BIS States that Cryptos Are Not a Strong Store of Value
The Bank for International Settlements released a new report talking about payment options and money in the modern age. It states that leading cryptos like BTC, ETH, or USDT can never serve the main functionalities of physical money and so do not possess a strong store of value.
Cryptos Not Likely to Take Over
The BIS further emphasizes in the published report that cryptos haven’t attained a significant critical mass and is not likely to attain it going forward. Reasons that are mentioned for why cryptos would never be able to replace traditional money is their not having scalability along with being very costly. The Annual Economic Report published mentioned earlier this year that costs related to mining or computing cryptos could actually cause a disaster within the economic climate. The BIS concluded that cryptos are harmed by the limitations of the internet, standing in the way of their efficiency as well as scalability. Furthermore, currently, there isn’t enough adoption of digital currencies which could indicate their imminent failure.
Cryptos are not currently preferred as a method of payment by many retailers or consumers. This is due to the fact that they have a sort of codependent structure to their relationship as each counts on the other to incite more use of cryptos. Retailers haven’t completely adopted the use of cryptos because there isn’t a sufficient number of consumers ready to pay for their use. Furthermore, not many retailers accept this type of payment. This means none of the two entities are inclined to take the risk.
A Bright Future for Blockchain
The report did, however, call out the few retailers who use cryptos for the sole purpose of engaging in a market schemes. This utilization of the assets is looked down upon as it diverges from their original purpose. On the other hand, the report referred to cryptos as a sort of asset, which brings a more official, reliable light upon the currencies.
In the year 2018, exit scams involving ICOs have already duped investors out of a total amount of about $10 million. A research study that was done recently shows that about 15% of BTC users and 46% of exchange transactions can be considered illegal. Moreover, the report had a positive outlook when it comes to blockchain technology, calling DLT a possible tool to exceedingly improve the efficiency of operations in banks.