The ECB's Bitcoin Blindness: Missed Opportunities and Financial Stagnation
Disclaimer: Your capital is at risk. This is not investment advice.
ByteFolio Issue 96;
The European Central Bank published a piece on their blog, ETF approval for bitcoin – the naked emperor’s new clothes. It was written by a couple of ECB technocrats, Ulrich Bindseil and Jürgen Schaaf, who specialise in payments. They are presumably bright people, in the hard-working and diligent sense, but when it comes to Bitcoin, they just don’t get it. Or, being the hard-working and diligent types, they don’t want to get it. Their opening line says it all.
“Bitcoin has failed on the promise to be a global decentralised digital currency and is still hardly used for legitimate transfers. The latest approval of an ETF doesn’t change the fact that Bitcoin is not suitable as means of payment or as an investment.”
Satoshi’s Bitcoin White Paper never promised anything, especially about Bitcoin; it was more of a proposal. It used the word “currency” once, and that was while referring to (folding) cash. It isn’t a currency, by my reckoning; a view shared by bulls and bears alike. It is a digital asset that behaves more like a commodity than an equity. You only have to watch old sci-fi movies to realise such a concept is inevitable.
The ECB claims Bitcoin failed in transfers despite it transacting around $50 billion each week on-chain and even more off-chain. Naturally, the ECB use the term “legitimate” because they believe they are morally superior beings. And, of course, no one ever did bad things with euros. More importantly, it’s their controlling instinct, which is so damaging to the European (inc. UK) economy.
It is strange for a major financial institution to call a trillion-dollar global monetary network a failure. But then you realise we are talking about the ECB, and you’d be even more amazed by what they consider to be a success. Bitcoin hasn’t failed despite their ongoing attempts to stifle it. It’s because the system has become suspicious of innovation.
Europe (inc.UK) is falling behind the USA (economically, not culturally) at a rapid pace and has become the slowest growing continent on earth, even if you include Antarctica. There are many reasons, most of them green, but it’s the instinct to ban new ideas rather than embrace them that is so worrisome. As a European, it saddens me that none of the Mag 7 Stocks could have been made in Europe (inc. UK). In the 20th century, that statement wasn’t true, but today it is.
The ECB’s second point was that the latest Bitcoin ETF approval in the USA doesn’t change things. This shows how they really don’t get it. Bitcoin is a network, and the ETFs just added a significant new source of demand.
The US bitcoin ETFs have scooped up nearly 100k bitcoin this year, drawing billions of dollars into the ecosystem. Even more important than the money perhaps, is the legitimacy of this freedom-loving, alternative digital asset. Gary Gensler, the SEC boss who was cool on the bitcoin ETF approvals, shows that legitimacy doesn’t come from regulators. In this case, it came from BlackRock, Fidelity, capital markets, and the US financial system as a whole. Gensler might prefer a job at the ECB.
Bitcoin is now a part of the financial landscape, and we Europeans (inc. UK) still ban it. It is very simple; we are on the wrong side of financial history. To those who don’t get Bitcoin, it’s simply digital gold. That short description is good enough, but best of all, it is simple. The ECB owns plenty of gold, so they should have a good chance of grasping the digital upstart and stop confusing it for a payment system.
Organisations, especially those in the public sector, that remain wary of Bitcoin and crypto are in denial of Schumpeter’s (another great Austrian) creative destruction, where the new technologies crowd out the old. It is true that price discovery is imperfect and that there are too many scams. I bet we’ll find fewer in the US going forward because the legitimate path is always more fruitful.
The ECB and their friends see financial freedom and decentralisation in a poor light. It would be much more impressive to see Bindseil and Schaaf consider how Europe (inc. UK) could challenge the US and leapfrog them with a radical and brave regulatory framework embracing this new world.
They should have a look at ByteFolio, a service we provide to identify the best projects in crypto. They’d soon discover it’s real, and better yet, there’s an alt season brewing.
