As much as electricity used in Switzerland is nowadays used by bitcoin miners. Bitcoin mining is an energy-intensive process and contributes to energy-related greenhouse gas (GHG) emissions unless the renewable energy has been used to power computers and servers. About 25% of global GHG emissions is a result of electricity consumption.
The Bank of International Settlements said that the computing power needed to trade with bitcoin growth would nearly destroy all computers. The BIS, an 88-year old institution in Basel, Switzerland stated in a 24-page article released as part of its annual economic report on Sunday that bitcoin and its ilk suffered from a range of shortcomings that aroused an explosion of investment and interest in the future asset class would prevent cryptocurrencies from meeting the raised expectations.
BIS serves as a central bank for other central banks. The BIS stated that cryptocurrencies are very much unstable and consume a lot of electricity too, which subject to too much manipulation and fraud that serve as bona fide mediums of exchange in the global economy.
It also told the decentralized nature of cryptocurrencies on the basis of fundamental flaw rather than a key strength, which means bitcoin and its imitators are created, transacted, and accounted for on a distributed network of computers.
The BIS analyzed in one of its most piquant findings that in the blockchain software underpinning bitcoin handled by national payment systems currently, what would it take to process the digital retail transactions.
The researchers have found that as the size of so many ledgers swells, which will destroy everything from individual smartphones to servers. The reports said that the associated communication involved could bring the internet to a halt.
The researchers also added that the process transactions by bitcoin miners are touching the same level of the quantity of electricity Switzerland consumes.
Moreover, the BIS said that the blockchain and the associated distributed ledger technology has been very much beneficial for the global financial system. For example, the software can help make sending of cross-border payments. The market for exports and imports and trade finance that depends on faxes and letters of credit were ready for improvement by related Blockchain programmes.
The institution concluded that the ability of one person to communicate with the ease of an email is the bitcoin’s great breakthrough and also its Achilles’ heel.
It’s a bit risky on a number of stages to try and run the global economy with no center on a network.
The report concluded by saying that the trust can vanish at any time because of the brittleness of the decentralized consensus through which transaction is recorded. Apart from the finality of individual payments, it also stops functioning of cryptocurrency resulting in a complete loss of value.