Tech 7 February 2019

Dan Taylor

Crypto mining is like counterfeiting, Russian banking exec says

The head of a Russian bank has compared cryptocurrency mining to ‘counterfeiting’, and warned the industry is unlikely to have a long-term future. In an English translation of comments delivered at the I Am Professional Olympiad, Andrei Kostin, head of VTB Bank, said he was not a fan of cryptocurrency or the mining process.

“I’m not a big supporter of crypto-ruble. For me, this is some kind of counterfeiting: a person is sitting and mining, the same as sitting and printing money. This is not happening yet,” Kostin was quoted by TASS news outlet as saying.

According to the banking executive, “There are a lot of negative factors. I’m not talking about the fact that cryptocurrency is considered dangerous from the point of view of money laundering, terrorist financing, etc.. Today both the Fed and the ECB regulate the market with monetary policy instruments, but this is impossible, there is no mechanism for regulating the cryptocurrency market.”

Kostin said that while the future for cryptocurrency mining was unsustainable, “there will remain a rather narrow niche in which the cryptocurrency will be used.”

His remarks come at a time of significant struggles for cryptocurrency mining companies, with many suffering the ill-effects of the ongoing collapse in Bitcoin Core (BTC) prices.

Similar opinions have been expressed by other banking executives, who have variously labeled cryptocurrency a fraud, a scam, a Ponzi scheme and a danger bubble. Broadly in-step with other senior bankers, Konstin’s comments have been called out by the crypto community as ‘naive’ and incorrect.

In reality, Kostin misunderstands cryptocurrency and the technology behind it. Particularly with Bitcoin SV (BSV), the comparisons to counterfeiting are misguided. BSV’s entire purpose is to present an alternative to fiat money, rather than emulating it.

It’s about peer-to-peer electronic cash, and a decentralized payment infrastructure—in many ways the antithesis of fiat money.

Unfortunately, Kostin is not alone in his misapprehensions, with other mainstream financial institutions still wary of cryptocurrency and the very real threat it poses to legacy banking and payment systems.

But as more merchants and institutional investors are won over, the proliferation of BSV as an alternative will only continue to gather momentum. We suggest Kostin might want to rethink his analogy. Rather the counterfeiting fiat, Bitcoin is out to replace it all together.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.

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