Agustin Carstens of BIS takes on Bitcoin and says by nature Bitcoin is flawed and contains risks that are inherited. Also says that because of its flawed structure, there is more than a 50% chance of it being exposed to risks of hack and theft attacks.
Augustin Carstens is the General Manager of the globally renowned Bank for International Settlements (BIS). However, the chief banker has recently heavily criticized Bitcoin and offended the crypto community as well as Bitcoin fans.
Carstens was never a big fan of digitalization nor digital currencies and remained skeptical about Bitcoin and others since their launch. He always advocated the concept that firstly there is no space for digital assets in the global financial system. Secondly, he always argued that if any digital currencies were to be issued, then it should be the sole prerogative of central banks only.
He was attending a gathering at Hoover Institute and during his speech he heavily criticized Bitcoin. In his speech, he said that Bitcoin investors should be aware that sooner or later Bitcoin will fall apart dramatically. Neither cryptography nor scarcity are good enough to ensure exchange, said Carstens.
Carstens is the incharge of a global bank that liaison with other banks of the world in settling international claims and disputes. He further argued that over the past few years, Bitcoin as well as its network, have become more vulnerable against scam attacks and theft. He argued that Bitcoin is going to reach its maximum supply limit soon and this will only increase the number of attacks.
He also pointed out that because only a small number of Bitcoins are remaining to be mined, therefore, the earnings of miners will decline significantly. Furthermore, this will also result in delayed response with regard to confirmation of the mining process, he argued. He stressed that limited supply and delayed response are two major issues that will encourage attackers.
According to him, Bitcoin should be used by video gamers who play games online and shouldn’t be a part of the financial system. He termed Bitcoin to be a “speculative” asset rather an actual asset similar to that of traditional assets.
Carstens further stated that the fluctuations in the value of Bitcoin are unrealistic. He stressed that this eliminates the sole purpose of it being used as an exchange product. In addition, it cannot be classified as a great source of storing value.
However, Carstens also didn’t hesitate to criticize stablecoins in his speech as well. He specifically spoke about Facebook’s proposed stablecoin called Libra, whose name has recently been changed to “Diem” by Facebook. He argued that private companies such as Facebook lack the expertise and skills to run a monetary system involving the public. He said that a comprehensive monetary system cannot be based upon some private stablecoin and would be absurd.