Cryptocurrencies: looking beyond the hype

Cryptocurrencies promise to replace trusted institutions with distributed ledger technology. Yet, looking beyond the hype, it is hard to identify a specific economic problem which they currently solve. Transactions are slow and costly, prone to congestion, and cannot scale with demand. The decentralised consensus behind the technology is also fragile and consumes vast amounts of energy. Still, distributed ledger technology could have promise in other applications. Policy responses need to prevent abuses while allowing further experimentation.

Hyun Song Shin, Economic Adviser and Head of Research, speaks about Chapter V of the Annual Economic Report 2018.

Cryptocurrencies’ decentralised model of generating trust limits their potential to replace conventional money, the chapter argues.

Full report: BIS Annual Economic Report | 17 June 2018

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