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Bitcoin could ‘bring internet to a halt’, say Swiss bankers

Bitcoin could ‘bring internet to a halt’, say Swiss bankers

Bitcoin’s associated communication volumes could bring the internet to a halt, said the Bank for International Settlements (BIS). The IT-specialists explains such a side effect with the storage capacity’s issues, TheLocal.ch reported.

Earlier, the BIS has previously warned of the fraud risk in cryptocurrencies. According to the IT-specialists, hypothetically, if Switzerland’s entire population turned to a digital currency like bitcoin, “the size of the ledger would swell well beyond the storage capacity of a typical smartphone in a matter of days, beyond that of a typical personal computer in a matter of weeks and beyond that of servers in a matter of months.”

But the key point goes well beyond storage capacity and extends to processing capacity, consequently, only supercomputers could keep up with verification of the incoming transactions, reads the most recent BIS report.

“In mainstream payment systems, once an individual payment makes its way through the national payment system and ultimately through the central bank books, it cannot be revoked. In contrast, permissionless cryptocurrencies cannot guarantee the finality of individual payment,”

the report said.

Another side effect is an “unstable value” of currencies such as bitcoin. Swiss investors suggest that arises from the absence of a central issuer with a mandate to guarantee the currency’s stability. In a broader meaning, the BIS raised long-standing regulatory concerns over the use of cryptocurrencies, particularly with regards to money-laundering and financing of terrorism.

The BIS report pointed to the case of the Silk Road underground marketplace for drugs and other contraband, which was shut down by the FBI in 2013, and which had used virtual currencies like bitcoin to shield customers from detection.