Unlike cryptocurrencies, which promote fragmentation, money, which facilitates economic transaction, is designed to be a coordination instrument, according to the paper.
By Zahra
The Bank of International Settlements (BIS) has asserted that cryptocurrencies can not fulfil the role of money for users in the world.
BIS, in a recent work conducted by its Economist, asserted that the use of blockchains has caused fragmentation, an issue unfavourable to keeping customers
According to the report, blockchains currently lack the ability to harness the benefits of traditional money, such as the ability to harness favorable network effects.
To the BIS, the lack of operations between rival blockchains leads cryptocurrencies to a disadvantage.
Unlike cryptocurrencies, which promote fragmentation, money, which facilitates economic transaction, is designed to be a coordination instrument, according to thereport .
Unlike with traditional money, transaction cost gets higher as transactions made by users per block get close to their limit.
This situation, BIS said would force users to find an alternative block to make their transactions, thereby leading to fragmentation.
The BIS, which is anti- cryptocurrency had disclosed earlier this year that about 105 countries were currently working on developing a digital currency through their Central Banks around the world.
