ECB Says Bitcoin’s Price is Artificially Kept High
European Central Bank (ECB) leadership issued the most recent criticism, stating that Bitcoin’s value “is likely to be artificially generated” and that the crypto-asset is on the “path to irrelevance.”
In the blog post, ECB Director General Ulrich Bindseil and Analyst Jürgen Schaff argued that the world’s biggest cryptocurrency had “never been utilized significantly for legitimate real-world transactions.” The pair even criticized Bitcoin’s “conceptual design and technology deficiencies” for its “questionable status as a payment method.”
The article made no reference of any particular data points that would indicate how central bank authorities arrived to the conclusion that Bitcoin’s market worth is based on “speculation.” According to several industry experts, their views seem to be excessively prejudiced.
The authorities noted, “the attitude that innovation must be allowed room at any costs clings tenaciously.” The pair did not seem pleased by the blockchain technology that underpins Bitcoin. As per them, DLT/blockchain has “generated minimal benefit to society” thus far, irrespective of “how big the future aspirations are.”
It also referred to Bitcoin as a “unparalleled polluter,” claiming the age-old controversy surrounding the cryptocurrency mining of Proof-of-Work-based currency.
“As Bitcoin does not seem to be acceptable as either a payment network or a vehicle of investment, it must be regulated as neither and shouldn’t be legalized. Likewise, the financial sector should be careful of the long-term consequences of pushing Bitcoin investments, regardless of the short-term gains they may generate (even if they had no stake in the play).
The history of cryptography was tumultuous. However, the failure of FTX and subsequent claims of misappropriation of funds stained the business. The cascading incidents then compelled other websites, which were pursuing a safe road to development rather than the cryptocurrency fortunes, to confront the fury of possibly absurd legislation.
The crisis looks to be empowering opponents and regulatory organizations to regulate the business.
The European Central bank (@ecb) covered Bitcoin on their blog today.
It said bitcoin is 'rarely used" for "legal" transactions.
But offered no statistic to back it.
So went down the rabbithole.
Time for some numbers ☕️ pic.twitter.com/M4lRgqM2VT
— Joel John (@joel_john95) November 30, 2022
Consequently, as criticism increased in volume, so did demands for legislation in the domain. The collapse of FTX will certainly accelerate regulation of digital assets in the United States. A new legislation termed Markets in Crypto Assets (MiCA) in the European Union (EU), which won’t go into effect for next few years, is anticipated to enforce governance practices for crypto enterprises similar to those of other types of regulated financial institutions in an effort to prevent internal failures comparable to FTX’s.
Nevertheless, ECB officials stated that rules should not be confused with authorization.