Bitcoin

The European Central Bank recently published an article titled &#34;ETF Approval for Bitcoin - The Naked Emperor&#39;s New Clothes&#34;, which delves into Bitcoin&#39;s classification as a speculative asset and raises concerns about its environmental impact.This article follows up on a previous piece released on November 30th, 2022. In the earlier publication, the focus was on the assertion that &#34;real Bitcoin transactions are cumbersome, slow, and expensive.&#34; However, according to data from the <a href="https://mempool.space/" rel="noopener noreferrer nofollow">Bitcoin mempool</a>, transactions can be processed within 10 minutes, with a high priority fee of less than $1. In contrast, settlements in traditional financial systems often take 1-3 business days, and point-of-sale (POS) systems typically deduct a cut ranging between 1.5% to 3.5% of the total purchase amount. With no intermediaries involved in Bitcoin settlements, the process is significantly faster, and the minimal transaction cost remains constant regardless of the sum being transacted.<img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/09e8348952614d0fbb082a8c00b7c328.png" />Another recurring comparison raised in both articles is the idea that Bitcoin lacks the attributes of real estate, equities, or commodities. However, it&#39;s crucial to understand the distinctions of these comparisons. Bitcoin serves as both a medium of transaction, similar to the USD, and a store of wealth, comparable to gold. It effectively addresses the double-spend problem without centralized validation, operating on a decentralized network that swiftly processes transactions. With its infinitely divisible nature and resistance to confiscation, Bitcoin opens up opportunities in financial inclusion for the global unbanked population, as shown in <a href="https://www.santander.com/en/stories/financial-inclusion-progress#:~:text&#61;The%20overarching%20challenge%20for%20the,methods%20other%20than%20direct%20debit." rel="noopener noreferrer nofollow">research from Santander</a>. Moreover, as programmable code, Bitcoin facilitates ongoing technological advancements that are reshaping payments and the financial landscape forever. Notably, Bitcoin can generate passive income via mining and staking, not making it too different from real estate and equities.<img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/8784f31bc7b042d5ae9188f09d2092a3.png" />The article then proceeds to tap into the environmental impacts of Bitcoin, specifically its Proof of Work mechanism: &#34;consumes energy on the scale of entire economies.&#34; Yet, when we examine the graph above by Lyn Alden, it becomes apparent that Bitcoin&#39;s energy consumption is relatively minimal compared to other sectors. An article published by <a href="https://www.forbes.com/sites/digital-assets/2023/09/21/why-bitcoin-mining-might-actually-be-great-for-sustainability/?sh&#61;5013ffcf3f31" rel="noopener noreferrer nofollow">Forbes</a> last year illustrates that Bitcoin can actually contribute to ESG (Environmental, Social, and Governance) objectives by stabilizing power grids and driving investment in renewables. More importantly, it has the potential to reduce methane emissions in our atmosphere. According to the Environmental Protection Agency (EPA), methane accounted for 10% of total greenhouse gas emissions in 2019. Considering methane&#39;s 84 times greater impact on global warming compared to carbon dioxide, Bitcoin mining can play a role in reducing emissions by capturing vented methane and generating electricity during combustion.<img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/45401fc9a22340fb8a291e6862404a13.png" />Let&#39;s also consider the total energy consumed by banks, ATMs, servers, and employees commuting to keep the financial system running. This combined energy usage far surpasses what Bitcoin processes through its miners. If Bitcoin were to replace the traditional monetary system, it could actually lead to energy conservation on a global scale. However, this aspect often goes unmentioned, mainly because Bitcoin directly competes with the financial system, upon which millions of corporations worldwide rely on.In their most recent article, the ECB states that, &#34;all these risks [they have mentioned in the previous post] have materialized.&#34; Although, one of these &#34;risks&#34; was the belief that &#34;Bitcoin&#39;s second promise to be a financial asset, the value of which would inevitably continue to rise, was equally wrong.&#34; Funnily enough, the price of BTC has risen over 200% since! Additionally, they claim that &#34;the fair value of Bitcoin is still zero”. When comparing the Euro against Bitcoin, we can see that it has depreciated by 99.35%.<img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/732e726a90bf42eb84a76f3abd1cc00e.png" />The ECB then shifts from environmental impacts of Bitcoin to the Spot ETFs. Their take on the newly introduced financial products are that they don’t “change the fact that Bitcoin is not suitable as a means of payment or as an investment.&#34; However, how can this assertion hold true when there are record inflows into these very ETFs? Currently, the 10 boast a total of over $38.03 billion in assets under management. Moreover, they have recorded unprecedented trade volumes, with $IBIT, $FBTC, and $GBTC consistently ranking among the top 10 leaderboard multiple times out of 3,400 ETFs listed in the US.<img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/091e1df243434080b0f2a2b07cdd44b1.jpeg" />Another argument they put forth against Bitcoin ETFs is: &#34;Why would anybody pay fees to an asset manager for the custody service of only one asset - instead of using the custodian directly?&#34; While this viewpoint may appear reasonable, it overlooks the fact that many institutions worldwide are unable to hold Bitcoin directly on their balance sheets due to internal policies. Hence, for these institutions, ETFs provide a necessary investment vehicle, opening doors to billions of dollars worth of capital. Moreover, holding an ETF offers numerous tax advantages and is less complex for retail investors to purchase and manage, without the intricacies of blockchain technology.They also mentioned that &#34;The &#39;market&#39; capitalization quantifies the overall social damage that will occur when the house of cards collapses,&#34; which is clearly an opinionated statement. In fact, their X post has garnered community notes directly (see post below), demonstrating the falsity of the information provided.<a href="https://x.com/ecb/status/1760580254920212640?s&#61;20" rel="noopener noreferrer nofollow">https://x.com/ecb/status/1760580254920212640?s&#61;20</a>To conclude, Bitcoin will remain a part of our lives for years to come. And so far, there hasn&#39;t been an argument hefty enough to satisfy the naysayers and drop the value of Bitcoin to zero once and for all. I personally believe that one day, millions of people will use SATs for their daily transactions and hedge against inflation by saving in Bitcoin.

The ECB Said What? The Truth About Bitcoin Uncovered

Crypto Kid

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