The chief banker at the bank for central banks, Agustín Carstens, cast doubt on bitcoin’s long-term viability Wednesday, saying it was only a matter of time before a 51% attack brings down the world’s original cryptocurrency.
Carstens’ comments, which he delivered to the Hoover Institute, underscored his belief that bitcoin fails as a currency, a medium of exchange and a value storage mechanism, working only as a “speculative asset” and seldom as money.
He also issued a dire warning to would-be bitcoin investors: the center cannot hold:
“Above all, investors must be cognizant that Bitcoin may well break down altogether. Scarcity and cryptography alone do not suffice to guarantee exchange,” he said.
Carstens then levied attacks against the attributes that have kept bitcoin running. He pointed out the “sad side effect” of bitcoin’s monstrous electricity dependence, which he said is as high as Switzerland’s where the Carsten’s organization, the Bank for International Settlements, is based. Bitcoin’s proof-of-work mechanism currently burns through reams of energy.
Carstens reserved particular bombast for what he framed as the inevitable systems failure hard-coded into bitcoin’s 21 million issuance cap. Fewer coins getting minted means fewer miners processing transactions, he said, and confirmation wait times will go up. So too will bitcoin’s vulnerability to a “majority attack.”
“So, clearly, if digital money is to exist, the central bank must play a pivotal role, guaranteeing the stability of value, ensuring the elasticity of the aggregate supply of such money, and overseeing the overall security of the system,” he said.
Bitcoiners were merciless in their rebuttal.
Jameson Lopp, chief technical officer at bitcoin storage startup Casa told CoinDesk Carstens’ arguemnt fails to stand up to bitcoin’s technical realities.
“Bitcoin becoming attackable like other networks is not likely, because it would still require a large…