In a blog post titled “Bitcoin’s Last Frontier,” ECB CEO Ulrich Bindsale and analyst Jurgen Schaff noted that for Bitcoin proponents, the apparent stabilization in its price this week seems “a signal of a respite on the way to new heights.”
“However, it is more likely that this is an artificially induced last gasp before becoming irrelevant – and this could have been foreseen even before FTX went bankrupt and the price of bitcoin fell well below $16,000,” the article says.
Bindsale and Schaff stated that bitcoin is not suitable for investment and cannot be a convenient means of payment:
“Bitcoin’s conceptual design and technological flaws make it a dubious means of payment: actual transactions are cumbersome, slow and expensive. Bitcoin has never been used to any significant extent for legal transactions in the real world.”
“Bitcoin is not a good 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). Thus, the market valuation of bitcoin is based solely on speculation.”
Analysts say FTX’s insolvency is likely to speed up digital currency regulation measures. An EU law called “Crypto Asset Markets” or MiCA is expected to harmonize the regulation of digital assets in the countries of the union. However, Bindsale and Schaff said it was important not to take regulation as a sign of approval.
“The belief that the path for new technologies must be cleared at all costs persists stubbornly.”
“First, these technologies are of limited value to 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.”
Experts expressed concern about the impact of bitcoin on the ecological situation and praised Ethereum for its approach to this problem.
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“This inefficiency of the system is not a flaw, but a feature. This is one of the features that guarantees the integrity of a fully decentralized system.”
Bitcoin topped $17,000 on Wednesday, a two-week high for the world’s largest digital currency. It struggled to maintain that level, dropping slightly to $16,875. Vijay Aiyar, vice president of corporate and international development at crypto exchange Luno, warned that the rebound is likely just a bear market rally and will not be sustainable.
This is not the first time the ECB has raised doubts about digital currencies. ECB President Christine Lagarde said in May that she believes cryptocurrencies are “worthless.” Her comments came amid an industry scandal, the multibillion-dollar collapse of the so-called terraUSD stablecoin.
Sources: ECB, CNBC