Bank of international payments: Bitcoin should abandon the algorithm Proof-of-Work

The researchers of the Bank for International Settlements on January 21 published a report in which they stated that only by abandoning the Proof-of-Work mechanism of consensus , Bitcoin will be able to get rid of its current and future problems.

According to them, in the future, when the size of the rewards for adding blocks to the blockchain cryptocurrency 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 tell us that after the size of the rewards drops to zero, it will take several months to make calculations on the Bitcoin network, unless new technologies are proposed to solve this problem ,” the publication says.

The BIS admits that second-level solutions such as the Lightning Network can ease the task, but "the only fundamental solution is to abandon the Proof-of-Work." According to the report, the transition to alternative consensus mechanisms “may require some kind of social interaction or institutionalization”.

“Even in the digital age, a good form of money is likely to remain a social, not a technological, concept,” analysts conclude.

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.

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