European Central Bank says ‘bulky, slow and expensive’ Bitcoin is on ‘path to irrelevance’

Hot potato: Bitcoin is going through hard times right now. The crypto winter that began earlier this year has led to a sharp drop in the price of the digital currency and the bankruptcy of companies. BTC has not been immune to the consequences, leading the European Central Bank (ECB) to label it “on its way to irrelevance.”

The TerraUSD crash in May wiped out almost $1 trillion from the cryptocurrency market. Since then, we’ve seen Celsius Network file for bankruptcy, FTX collapsed, and millions of dollars worth of investment lost – Justin Bieber’s Bored Ape NFT is an example of a wider impact.

Some long-term bitcoin holders (hodlers) may wonder if they should have sold their bitcoins back in November 2021 when they peaked at $69,000. The world’s most popular cryptocurrency is currently worth $16,827 and the ECB thinks things will get worse.

Bitcoin hovered around $20,000 for a while. ECB CEO Ulrich Bindseil and analyst Jürgen Schaff said that while proponents may have seen this as signs of stability before the price began to rise, it was in fact “an artificially induced last gasp before the road to irrelevance – and this could have been foreseen even before FTX went bankrupt and raised the price of bitcoin. well below $16,000.”

The ECB has not finished its anti-crypto tirade. “Bitcoin’s conceptual design and technological flaws make it a dubious means of payment: actual Bitcoin transactions are cumbersome, slow and expensive. Bitcoin has never been used to any significant extent for legal transactions in the real world.”

The message then contains the same critique of Bitcoin that was made by one of its biggest detractors, billionaire investor Warren Buffett, who once said he wouldn’t buy all the Bitcoin in the world for $25 because it’s actually worth nothing and nothing. does not produce. .

“Bitcoin is also not suitable as an investment. It does not generate cash flow (like real estate) or dividends (like stocks), cannot be used productively (like commodities) or provide social benefits (like gold). The market valuation of Bitcoin is therefore based solely on speculation,” wrote Bindsale and Schaff.

With governments rushing to introduce stricter regulation of crypto markets in the wake of the FTX crash, the ECB pair is warning that such an action should not be misunderstood as an endorsement. “The belief that innovation must be pushed aside at all costs persists stubbornly,” they wrote. “Firstly, these technologies have so far created limited value for society – no matter how great the expectations for the future are. Secondly, the use of a promising technology is not a sufficient condition for the added value of a product based on it.”

The post also noted the damage that bitcoin mining causes to the environment, including the energy used for mining (comparable to Austria) and the e-waste it generates.

The ECB has never made a secret of its dislike of cryptocurrencies – President Christine Lagarde said in May that it was based on “nothing” and worth nothing – and many central banks around the world often warn against investing in digital assets. Older generations of investors and bankers seem to hate it too – Berkshire Hathaway vice chairman Charlie Munger called it “a venereal disease.”

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