Cryptocurrencies have always been a source of much controversy, but is still seeing widespread usage and more importantly a steady increase in the number of its use cases. However, recently, reports have been published which say that Banco de España (BDE), Spain’s central bank, considers Bitcoins to be an inefficient system of payment.
The report which has primarily brought this objection to the fore is titled ‘Bitcoin: A solution for payment systems or a solution in search of a problem?’. This report, it seems provides a detailed analysis of whether Bitcoin is sufficient in its current state to be used as a payment mechanism or is it just another fad, that will fade gradually with time. This report has been written by the central bank’s Deputy General Director of Financial Innovation and Market Infrastructures, Carlos Conesa. His report speaks unfavorably of cryptocurrencies, and outlines that ultimately, all things considered, it is not a sustainable solution.
The report also says that decentralization and the lack of intermediaries and a supervisory figure are the main limitations to Bitcoin’s inability to succeed as a large-scale payment system. It elaborates on decentralization as a process requires intensive validation in the consumption of resources, which reduces system efficiency.” whereas by comparison, “centralized systems with an intermediary trusted by the parties allow the design of much simpler and cheaper systems.
Consea also says that an effective and useful payment system should be characterized by a few characteristics. It should facilitate money transaction between two parties, in a way which is simple, economical, quick and safe. However, in his report, he explains why and how bitcoin is not an efficient payment system, as it does not fulfill quite a few of these aforementioned criteria