Bitcoin: new report by the Bank for International Settlements
While Europe is preparing to recognize crypto-currencies in full through the EU Directive 2018/843, the BIS, the Bank of international regulations, seems to go against the trend, showing all its intolerance towards bitcoins and sisters in the publication of a official report of 24 pages. We talk about it with Giampaolo Lo Conte, an important trader and Italian entrepreneur who has always been very attentive to the world of cryptocurrencies and to the investments related to them.
The world of cryptocurrencies is getting ready to be revolutionized by the arrival of a European Directive which sanctions the recognition of virtual currencies within the Member States. Japan is therefore preparing to no longer be the only country in the world to recognize the “legal” value of cryptocurrencies thanks to the intervention of the European Parliament that “will force” Europe to adopt the EU Directive 2018/843 by 10 am January 2020. By that date, therefore, digital currencies will be recognized as entities having an electronic course, they are defined as a representation of digital value used by both legal persons (companies) and physicists (ordinary citizens) who consider them to all effects a medium of exchange. Extract from the Directive: “digital currencies are a representation of digital value that is not issued or guaranteed by a central bank or a public body, is not necessarily linked to a legally established currency, does not have the legal status of currency or currency”.
Faced with this, which seems to be a complete opening towards digital currencies in Europe, banks are moving in the opposite direction. The BIS, in fact, the Bank of International Settlements, the oldest international financial institution, has issued and published on the official website a 24-page document through which it attacks cryptocurrencies, declaring it officially “war”.
The BRI move obviously has a specific weight not indifferent, if we consider that at the “table” of the great sit the highest international positions of Europe by the president Jens Weidmann, to the president of the ECB Mario Draghi up to the president of the New York Fed William Dudley.
What the BRI document says
Within the document, the “bank of banks” warns users against the instability of virtual currencies, defining them as unreliable compared to traditional and especially “dangerous” currencies, both for the Internet and for the environment. According to the report, the crypts would risk toppling the entire system of the network: if hypothetically all people used a cryptocurrency, the size of the blockchain – the electronic ledger where all transactions are recorded – will swell so much to go well beyond the memory capacity typical of devices like PC or smartphone, creating a real block of internet. In addition to archiving the problem that could occur is related to the processing of data, manageable, in the case of a complete adoption of virtual currencies, only by supercomputer.
Extract from the document: “Associated communication volumes may block access to the Internet”.
With these words, the report wants to highlight the inefficiency and uselessness of virtual currencies that, on balance, could not be used, for example, for “daily” and small-scale transactions. In addition, another problem identified by the BIS lies in the excessive consumption of electricity (to produce cryptocurrencies are necessary powerful computer calculations) that threatens to threaten the environment just think that, currently the total electricity consumption used for the extraction of bitcoin is equivalent to that of a medium-sized economy like Switzerland. Extract from the document: “Well-governed central banks are successful in stabilizing the value of their currencies by adjusting supply with demand. This is in contrast to cryptocurrencies, where generating trust in value requires that the offer be pre-determined by a protocol. And this means that the assessments of cryptocurrencies are extremely volatile. Instability is difficult to overcome by better protocols or financial engineering “.
As anticipated in the opening article, to analyze the situation we contacted Giampaolo Lo Conte, well-known international trader with a great preparation in terms of Bitcoins.
Q. Good evening Giampaolo, what do you think of the European Directive that seems to finally give “confidence” to cryptocurrencies?
A. The European Directive represents a huge step towards the future of virtual currencies. I had been monitoring this decision of the European Parliament for some time and finally the moment has arrived. Recognizing the crypts as a medium of exchange like sovereign currencies, I think it was an inevitable but necessary step. We’ll see what happens …
Q. How do you feel about responding to the BRI instead?
A. I have great respect for what is an international institution of great value and tradition, but I certainly can not avoid aligning myself against the published report. Ignoring and demonizing virtual currencies means not grasping a great opportunity; it means closing in front of one of the most important technologies of the last years, the blockchain; it means giving a big stop to the process of digitization of the whole world. There is a lot of talk about electricity consumption and damage to the environment, when it is well known that many green solutions are emerging. There is talk of a network in tilt, when every day there are those who offer their expertise in research and maximizing performance. I sincerely hope that this document does not “convince” the banks to close, once again, their eyes on the future.
Q. We know that Giampaolo Lo Conte is a great sponsor of innovation and is always looking for new projects. Something new in sight?
A. In the coming seasons I expect important appointments to define business projects in Europe and in the United States. These are new economy projects that involve investor involvement in the digital economy.