On Wednesday, the European Central Bank issued a scathing indictment of the cryptocurrency known as Bitcoin, claiming that Bitcoin stock is “on the road to obsolescence.”
Ulrich Bindseil, director general of the ECB, and Jürgen Schaff, analyst wrote a blog post with the heading “Bitcoin’s last stand,” stating the apparent stabilization in the price of bitcoin this week “signals a breather on the path to new heights” for supporters of the cryptocurrency.
“More likely, though, it is an intentionally produced last gasp before the road to irrelevance,” the authors stated. “And this was already anticipated before FTX collapsed, dropped the bitcoin price too much below USD16,000,” the authors continued.
Bitcoin Stock Price
On Wednesday, the value of Bitcoin surpassed $17,000, reaching a new record for the world’s largest digital asset in less than two weeks. On the other hand, it needed help keeping up with that level, and it ended up dropping to $16,875. Vijay Ayyar, the vice president of corporate development and international at the cryptocurrency exchange Luno, warned that the bounce is likely simply a bear market rally and would not be sustained in the long term. He told CNBC that “this is a bearish retest” of the price.
The words from the ECB authorities come at a reasonable time, as the cryptocurrency industry is still recovering from one of its most devastating failures in recent history. This failure was caused by the collapse of FTX, an exchange that was once valued at $32 billion. The Federal Reserve has been raising interest rates this year, which has harmed the market and contributed to a general lack of optimism.
According to Bindseil and Schaff, bitcoin stock does not fulfill the requirements of an investment and is not a viable option for use as a payment method.
They wrote, “Real Bitcoin transactions are complex, time-consuming, and expensive, which raises doubts about Bitcoin’s viability as a payment method.” Bitcoin has never been utilized in any significant capacity for legally binding transactions in the real world.
“Bitcoin stock is also not an appropriate asset for investment purposes. It does not produce cash flow (like real estate) or dividends (like stocks), it cannot be employed for productive purposes (like commodities), and it does not deliver social benefits (like gold). Because of this, the current valuation of Bitcoin stock on the market is entirely dependent on conjecture,” they continued.
The insolvency of FTX is expected to speed the process of regulating digital currencies, according to analysts. It is anticipated that the new law in the European Union known as Markets in Crypto Assets, or MiCA, will standardize the regulations that apply to digital assets throughout the bloc.
Bindseil and Schaff stressed the significance of recognizing that regulation is not the same as a stamp of approval.
“The concept that room must be provided to innovation at all costs tenaciously prevails,” they added. “The belief that space must be given to innovation at all costs.”
“To begin, despite the high hopes that have been placed shortly, the benefits these technologies have brought to society thus far have been relatively modest. Second, more than the utilization of a potentially fruitful technology is required for an increased value in a product based on that technology.
They also expressed concern regarding the lack of environmental credentials that bitcoin possesses. The technical foundations of the cryptocurrency are designed in such a way that it necessitates an enormous amount of computer power to validate and confirm new transactions. Ethereum, the network behind ether, a cryptocurrency that competes with bitcoin, just moved to a new foundation that its supporters say will lower its energy use by more than 99%.
Bindseil and Schaff claimed that the system’s inefficiency is not a defect but rather a characteristic of the system. “The ability to guarantee the integrity of the entire decentralized system is one of the unique aspects of this architecture,”
The European Central Bank has also expressed skepticism over virtual currencies on other occasions. In May, Christine Lagarde, the President of the European Central Bank (ECB), stated her belief that cryptocurrencies are “worth nothing.” Her statements were made in the wake of a significant incident that affected the sector, which was the implosion of the so-called stablecoin terraUSD, which cost several billions of dollars.
Featured Image – Pexels © Karolina Grabowska
Author Valerie Remorosa 
