As a Greek-American, I’ve been paying attention to the European Central Bank (ECB) for too long.
Imagine the scene: There’s a teenager on the way to soccer practice absolutely in shambles because he just learned that Goldman Sachs brokered a cross-currency swap for Greece so that the latter could gain admission into the eurozone. The teenager then systematically loses his mind after each austerity package is announced in the following months and years.
That teenager was me.
Next, imagine that now-adult person, who writes about bitcoin for a living, reading a ECB blog post with the title: “Bitcoin’s last stand.”
The kid can’t catch a break. But no need to imagine because this actually happened last Wednesday. It’s critical to level-set that the published article doesn’t represent an official position of the ECB. It’s just a blog post on the ECB’s official website. But because it’s on the ECB’s official website, it is flying under a banner of authority. As such, it is worth parsing through the main points brought up in the post.
The post starts with an unsubstantiated (which was never substantiated later) point that bitcoin’s current price action is “an artificially induced last gasp before the road to irrelevance.” But what can be asserted without evidence can also be dismissed without evidence. So, let’s dismiss this point.
Bitcoin’s last stand? Probably not, ECB
The next section in the ECB post is titled: “Bitcoin is rarely used for legal transactions.” Unfortunately, the body of the section doesn’t prove this point specifically (a shame, really, because it isn’t true) and instead focuses on how bitcoin’s value is based solely on speculation because a) it has no cash flow (like real estate), dividends (like equities), productivity (like commodities) or social benefits (like gold) and b) VCs are propping it up with $17.9 billion of investment in blockchain and crypto.
On a), not all real estate generates cash flow, Google has never paid a dividend, people use bitcoin so it is productiveand there are clear social benefits to bitcoin. On b), the idea that $17.9 billion of VC investment in blockchain and crypto is enough to sustain $300 billion of value to bitcoin is frankly absurd, but I’ll concede that point because VCs do have vaunted reputations, so their involvement might, in fact, be propping up some of bitcoin’s market value.