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JUST IN: 🇪🇺 European Central Bank says Bitcoin fair value is still zero, and it's not suitable as means of payment or as an investment.
The European Central Bank (ECB) has maintained a skeptical stance on the practicality and intrinsic value of Bitcoin, the world's first and most well-known cryptocurrency. In its analysis, the ECB argues that Bitcoin lacks the fundamental characteristics required to be considered a viable means of payment or a stable investment.
Their primary concerns center around Bitcoin's significant price volatility, its limited transaction throughput due to the constraints of its underlying technology, and the absence of a stable value reference which is typically provided by sovereign currencies backed by governments and central banks. The ECB also points to the environmental impact of Bitcoin mining, which requires an extensive amount of electricity and has raised sustainability concerns.
Moreover, the ECB views Bitcoin as an unsuitable means of payment because it is not widely accepted by merchants and consumers due to its price instability and potential regulatory issues.
The bank's assessment that Bitcoin's fair value is zero reflects their belief that it does not embody any intrinsic value like commodities or fiat currencies, which are backed by physical assets or the economic output of a country, respectively. Instead, the value of Bitcoin is largely driven by speculative interest and market sentiment, which can lead to unpredictable price swings.
In light of these challenges, the ECB continues to caution investors and the public about the risks associated with Bitcoin and other cryptocurrencies. While the bank acknowledges the innovative potential of blockchain technology, it distinguishes this from the merits of cryptocurrencies as financial assets or reliable payment instruments. The ECB's position is part of a broader debate within financial institutions and regulatory bodies worldwide as they grapple with the integration of digital currencies into the existing monetary system.
