Agustin Carstens, general manager of Bank for International Settlements (BIS), has criticized bitcoin, saying the asset was inherently risky and “increasingly vulnerable” to a 51% attack.
A long time bitcoin (BTC) Carstens skeptically stressed that only central banks should issue digital currencies.
“Investors should realize that bitcoin may be completely destroyed,” he said in a statement speech delivered to Hoover Institute on January 27, 2021. “Scarcity and cryptography alone are not enough to guarantee exchange,” Carstens stressed.
Carstens, who runs the Basel-based central bank central bank, speculated that the Bitcoin network is becoming “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, he said, and the wait times for confirmation will increase. As a result, bitcoin’s vulnerability to majority attacks will increase.
Carstens described bitcoin as “a speculative asset” that “lacks true value support” and as such should be viewed as a “community of online gamers.” He also cited mining with “more electricity than all of Switzerland” and alleged price manipulation as reasons for this impending outage.
“Bitcoin pretends to be its own unit of account, but value fluctuations make it unrealistic to set prices in bitcoin. This also undermines its usefulness as a medium of exchange, making it a poor store of value, ”said Carstens.
The BIS main banker also targeted stablecoins, such as the one suggested by Facebook, originally known as Scale, but recently renamed Diem. He finds fault with private entities that run a public monetary system by issuing coins backed by other assets, such as fiat currencies.
“Private stablecoins cannot serve as the basis for a healthy monetary system. They need to be tightly regulated and monitored, ”Carstens roared. In his book, governments must be in control of spending money forever.
“It is clear that if digital money is to exist, the central bank has a vital role to play in ensuring the stability of value, ensuring the elasticity of the total supply of such money and overseeing the overall security of the system “he explained.
What do you think of Agustin Carstens’ comments about bitcoin’s risk and vulnerability? Share your thoughts in the comments below.
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