The new Atlas tracking system, developed by an undisclosed central bank lab, provides insight into Bitcoin's relevance in global payments.
In a recently published report, the Bank for International Settlements (BIS) analyzed the Atlas project, a new tracking system that collects data on Bitcoin transactions, both on and off the chain, to provide a clearer and more realistic view of the role that the world's most important cryptocurrency is playing in global payments.
According to this report, titled “Project Atlas: Mapping the world of decentralized finance”, Bitcoin has a substantial impact on cross-border payments, even greater than previously thought.
The BIS explained that Atlas' first proof of concept or PoC provides more accurate data and statistics on transactions attributed to the Bitcoin network. This data gives a more realistic estimate of the flow of Bitcoin in cross-border payments across specific geographic locations and contributes to the development of more accurate and comprehensive studies and research, the bank noted.
In addition to Bitcoin, Atlas also provides insight into the impact of other cryptocurrencies and the decentralized finance (DeFi) ecosystem on payments and the global economy. It could also be used to understand the potential demand and impact of stablecoins in different jurisdictions.
The Bank for International Settlements is an international financial institution that serves as a bank for the world's central banks.
In recent years, the BIS has been analysing the cryptocurrency and blockchain ecosystem to better understand the innovation of these technological developments. Last year, the BIS joined forces with the Cambridge Digital Asset Programme (CDAP) at the University of Cambridge to delve into applications and use cases potential of cryptocurrencies and new technologies.
Atlas merges data on and off the Bitcoin chain
The biggest innovation in Atlas' development is perhaps that it is able to collect and incorporate into its statistics data from the public blockchain as well as private data from exchanges, connecting data on and off the chain to provide more novel statistics.
This project was developed with the vision of measuring capital flows of Bitcoin, cryptocurrencies and the DeFi ecosystem between countries and regions.
However, as noted by the BIS, Atlas has its limitations, especially considering that not all cryptocurrency exchanges and trading platforms have a clear geographic location and that the available data may be incomplete or inaccurate. Therefore, the BIS recommends that the results obtained through this tracking system should always be considered as an underestimation of the reality in the market.
Bitcoin plays a substantial role in payments
Atlas' proof of concept was used to map the flow of Bitcoin in different parts of the world, revealing that the cryptocurrency is increasingly used to send money in the remittance market, as it offers a more accessible and reliable alternative for people in areas with limited access to conventional banking services.
Atlas data shows that due to its global and decentralized nature, Bitcoin has been emerging as an important option for transferring funds across borders.
The BIS report also acknowledges that Bitcoin offers certain advantages for optimising cross-border payments, such as decentralisation, transparency and censorship resistance, but also warns of the risks associated with the volatility of its market price.
Continue reading: BIS supports the creation of a neutral regulatory framework for DeFi
