Banking Group Warns That Bitcoin (BTC) Could Cause Global Internet Outage

In an annual economic report the Switzerland-based Bank of International Settlements has pointed out the shortcomings that plague Bitcoin (BTC) and other virtual currencies. Due to these shortcomings the lofty expectations that were placed on digital currencies and which are believed to have prompted interest as well as investment in Bitcoin will not materialize according to BIS.

Per the BIS virtual currencies suffer from wild volatility and regulatory uncertainty and this is what will prevent them from ever becoming widely adopted as means of exchange across the globe. Other shortcomings of the Bitcoin and other virtual currencies include the fact that they use too much electricity when they are being mined. Additionally they are also prone to fraud and manipulation.

Fundamental flaw

According to the Bank of International Settlements the decentralized nature of virtual currencies is a fundamental flaw as opposed to being a key strength. For instance with miners trying to beat each other in processing transactions this leads to wastage and high electricity consumption rates. Another shortcoming of Bitcoin according to the BIS is the fact that with increased adoption it will become harder to protect blockchain transactions. This is because it will get more expensive as the number of users increases. 

However the Bank of International Settlements argues that the global financial system could benefit from the decentralized and distributed ledger technology. As an example blockchain could increase the efficiency with regards to the sending of cross-border payments. Other sectors that could benefit from blockchain technology include trade finance which is still reliant on letters of credit and faxes.

Bitcoin price prediction

This comes in the wake of Phillip Nunn, a fund manager reiterating that he still expected the price of Bitcoin to reach a figure of $60,000 this year. Nunn was speaking during an event organized by KPMG in Manchester. According to Nunn most of the investors in the cryptocurrency sector currently are retail investors and consequently the release of bad news tends to cause the price of the flagship digital currency to fall.

Nunn acknowledged that due to the wild volatility associated with virtual currencies this was discouraging institutional investors. The fund manager who also serves as the chief executive officer of Blackmore Group, an investment firm based in Manchester, also sees some projects failing in the future especially the ones that are not established. Currently there are around 1,600 tokens. However Nunn could not exactly say the number of projects he expects to fail.

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