The ECB has split a pamphlet against bitcoin. We awaited this umpteenth projection with relish.
“Bitcoin’s last stand”
FTX obliges, the ECB began to cry out loud with a blog post titled “Bitcoin’s last stand” (“Bitcoin’s Last Breath”)…
The first title of the article is hardly believable: “Bitcoin is rarely used for legal transactions.”
However, the latest report “Crypto Crime Report” claim that only 0.15% of bitcoin transactions are involved in illegal activities. Transactions which, by the way, amounted to 15 trillion dollars this year (on-chain volumes).
The authors then claim that bitcoin “was created to undo the existing monetary and financial system”. The goal is obviously to generate fear so effective in paralyzing the masses.
In truth, the fiat system is inherently a threat to itself. It’s a ponzi always requiring more growth and energy to stand up.
Satoshi Nakamoto simply offered us a perfectly neutral, uncensorable store of value. 21 million BTC to immunize against the pangs of inflation.
We even had the good old cliché that the low transaction rate of bitcoin prevents it from becoming a payment network.
That’s what BCH (Bitcoin Cash) advocates thought too. However, BCH with an unlimited transaction rate has just been ejected from Coinbase. There is no point running…
Did you say Ponzi?
The ECB estimates that “Bitcoin is also not suitable as an investment”. The reason being that it does not generate a return, “such as real estate or stocks”.
Indeed, bitcoin is not based on a fiat ponzi soon caught up in the physical limits of growth. Aka energy scarcity inevitably causing ever more inflation.
This is how. Regardless of the (monetary) policies in place, prices will never stop rising. Why ?
For a simple reason: all other things being equal, the price of everything depends on the price of the resources needed to produce it.
Metal, wood, sand, grain, etc. So many raw materials that require energy to be extracted from nature, transported and transformed.
But all these resources are becoming scarce. World production of conventional oil has only been decreasing since 2007 (the famous “peak oil”).
The EROI of oil (Energy Return On Investment) has fallen from 50 in 1950 to 9 in 2022. In other words, for one barrel invested in oil extraction, we only produce 9, compared to 50 in the 1950s. .
The same goes for metals. Copper content in mines has fallen from 4% in 1930 to 1% today. Consequence: it is necessary to extract four times more ore to obtain the same quantity of copper. And therefore spend four times more energy, which inevitably raises prices…
This automatically results in a growing indebtedness, under penalty of economic depression. Unfortunately, this inflationary headlong rush authorized by the ECB benefits those who are rich enough to buy luxury real estate, paintings, stocks, etc.
This privilege ends now that everyone can save in the greatest store of value in human history: Bitcoin. From 20 euros, and not from 200,000 euros.
The ECB makes threats?
The two accomplices Ulrich Bindseil and Jürgen Schaaf finally lament that “big investors finance lobbyists to influence European deputies and regulators”. “In the United States alone, the number of crypto lobbyists nearly tripled, from 115 in 2018 to 320 in 2021.”
The denial thickens a bit further:
“The stamp of approval conferred by the regulations encourages the financial sector to facilitate access to bitcoin for its customers. »
The American pension fund Fidelity does indeed intend to invest heavily in bitcoin. So much so that Ulrich and Jürgen felt compelled to warn European players:
“Since bitcoin does not seem to be suitable either as a payment system or as a form of investment […] banks and investment funds should be wary of reputational damage…”
These thinly veiled threats are not worthy of such an institution. The ECB should instead concentrate its efforts on inflation. She might as well think about the consequences of a totalitarian CBDC. There will always be a demand for a currency to protect against an authoritarian regime.
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