The European Central Bank predicts the imminent surrender of bitcoin

Although the flagship cryptocurrency may seem stable at the moment, bitcoin is «on the verge of irrelevance,» according to two European Central Bank (ECB) advisors, Ulrich Bindseil and Jürgen Schaaf. According to their joint post on the ECB blog, bitcoin is rarely used in transactions in the EU and poses a reputational risk to state-owned banks.

The stabilization of bitcoin’s value at around $ 20,000 — down from a peak in 2021 of around $ 69,000 — was «an artificially induced last gasp before the road to irrelevance,» the officials said.

bitcoin’s «conceptual design and technological shortcomings» made transactions «cumbersome, slow, and expensive,» and the flagship digital currency itself a «dubious» form of payment. Bindsale and Schaaf also advocate not granting bitcoin any official payment status.

«It (the CTS) does not generate cash flows (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 purely on speculation,» the officials wrote.

Moreover, the officials criticized the cryptocurrency regulator, arguing that the current cryptocurrency frameworks were formed on the basis of judgment, as if «innovation should be promoted at all costs.»

«Since bitcoin does not seem to be suitable either as a payment system or as a form of investment, it should be treated as neither in regulatory terms and therefore should not be legitimized,» the ECB advisors concluded.

Despite the criticism of the flagship crypto asset, the EU is actively working on the launch of the digital euro. EU leaders see it as an opportunity to preserve the value of the common currency for the euro area. «The introduction of advanced technologies into the payment system can reduce the risk of dependence on foreign payment services. This will have good implications for Europe’s strategic financial autonomy,» European Central Bank President Christine Lagarde said in early November.