Hyun Song Shin, Economic Adviser and Head of Research of the Switzerland-based Bank for International Settlements (BIS), expressed that bitcoin and other cryptocurrencies “fall a long way short of being able to sustain a monetary system” and merely “masquerade” as real currencies.
Shin stated that money, being in the form of digital cash or tokens, is a “record keeping device” and is basically worthless.
Agustín Carstens, general manager of BIS, in July described bitcoin as “a bubble, a Ponzi scheme, and an environmental disaster.” Shin’s response to questions regarding Carstens statement was that miners have two incentives for checking transaction. They take their reward in the form of bitcoin including transaction fees paid by users.
If there is an increase in the capacity of the network, in addition to the problem being solved, transaction fees will be zero. This will lead to miners losing their incentive to verify blocks and this is where “the economics really bump into technology.” Shin went on to state that even though this statement is true for bitcoin, other cryptocurrencies may offer better solutions.
“What is a valid payment depends on what the bookkeepers agree is a valid payment. It is the result of a collective decision of the bookkeepers themselves,” said Shin regarding bitcoin’s finality issue.