In November 2018 during the Economics of Payments IX conference, a European Central Bank (ECB) executive board member by the name of Benoît Cœuré described Bitcoin as “the evil spawn of the financial crisis.” If ever there was a chuckle with his statements, it’s safe to assume that smirk has now been wiped clean.

In Brief

  • Comments from the Bank of International Settlements (BIS) and the Euopean Central Bank (ECB) in 2018 haven’t aged well.
  • 2020 will be remembered as the year that institutions officially embraced bitcoin.
  • CBDC’s are coming, with China, the Eurozone and Sweden leading the way.
  • Bitcoin continues to look like a great idea.

The Bank of International Settlements’ (BIS) general manager Agustín Carstens’ had described bitcoin as “a combination of a bubble, a Ponzi scheme and an environmental disaster.” Similarly, Cœuré elaborated on this to say that bitcoin is a “clever” idea, but “sadly, not every clever idea is a good idea.”
Leading bitcoin evangelists and experts were quite amused by these comments, which have proven to be not only wrong, but dead wrong.

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Since these comments, bitcoin has gained 180% against the euro, growing from €4,865 in November of 2018 to €14,100 at the time of writing.
Blockstream CSO Samson Mow had also commented on Cœuré’s statements, asking whether the European Central Bank’s comments would stand the test of time. Clearly, they haven’t.

The year of institutional adoption

This year, major financial institutions have poured into bitcoin, validating its existence on the world stage and in many cases as a hedge against dollar inflation.
By the time public companies like Microstrategy and Square allocated significant portions of their portfolios into bitcoin, the narrative shift outside the industry already started taking shape. Indeed, 2020 will be remembered as the official year institutional adoption took flight as accredited investors rushed into the ecosystem.
The commercial banking sector has also u-turned on bitcoin. JP Morgan has led this charge, overturning comments on bitcoin in 2017 from the CEO Jamie Dimon who had called the asset a ‘fraud’. Today, the bank describes bitcoin as an alternative form of gold preferred by millennials.
Back in October, another bank – the Southeast Asia bank DBS published details of an upcoming cryptocurrency exchange that targets institutional clients. The release was quickly removed since the bank is still working on getting regulatory clearance. However, this speaks to the level of seriousness institutions are now treating bitcoin with.

The ECB and the Digital Euro

While bitcoin has evolved dramatically since 2018, the Eurozone has now launched its pilot project to create a central bank digital currency (CBDC).
In his 2018 talk, Cœuré stressed the potential behind CBDCs and noted that while multiple central banks around the world were conducting research into the field, for most countries, “there is more time to continue studying the technology and to assess the implications” of a central bank-issued digital currency.
Today, it appears that China is leading the way for central bank digital currencies, which will undoubtedly have a series of trade-offs with today’s currencies, namely the greater impact Central Banks will have on fiscal policy.
Meanwhile, Sweden took matters into its own hands and has launched a pilot for the e-krona.
That being said, the “evil spawn of the financial crisis” continues to gain ground. Indeed, it not only looks like a clever idea, but a good one too.

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