An opposite reaction to the “Bitcoin Law” approved by El Salvador and its increasing adoption was to be expected. The mainstream media outlets have been replicating news about BTC’s alleged negative environmental impact, its use for illicit activities, and others.
However, the director of the Dutch Office for Economic Analysis, Pieter Hasekamp, could be the finalist for the award for the most anti-Bitcoin article of the week. His post titled “The Netherlands Must Ban Bitcoin” is a critique of BTC and a defense of fiat currencies.
Hence, he calls cryptocurrency a bad form of money due to its “unclear origin, uncertain valuation, shady business practices.” He even goes on to say that cryptocurrencies are not used in regular payment transactions.
His argument is based on Gresham’s Law, elucidated in the 16th century, and used to measure the properties of good and bad money. This economic law has a fundamental principle: bad money drives out good.
Hasekamp believes that the argument in defense of Bitcoin is wrong. It states that cryptocurrency does not have any of the three functions of money: unit of account, means of payment, and store of value. At the same time, he argued that fiat currencies “score well” on these properties and are a good store of value. He said:
In recent decades, there has hardly been a devaluation of the currency. Although inflation is now rising cautiously, few people believe that we are going back to the figures of the 60s and 70s.
The government official maintains that the new form of electronic payments based on fiat currencies has improved their ease of use. His conclusion is that the current financial system works “quite well in practice.” In the future, he predicts that central bank digital currencies (CBDC) will make it even better. He adds:
Therefore, cryptocurrencies are not suitable as a unit of account and a means of payment outside the criminal circuit (…). Gresham’s law is replaced by Newton’s law: what goes up, must come down. The ultimate collapse of the crypto bubble is inevitable.
The other side of the coin, Bitcoin has a tool for progress
The Dutch government official called on countries that opposed Bitcoin to take action. He claims that waiting longer could make the “looming” crypto crash worse. Later, he compares cryptocurrencies to drug trafficking and explains that a complete ban on cryptocurrencies will be more effective.
David Rosa, a developer at Ledger, posted a rebuttal via his Twitter account. It states that Bitcoin must go through the properties of money in stages, first from a store of value to a unit of account. Furthermore, it emphasizes that BTC is an emerging asset. Therefore, many tried to use it to “get rich quick”.
Eventually, these investors have the opportunity to learn about the unique properties of Bitcoin: immutability, resistance to censorship, scarcity, without permission. Many of these characteristics made BTC an invaluable asset for people in developing countries, such as El Salvador, who have access to a global financial system and a savings account far from the reach of central banks. Rosa said:
It is intellectually dishonest to blame #Bitcoin and crypto assets for the financial instability caused by a crash. The fiduciary system is marked by central banks that keep interest rates artificially low, causing misallocation of capital that in turn leads to large corrections.
Ultimately, people turn to BTC because they stop trusting their national governments. This is the biggest crisis, right now, according to Rosa. Across the world, central banks seem more likely to serve their interests than those of the people they claim to protect.
BREAK: The director of the Dutch Office for Economic Analysis is calling for a COMPLETE BAN on mining, holding and trading #Bitcoin and other crypto assets.
Dutch article behind paywall:https://t.co/ECibJGBO4w
I have highlighted the main points of the thread 👇
1 / pic.twitter.com/T1Y84EJOEX
– 🟩 David El Silvador Rosa (@dldasilvarosa) June 11, 2021
As of this writing, BTC is trading at $ 37,041 with sideways movement in lower time frames. The top cryptocurrency by market cap needs a boost from the bulls if it wants to break the resistance at $ 38,000 and $ 40,000.