BIS Chief Banker Criticizes Bitcoin as Inherently Risky, Says BTC Vulnerable to 51% Attack

Bank for International Settlements (BIS) general manager Agustin Carstens has criticized bitcoin saying the asset was inherently risky and “increasingly vulnerable” to a 51% attack.

A long time bitcoin (BTC) skeptic, Carstens stressed that only central banks should be issuing digital currencies.

“Investors must be cognizant that bitcoin may well break down altogether,” he opined, in a speech delivered at Hoover Institute on January 27, 2021. “Scarcity and cryptography alone do not suffice to guarantee exchange,” Carstens stressed.

Carstens, who runs the Basel-based central bank for central banks, speculated that the Bitcoin network becomes “increasingly vulnerable” to majority attacks as the cryptocurrency approaches its maximum supply of 21 million coins.

With fewer coins being produced, rewards to miners for processing transactions will also decline, he said, and confirmation wait times will increase. As a result, bitcoin’s vulnerability to majority attacks will go up.

Carstens described bitcoin as “a speculative asset” that lacks “the actual value backing” and as such, should be seen as a “community of online gamers.” He also cited mining using “more electricity than all of Switzerland” and alleged price manipulation as reasons for this impending breakdown.

“Bitcoin poses as its own unit of account, but fluctuations in value mean it is unrealistic to set prices in bitcoin. This also undermines its usefulness as a means of exchange, and makes it a poor store of value,” noted Carstens.

The BIS chief banker also took aim at stablecoins, such as the one proposed by Facebook originally known as Libra, but recently renamed Diem. He finds fault with private entities running a public monetary system by issuing coins that are backed by other assets such as fiat currencies.

“Private stablecoins cannot serve as the basis for a sound monetary system. They need to be heavily regulated and supervised,” Carstens thundered. In his book, governments should forever remain in control of issuing money.

“Clearly, if digital money is to exist, the central bank must play a pivotal role, guaranteeing the stability of value, ensuring the elasticity of the aggregate supply of such money, and overseeing the overall security of the system,” he explained.

What do you think about Agustin Carstens’ remarks on bitcoin risk and vulnerability? Share your thoughts in the comments section below.

Join us on Facebook

Cryptocurrency converter

Weekly Analysis

Quadency Review: Automated Crypto Trading Platform & Portfolio Management

Quadency is a digital asset management platform that provides automated trading and portfolio management solutions for both retail and institutional traders. The platform incorporates a...

Trade Like Her: $50,000 Giveaway

It’s International Women’s Day and Women’s History Month! Phemex is always hosting new events and campaigns to its dedicated users. In this special month,  Phemex...

3Commas vs Cryptohopper: Which is The Best Crypto Trading Bot Platform in 2022?

Automated trading platforms or ‘bots’ have become a popular way to trade cryptos. Instead of having to watch the crypto markets, and look for entry...

CoinRule Review: Automated Crypto Trading Bots Platform

Cryptocurrency traders can choose from a growing number of efficient, automated trading platforms that aim to simplify the entire process and allow anyone to make...

Bitrue fostering Cardano ecosystem growth with ADA base-pair listing

Bitrue, one of the fastest-growing cryptocurrency exchanges, has revealed the listing of ADA as a base currency on its trading platform from Thursday, February 24....

Phemex Exchange Adds SHIB, DYDX & FTM for Spot Trading

Phemex, the renowned crypto exchange and crypto futures trading platform announced back in November 26, 2021 the addition of three popular new assets for spot...