ECB President Christine Lagarde says Bitcoin is not a currency

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European Central Bank (ECB) President Christine Lagarde was interviewed on Bloomberg TV on September 13, which aired yesterday September 15. Among the topics discussed, monetary policy, debt and gross domestic product (GDP) of European Union (EU) countries, Lagarde also shared his point of view on Bitcoin and “cryptocurrencies”.

“Cryptos are not currencies. Full stop,” Lagarde said emphatically in the video. “Cryptos are highly speculative assets that claim their fame as a currency, perhaps, but they are not. They are not.”

More than just bashing ‘cryptos’, Lagarde shows a deep need to hush up something that threatens his job and his agenda. Apart from “cryptos”, which are indeed not currencies, there is Bitcoin which is not only a currency but which has the potential to make the ECB and other organizations which have a monopoly on money totally obsolete. monetary creation in the world. But before discussing Lagarde’s agenda at the head of the ECB, we must determine the meaning of “money”.

What is a currency?

Merriam Webster’s definition of money categorizes it as “something that is in circulation as a medium of exchange.” On the other hand, the medium exchange noun phrase is defined as “something commonly accepted in exchange for goods and services”.

Money is then something used for someone in exchange for another product or service. But this role of medium of exchange of money is only one of the many characteristics of a good monetary medium. Money also serves as a store of value and a unit of account.

Does this mean that Lagarde does not understand what a currency is? Unlikely. As the head of one of the world’s major central banks, it is fair to expect her to know exactly what a currency is. The catch, however, is that it is in his best interest to promote the currencies of his institution and his fellow central banks to the detriment of others. If Bitcoin was irrelevant and posed no threat to central banks, the President of the ECB would simply not talk about it.

The mainstream media will undoubtedly share Lagarde’s words, and the general public might even consider it to be the truth. Well, so be it. In the end, it’s free press for Bitcoin. People historically selected which monetary goods to use based on the benefits they brought to those who used them, but over the past two hundred years, central banks have dictated what should be enacted by determining the means with which citizens can pay their taxes – until Bitcoin came along with it.

Bitcoin is a currency

Bitcoin, born barely twelve years ago, has long ceased to be magic money on the Internet. The idealized peer-to-peer digital currency network invented by Satoshi Nakamoto has moved beyond “collectible” status to begin to be recognized as a store of value. Indeed, leading investors in developed economies claim how superior it is to gold, the best store of value for centuries.

The significance lies in the historical path that monetary goods generally take from their creation to their acceptance and use around the world. Historically, new money starts out as a collector’s item, something that a small percentage of the population considers and buys for a variety of reasons. As its value increases over time and money lasts, more and more people notice it, increasing its adoption and allowing it to be seen as a store of value. Second, money is mostly hoarded as more and more people recognize its proven ability to increase purchasing power against other currencies well established in this society. This stage is probably where Bitcoin is currently.

Investors, businesses and people around the world are realizing the value proposition of Bitcoin. As adoption increases, peer-to-peer digital money will continue to move forward on its monetary trajectory to become a widely accepted medium of exchange. Finally, with sufficient adoption, bitcoin can be recognized as a unit of account.

National currencies are the only type of currency used as units of account, each in its own country, due to political mandates and the lack of legal options. However, on the medium of exchange side, different goods can often be used as the parties to the transaction see fit according to their own needs.

This is already being played out in many countries around the world. Kenya, Nigeria and other African countries are becoming hotbeds of using Bitcoin as a store of value and medium of exchange as citizens face currency depreciation, monetary colonialism and access limited to the banking system. Likewise, in Central America, El Salvador recently adopted bitcoin as legal tender after the Bitcoin Law was enacted last week. Where the majority of the population does not have a bank account, a real change is happening with Bitcoin.

Central banks fear Bitcoin

Lagarde’s comments on Bitcoin and “cryptos” highlight the fear of those who currently hold the monopoly on money creation. Their moves to move towards central bank digital currencies (CBDCs) further illustrate an attempt to tell the public, “Hey, we can be digital too! But people will not be fooled.

Satoshi Nakamoto created a parallel currency that does not require permission from a central authority to be used. Bitcoin allows people of all backgrounds, nationalities, religions and races to access solid money.

Beyond empowering people marginalized by the authorized monetary system put forward by the ECB, Federal Reserve, and International Monetary Fund, Bitcoin also offers everyone the opportunity to be their own master – something a digital euro or digital dollar will never be able to do. accomplish.

Bitcoin was created in direct response to the bailouts given to banks that caused the subprime mortgage crisis in 2008. Big corporations can afford to be reckless because there is always a friendly central bank to save them and forgive their debt while the average citizen pays the price. .

But apparently, it’s only now that these central banks realized why Satoshi Nakamoto and the cypherpunks before him brought Bitcoin to the world, and they can’t help but fear the end of an age-old monopoly. They are uncomfortable with seeing the end of a colossal power that empowers banks, corporations and influential individuals at the expense of ordinary citizens who work hard to pay the very taxes that support such a system. . But the people say no more; because now they have Bitcoin.

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