Goldman Sachs Exec: Crypto Created by Central Bank Can Be Useful

A senior executive for Goldman Sachs believes that cryptocurrencies created by central banks could be incredibly useful  
28 February 2018   876

During an interview with Business Insider, Sharmin Mossavar-Rahmani, chief investment officer for Goldman's Private Wealth Management unit noted that in her opinion, cryptocurrencies in their current format are in a bubble.

The bitcoin prices are astronomical. Then we compare that to the ether, and ether is even more astronomical. So clearly, these valuations don't make sense to us.

Sharmin Mossavar-Rahmani

Furthermore, Mossavar-Rahmani stated that in future such digital currencies would be more useful than the coins in existence today. She said that there is a room for a digital currency, for example, sponsored by one of the central banks. In her opinion, it could be very useful and it could reduce transaction costs. But, the existent currencies can't do that.

She went on to speculate about the impact of a potential downturn in the cryptocurrency market on the wider economy.

So in terms of the impact, it'll have some impact. There are a lot of people who have set up various exchanges, infrastructure, hedge funds in that space, so obviously, they will get hurt. But it's a very, very small part of global GDP.

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