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Bank of America Criticizes Bitcoin for Its Supposed Shortcomings

Bank of America Criticizes Bitcoin for Its Supposed Shortcomings

Key highlights:

  • An analyst from Bank of America calls Bitcoin an inefficient system for storing value and processing payments.
  • The analyst declares that demand is the only factor that determines the price of Bitcoin. 
  • The analyst also thinks that Bitcoin has some risks for governments, including money laundering, fraud, and more.

Bank of America analyst Francisco Blanch recently criticized some of of the negatives he sees with Bitcoin, the world’s largest cryptocurrency. He believes Bitcoin cannot function as a haven against inflation, and isn’t a store of value.

Bank of America analyst says Bitcoin has some significant problems 

Blanch refers to the fact that Bitcoin is very appealing to retail traders, but he thinks the currency will lose its demand in the long run. He thinks Bitcoin has some significant issues, and these problems will be serious obstacles for BTC in the future. One of the major obstacles is the complicated nature of BTC mining which is the base for the settlement process of this cryptocurrency. Blanch also talked about scalability and noted that Bitcoin couldn`t process nearly as many transactions as services like Visa. 

Blanch called Bitcoin a volatile asset that is not suitable for storing value or making payments. He says people put Bitcoin in their portfolio due to the expectations that the prices might surge in the future. 

The analyst believes Bitcoin is not environment-friendly. He talks about the amount of CO2 that Bitcoin creates around the globe, and noted Bitcoin’s carbon footprint as one of its major problems.

Blanch also talked about social and governmental aspects and says Bitcoin can be used for illegal activities. He declares the Bitcoin anonymity can facilitate criminal activities. Money laundering, bribery, fraud, and other crimes can be done via Bitcoin, in his opinion. 

Blanch believes the future is for CBDCs 

In Blanch`s opinion, CBDCs will replace Bitcoin and other cryptocurrencies in the future due to the shortcomings of cryptocurrencies. He thinks CBDCs will utilize blockchain and adopt positive aspects of cryptocurrencies, but will also enjoy the backing of governments. 

Critics think the main factor for Bitcoin`s recent surge was stimulus packages from the governments. In their opinion, although the Bitcoin supply is limited, it has no intrinsic value like stocks or real estate. Therefore, the changing nature of demand will play a key role in determining BTC prices in the future. 

Even though it’s clear that Bitcoin is facing real problems, the Bitcoin ecosystem is continuously adapting to these challenges – for example, the Lightning Network can bring massive improvements in the area of scalability. And even if Bitcoin will ultimately succumb to its shortcomings, there’s plenty of other cryptocurrencies that have taken radically different approaches and are already addressing some of Bitcoin’s biggest downsides. Proof-of-stake blockchains, for example, consume considerably less energy than proof-of-work blockchains like Bitcoin.

Published at Sat, 27 Mar 2021 18:00:00 +0000