Bitcoin maximalists consider the world’s premier cryptocurrency a near-perfect monetary instrument, devoid of artificial manipulation by central banks and reflective of market forces in a pristine form. Considering its baked-in supply scarcity, Bitcoin is often touted as digital gold. However, key officials at the European Central Bank (ECB) have now unleashed scathing criticism against the cryptocurrency, taking aim at Bitcoin’s legendary volatility.
The apparent stabilisation of bitcoin’s value is likely to be an artificially induced last gasp before the crypto-asset embarks on a road to irrelevance. #TheECBblog looks at where bitcoin stands amid widespread volatility in the crypto markets.
Read more https://t.co/Hk1LuYX2de pic.twitter.com/I3Uidks8Xo
— European Central Bank (@ecb) November 30, 2022
The director general of ECB’s Directorate General Market Operations, Ulrich Bindseil, has authored a blog post on Bitcoin in collaboration with Jürgen Schaff, an advisor. This post takes a no-holds-barred approach to the world’s largest cryptocurrency by market capitalization.
As per the contents of the blog post, the ECB officials believe that the current period of relative stabilization in Bitcoin’s value, as characterized by its gyrations within the $15,000 to $20,000 price range, is merely a prelude to the eventual destruction of the cryptocurrency:
“For bitcoin proponents, the seeming stabilization signals a breather on the way to new heights. More likely, however, it is an artificially induced last gasp before the road to irrelevance – and this was already foreseeable before FTX went bust and send the bitcoin price to well below USD16,000.”
The ECB officials then go on to raise three major points. Firstly, Bindseil and Schaff state that Bitcoin is rarely used for legal transactions and that the cryptocurrency represents a Ponzi scheme of sorts where the “big Bitcoin investors” have every incentive in the world to keep the gravy train flowing.
Interestingly, Bindseil and Schaff have provided no information as to the proportion of transactions on Bitcoin they consider illegal. They have also eschewed a comparative analysis with fiat-based currencies on this metric.
Secondly, the ECB officials apparently believe that just because governments around the world are enacting regulations on cryptocurrencies, it does not automatically bestow legitimacy on this nascent sector.
“The current regulation of cryptocurrencies is partly shaped by misconceptions. The belief that space must be given to innovation at all costs stubbornly persists.”
The post then goes on to berate Bitcoin for being “an unprecedented polluter” by consuming as much electricity per year as Austria. This, however, is a false equivalence. As we’ve repeatedly noted, a significant proportion of Bitcoin mining is now done using renewable energy resources. Moreover, Bitcoin still consumes only a fraction of the energy used by the global financial industry.
Bindseil and Schaff then end their blog post by warning banks regarding reputational risks that supposedly emanate from dabbling in cryptocurrencies:
“The financial industry should be wary of the long-term damage of promoting Bitcoin investments – despite short-term profits they could make (even without their skin in the game). The negative impact on customer relations and the reputational damage to the entire industry could be enormous once Bitcoin investors will have made further losses.”
Do you think the ECB is now taking a definitive stance against Bitcoin? Let us know your thoughts in the comments section below.
The post Key Officials at the European Central Bank (ECB) Believe That Bitcoin Is at a “Last Gasp” Stage on the “Road to Irrelevance” by Rohail Saleem appeared first on Wccftech.
