The recent erosion in its value indicates that it is on the road to irrelevance, according to the European Central Bank.
The last gasp before the road to irrelevance was when the price of the digital currency fell below $16,000, and this was already foreseeable before FTX went bust.
The central bankers believe that the conceptual design and technological flaws of the currency make it questionable as a payment method. Transactions are slow and expensive in real life. They wrote that no significant amount of legal real-world transactions have been done with Bitcoins.
Cash flow, dividends, and social benefits, like gold, can't be generated by bitcoin. They wrote that the market valuation of the virtual currency is based on speculation.
Some of the bankers' arguments lack strong data points and seem to be fueled by irrational and emotionally-driven biases. It has been criticized by several tech-lovers.
According to a report by Chainalysis, only 0.15% of transactions in cryptocurrencies were linked to criminal activity, compared to 5% for the traditional currency.
I don't mean to suggest that there are no funny actors in the area. Regulators are a crucial part of the mix. A little more research into how the industry is covered can help. John said that bias doesn't deliver progress.
But this argument is flawed in the sense that as a technology becomes the norm, an increasing share of events will be linked to it.
We no longer say "internet linked accident" or "mobile app linked suicide" – as terrible as both events are.
— Joel John (@joel_john95) November 30, 2022
The central bank said that bitcoin has benefited from waves of new investors and thatmanipulations by individual exchanges or stable coin providers aren't able to provide stabilizing factors.
Lobbying activities need a sounding board to have an impact, according to the bankers, and that's why they're not proving successful.
The regulation of Cryptocurrencies is shaped by misconception. It is still believed that space must be given to innovation. It has a high potential since it is based on a new technology. These technologies have created limited value for society, even though they have great expectations for the future. It's not enough for a promising technology to be used for an added value of a product.
Several central banks around the globe have expressed concerns about the adoption of cryptocurrencies. The governor of the Reserve Bank of India said that the Dutch tulip market bubble from the 17th century was not related to the value of cryptocurrencies. The South Asian nation is going to start a pilot for retail digital currency on Thursday with the goal of protecting citizens from the volatility of private cryptocurrencies.
The financial industry players, who are high-profile backers of the firms, should be wary of the long-term damage to their reputation once investors make further losses.
Goldman Sachs, Morgan Stanley, HSBC, Wells Fargo, Citigroup, Bank of America,Deutsche Bank, UBS, Commonwealth Bank of Australia, Bangkok Bank, and Development Bank of Wales are some of the banks that have backed one or more cryptocurrencies.
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