Commerzbank embarrasses itself with anti-Bitcoin letters

by Patricia Lin
Commerzbank embarrasses itself with anti-Bitcoin letters

Crypto-skeptical tones have a protracted custom within the banking sector. Commerzbank is sticking to this custom and divulges one factor above all in an “Insight Report”: academic gaps.

Bitcoin and Commerzbank will in all probability not discover a inexperienced department anytime quickly. In an “Insight Report”, the massive financial institution presents its crucial view of the asset and divulges some information gaps. The prejudices are the well-known: Bitcoin is used for cash laundering, has no intrinsic worth and usually the crypto market exhibits parallels to the tulip mania.

Commerzbank dissects Bitcoin

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Bitcoin is just not cash: The report “Precious metals versus cryptocurrencies” involves this devastating verdict, during which the identical issues sounded as have been heard because the starting of the Bitcoin blockchain. Even if Commerzbank makes the precise arguments, the core message of the report ignores actuality.

Because the report means that Bitcoin is a shadow forex that opens the door to cash laundering and terrorist financing. The underlying blockchain know-how is “completely anonymous, with all advantages and disadvantages”. A nonetheless widespread fallacy: Blockchain know-how is just not nameless, however pseudonymous.

All transactions will be seen by all community contributors at any time. The Bitcoin Blockchain is a clear database during which the stream of cash will be traced – additionally for regulation enforcement authorities. The KYC course of makes it simple to hint unlawful money flows again to originators. Even if criminals can take the detour by way of Mixer or privateness cash like Monero, the crypto ecosystem is just not the black gap it’s typically portrayed as. If you wish to discover a scapegoat, fiat cash stays the preferred cash laundering car.

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Bitcoin with out “ideal value”?

Commerzbank sees one other level of criticism within the alleged misrepresentation of Bitcoin as a digital gold model. Due to the “ultra-expansionary monetary policy” attributable to the corona, buyers are fleeing to protected havens from inflation safety. Bitcoin doesn’t do justice to this standing, nevertheless, as a result of it lacks “the use value and also the ideal value”.

The treasured steel, alternatively, has “always had a high ideal value”, which is because of the truth that “gold cannot be increased at will and its extraction is associated with corresponding mining costs”. The thesis that Bitcoin has no best worth is all of the extra outstanding in view of this conclusion, because the identical premises additionally apply to Bitcoin. At Bitcoin, the funding prices in the end discover their counterpart within the proof-of-work course of and will be measured within the type of the computing energy used.

If, in line with Commerzbank, a decisive criterion for the perfect worth is that “gold cannot be increased at will”, then Bitcoin would additionally must be the higher gold. The provide of Bitcoin is proscribed to 21 million models. Bitcoin won’t ever be in circulation once more. While Bitcoin manufacturing is clear, gold manufacturing has fluctuated round 1,000 tons over the previous ten years. The remaining gold deposits are additionally primarily based on estimates.

Pure perception

Thus the report involves the much less conciliatory conclusion that “digital currencies are not an alternative to official central bank money and also not to gold or other precious metals”. A “minimal economic benefit” would in the end be offset by “major disadvantages”. Whether Bitcoin is price a cent or one million euros, “is a matter of faith”. The crypto market is a large hypothesis, akin to a on line casino or the “shell game on the street”.

Even if Commerzbank rightly warns of the dangers of a extremely unstable market within the letter, these judgments testify to some untenable prejudices. The view of a “minimal economic benefit” mocks buyers who shift their capital into inflation-protected belongings for worry of inflation. Whether Bitcoin can be a substitute for gold is just not on the discretion of Commerzbank. This growth course of is evidenced by the truth that increasingly firms are parking money within the reserve asset Bitcoin. Whether Bitcoin will change gold in the long run is in the end a query of belief. And business confidence in digital belongings is rising steadily. Last however not least, the worth attribution of Bitcoin and Co. can be simply as “a pure matter of faith” as the worth of Euro and Co.

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