The European Central Bank (ECB) is once again criticizing Bitcoin, arguing in a recent report that the cryptocurrency is failing as a decentralized digital currency. These criticisms seem to ignore the economic, social and energy benefits of cryptocurrency.
European Central Bank Attacks Bitcoin Again
The European Central Bank (ECB) is again launching an attack on Bitcoin with a circular, arguing that it is not succeeding in its role as a decentralized digital currency and arguing that its intrinsic value remains zero.
Courtesy of the European Central Bank fast Stating that the SEC's approval of spot Bitcoin ETFs on January 10, 2024 misrepresents Bitcoin as a safe asset and could have a negative impact on the economy.
ECB Account Some commentators mentioned that it published a similar message on November 30, 2022, when the price of Bitcoin was $17,000, arguing that its true value was zero at that time. Since then, the price of Bitcoin has doubled.
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The ECB's arguments and why they are far from the truth?
The ECB's criticism of Bitcoin is based on several "false" arguments. Which doesn't really reflect the nature of this financial asset and how it works. Among the most striking points and arguments he used are the following:
-Bitcoin transactions are inconvenient, slow and expensive:
It's true that on-chain Bitcoin transactions take an average of 10 minutes, with fees of up to tens of dollars. But Bitcoin was designed as a store of value, not an instant payment system. Although there are second-layer solutions such as the Lightning Network that make Bitcoin transactions fast and cheap. In contrast, even traditional banking transactions can only take 24 to 48 hours to be finally confirmed.
- Using bitcoins for illegal activities:
This argument is supported by Chaina analysis data showing that only 0.34% of cryptocurrency transactions involve illegal activity. This is significantly lower than for fiat currencies, where about $3.1 trillion, or 3.44% of global GDP, was linked to illicit activity in 2023.
In this regard, the ECB circular appears to contradict itself. Emphasizing in the same sentence that Bitcoin facilitates illegal activity while acknowledging that its transactions are easy to trace:
“Bitcoin has thus become a cursed tool of anonymity, facilitating illegal activities and inviting lawsuits against criminals by tracking transactions.”
Bitcoin is a bad investment because it does not generate cash flow compared to real estate or stocks:
In fact, Bitcoin is a rare asset, with its supply limited to 21 million units. It has proven its ability to maintain its value over the long term despite short-term volatility. Over the past five years, BTC's performance has reached almost 1500%.
Bitcoin will be bad for the environment:
This argument is often used when its critics are concerned about mining and proof of work (PoW). Although the Bitcoin network consumes more than 150 terawatt-hours per year. However, today the mining industry is a tool for developing the renewable energy industry, as well as reducing fossil energy waste.
Bitcoin price is being manipulated by the European Central Bank:
The ECB makes this argument, noting that trading volume fell significantly in 2023 compared to 2021. He also cites Forbes' hypothesis that 51% of Bitcoin trading volume comes from trading bots.
By comparison, the SEC estimates that in 2020, 78% of trades in traditional markets were completed using automated systems and algorithms. In other words, this argument actually fails.
The report also states that if it is not possible to restrict Bitcoin, sanctions should be considered for mining companies that confirm transactions related to illegal activities. This is a procedure that can be serious.
The European Central Bank is completely ignoring what Bitcoin has given to humanity!
The European Central Bank has ignored the economic, social and energy benefits of Bitcoin. Bitcoin can help expand financial inclusion, reduce countries' dependence on fiat currencies, and provide a more energy-efficient alternative to remittances.
In conclusion, the ECB's arguments against Bitcoin demonstrate a lack of understanding of the nature of cryptocurrency and its benefits. While this bank continues to attack Bitcoin, the cryptocurrency community continues to grow and prosper.
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