European Central Bank president calls crypto worthless and "based on nothing"

[midian182]

What just happened? Cryptocurrencies are not having the best of times right now. In addition to the crashing prices that saw almost $1 trillion wiped off markets, it seems people are lining up to disparage Bitcoin and other digital assets. The latest criticism has come from European Central Bank (ECB) president Christine Lagarde, who said crypto is both based on and worth "nothing."

Speaking on Dutch television recently, Lagarde made her feelings on the subject very clear. "I have said all along the crypto assets are highly speculative, very risky assets," she explained. "My very humble assessment is that it is worth nothing. It is based on nothing, there is no underlying assets to act as an anchor of safety."

As the caretaker of the euro, we @ecb want to keep an open dialogue with the people we serve.

I had the pleasure to answer students' questions about inflation, the war in Ukraine and my career.

Watch the @collegetour_nl episode at 20:20 CET on the Dutch TV channel NPO2. pic.twitter.com/GoqnA7AARh

— Christine Lagarde (@Lagarde) May 22, 2022

Lagarde's comments come at a time when crypto is facing a major crisis. The collapse of Terra and its support coin Luna earlier this month decimated the value of the crypto markets, which have been facing the added pressure of increased regulatory scrutiny and the Russia/Ukraine war. Bitcoin's price is down by almost 50% compared to six months ago, and Ethereum has fallen around 42% in the last month.

Bitcoin's price over the last six months

Lagarde isn't a complete crypto skeptic, though. She also talked about the ECB's digital Euro project, which is expected to arrive in the next four years. "The day when we have the central bank digital currency out, any digital euro, I will guarantee -- so the central bank will [be] behind it and I think it's vastly different than many of those things," she added.

While the ECB president admitted that she practiced what she preached by not holding any crypto assets herself—though she follows them "very carefully"—one of her sons has invested, going against his mother's advice. "He's a free man," she said.

The comments arrived soon after Sam Bankman-Fried, crypto billionaire and founder/CEO of crypto exchange FTX, said that he doesn't see a future for Bitcoin as a payments network. He criticized BTC's proof-of-work system for its high environmental costs and inefficiency.

h/t: Bloomberg

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https://www.techspot.com/news/94679-european-central-bank-president-calls-crypto-worthless-based.html

 

[Achaios]

There's ppl who 'r still buying the dip, though.

Just checked coinbase.

I wonder who they are and when their money will end b/c they systematically have been buying for weeks now around the 1800 EUR mark.

*Speaking abt ETH here.

 

[QuantumPhysics]

It’s about time!

 

[Sathi43]

Not defending crypto here. But the "based on nothing" part is true for Euro as well. Euro is basically a bet against the continuity of EU.

 

[QuantumPhysics]

The Russia-Ukraine war not only stopped the globalists in their tracks, but took down the crypto market!

It’s like 2 for the price of 1!

 

[Thanthan]

Can we start replacing the word ‘investing’ with ‘speculating’ when talking about purely speculative transactions? You can invest in a company, a person, a country or whatever. But when we’re talking about buying up speculative assets like crypto, or even regular currencies for that matter, it’s not an investment. You’re not ‘investing’ in anything, you’re not creating any value. You are purely hoping that the asset goes up by n% due to happenstance rather than any meaningful change in whatever underlies the asset… it’s just gambling.

 

[Burty117]

Not defending crypto here. But the "based on nothing" part is true for Euro as well. Euro is basically a bet against the continuity of EU.

This. But we'll ignore that. Crypto bad, everything else, good.

 

[VitalyT]

Central Bank president calls crypto worthless and "based on nothing"

No duh!

Sorry, but it's the best such PR-s deserve.

 

[dangh]

Not defending crypto here. But the "based on nothing" part is true for Euro as well. Euro is basically a bet against the continuity of EU.

That's not how it works. If for some reason countries would move from euro to other type, like back to "Mark" currency, all citizens Euro money would be exchanged to Mark. Garman banks and economy would be backing the strenght of Mark as they did before euro, and currently they are part of backing strength of Euro.
Euro is a currency backed by multiple large economies and their banks, means there is material value behind.

What you saying is like I'd say that strength of US Dollar is "based on nothing" - it is a bet agains continuity of United States

at topic - many people working with finances recently clearly stated what kind of asset crypto currency are.

 

[Theinsanegamer]

Not defending crypto here. But the "based on nothing" part is true for Euro as well. Euro is basically a bet against the continuity of EU.

The euro, at bare minimum, has the backing of the EU's authority, and is pegged to the USD, which itself is soft pegged to oil prices. So long as the petrodollar is USD the rest of the world's FIAT has value by extension. And the EU's existence is pretty solid, seeing as how russia can barely manage the ukraine if the stars align.

Crypto isnt a currency. It isnt an asset. It isnt a security or a stock. It's a frankenstein monster of all those things, a glorified greater fool theory that is experiencing its own 1929 bank run and people are, very quickly figuring out that without FIAT crypto is utterly worthless. Its just a hedge to gamble your real world money on, nothing more.

 

[MaXtor]

Not defending crypto here. But the "based on nothing" part is true for Euro as well. Euro is basically a bet against the continuity of EU.

Fixed:

"I have said all along that fiat currencies are highly inflationary, very risky currencies,"

"My very humble assessment is that it is worth nothing. It is based on nothing, there is no underlying assets to act as an anchor of safety."

 

[whateversa]

Gold jewelry is also worth nothing in my opinion - its a psychological matter... I won't pay a cent for gold. Gold used in a product such as electronics is useful in a practical sense, but that's not why gold is so expensive. People decided it has value. So how is that different? You might argue you depend on someone else to buy it from you - just like crypto... What I am saying is money makes no sense, so just give me all your money.

 

[stewi0001]

Gold jewelry is also worth nothing in my opinion - its a psychological matter... I won't pay a cent for gold. Gold used in a product such as electronics is useful in a practical sense, but that's not why gold is so expensive. People decided it has value. So how is that different? You might argue you depend on someone else to buy it from you - just like crypto... What I am saying is money makes no sense, so just give me all your money.

I believe the difference though is that gold is a tangible asset where as crypto is a sequence of numbers and letters. You are correct though about people deciding the value of something. Supply and demand curves. This is also why athletes and celebrities are highly over paid.

 

[fps4ever]

I believe the difference though is that gold is a tangible asset where as crypto is a sequence of numbers and letters. You are correct though about people deciding the value of something. Supply and demand curves. This is also why athletes and celebrities are highly over paid.

Gold and to a lesser extent silver is the standard the world runs by and has been for thousands of years. Comparing gold to software crypto is pure moronic. A thousand years ago if you have a ton of gold you'd be rich. Today if you had a ton of gold you'd be rich.

 

[Uncle Al]

Banks & reputable investment firms understand the importance of non-volatile securities no matter if they are stocks, bonds, currencies, etc.. Regardless of the firm, highly volatile units like Crypto are considered high risk and not recommended. I'm not in favor of some of the more recent changes to the banking laws like "know your customer", especially since it is for the benefit of the government and has no benefit for the customer but the stability of the currency and insurance to guard against individual losses and unmatched in the world of finance & currencies.

You can claim all sorts of benefits of Crypto but you can't claim it's low volatility or not a dangerous gamble with your money. Like the stock market, you should only invest what you can afford to loose and to think that playing in Crypto doesn't make you a "marked target" of the IRS, FBI, and several other agencies is foolish. Unless you are using Crypto to move funds that you think are untraceable, there simply isn't a need for it and to actually believe it's untraceable is ridicules since transactions are over the internet and on the web there is no longer reasonable invisibility, and you don't need to be a Rhodes Scholar to figure that one out.

 

[MaXtor]

Gold and to a lesser extent silver is the standard the world runs by and has been for thousands of years. Comparing gold to software crypto is pure moronic. A thousand years ago if you have a ton of gold you'd be rich. Today if you had a ton of gold you'd be rich.

The only comparison I would draw is that some crypto (like Bitcoin) is deflationary, just like gold and silver are limited resources.

Now, to say that Bitcoin or any decentralized crypto will become a standard currency (accepted by governments), that's a stretch. However, the technology will be the base for future government backed currencies. We've already seen China launch their centralized crypto and legislation is passing in the US while banks are working towards a US centralized crypto.

All the hate on crypto is unfounded, especially from a central bank who are certainly working towards their own centralized, fully traceable iterations. They're just talking trash about the competition. The blockchain is the future, whether that's decentralized crypto geared towards freedom, or centralized crypto geared towards control (or potentially, both).

 

[m4a4]

*Sigh* Another old person with competing interests doesn't like crypto. And the sky is blue.

 

[VaRmeNsI]

Lagarde is right but fiat is also backed by nothing.

 

[fps4ever]

The only comparison I would draw is that some crypto (like Bitcoin) is deflationary, just like gold and silver are limited resources.

Now, to say that Bitcoin or any decentralized crypto will become a standard currency (accepted by governments), that's a stretch. However, the technology will be the base for future government backed currencies. We've already seen China launch their centralized crypto and legislation is passing in the US while banks are working towards a US centralized crypto.

All the hate on crypto is unfounded, especially from a central bank who are certainly working towards their own centralized, fully traceable iterations. They're just talking trash about the competition. The blockchain is the future, whether that's decentralized crypto geared towards freedom, or centralized crypto geared towards control (or potentially, both).

All the hate is certainly not unfounded. I'm not sure where you are getting that from whatsoever. Just read the latest scams, thefts and volatility. Blockchain for bank transactions and back end financial work makes perfect sense. Crypto as a currency or any commodity certainly does not. Two separate things...

 

[dotnon]

The blockchain is the future, whether that's decentralized crypto geared towards freedom, or centralized crypto geared towards control (or potentially, both).

It's possible we're not talking about the same thing, but none of the government-issued digital currencies will be backed by blockchains. At least not ones issued by sane countries. They will not be cryptocurrencies, and that's a very good thing.

The noise you're hearing about these central bank digital currencies is a combination of politicians riding the hype and crypto-evangelists searching desperately for legitimacy.

The reality of most of these CBDCs, if they ever happen, will be much more mundane - essentially more people will be able to hold accounts directly with the central bank.

https://www.bankofengland.co.uk/research/digital-currencies

We've already seen China launch their centralized crypto

The digital yuan does not use a blockchain.

If you believe blockchain based cryptocurrencies are the future, I may have a bridge to sell you...

 

[Revolution 11]

Lagarde is right but fiat is also backed by nothing.

Except fiat IS backed by something.

The will and trust/guarantee of national governments who have sovereignty over their national assets and the balance sheets these governments control.

Now some people may consider the idea of governments and state power to be immoral or evil or whatever but the reality is that all states have hard power under their control which is what backs their (ultimate/final) control over assets and wealth which is what backs their fiat currency.

Fiat money for this reason can certainly fall to a very low value during hyperinflation but it never falls to zero unless the entire state itself fails. Then you have much bigger problems than what crypto can ever solve.

 

[nodfor]

Except fiat IS backed by something.

The will and trust/guarantee of national governments who have sovereignty over their national assets and the balance sheets these governments control.

Now some people may consider the idea of governments and state power to be immoral or evil or whatever but the reality is that all states have hard power under their control which is what backs their (ultimate/final) control over assets and wealth which is what backs their fiat currency.

Fiat money for this reason can certainly fall to a very low value during hyperinflation but it never falls to zero unless the entire state itself fails. Then you have much bigger problems than what crypto can ever solve.

fiat currency isn't backed up by anything that is why it is called fiat. Governments force the use of fiat currency, by making it legal tender, and so they artificially create demand for it, therefore increasing its price.

When they "print" too much of it, it follows the D-S curve like any other commodity / product and its value decreases.

 

[tellmewhy]

Any currency is just unique token(s) that has no value, it reflects the value of the work of the people who use it as a medium for their exchanges.

If someone has a health problem and goes to a good surgeon and that surgeon only accepts bitcoins (for tax reasons) how the ecb support will help? If the Venezuela or Iran or OPEC decide to sell oil only in bitcoin how will the ecb support will help? In that case if you want to buy oil you must have bitcoins.

 

[emmzo]

Any currency is just unique token(s) that has no value, it reflects the value of the work of the people who use it as a medium for their exchanges.

If someone has a health problem and goes to a good surgeon and that surgeon only accepts bitcoins (for tax reasons) how the ecb support will help? If the Venezuela or Iran or OPEC decide to sell oil only in bitcoin how will the ecb support will help? In that case if you want to buy oil you must have bitcoins.

Haha, selling oil for a high risk type of asset. I`d love to see that!

 

[VaRmeNsI]

Except fiat IS backed by something.

The will and trust/guarantee of national governments who have sovereignty over their national assets and the balance sheets these governments control.

Now some people may consider the idea of governments and state power to be immoral or evil or whatever but the reality is that all states have hard power under their control which is what backs their (ultimate/final) control over assets and wealth which is what backs their fiat currency.

Fiat money for this reason can certainly fall to a very low value during hyperinflation but it never falls to zero unless the entire state itself fails. Then you have much bigger problems than what crypto can ever solve.

So in other words, it's backed up by the figment of ones imagination... like crypto.