Don’t bet on bitcoin ever replacing the dollar or other traditional currencies as everyday money.
That’s one of the messages from a new report by an organization that represents dozens of the world’s central banks.
The group, Switzerland-based Bank for International Settlements (BIS), said the “intense interest” in bitcoin and other cryptocurrencies had prompted it to look “beyond the hype” at what use they could actually contribute to the economy.
The report’s authors were unimpressed, detailing a range of problems with trying to adopt cryptocurrencies as a widely used form of money.
They include the danger that just processing all the payments “could bring the internet to a halt,” said the report, which was published Sunday.
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A big part of the appeal of many cryptocurrencies to their supporters is that they are decentralized rather than tied to a central bank like the US Federal Reserve. Records of transactions are kept on a digital ledger.
But because every single transaction is added to the digital ledger, the report said using a cryptocurrency like bitcoin for retail transactions around the world would quickly swell the ledger beyond the capacity of computer servers to store it. Supercomputers would be needed to keep up with verifying incoming payments, and the huge amounts of data being exchanged between users would bring the internet to its knees.