The latest report by Bank of International Settlements (BIS) has alleged that Bitcoin’s use of Proof-of-Work algorithm will lead to its further evolution. The report is called ‘Beyond the doomsday economics of ‘proof-of-work’ in cryptocurrencies.’
BIS report has focused on double-spend attacks in the current cryptocurrency blockchain as well as the life-term of bitcoin mining profitability, the stability of the decentralized ledger technology. BIS which is the bank which backs the central banks of the world has often criticized decentralized currency. The industry has been objecting to the sweeping comments made by BIS. These have been ridiculed by the cryptocurrency community repeatedly.
According to the author of the report, Raphael Auer, “the conclusions are, first, that Bitcoin counterfeiting via ‘double-spending’ attacks is inherently profitable, making payment finality based on proof-of-work extremely expensive.”
Additionally, Auer adds when block rewards become zero again insufficient momentum on blockchain will take time to confirm the transaction.
Auer also mentions that Lightning network says:
“Second-layer solutions such as the Lightning Network might help, but the only fundamental remedy would be to depart from proof-of-work, which would probably require some form of social coordination or institutionalization.”
The community says, “have to give BIS credit for identifying a decent Achilles ’ heel, Fee market incentives should work, but we can’t throw it on a testnet to prove it. Bitcoin is the testnet.”
Thus far, the banking industry has joined the BoE in continuing to ridicule bitcoin. Thus far, the Senior Adviser to Governor of BoE Mark Carney has already predicted that
“I’m not so worried about cryptocurrencies. They fail the basic tests of financial services. They’re not a great unit of exchange, they don’t hold value, and they’re slower.”
The advisor also says that fintech innovation is about delivering to customers’ products and services which engage and provide for their needs. At the same time, Steenis also says the current imposition on the cryptocurrency industry is the slow pace at which the technologies are being implemented.
At the same time, the fast pace of changes that traditional banks are bringing about by moving into decentralized ledger technology services may disrupt the innovation which the modern fintech hope to offer in the near future. Additionally, financial institutions are also obsessed about introducing their own types of products and services such as ETFs and if these trading equipment were to be easily available in the market, traditional financial services would gain the upper hand.
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