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:
The crypto fragmentation issue
Furthermore, the report explains that: The report also touches upon the “limited scalability and a lack of interoperability,” which “not only prevent network effects from taking root, but a system of parallel blockchains also adds to governance and safety risks.” As for different blockchains exhibiting strong price co-movements despite fragmentation, the organization interprets this as these networks sharing the same investor base and growth being “sustained by speculative buying of coins.” This is not the first time BIS has criticized crypto. In December 2021, Finbold reported on BIS General Secretary Agustin Carstens discussing the “break of the manifestation of non-bank financial intermediation” and his belief that DeFi is “illusive”.
