Bitcoin may fall victim to its own popularity, BIS says
|- Large cryptocurrencies are more fragile and vulnerable to downside risks.
- Bitcoin and other major coins lost over 20% in a month.
Large cryptocurrencies are at risk of collapse due to fragile nature of their decentralized networks, according to the latest BIS research.
“Trust can evaporate at any time because of the fragility of the decentralized consensus through which transactions are recorded. Not only does this call into question the finality of individual payments, it also means that a cryptocurrency can simply stop functioning, resulting in a complete loss of value,” BIS researchers said in the report.
The currency has to be used, otherwise, it loses its intrinsic value as a medium of exchange. Meanwhile, many people buy coins for speculative purposes, so they tend to hold them instead of spending.
High transaction fees and the limited number of transactions per second are among other top reasons, why Bitcoin and other popular virtual money are vulnerable to further price declines, BIS stated.
Meanwhile, all major coins are in the red zone today, following the decline registered on the previous week. Bitcoin, the digital currency No. 1, has lost over 21% in a month, while Ethereum and Ripple are down 23% and 28% respectively. NEO and Tron are down over 38% on monthly basis. IOTA, Litecpoin, and Cardano are the worst performers in 6-month time span, down over 70%. Bitcoin lost 65% for the same time period.
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