Hyun Song Shin (Economic Adviser and Head of Research) expresses about Chapter V of the Annual Economic Report 2018.

In this latest chapter entitled “Cryptocurrencies: looking beyond the hype” released by the BIS (Bank for International Settlement) yesterday, the self-proclaimed ‘oldest international financial institution’ has besieged cryptocurrencies and Blockchain technology with a resolutely limited view to discrediting the use of this disruptive alternative currency system, in favour of the centralized global banking system.

Claims that “the tried, trusted and resilient way to provide confidence in money in modern times is the independent central bank.”

The BIS further outlines their perspective in a chapter V of the Annual Economic Report, that the prevailing centralized financial infrastructure is the only mechanism to ensure security for the global financial security and trust, deploying a comprehensive generalisation to argue that all cryptocurrencies suffer from the same shortcomings: poor scalability, energy inefficient consensus protocols, slow congested networks and costly transactions.

They perceive that the cryptocurrencies potential to replace trusted institutions with distributed ledger technology. Yet, looking beyond the hype, it is quite difficult to figure out a particular economic issue which they currently resolve. Processing of transactions are tepid and expensive, prone to congestion, and cannot scale with demand. The decentralized consensus behind the technology is also fragile and consumes vast amounts of energy. Still, distributed ledger technology could have promise in other applications. Courtesy: BIS publication, cryptovest

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