The European Central Bank (ECB) views the cryptocurrency market negatively in a recent blog post, claiming Bitcoin had failed. ECB also stated that Bitcoin transactions are tedious, costly, and rarely used for legitimate purposes. Okay, now let’s check to see if what they’re saying is true and supported by evidence.
1. Bitcoin has already died 467 times in the past
The ECB stated that this is the last stand of Bitcoin. ECB has however overlooked the fact that Bitcoin’s demise has already been reported in the media 467 times. They also forgot that fiat transactions may take several days and cost tens of dollars, while Bitcoin transfers take a few minutes and if done over Lightning Network, cost hardly anything.
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To top it all off, Bitcoin’s price shot up from zero to the current $17,000ish, with an ATH being close to $70 000. That’s pretty good for an asset that has only existed for approximately 13 years. But it’s no surprise the ECB and other central banks don’t want Bitcoin. It poses a threat to the system they have created. However, a Harvard paper suggests the Fed and other central banks should use Bitcoin as a hedging asset.
2. Bitcoin payments are actually becoming legal
The ECB claims Bitcoin is not used for legal payments. It may be true, yes. However, there are also millions of illegal payments done in cash. But more importantly, do you know about a guy who bought two pizzas for 10,000 BTC? That happened back in 2010, just one year after Bitcoin’s creation.
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This Bitcoin payment happened 12 years ago! Now, countries like El Salvador, the Central African Republic, and even Brazil recognize Bitcoin as a legal tender. Bitcoin adoption is happening faster than we may think and the argument of Bitcoin used for illegal payments has been revoked on several occasions.
3. Bitcoin is the safest cryptocurrency out of all
In recent years, between 200,000 and 400,000 Bitcoin transactions have been processed daily on average. Despite the tremendous growth of the Lightning Network and alternative cryptocurrencies (altcoins), this figure has not decreased over the past few years.
On the other hand, Bitcoin has maintained its status as the crypto community’s “safe haven” due to investors’ conviction that it will not experience a catastrophic collapse like Terra Luna or FTX. BTC fell numerous times but always managed to make a new all-time high after a halving event, which happens every four years.
4. Bitcoin and “cash-flow narrative”
In its blog, the ECB compared Bitcoin to other assets like real estate, stocks, or gold. The ECB stated that Bitcoin doesn’t produce cash flow, which is why many crypto haters don’t like these digital assets.
Alright, yes. Apartments, houses, or hotels do produce cash flow, but they also have certain disadvantages, like low liquidity. Companies that are publicly traded as stocks also produce revenue, however, they may struggle with profits like Spotify or other unicorn companies.
Bitcoin is a little more complicated than traditional investments like stocks or real estate. It produces cash flow, but miners are the ones reaping the fruit. They receive the transaction fees as a reward for mining, plus the mined bitcoins. On the other hand, Bitcoin investors make money if it appreciates in value.
5. ECB calls Bitcoin a bubble
Every time crypto is going through a rough bear market, the media starts calling Bitcoin ‘dead’ or a ‘Ponzi scheme.’ And now the ECB has decided to join the chorus of naysayers. If Bitcoin did indeed benefit from a flood of new investors, can ECB point at an asset that did not? Or are we seeing the “everything bubble”?
Also read: Rise of internet and social media – what you did not know
When more people buy stocks, the price goes up. The same applies to crypto or other assets. Legislators have been trying to figure out what Bitcoin is, but they have completely missed the fact that it is a cryptocurrency. It’s not a commodity or a stock. It’s a completely new asset that we might just as well let be called “cryptocurrency.”
6. Central banks criticize crypto, but adopt its technology
Bitcoin allows its users to express themselves freely. It has its pros and cons, like everything else. But even though central banks criticize crypto technology, they are using it to make their own digital currencies (CBDCs). Many countries are already testing a digital version of their fiat currency. CBDCs are coming.
And that is the reason why ECB is trying to undermine the position of Bitcoin. They know that a decentralized Bitcoin will be a direct competition to their centralized CBDCs. Thus, they need to make sure that they badmouth it as much as possible, which is what they tried to do in this blog without any supportive arguments, facts or data.
Authorities are cracking down on cryptocurrencies, which is a great thing. Many would prefer a more regulated crypto industry because it currently operates like the Wild West. Scammers should not be able to get away with their crimes so easily. But more importantly, whatever happens, Bitcoin cannot and will not be killed.
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