Bitcoin can cause massive internet shutdown – report
Only supercomputers will be able to process cryptocurrencies in nearest future, and transactions can lead to an internet collapse, according to a recent report by Swiss-based Bank for International Settlements (BIS).
“To process the number of digital retail transactions currently handled by selected national retail payment systems, even under optimistic assumptions, the size of the ledger would swell well beyond the storage capacity of a typical smartphone in a matter of days, beyond that of a typical personal computer in a matter of weeks and beyond that of servers in a matter of months,” the report said.
Records of cryptocurrency transactions are kept on a digital ledger. With every money transfer, the ledger swells in size.
Then, users of cryptocurrencies will face other problems with transactions, according to the report. “Only supercomputers could keep up with verification of the incoming transactions. The associated communication volumes could bring the internet to a halt, as millions of users exchanged files on the order of magnitude of a terabyte,” BIS wrote.
The BIS also criticizes the mounting transaction fees of cryptos. When bitcoin peaked at $20,000 in December, a single operation with the digital currency cost additional $57. "Just imagine, if you bought a $2 coffee with bitcoin, you would have had to pay $57 to make that transaction go through,” said Hyun Song Shin, the bank’s head of research. Some people don’t hold cryptocurrencies as money, but are speculating on its price, he added.
Founded in 1930, the Bank for International Settlements is the oldest global financial institution, and is known as the bank for central banks because it is where they hold accounts. It provides gold and foreign exchange transactions for them and holds central bank reserves. The BIS is also a banker and fund manager for other international financial institutions.
The BIS has consistently called on central banks to clamp down on bitcoin and other cryptocurrencies to stop them “piggybacking” on mainstream institutions and becoming a “threat to financial stability.”
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