Bitcoin has unarguably gained massive adoption of recent and there are hopes that someday, it could potentially become a global currency. However, the European Central Bank, the Central bank for Europe’s currency Euro in a tweet on July 9, 2019, stated that it has no plans to add Bitcoin to its reserves because Bitcoin is not a currency but a very volatile asset.
— European Central Bank (@ecb) July 9, 2019
Philip R. Lane Begins Ask Me Anything (AMA) Session on Twitter
On July 9, 2019, Philip R. Lane, Chief Economist of European Central Bank (ECB) began an AMA session on Twitter where he stated that he will answer questions for the next 45 minutes from the general public. While several questions were thrown Lane’s way, one that was captivating is from the user, @Juuso_I.
@Juuso_I asked if ECB has plans to add Bitcoin, the top cryptocurrency by market cap to its reserves. As a response, the Chief Economist said Bitcoin is not a currency, rather, it is an asset and it is very volatile. The response can be taken as another way of saying an addition of BTC to its reserves won’t be happening anytime soon.
Crypto Community Assert Bitcoin is a Currency
The cryptocurrency community, on the other hand, was on its toes after Lane’s comment was made. A Bitcoin proponent, for instance, outrightly said Bitcoin is a currency. According to the enthusiast, there is a consensus among millions of people across the world to accept Bitcoin as money, a medium of exchange for goods and services, and a store of value. In the same vein, money is a belief system and as such, Bitcoin is a currency.
Another crypto enthusiast opined that Bitcoin is currently volatile in an upward direction due to its frequent surge in price. They also asked how the ECB expects new money to move from nothing to global adoption without it being volatile. An enthusiast also said they do not want the ECB or Federal reserve to even consider buying Bitcoin “until the total market capitalization hits $400 trillion”.
ECB Says Cryptocurrencies are Not to Financial Stability
It can be recalled that in May 2019, the ECB in a paper stated that cryptocurrencies are not a threat to financial stability and they have no “tangible impact on the real economy.” In the same vein, crypto assets do not perform money’s function and only a small number of merchants are accepting the asset for the purchase of goods and services.
Despite the ECB’s sentiment and that of other Bitcoin critics, the top cryptocurrency, Bitcoin is still soaring in price and has come a long way from its $3,000 price level which it opened at the beginning of the year. Institutional investors are also trooping into the market and the uncertainties in global economies have attracted more investors into the crypto space.