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Bitcoin figures rejected the Bank of International Settlements' (BIS) latest cryptocurrency report after stating that Bitcoin should stop using its Proof-of-Work algorithm.
BIS: Bitcoin must give up the proof of work
The report "Beyond the economic disaster of" proof of work "in crypto-currencies" was published on January 21st.
It's focused on double-spending attacks within cryptocurrency block chains, as well as on the long-term future of Bitcoin mining profitability and stability of the chain of blocks.
Agustín Carstens, Managing Director of BIS
The BIS, also known as the Central Bank of Central Banks, is well known for its virulent criticism of decentralized currencies in particular. His previous announcements have attracted much criticism and even mockery from the cryptocurrency sector.
"The findings are, first, that Bitcoin counterfeiting via" double-spend "attacks is inherently profitable, making the final payment based on evidence of work extremely expensive," writes the journal's latest author, Raphael Auer.
Secondly, the trading market can not generate an adequate level of "mining" revenue through royalties, as users freely enjoy the commissions of other transactions of one block and the next blockchain. Instead, newly manufactured bitcoins, known as block rewards, have made up the bulk of mining revenues to date.
Doubts of the Lightning Network
As such, continues Auer, when the block rewards will eventually be zero, the Bitcoin blockchain will not have enough momentum and the confirmation of a transaction could take "months".
The conclusion does not take into account upward trends in fees, as well as the combined effect of off-line sizing technologies such as the Lightning Network, which already allows for a significant expansion of Bitcoin's transaction processing capabilities.
Auer mentions Lightning, but rejects it largely:
Second-level solutions such as the Lightning Network could be useful, but the only fundamental remedy would be to move away from the evidence of work, which would probably require some form of social coordination or institutionalization.
In a predictable reaction, defenders of cryptocurrency criticized the results, with The Bitcoin standard author Saifedean Ammous reiterating his calls to the BIS to initiate a debate on his point of view.
Recall that the research manager of the BIS has time to give interviews about the bitcoin flaws, but ignores my offer to discuss these shortcomings: https: //t.co/iCYEet6VqN
– Saifedean Ammous (@saifedean) January 21, 2019
Other reactions took into account the logic of the report.
"Must recognize that BIS has identified a decent Achilles heel," said a Twitter user. responded. "Incentives related to the fee market should work, but we can not throw it on a test network to prove it. Bitcoin is the test network. "
The banking group joined this week the Bank of England to shade Bitcoin. At the World Economic Forum in Davos, Huw van Steenis, senior adviser to Governor Mark Carney, said crypto-currencies in general "fail basic tests".
"This is not an excellent trading unit, they have no value, they are slower [than fiat]," he said.
What do you think of the latest report from the BIS? Let us know in the comments below!
Images courtesy of Shutterstock
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