ARTE has recently published a documentary on Bitcoin titled “Cryptocurrencies: how dangerous is the new money”. The documentary lets opponents and proponents of #Bitcoin speak and (mainly) provides a balanced discussion. Clearly, progress in the public reporting on cryptocurrencies can be observed.
Nevertheless, I would like to comment on some statements made in the documentary:
1️⃣ Benefits: The documentation rightly points to the potential Bitcoin can provide in the context of financial inclusion. Access (and thus saving) in Bitcoin is very easy, because setting up a wallet is way easier than setting up a bank account.
2️⃣ Risk: Of course, the high volatility is an issue and investing in Bitcoin is risky. I would argue that nobody seriously challenges that there is risk involved when investing in Bitcoin. Still, we see tremendous evidence that Bitcoin is the backbone of a new asset class, namely a digital asset that is – by code and by design – scarce – a form of digital gold.
3️⃣ Institutional Interest: Besides interest from retail customers, we currently observe a great interest from the institutional side in launching Bitcoin-based financial products, such as ETFs. A vast amount of global asset managers recently filed applications to issue Bitcoin ETFs in the US, most prominently BlackRock. I do not agree with the statement in the documentary saying that “there are many scarce things” and that the „value of society is unclear“. Improving financial inclusion and providing a new promising asset class for savings are only two benefits of Bitcoin. Others are, also via the Lightning Network, cheap global payments that are instantly settled.
4️⃣ Criminal Use: That Bitcoin is mainly used for criminal activities is a statement which is still often raised, but simply not supported by evidence, such as reports by Chainalysis of the use of crypto for illicit activities. Using the most transparent payment system today (=Bitcoin) is also not a really smart move if conducting illicit activities. Recent seizures also show that law enforcing agencies have tools in their hands today to detect illicit activities with Bitcoin.
5️⃣ Energy Consumption: Yes, Bitcoin consumes energy, as almost anything. And yes, it also consumes a lot of energy. It is not the question whether it consumes energy, but rather which utility it provides. Mining gold consumes a lot of energy as well (some studies suggest that this is even more than Bitcoin), but still it is accepted by society. Watching YouTube and Netflix consumes myriads of energy. Also accepted, because the utility is recognized. I would argue that the utility is massive and this will become more and more apparent also over the next years/decades.