European Central Bank Says Bitcoin Is on the “Road to Irrelevance”

European Central Bank Says Bitcoin Is on the “Road to Irrelevance”

European EU flag with bitcoin image on top

The European Central Bank has issued a scathing critique against bitcoin, and by extension crypto in general.
Chart: Craig Hastings (Shutterstock)

We can now add the European Central Bank to the ranks of high-ranking crypto skeptics, with high-ranking leaders going further to say that crypto should not be legitimized by any government or major financial institution.

In a blog post Written by ECB leaders Ulrich Bindseil, director general of market infrastructure, and Jürgen Schaaf, an ECB markets adviser, the pair said bitcoin is currently experiencing an “artificially induced last gasp before the path of no -relevance”. The precipitous fall in the price of Bitcoin over the past few years and the implosion of major crypto institutions, most recently the collapse of FTX and its later fallout— shows that even if the price of bitcoin stabilizes, it won’t stop the tide from turning, according to the authors.

The pair noted that bitcoin’s value peaked at $69,000 in November 2021, but that huge price had dropped to just $17,000 by mid-June this year. The price has hovered around $20,000 in the months that followed. Bbut on Wednesday morning he fluctuated around $16,800. The problems bitcoins faces were spread even before the ongoing drama with the end of FTXspecify the authors.

The generally straight and starchy members of Europe’s preeminent central bank did not seem to hold their tongues describing what they considered a “dodgy means of payment”, despite its initial stated aims to upend the international financial system. The pair with precision declared that “bitcoin has never been used in any meaningful way for legal transactions in the real world”.

IIt’s hard for even the boldest crypto brother to deny that the world’s largest cryptocurrency has been at the heart of illicit online transactions, scams, flightand money laundering for years now. And the long transaction times and associated fees have made bitcoin impractical in general. currency.

Bindseil and Schaaf implicated the crypto promoters and big crypto whales who “have the strongest incentives to keep the euphoria going” on the crypto “speculative bubble”, further noting that some venture capitalists have put $17.9 billion in the crypto and blockchain industry. Bitcoin mining, the process by which new bitcoin is made, consumes a huge amount of energy and creates an inordinate amount of carbon emissions. New York State recently declared a moratorium on crypto mining citing those same complaints.

As it concerns crypto regulation is concerned, the pair at the ECB remains skeptical. They pointed the increased lobbying efforts, especially in the United States, and that legislative and regulatory frameworks have been so slow to unfold because lawmakers still believe they have to pander to the vagaries of innovation. They seem to imply that any tacit endorsement of bitcoin, whether by governments or financial institutions, only further perpetuates the fraud.

“The supposed regulatory sanction has also tempted the mainstream financial sector to make it easier for customers to access bitcoin,” the ECB pair wrote. “This concerns asset managers and payment service providers as well as insurers and banks. The entry of financial institutions suggests to small investors that investing in bitcoin is sound.

The major banking institutions were originally upset the idea of ​​crypto (remember, crypto was supposed to “replace” centralized finance) but seeing the top benefits caused banks like JPMorgan Chase and Goldman Sachs to start chase that bitcoin rainbow in the sky. Unfortunately, the crypto market crash of mid-to-late spring 2022 highlighted the inherent problems of volatile digital currencies. Some big banks like JPMorgan are still in the action as promote more regulationwhich perhaps explains why the leaders of the ECB are putting their foot down.

The blog post could be read as a staked opinion, rather than an actual data processing report. For this, you can turn to the Bank for International Settlements, which recently proposed that the the vast majority of people who invest in bitcoin have lost money. This report made make assumptions that people who downloaded crypto apps also invested in crypto, but it’s the authors noted that mainly Young, male investors are attracted to crypto—not because of a lofty belief in decentralized finance or the end of big banks, but because they’re just trying to make a quick buck.

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