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BIS boss: The Bitcoin system can collapse

coin with bitcoin logo. (Photo: dpa)

A forecast by BIS Chairman Agustin Carstens paints a dystopian future scenario for Bitcoin. However, these assumptions are hardly realistic.

Agustin Carstens, Chairman of the Bank for International Settlements (BIS), is critical of the future development of Bitcoin. According to a Bloomberg report, the BIS boss even predicted a crash of the digital store of value.

“Investors must be aware that Bitcoin may well collapse “because the system becomes vulnerable to majority attacks when it approaches its maximum supply of 21 million coins, said Carstens in a speech for the Hoover Institution on January 27, 2021. More precisely, he means the following scenario:

As the amount of Bitcoin mined continued to decrease, miners withdrew more and more. This leads to longer transaction times and makes the system more vulnerable to majority attacks.

In addition, the BIS boss criticized stablecoins for the fact that a private company such as for example, Facebook is responsible for maintaining the deposit of the asset, which raises questions of governance. In general, this responsibility should still lie with the central banks. As a result of the pandemic, the state institutions recognized that there was a trend towards electronic payments. Accordingly, central banks around the world are now being encouraged to develop technologies that will enable progress towards digital currencies. Specifically, says Carstens: “Healthy money is of central importance for our market economy, and it is the central banks that are uniquely able to guarantee this. If digital currencies are needed, the central banks should be the ones to issue them. “

Pessimistic Bitcoin forecast unrealistic?

But the reduced amount of mined Bitcoin due to the halving is usually compensated for by the increasing price for the miners due to the shortage of digital gold. The last bitcoin is expected to be mined in 2140. Only then do experts expect higher transaction fees within the crypto network. It is also quite possible that modifications will be made to the industry leader by then. BTC-Echo was already dealing with a possible future scenario.

An attack on Bitcoin is possible in principle. For this, however, at least 51 percent of all blocs would have to come under the control of the attacking party for a certain period of time. That is far too costly to result in an economic advantage. In addition, the decentralization tends to increase with every newly mined block. This fact is currently even favored. The high price opportunities of Bitcoin are currently attracting even more miners to the crypto space.

Jameson Lopp, the CTO of Casa, a security service provider for crypto Assets, also considers an attack on the cryptocurrency unlikely. He outlined a scenario for a possible decline in miners to Coindesk. Such a situation is only likely if another crypto network emerges that is far more lucrative for miners. So far, such a network is nothing more than pure speculation.

Author of the article is Daniel Hoppmann.

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Derrick Santistevan
Derrick Santistevan
Derrick is the Researcher at World Weekly News. He tries to find the latest things going around in our world and share it with our readers.

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