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Report: Bitcoin payments are inefficient and expensive, Bundesbank exec says

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Report: Bitcoin payments are inefficient and expensive, Bundesbank exec says

Bitcoin and other cryptocurrencies lack the efficiency and credibility to be accepted as a means of payment by central banks, Carl-Ludwig Thiele, executive board member of the Bundesbank responsible for controlling and accounting as well as payment and settlement systems, said in an interview with Handelsblatt on Dec. 7.

"From my point of view there are three scenarios in which cryptocurrencies could play a bigger role for us. Firstly, if they could prove they are technologically superior. Secondly, if they enjoy greater credibility than a conventional state currency. Or thirdly, if other central banks start issuing digital money which is used more by us. But all three scenarios are currently unlikely to happen in Europe," he said.

The Bundesbank, in cooperation with Deutsche Börse AG, is currently testing how blockchain technology would function in securities trading and there is evidence that it works well. However, there is no evidence that this technology, on which the bitcoin currency is based, is better or more efficient than the conventional one, Thiele noted.

Thiele cited recent data by blockchain expert Alex de Vries showing that a single Bitcoin transaction requires 276 kWh of energy, which is equal to the monthly power consumption of a single family household in Germany. The high price volatility and concerns about fraud and terror-related payments with bitcoin show it lacks essential attributes of a conventional currency as it is less trustworthy, Thiele said.