The Bank for International Settlements in a 24-page article published yesterday as part of the annual economic report stated that cryptocurrencies are not scalable enough to function as money.
According to BRM - an organization based in Switzerland consisting of 60 central banks from around the world - cryptocurrencies will not be able to become a medium of exchange in the global economy. The BRM report presents three key shortcomings that will prevent cryptocurrencies from replacing money - they are 'scalability, the stability of value and trust in payment finality'.
BRM criticizes the decentralization of cryptocurrencies as a flaw rather than force, claiming that "trust can disappear at any moment because of the weakness of the decentralized consensus in which transactions are recorded." The bank claims that the majority of Blockchains can at best provide only a "probabilistic" transaction finality.
In this spirit, the report warns further about the "fork-in" of the Blockchains which may cause the division of cryptocurrencies, which entails the risk of a complete loss of their value. The report cites the incorrect update of Bitcoin software from March 2013, which caused the temporary division of Blockchain, and the price of Bitcoin fell by almost a third - although BRM does not mention that Bitcoin regained the majority of losses in a few hours.
BRM also raises concerns that with the expansion of the shared registry, processing transactions require more and more electricity and computing resources that are larger than even the most powerful facilities. In addition, he refers to the manipulation problem caused by the fact that cryptocurrencies extractable are controlled by a small group of miners who have the very powerful equipment.
The report focuses mainly on cryptocurrencies using proof-of-work, non-permissive Blockchain, although it acknowledges the existence of alternative consensus mechanisms, such as proof-of-stake, as well as scaling solutions such as the Lightning Network, maintaining that their operation still needs to be proven in practice.
Let's now take a look at the Bitcoin technical picture at the H4 time frame. The market has made another higher high at the level of $6,800, but the price is still trading under the key technical resistance at the level of $6,993. The golden trend line provides the dynamic support for the price and the momentum is still positive. The chances for a test of the key resistance level as still high, so it is worth to keep an eye on $6,993. The immediate support is seen at the level of $6,531.
