The ECB says Bitcoin is not a currency, and that's ok!

in bitcoin •  8 months ago

The ECB just recently updated its website to include their thoughts on Bitcoin.

Their conclusions were both encouraging and not so encouraging at the same time.

On the one hand they stated that there will not be a ban of bitcoin.

The exact wording can be read here:

"It is not the ECB’s responsibility to ban or regulate bitcoin or other cryptocurrencies. But, given the lack of consumer protection, it is important to exercise caution."

Good news, no ban coming from the ECB!

However, they did pour cold water on the notion that bitcoin is indeed a currency.

In fact they summed up their thoughts pretty well in one simple chart:


(Source: https://www.marketwatch.com/story/the-ecb-just-illustrated-all-the-key-problems-with-bitcoin-in-one-simple-chart-2018-02-13)

Ok, so bitcoin is not currently a currency, but guess what, that is ok!

Lets counter their reasoning why it is currently not a currency one by one.

1 - No one is backing it.

Yes that is true in the sense that no government or single entity is backing it, however, that is also one of its strongest selling points.

The fact no one country or entity controls it makes it incorruptible, it also protects against rampant inflation as it cannot be printed at will.

So yes, there is no central authority backing it, but that is a good thing.

There is a large network of people that are starting to use it and support it. As that network grows there will be plenty backing it.

2 - It is not widely accepted.

While this is true currently, it may not always be the case.

With the Lightning implementation expected to roll out later this year on bitcoin, there is a very real chance that transactions will take place almost instantaneously and with fees costing fractions of cents.

In that world it will be interesting to see if merchants start adopting it as a form of payment.

3 - Users are not protected.

This is an interesting statement.

On the one hand, if I am holding $100 in cash and I am robbed in the parking lot, who is there to protect me?

To me, this seems like pretty much the same thing.

Yes there are protections regarding banks and credit cards in the form of insurance, but that is also something exchanges could start offering as well.

There is no protection for users holding cash, should we not accept cash then either?

4 - It is too volatile.

This is probably the most reasonable reasoning of them all.

Yes the currency is volatile, in fact, it's extremely volatile.

So much so that no one wants to accept payment in it for fear that it's purchasing power could erode by 50% within a week.

However, I recently saw a chart of gold when it first started trading freely.

The volatility on it was actually very similar to what we see now with bitcoin.

Check it out:


(Source: https://steemit.com/bitcoin/@jrcornel/store-of-value)

The premise here is that the longer bitcoin exists and as it makes its way into more and more hands, much of that volatility will come out of the price.

Much the same way that gold has.

There is no guarantee that this will happen, but the logic makes sense.

All in all, the ECBs conclusions are mostly spot on, however, most of them won't be spot on forever.

I am just happy they are taking a wait and see approach, as opposed to banning something they don't fully understand the potential of just yet.

In that regard, I would say their commentary has been a win!

Stay informed my friends.

Follow me: @jrcornel

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No one cares what they say. They should not be acknowledged, but merely only be used as fuel to work towards making all government workers unemployed forever.

Good article and good analysis. I could care less if their definition does not rate BTC as a currency. Let’s just keep buying/selling/trading it. Some day conventional thinking will catch up.

💰💰💰💰💰💰💰💰💰💰💰💰💰

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I think as the technology matures and catches up with the hype, conventional thinking will also be forced to "catch up". :)

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Indeed!
To add to that; when buying/trading continues en increases their stance will change because it will be more widely accepted! (And the no one is backing it and user protection arguments are already a bit iffy, as mentioned in the article)

I believe the ECB hasn't properly researched the Streisand Effect. LOL

We should ask the ECB what they are backed by: https://www.reuters.com/article/us-steinhoff-africa-bonds-ecb/ecb-sells-steinhoff-bond-at-loss-after-scandal-idUSKBN1EX1M6

It can't denied that Bitcoin is still the standard for all crypto!

In the big picture, the game never changes. There will be early shrewd veterans who get in early. There will be overly eager fools who stay in too late. The players won’t change. The end result will always be the same.

If (Gold == currency && Bitcoin == Internet Gold){
Print 'Nobody Cares What ECB thinks :)';
}

Currency can be anything as long as people accept it. Dollar is not backed by anything, since Richard Nixon removed the gold standard. It exist only, because people have "trust" in it. But for how long?

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For how long? I guess we will find out in the next 2 years to come.

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Basically as long as the US government and military is the big kid on the block.

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Which itself might not be that much longer, China will be the next major world power, if you do not already consider them as such. The US might be able to "quantitatively ease" their way out of a massive economic depression for a while longer, MIGHT, but that is a temporary fix. The writing is on the wall, and I cannot imagine a way that the government or the US citizens mobilize in a meaningful enough way to save a total economic collapse in our lifetime. And worse yet, as the US economy goes, so goes the global market, the debts are too intertwined.

I really think we are in for something worse than we can imagine, and yet it appears to be maintain the status quo from most officials and politicians. Talk about burying your head in the sand.

Thanks for the post.

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@bloomberg215 That is a point people do not know. If people read books like "currency wars" and other books by same author they will see it for themselves. US dollars is nothing but a paper trusted by the people as a veritable means of exchange. Trust has always been the backbone of the massive adoption of any currency, crypto or fiat.

Eyes will clear in few years time. Its just a matter of time.

great posts @jrcornel

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Actually has a value because you pay your taxes and common utilities with it. And that is precisely why BTC has zero value in the current world setup. The blockchain, on the other hand, it is a priceless tech. Even damn wood has more intrinsic value than BTC.

Thanks for sharing - in a nice readable condensed version.

Pablum for the masses.

I think I'll go take a short nap, LOL

that's good, them saying it is not a currency means they can't regulate it.

I'm glad they do not consider it a currency then they won't be able to try and regulate it...

Actually currency is something that is acceptable by the public, divisible and as a mean of exchange. Bitcoin is shaking the core of the goverment's core control, ie fiat currency, hence, not accepting any 'competition'. This argument will definitely go on for awhile.

Thats OK if they didn't accept bitcoin as currency.even Gold,Silver,the lands we purchased doesnt come under "legal tender"
Doesn't mean you can't invest in it.the good thing is they are partially identifying it.

maybe its gonna be massive. and the future looks bright :D

Outstanding blog..
Your post gift us genarel knowledge incrase. Your New thinking give us new blog wrighting inspirations.

If its not currency than the ECB has no say. So the ECB not banning it is great but the mainstream media is still spinning it as bad news for Bitcoin.

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I would expect nothing less. :)

The past definitions (beliefs) of currency was based on "national" boundaries. Crypto is borderless, and thus some governments, and institutions, have a hard time comprehending the value, and utility, of crypto. Mark Cuban, on the other hand, has called crypto "a collectible."

I agree! So what if it's not a currency yet? The volatility works for me unless stupids don't know how to trade. We're pretty much have the same thought on this topic my friend.

I'd be interested to see how they rationalise these kind of statements in a few years when blockchain tech is day-to-day.

Good analysis and counter arguments. I do believe its a matter of time before all their points are rendered null.

The Bitcoin and Crypto debate is becoming such a tug of war of words. One day we hear this and the next day we hear that. Just two days ago I read that governments are going to accept Bitcoin as a form of payment and today its no a currency. I am so glad you broke down each of these individual reasons so well. The fact of the matter is we are really still in the infancy of the Crypto revolution. There is still so much growth and acceptance to come. As this market grows and we get to a point where we grow with strength rather than on a yoyo more and more people will start to accept this payment. These are the same people that are gong to be backing Bitcoin. I find it very frustrating how it is stated that Bitcoin needs to be backed by a formal entity such as a bank or government. The who point is to remove the control that those institutions have. The only one of those four points that has any legs for me is the volatility. The issue here is that we are still so tied to the value of the US dollar. As long as that is the case then we are going to have scared people. As more and more accept Bitcoin as payment and LitePay comes online and Crypto cards further develop and get used in a more mainstream why, the harder it will be for anyone to deny the validity of Bitcoin. It is a currency if you want it to be!!!

I agree with you: it is ok that bitcoin is no official currency. It is maybe better because so no of the normal regulations for currency work wth bitcoin. For example there is no income tax as long as your income stays Bitcoin or other non official currency’s (I think)

wondering what the E Coli Brigade has to do with BitCoins.

You make some good points on here .I do indeed think it'll be a while before people truly understand what bitcoin is meant to represent.

This will take a few more years to be considered one. Also I read a recent article that said they think the new goal for bitcoin is for massive companies to move funds to one another... Interesting right?

One day ECB will have to accept Bitcoin for currency

Something's missing 🤔

Bitcoin is no currency and never will be. The thing is, that there is no currency in cryptocurrency at all! 😉All Crypto is, is an investment in blockchain technology. If they don´t ban shares, why should they do it with Crypto? Also since Bitcoin is in the meantime owned by banks anyway, the ECB has no reason to ban it. So yes, everything is fine and they were only stating the obvious! 😀

The ECB said that they are not worried with crypto/BTC for now because it still to small to be at the top of their To Do list.

I didn´t know that Gold had that similar volatility when it first started trading freely. Another amazing coincidences for the markets!

yes i agree with you , but bitcoin need a lot of improvements to Become a worldwide currency , we are the early adopetuer of a revoulution

perhaps steemit will take its place.

As of now, it's mainly a store of value - infeasible to purchase small items (pack of gum, etc) with Bitcoin. But the future looks bright

Great, post! Many compliments

As long as it holds the value!!

What is the ECB? European Central Bank, I guess. That is not cool on your part.

However, I agree with you. The only problem I see is the volatility, which will change as more people come into it.

Moreover, fiat has the same inert problem. Look at Zimbabwe and Venezuela: volatile, lack of protection, and now are not widely accepted.

"However, I recently saw a chart of gold when it first started trading freely.
The volatility on it was actually very similar to what we see now with bitcoin."

Do they consider gold a currency?

how your prediction of bitcoin will come.
I pray for bitcoin to rise to the moon.
thanks for sharing

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Please wait with your prayings. I need to buy some more.

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Coinbase wants me to scan my ID. The other platforms didn't ask. Is this normal for security?
Great post. Joy

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Basically any of the platforms that have fiat on/off ramps are being forced to do things like that, yes.

Let's see how they tax it...

Love the reasoning, very good points 👍 Bitcoin is the future 🚀

The dinosaurs make another comment, on technology that MOST dont truly understand (thinking face)

Great counterarguments jrcornel. I enjoyed the cash robbery analogy, it does make the ECB's point kind of moot.

I just posted an article on how a bitcoin backed ETF could help to legitimise crypto as well as making it more accessible and a safer investment. This would massively increase adoption.

We hope the SEC will not drag their feet too much longer and get some of the applications approved.

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Yes I agree. Though it needs to be backed by physical crypto (as odd as that sounds), and not based on futures products that are based only on bitcoin's price. Basically, I want these funds to own the coins themselves and not just be a derivative play on the prices.

Bitcoin may never become a true currency and that is fine. The volatility, slow processing time, and high transaction fees are currently the main problems. Yes, the lightning network will help as soon as that is up and running at full speed. Even after the lightning strikes, it may still just be used as digital gold as many refer to it these days. But you could bet your ass that there will be a cryptocurrency at some point that will be used as a currency, globally accepted, decentralized, and not backed by central banks or the fraudulent financial system. It's inevitable.

Great analysis of their conclusion. I'm really pleased to hear the outcome of their examination of bitcoin, I've talked with many who believed they would try to ban it.

thats ok,as long as we can make some good money off it.

Bitcoin and the crypto currency is the future. No matter what happens ECB will accept the crypto currency regardless of the paper money.
This is a nice post to talk on. Stay blessed buddy

Interesting article! Checkout @cryptobroye for more bitcoin info and analysis. Im sure there's a lot we can learn from each other!

They are just afraid of things they don't understand. They'll necessary change their minds

Very good reasoning. if I think sharply the same principles could be used for asset with limited supply.