Swiss Bank for International Settlements does not advise trusting the Crypto-currency
Tags: English, Plasmabank, Finance, Cryptocurrency, Bitcoin

Agustin Carstens, general manager of BIS, calls bitcoin a combination of “bubble, Ponzi scheme and environmental disaster”. He says that most crypto currency is a tool of speculators, their fluctuation is too high, and the course can not be predicted. As a result, many holders lose their funds.

Frankly speaking, there is a rational grain in the indignation of the financier, but we shouldn’t forget that conservative banks do not benefit from the blockchain system with its openness and decentralization.

There is an ambivalent attitude to bitcoin and altcoyin in the modern society. Ilya Maksimenka, CEO Plasma Bank, is certain about the increasing of popularity of virtual money:

“Cryptocurrency is the first currency used by people without the totalitarian requirements of states. Crypto-currencies have given the world new technologies for managing digital assets. Technologies are not perfect yet, but thousands of developer enthusiasts are working on improving them. With the existing speed of the development of the world, in a couple of years the main crypto currency’s blockchains will surpass any financial system in the world in terms of speed and reliability”.

At the moment bitcoin has a lot of disadvantages. The length of the operations code is constantly increasing, and the system does not have time to manage it. Very often operations are delayed up to a week and that has become one of the reasons for the appearance of new coins with a shorter code. Sending multiple transactions in one package globally does not solve the speed problem. “

Before conducting batch transactions the transfer commission was constantly growing. This question is related to the cost of bitcoin. In December, at the peak of the popularity of the coin, it took $ 34 for one transaction, and in February the comission fell down to $ 0.79. The biggest commission was for the withdrawal of virtual money to fiat. This February the WEX stock exchange withdrew 20%. This was associated with the Chinese New Year, which lasted for almost a month, and this is the time when the citizens of the country travel actively and spend cash.

Another problem of crypto currency is expensive mining. With the increase in the block, more energy is required to find a new link in the chain. “Farms” overheat and do not cope with the load. Now, the production of new bitcoins already requires industrial capacities located in the cool regions: Canada, Iceland, Northern Europe.

There are attempts to speed up transactions and unload the system with the help of hardcovers — the emergence of new coins based on existing ones. The most notable were Bitcoin Cash and Etherium Classic.

Speed up transactions and unload the system with the help of hardcovers, i.e. the emergence of new coins based on existing ones. The most notable are Bitcoin Cash and Etherium Classic.

A temporary measure to increase the network throughput is the Segregated Witness (SegWit) technology solution. The capacity of the block is increased while maintaining its size. It can be achieved due to the separation of the cryptographic signature that is carried outside the block. The algorithm was introduced in August 2017. The problem is that SegWit requires software updates. As a result, it is used by only 15% of users. However, at full load the speed of operations will increase twice, and it will still take much more time than transactions with Visa or MasterCard.

Another way to unload the network is the Lightning Network (LN) technology. It increases the bandwidth of the chain by several orders of magnitude, shifting the load on the processing of transactions from the miners to other users of the blockchain system. However, LN is not compatible with some bitcoin-applications, and in the end transactions will only be slower.

All these problems make the use of crypto currencies ever less profitable. To solve this problem we should find a revolutionary solution for the blockchain.