Right now, Bitcoin is not having the best of times. The digital currency “winter” that started earlier this year has resulted in falling prices and bankruptcies of businesses. The European Central Bank (ECB) has said that BTC is on the “road to irrelevance” since it hasn’t been immune to the impacts.
The cryptocurrency market lost over $1 trillion due to TerraUSD’s collapse in May. Since then, millions of dollars worth of investments have been lost, including those made by the Celsius Network, FTX, and Justin Bieber’s Bored Ape NFT, to name a few.
Some long-term Bitcoin investors (HODLers) may question whether they should have sold their BTC when it reached its high price of $69,000 in November 2021. The cost of the world’s most widely used cryptocurrency is $16,827,000, and the ECB predicts further declines.
For a while, bitcoin prices had circled at $20,000. Although supporters may have interpreted this as evidence of stability before the price increase, ECB Director General Ulrich Bindseil and Analyst Jürgen Schaff said that this was actually “an artificially induced last gasp before the road to irrelevance – and this was already foreseeable before FTX went bust and sent the bitcoin price to well below $16,000.”
The ECB continued to rail against cryptocurrencies. “Bitcoin is debatable as a form of payment because of its conceptual structure and technological flaws: authentic Bitcoin transactions are time-consuming, expensive, and demanding. Bitcoin has never been utilized extensively for legitimate, everyday transactions in the real world.”
The article continues by criticizing Bitcoin similarly to one of its most vocal opponents, billionaire investor Warren Buffett, who once declared he wouldn’t buy all of it for $25 since it doesn’t generate or have any value.
“Additionally unsuitable as an investment is Bitcoin. It cannot be used productively (like commodities) or provide dividends (like stocks) or generate cash flow (like real estate), or give social benefits (like equities) (like gold). Thus, sole speculative activity is the basis for Bitcoin’s market price, “Schaff and Bindseil wrote the text.
Following the collapse of FTX, countries are rushing to enact greater regulation over cryptocurrency markets, but the ECB pair warn that this should not be interpreted as approval. They wrote, “The assumption that innovation must be granted space at any costs persistently continues.” “First off, despite the high hopes for the future, these technologies have contributed little to society so far. Second, using a promising technology alone does not guarantee that a product based on it would bring value.”
The piece also highlighted the extent of the harm that Bitcoin mining causes to the environment, including the energy required to mine (equal to Austria) and the e-waste it produces.
Since President Christine Lagarde declared in May that cryptocurrencies are both founded on and worth “nothing,” the ECB has never hidden its distaste for them; additionally, several central banks worldwide frequently advise against buying digital assets. Older investors and bankers seem to loathe it as well; vice chairman of Berkshire Hathaway Charlie Munger referred to it as a “venereal sickness.”
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