European Central Bank advisers doubled down on the criticism: Bitcoin BTC
+0.83%
This suggests that it failed to become a globally decentralized cryptocurrency and instead fell victim to fraud and manipulation.
In an ECB blog post Thursday morning, Urrich Bindseil and Jurgen Schaaf called the U.S. Securities and Exchange Commission’s (SEC) approval of a spot Bitcoin exchange-traded fund in January a “naked emperor bird.” and claimed that this did not change the fact that it was “the naked emperor’s new clothes.” “Bitcoin is not suitable as a means of payment or investment.”
The ECB post goes on to suggest that for Bitcoin’s “disciples,” the ETF approval is seen as confirmation that Bitcoin is safe, and the subsequent price rise is proof of victory. Bindseil and Schaaf said they disagree with both claims, maintaining their view that Bitcoin’s fair value is zero. They also claimed that another boom-bust cycle for Bitcoin was a “terrible prospect” and that the collateral damage would be “enormous.” It cited environmental damage and redistribution of wealth at the expense of “less sophisticated” people.
Both authors have roles at the central bank, although the blog post states that the views expressed do not necessarily represent those of the ECB. Bindseil is the ECB’s director-general for markets infrastructure and payments, and Schaaf is an ECB adviser in the same department. The ECB also promoted the blog post through its official X account.
Bankers say Bitcoin trading is ‘inconvenient’
The authors argued that Bitcoin transactions remain “inconvenient, slow and expensive,” adding that they are “rarely used for payments” outside of criminal activity on the darknet. It was also noted that El Salvador has not established this, granting Bitcoin legal tender status. As a successful payment method
They suggest that regulatory plans to combat large-scale criminal use of the Bitcoin network have not been successful, that prices have been manipulated, and that Bitcoin mining using the proof-of-work consensus mechanism “continues to pollute the environment at a scale do. A higher Bitcoin price means higher energy consumption.”
The U.S. Department of Energy’s recent “urgent request” to collect energy usage data from cryptocurrency miners cited the rise in Bitcoin prices as evidence. Pierre Rochard, vice president of research at Bitcoin miner Riot Platforms, disagreed with the assessment, pointing to a recent report. Impact of cryptocurrency mining on the power grid. “The science is clear. Experts agree: Bitcoin Stabilizes the grid thanks to demand response. “There is no ‘emergency’ in collecting data,” he said at the time.
Other criticisms from advisors include that Bitcoin is not suitable as an investment because it does not generate cash flow, that it cannot be used productively like a commodity, and that it does not provide social benefit. “Individual investors with limited financial literacy are attracted by the fear of missing out on opportunities and potentially losing money,” they added.
Daniel Batton, climate technology investor and managing partner at CH4 Capital, commented on the post about X: “This is optimistic. Bitcoin rose 197% after the ECB announced ‘Bitcoin’s last stand’. Keep the FUD going, ECB. “More than 400 million people have now been vaccinated worldwide, and the number is growing exponentially.”
Bitcoin bears record bottom as ECB claims ‘last gasp’
This latest criticism follows an ECB blog post from November 2022 that said Bitcoin was in its “last gasp before heading towards indifference.” The comments coincided with the bottom of the bear market for the largest cryptocurrency by market capitalization after the cryptocurrency exchange went bankrupt. FTX.
At the time, the ECB argued that the premise that Bitcoin was a financial asset that was bound to continue to rise was wrong. However, according to The Block’s price page, Bitcoin reached its bear market low of about $16,000 on November 21, 2022, a week before publication, and has since risen 225% to $51,930.
BTC/USD price chart. Image: Block/TradingView.
ECB advisors answer the question “Why is this dead cat bouncing so high?” A shift in U.S. Federal Reserve interest rate policy, April’s Bitcoin halving event in which block rewards for miners will be cut in half expectations were presented. The recent launch of Spot Bitcoin ETF was behind this move.
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