Bank of International Settlements (BIS) GM Calls Cryptocurrency ‘Fake Money’
Plato had famously discussed knowledge in his magnum opus, The Theatetus. He defined it as “justified true belief.” each of those words needs a thorough dissection, perhaps best left for philosophers. However, it lays the fondations to understanding any point of view. Many take a dim view of the current head honcho of Bank of International Settlements (BIS), Agustín Carstens. He has repeatedly attacked crypto currencies in some way or the other. Less then six months ago he was lambasting the industry as a “buddble”. And he was doing so again recently.
At a recent speech in the US, The BIS head presented a report “Money and payment systems in the digital age.” As expected part of the presentation focused on virtual coins; which he dubbed “Cryptocurrencies: fake money.”
“No discussion of money and payments in the digital age would be complete without addressing cryptocurrencies. But are cryptocurrencies money? No. The use of “currencies” is misleading,” Agustín told the gathering. He then went on to explain his view that Virtual coins were not currencies but a piece of art, made by and for those who like cryptography. “From my perspective, cryptocurrencies are, at best, an asset of some sort. Perhaps an asset comparable to a piece of art for those who appreciate cryptography. ” he was quoted saying.
Bank of International Settlements is an organization that encapsulates about sixty central banks from around the world. Thus, when these remarks were made on the 1st of November, during the meet of Finance and Global Economics Forum of the Americas in Miami, people took notice. Agustín went on to explain that virtual coins, including the likes of Bitcoin (BTC) and Ethereum (ETH), do not fulfill what is considered the main functions of money. He discussed how, in his opinion, these assets are not a true unit of account and are certainly not widely used as any instruments of payment. Furthermore, the crypto markets recent volatility also dismembers the notion of virtual assets as a good store of value.”Buyers of cryptocurrencies are buying into nothing more than a software algorithm,” he noted.
He then went after companies that try to make securities or other financial instruments based on these virtual coins, saying they are creating something akin to collectibles; “art hanging on your wall.”
“There have been many attempts in history to create private money; all have eventually failed,” The BIS head explained.”[November 2] is Día de los Muertos in Mexico, when we remember the dead. In the land of money, this would include the likes of cocoa beans, beaver skins, and snail shells. Many cryptocurrencies have shared the same fate, and more are to come.”
He summed up his talk by reiterating excerpts from an earlier BIS crypto report focusing on keys issues of scalability, efficiency and electricity concerns that would likely prevent any large-scale adoption of this technology. He noted that digital assets had what he termed as “a classic network problem,” a cyclical issue due to consumers who wouldn't adopt virtual coins due to insufficient retailers who have incorporated them as a payment method; while retailers fail to implement this payment solution as there is an underwhelming demand from the clientele to use them.
The concerns raised by the General manager of such a powerful organization cannot and should not be lightly discarded. However, one should always tread lightly on the topics of impossible. The ingenuity of the human mind has time and again proven that solutions to a problem, however improbable are not impossible.