In a recently published blog post, Ulrich Bindseil, director general of market infrastructure and payments at the European Central Bank (ECB), and Jürgen Schaaf, advisor to the senior management of the market infrastructure and payments business area of the ECB, predict that Bitcoin is heading toward irrelevance.
Bindseil and Schaaf believe that the recent price stabilization is the "last gasp" before the cryptocurrency eventually plunges lower.
Bitcoin's path to irrelevance was already foreseeable even before the downfall of the FTX crypto empire that sparked the biggest cryptocurrency crisis to date.
The largest cryptocurrency has not gained any traction as a means of payment while also failing to perform as a viable investment option. The ECB says that Bitcoin only managed to benefit from waves of new investors who want to speculate on the cryptocurrency's price.
So far, as Bindseil and Schaaf say, Bitcoin has managed to create only "limited" value for society while also being "an unprecedented polluter" due to its energy-intensive mining algorithm.
The blog post also states that Bitcoin bears an "enormous" reputational risk for banking institutions. Hence, traditional finance should be wary of legitimizing cryptocurrencies despite possible short-term profits.
As reported by U.Today, ECB President Christine Lagarde said that cryptocurrencies were worth "nothing" back in April. Prior to that, she criticized Bitcoin for facilitating "reprehensible" money laundering.
The ECB is currently working on its own central bank digital currency. The development of a digital euro was mainly triggered by the rapid growth of private stablecoins such as Tether.