Recently, the “Central Bank of Central Bank” issued a 24-page report making a rigid decision against the cryptocurrency movement and the mainstream application of the technology.
The Bank for International Settlements (BIS) “fosters international monetary and financial cooperation and serves as a bank for central banks,” and apparently the recent crypto- doomsday report was done by formed experts in the banking sector. Regardless of the encouraging adoptive measures, we have seen throughout the crypto-ecosystem in recent months, the reports claim that permissionless cryptocurrencies just do not have use case as a monetary instrument.
The report has been covered in this article which gives a brief summary of the findings of the report pleasantly.
Central banks are essential for the use of fiat currency, there is no question to it. Such organizations ensure the supply of fiat currencies in a way to control inflation- not being able to do this will surmount in currency runs as experienced in Egypt, Venezuela, and Argentina where the cost of living has spiked as a result to declining currency value.
The absence of central banks will result in the economy of the world not having any form of regulating unbacked, uncollateralized fiat currency, resulting in widespread economic chaos and disaster. Even the most devoted fan of cryptocurrency as the only form of currency will likely agree that these institutions cannot be easily replaced overnight if they are ever to be replaced at all.
“The tried, trusted and resilient way to provide confidence in money in modern times is the independent central bank. This means agreed goals: clear monetary policy and financial stability objectives; operational, instrument and administrative independence; and democratic accountability, so as to ensure broad-based political support and legitimacy.”
According to the report, permissionless cryptocurrencies lack accountability given that they are usually decentralized. “Trust can evaporate at any time because of the fragility of the decentralized consensus through which transactions are recorded.”
Additionally, the report states that permissionless cryptocurrencies have high energy consumption level and are inefficient with regards to scaling issues that are presently faced by current-generation blockchains. Moreover, blockchain forks establish transaction uncertainty.