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   From: rcooper@outlook.com   
      
   Bitcoin Could Break the Internet, Central Bank Overseer Says   
      
   The Bank for International Settlements just told the   
   cryptocurrency world it’s not ready for prime time -- and as far   
   as mainstream financial services go, may never be.   
      
   In a withering 24-page article released Sunday as part of its   
   annual economic report, the BIS said Bitcoin and its ilk   
   suffered from “a range of shortcomings” that would prevent   
   cryptocurrencies from ever fulfilling the lofty expectations   
   that prompted an explosion of interest -- and investment -- in   
   the would-be asset class.   
      
   The BIS, an 88-year-old institution in Basel, Switzerland, that   
   serves as a central bank for other central banks, said   
   cryptocurrencies are too unstable, consume too much electricity,   
   and are subject to too much manipulation and fraud to ever serve   
   as bona fide mediums of exchange in the global economy. It cited   
   the decentralized nature of cryptocurrencies -- Bitcoin and its   
   imitators are created, transacted, and accounted for on a   
   distributed network of computers -- as a fundamental flaw rather   
   than a key strength.   
      
   In one of its most poignant findings, the BIS analyzed what it   
   would take for the blockchain software underpinning Bitcoin to   
   process the digital retail transactions currently handled by   
   national payment systems. As the size of so many ledgers swell,   
   the researchers found, it would eventually overwhelm everything   
   from individual smartphones to servers.   
      
   “The associated communication volumes could bring the Internet   
   to a halt,” the report said.   
      
   ‘Disaster’   
   Researchers also said that the race by so-called Bitcoin miners   
   to be the first to process transactions eats about the same   
   amount of electricity as Switzerland does. “Put in the simplest   
   terms, the quest for decentralized trust has quickly become an   
   environmental disaster,” they said.   
      
   The BIS is weighing in at pivotal moment in the cryptocurrency   
   story. Even as Goldman Sachs Group Inc., the New York Stock   
   Exchange, and other institutions take steps to offer clients   
   access to the new marketplace, the U.S. Securities and Exchange   
   Commission is cracking down on the offerings of new digital   
   tokens, which it has found are rife with ripoffs. At the same   
   time, cyber-attackers are hitting crypto exchanges regularly --   
   just last week, Bitcoin nosedived after a South Korean exchange   
   reported it was hacked. It fell 0.8 percent to $6,449 as of   
   11:19 a.m. in New York on Monday.   
      
   The report may also revive concerns that for all its ingenuity,   
   blockchain transactions will get harder and harder to protect as   
   it scales up. When this decentralized anonymous system was   
   introduced in 2009, it quickly proved it could secure purchases   
   by computer enthusiasts, networks of friends, as well as   
   criminals in the digital black market, says a working paper   
   published by the National Bureau of Economic Research, a non-   
   profit organization in Cambridge, Massachusetts. Yet with   
   supporters pushing to make it a mass market platform utilized by   
   companies and governments, it may become too expensive to   
   secure, concludes Eric Budish, the paper’s author and an   
   economics professor at the University of Chicago Booth School of   
   Business.   
      
   The value of the cryptocurrency market has plunged 53 percent   
   this year to $280 billion, according to CoinMarketCap.   
      
   Some Benefits   
      
   The BIS did say that blockchain and its so-called distributed   
   ledger technology did provide some benefits for the global   
   financial system. The software can make sending cross-border   
   payments more efficient, for example. And trade finance, the   
   business of exports and imports that still relies on faxes and   
   letters of credit, was indeed ripe for the improvements offered   
   by Blockchain-related programs.   
      
   Still, the institution concluded that Bitcoin’s great   
   breakthrough, the ability of one person to send something of   
   value to someone else with the ease of an email, is also its   
   Achilles heel. It’s simply too risky on a number of levels to   
   try and run the global economy on a network with no center.   
      
   “Trust can evaporate at any time because of the fragility of the   
   decentralized consensus through which transactions are   
   recorded,” the report concluded. “Not only does this call into   
   question the finality of individual payments, it also means that   
   a cryptocurrency can simply stop functioning, resulting in a   
   complete loss of value.”   
      
   https://www.bloomberg.com/news/articles/2018-06-17/bitcoin-could-   
   break-the-internet-central-banks-overseer-says   
      
   --- SoupGate-Win32 v1.05   
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