BTC Can Fall to Zero, Vanguard Says

Global chief economist at Vanguard says that cryptocurrency can not have viable applications
22 May 2018   940

Due to the lack of fundamental economic factors in the formation of the value of the cryptocurrency, the price of bitcoin will fall to zero with a high probability. This is said by the leading economist of Vanguard Joe Davis for ETF. com.

He pointed out that the cryptocurrency can not have viable applications. So, it can not be perceived as a form of money, because it is not an effective means of accumulation.

The investment case for cryptocurrencies is weak. Unlike stocks and bonds, currencies generate no cash flows such as interest payments or dividends that can explain their prices. National currencies derive their prices from the underlying economic activity of the countries that issue them. Cryptocurrency prices, on the other hand, are generally not based on economic fundamentals. To date, their prices have depended more on speculation about their eventual adoption and use. The speculation creates volatility that, ironically, undermines their value as a currency.
 

Joe Davis

Vanguard

The economist urged investors to refrain from investing in bitcoin.

As innovation quickens and competition increases, the majority of networks (and their associated cryptocurrencies) may be rendered obsolete, leaving many cryptocurrencies like tulip bulbs in 17th-century Holland—soaring to incredible heights before the speculative bubble pops. And, unlike tulips, they don’t look very nice in a vase.
 

Joe Davis

Vanguard

At the same time, Davis noted that Vanguard, which manages assets worth $ 5.1B, is already using blocking technology and is very enthusiastic about it.

BIS to Issue Research on Bitcoin Problems

Researcher from the Bank of International Settlements believes BTC should abadon PoW
22 January 2019   82

Researchers from the Bank for International Settlements published a report in which they stated that only by abandoning the Proof-of-Work mechanism of consensus, Bitcoin could get rid of its current and future problems.

According to them, in the future, when the size of the rewards for mining drops to zero, transaction processing fees alone will not be enough to justify the miners' activities. Consequently, the Bitcoin network will become so slow that it will be impossible to use it, the authors argue.

Simple calculations suggest that once block rewards are zero, it could take months before a Bitcoin payment is final, unless new technologies are deployed to speed up payment finality. 
 

Raphael Auer

Principal Economist, BIS

The BIS admits that second-level solutions such as the Lightning Network can ease the task, but “only fundamental remedy would be to depart from proof-of-work.” According to the report, the transition to alternative consensus mechanisms “require some form of social coordination or institutionalisation”.

The Bank for International Settlements contributes to the cooperation of 60 central banks from various countries of the world, which account for 95% of global GDP.

Earlier this month, the agency disclosed statistics on central bank initiatives in the field of state digital currencies. According to him, about 70% of central banks conduct research related to the issuance of national digital currencies, but plans for their implementation and the perception of the issue vary considerably in different countries