BIS boss chastises cryptocurrencies… again
The way in which digital currencies are created – mined – is not compatible with the way money should work.
The head of the Bank for International Settlements (BIS) has reinforced the organization’s claims that cryptocurrencies are inadequate as money, suggesting that they are instead a form of investment, an asset.
In a recent interview with Swiss regional newspaper Basler Zeitung, translated by the BIS, general manager Agustín Carstens argues that cryptocurrencies are “a bubble, a Ponzi scheme and an environmental disaster”.
Carstens asserted that digital currencies cannot assume the functions of money because of the way in which they are created. The BIS boss said that mining or producing tokens is intended to be a profitable activity and in turn, supports the infrastructure that sustains cryptocurrencies and the blockchains they operate on.
“This incentive, however, is not compatible with maximizing the usefulness of money. Cryptocurrencies do not fulfill any of the three purposes of money,” Carstens said. They are neither a good means of payment, nor a good unit of account, nor are they suitable as a store of value. They fail dramatically on each of these counts.”
Carstens said that distributed ledger technology (DLT) or blockchain is very different from cryptocurrencies.
“The technology may have useful applications, but producing money is not one of them,” he said.
The GM recommended that central banks and governments should increase protection and advice for investors and consumers and assume responsibility for strengthening national anti-money laundering legislation.
Central banks are trusted, and that trust is something they have built up over decades and for which there is no substitute right now. Trust is a valuable commodity. It is easily destroyed, but winning it takes time. Money has become established. Young people should use their many talents and skills for innovation, not reinventing money. It’s a fallacy to think money can be created from nothing.
BIS general manager Agustín Carstens on youthful obsessions and creating wealth
The BIS released a report last month which identified underlying economic problems and barriers preventing cryptocurrencies from becoming everyday means of payment, singling out three primary shortcomings.
A global operational taskforce, the Joint Chiefs of Global Tax Enforcement (J5), has been created to share and facilitate information and intelligence regarding international tax crime and money laundering activity.
You can learn all about different exchanges, understand exactly how to buy and sell cryptocurrencies, calculate your taxes, discover digital wallets to hold assets and explore a list of all the alternative coins on the market.
- Cryptocurrency: Why all eyes are on eToro’s USA launch
- Bitcoin weekly price analysis 28 August: Token’s value soars in face of ETF rejections
- Most global companies are slow to adopt blockchain technology: PwC survey
- Leading universities are offering a growing number of crypto courses: Coinbase
- Cryptocurrency: Value-making coins vs value-giving coins