Spanish Central Bank BDE Criticizes Bitcoin’s Payment System for Being Inefficient
Across the globe, there have been mixed reactions from state governments to cryptocurrency. There are countries like Malta that have fully embraced blockchain and crypto and have even built their evening around attracting blockchain business.
There are other countries that are a bit more critical of crypto, one of which is Spain, whose central bank recently gave some criticisms of bitcoin. The Central Bank, called Banco de España (BDE), published a new report stating that bitcoin is an ineffective method of payment.
The report was titled ‘Bitcoin: A solution for payment systems or a solution in search of a problem?’ And was authored by Carlos Conesa. In the report, some insight is given into what exactly bitcoin is and then examined whether it would be an effective mass payment system.
Some of the reasons why it was deemed ineffective were its decentralization and lack of intermediaries. According to the report, decentralization involves:
“process of intensive validation in the consumption of resources, which reduces system efficiency.” In contrast, “centralized systems with an intermediary trusted by the parties allow the design of much simpler and cheaper systems.”
What the report fails to take into account is the fact that decentralization is one of the biggest reason why people are drawn to bitcoin in the first place. Bitcoin was created during the chaos of the late 2000s market crash and subsequent recession. The crash and all the misdeeds that were exposed during that time sensitized people about the flaws that existed in a centralized financial system, particularly the monopoly that large firms had on the market.
Despite its lack of intermediaries and centralized authority, bitcoin has grown tremendously over the first decade of its existence and only sees more acceptance.
According to the report, a payment system should facilitate the sending of funds between parties and argues that Bitcoin is more concerned with creating a platform that is free of censorship. While blockchain, the technology that bitcoin is based on has been used in places like China to subvert censorship, bitcoin has, for years, facilitated the sending of funds and shows no signs of stopping.
The report also fails to take the new lightning system into account and instead states that the daily transactions on bitcoin, which surpass 600,000 are insignificant compared to the global transaction numbers.
Overall, it would seem that the article was merely critical of bitcoin but failed to take into account all the factors that have made it the global force it is today.