. “
For the Bitcoin SV community, the decline in block rewards has been mitigated by the increase in block sizes and, consequently, the increase in the number of transactions per block. While the Airdrops are still reliant on the block reward, the BSV community has turned to transaction processing to ensure a stable income every four years despite the programmed decline in block rewards.
For Carstens, the best solution to the “shortcomings” of Bitcoin is a digital currency from the central bank. The BIS recently conducted a survey that found that 86% of central banks are doing some form of research or implementation of a CBDC.
He concluded: “Despite all the restrictions on Bitcoin and other unauthorized cryptocurrencies, there is a greater economic promise in the” permitted “variant of DLT.”
See also: CoinGeek Live Panel, The Future of Banking, Financial Products, and Blockchain
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