Despite the cryptocurrency sector expanding and advancing with each day, many authorities and financial organizations, particularly those supervising the emerging decentralized finance (DeFi) industry, are still expressing concerns about the space.
One of these organizations is the Bank for International Settlements (BIS), which released a bulletin on June 7 titled “Blockchain scalability and the fragmentation of crypto”, in which it presents its view that “crypto cannot fulfill the social role of money.”
In this report, the organization lists a number of problems it perceives in the crypto and blockchain industry, including high fees and network congestion that lead to fragmentation of the crypto landscape:
“Building on permissionless blockchains, crypto, and DeFi seek to create a radically different monetary system, but they suffer from inherent limitations. A system sustained by rewarding a set of decentralized but self-interested validators through fees means that network effects cannot unfold. Instead, the system is prone to fragmentation and costly to use.”