Bitcoin, Crypto currency, Blockchain

Little surprise: BIZ renewed their criticism of crypto-currencies

f112a9b531a3f5c316087e0339becd74 - Little surprise: BIZ renewed their criticism of crypto-currencies

From the centralist corner hailing, once again, criticism of crypto-currencies. The Bank for International settlements (BIS), the main problem is the lack of scalability of the digital money.

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Hyun Song Shin, Head of Research of the BIS, in an Interview with finews.ch renewed the criticism of the organization of crypto-currencies. It lacks these “characteristics of conventional money, and it is so popular”. What properties exactly he means by this, he leaves open. Instead, he is questioning the role of the Miner as an integral part of the crypto-Economy, and compares it to conventional book holders:

“As an accountant with the miners [sic] must make a record of every payment transaction, in the case of the crypto-currencies are used, electronically. The prepared effort and cost. Therefore, the use of crypto-currencies with fees.“

Shin leads as an example of high transaction fees in the December of last year, the month in which the price of Bitcoin was at its previous peak.

“If you wanted to pay, for example, a Cup of coffee with Bitcoin, they had to pay 57 US dollars fee.”

The Miner would make a “good business” and are keen to produce “traffic jams”. Shin is right, of course, when he refers to the scaling problems of the Bitcoin Ecosystem. Unfortunately, neither he nor his Interviewer lose a word about the fact that already several promising approaches to the Problem of scalability exist. The most prominent example for such a solution a proposal by the Lightning Network is in Bitcoin.

Purchasing power is created through trust – not only in what?

In addition to the lack of scalability, there is also a lack of trust, crypto-currencies’d compared to “normal money” to fall behind.

“You can’t be sure whether you can buy with a hard-earned crypto-currency later. […] If you have a Ten-franc Note, you can assume that you will receive for this traditional money in the Store.“

The last sentence is only valid when one speaks of regions with a stable currency. Who lives in a Hyperinflation-ravaged Economy like the current Venezuela (over), can’t be sure that its currency is not fast and loose.

Shin argues that trust in traditional currencies is justified by the Central banks:

“Behind traditional currencies and banks, which are incorporated in the respective political systems, and under public control are Central. This creates trust. Without the trust of the citizens in the purchasing power of money money is worth nothing.“

What is Shin here to lead as the advantage of the Fiat money, can also be used as one of his weaknesses interpret. Because his statement implies that in the case of a vibration of this trust in these institutions, the trust in the currency drops. Crypto-currencies, however, have the advantage that you have to give to any Central instance of his confidence, but a network, and ultimately the cryptography.

A real danger for the stability of the financial system of the BIS-Advisor in Bitcoin & co. does not, however. For the volume of Crypto is currency still too low. Also, a ban is the wrong way to go, because the crypto would submerge the Economy completely “in a world of shadows”, where she was then regulated.

Shin repeated the claim of the BIZ in June, by advocates, to regulate crypto-currencies, like other forms of investment.

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