According to the ECB, Bitcoin (BTC) is an expensive and wasteful system for international settlements

In a document listing the technologies that could potentially become the “Holy Grail” of cross-border payments, the European Central Bank (ECB) looks at Bitcoin (BTC). However, the latter is getting negative reviews, while stablecoins and central bank digital currencies (MNBC) are getting more positive reviews.

The ECB gives its opinion on Bitcoin again

The European Central Bank (ECB) published the work report on the search for the “holy grail of cross-border payments”, in which it paints an unflattering picture of Bitcoin (BTC). In this 59-page document attributed to Ulrich Bindseil and George Pantelopoulos, several solutions are explored and of course, elements relating to our ecosystem are present there.

An international payment system that can claim the qualification of “Holy Grail” must meet four conditions:

  • Be immediate;
  • Be cheap;
  • Have a universal scope;
  • Be a secure means of payment, such as central bank money.

As far as Bitcoin is concerned, this option is processed in fifth part and starts with this introduction:

” The [Conseil de stabilité financière] does not even consider non-backed crypto-assets such as Bitcoin as a means of cross-border payment. »

The irony of the situation is that the term “bitcoin” is nevertheless mentioned 199 times in the documentwhich contrasts with the low importance that seems to be given to it.

The report half-acknowledges that the Lighting Network responds to the problem of speed and low transaction costs, but it also highlights many black points. Once again, the proof-of-work (PoW) consensus is questioned for being described as expensive and unnecessary.

Note also the eternal crime argumentyet repeatedly contradicted:

“Much of its perceived appeal for cross-border payments stems from the fact that it escaped (so far) to equal regulatory treatment in terms of compliance […]. This has led to the widespread use of Bitcoin for criminal purposes. »

👉 To go further – Discover the arguments of Alexander Stachchenko to defend Bitcoin (BTC)

Diverse and comprehensive services

Buy and make your cryptos work

The issue of stablecoins and MNBCs

Beyond Bitcoin, the ECB is also focusing on stablecoins as well as central bank digital currencies (MNBC).

As for stablecoins, the survey highlights the fact that they have interesting qualities for possible use in international settlements. For reasons of financial stability, however, the emphasis is on collateralized stablecoins.

On the other hand, the authors of the report highlight the sovereignty issues generated by this technology. In this case, a digital asset would then replace the sovereign function of a State, which is monetary issuance.

Concerning MNBC, the works describe a system with a Forex overlay. This means that each country could use its own currency, but that currency would be directly converted in the destination currency. That said, the low development of MNBCs at the present time constitutes an obstacle to the development of this solution for the moment.

Once again, we see that blockchain-related technologies are of interest, but related assets, such as Bitcoin, are divisive. Often criticized, the latter would nevertheless be 56 times less energy consuming than the traditional financial system, according to a study by Michel Khazzaka. Moreover, a transaction with the Lighting Network would be 345,000 times faster than a traditional transaction and 14 times faster than instant payment technologies.

👉 Also in the news – MicroStrategy: Michael Saylor wants to focus on Bitcoin (BTC) and steps down as CEO

Join Experts and a Premium Community


Invest in your crypto knowledge for the next bullrun

toaster icon

Source: European Central Bank, Michel Khazzaka

Newsletter 🍞

Get a crypto news recap every Sunday 👌 And that’s it.

What you need to know about affiliate links. This page presents assets, products or services relating to investments. Some links in this article are affiliated. This means that if you buy a product or register on a site from this article, our partner pays us a commission. This allows us to continue to offer you original and useful content. There is no impact on you and you can even get a bonus by using our links.

Investments in cryptocurrencies are risky. Cryptoast is not responsible for the quality of the products or services presented on this page and could not be held responsible, directly or indirectly, for any damage or loss caused following the use of a good or service highlighted in this article. Investments related to crypto-assets are risky in nature, readers should do their own research before taking any action and only invest within the limits of their financial capabilities. This article does not constitute investment advice.

Leave a Comment