Is Bitcoin the Answer to a Cashless Society? The European Central Bank Does Not Believe So

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Bitcoin and cryptocurrency supporters believe that the financial future will be based on cryptocurrencies. Some of the most positive thinks about cryptocurrencies imagine a future in which cash will not exist anymore and it will be replaced by virtual currencies. But the European Central Bank (ECB) does not think so.

ECB: Bitcoin Not the Answer to a Cashless Society

In a report presented by the ECB, the institution explains that a cashless society will not be related with Bitcoin. The report has been written by Benoît Coeuré, Member of the Executive Board of the ECB and Chair of the Bank for International Settlements (BIS) Committee on Payments and Market Infrastructures.

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The next week, a group of 20 policymakers will discuss about cryptocurrencies and how they can influence the society. The European Central Bank is also worried about the different illegal activities that are related with these cryptocurrencies.

The statement starts as follows:

“Next week, Group of 20 policymakers will discuss bitcoin and other blockchain-based digital tokens. Such cryptocurrencies are poor imitations of money. Almost nobody prices goods in bitcoin, few use them for payments, and, as a store of value, they are no better than gambling in a casino. Policymakers are rightly worried about consumer and investors abuses, as well as illicit use.”

For Mr Coeuré, cash will be replaced, but at the moment, it is being used in many parts of the world. According to a research performed by the BIS, non-cash payments have doubled in size since the year 2000. But the way to build a cash-less future is not through Bitcoin, but neither using what Coeuré describes as central bank digital currencies (CBDC).

Clearly, CBDC are an instrument to protect and retain the power of the central banks. But they do not seem to properly work. At the same time, Bitcoin is a decentralized cryptocurrency that does not depend on any government of central institution. And clearly, they are an important threat to Central Banks.

Bitcoin’s Future for the Society

“Despite its many faults, bitcoin has put the spotlight on an old failing of our current system: cross-border retail payments,” says the statement. “Such payments not only permit shoppers to easily buy goods online from overseas, but also allow foreign workers to send money home, supporting financial inclusion and development.”

He still explains that bitcoin payments are slow, less transparent and more expensive than domestic ones. It is important to explain him that Bitcoin and cryptocurrencies offer almost instant transnational payments, there are cryptocurrencies that are focus on privacy and every single transaction is registered on the blockchain.

Central banks are worried about the future of their business, and clearly, Bitcoin and cryptocurrencies are threatening traditional banking operations.

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