Agustin Carstens, general manager of the Bank for International Settlements (BIS), criticized Bitcoin, saying the asset was inherently risky and “increasingly vulnerable” to a 51% attack.
Carstens, a longtime Bitcoin (BTC) skeptic, stressed that only central banks should issue digital currencies.
“Investors must be aware that Bitcoin may collapse completely,” he said in a speech on January 27, 2021 at the Hoover Institute. “Scarcity and cryptography alone are not enough to guarantee the exchange,” emphasized Carstens.
Carstens, who runs the Basel-based central bank for central banks, speculated that the Bitcoin network will become “increasingly vulnerable” to majority attacks as the cryptocurrency nears its maximum supply of 21 million coins.
As fewer coins are produced, the rewards for miners for processing transactions will also decrease, and waiting times for acknowledgments will increase. As a result, Bitcoin is becoming more vulnerable to majority attacks.
Carstens described Bitcoin as a “speculative asset” that lacks “real added value” and as such should be viewed as a “community of online gamers”. As the reasons for this impending collapse, he cited mining with “more electricity than in the whole of Switzerland” and alleged price manipulation.
“Bitcoin presents itself as its own unit of account, but fluctuations in value mean that it is unrealistic to set prices for Bitcoin. This also undermines its usefulness as a medium of exchange and makes it a poor store of value, ”remarked Carstens.
The BIS chief banker also went for stable coins, such as the one proposed by Facebook, originally known as Libra but recently renamed Diem. He criticizes private companies that operate a public currency system by issuing coins backed by other assets such as fiat currencies.
“Private stable coins cannot serve as the basis for a solid monetary system. They have to be strictly regulated and monitored, ”Carstens thundered. In his book, governments should forever keep control of the spending of money.
“If digital money is to exist, the central bank must play a central role, guaranteeing stability of value, ensuring the elasticity of the overall supply of this money and monitoring the overall security of the system,” he said.
What do you think of Agustin Carstens’ remarks on Bitcoin risk and vulnerability? Share your thoughts in the comments below.
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