A high-ranking official at the European Central Bank (ECB) says that pseudonymous Bitcoin (BTC) creator Satoshi Nakamoto didn’t have an “in-depth understand” of money issues while developing BTC.
In a new speech at Columbia University, ECB executive board member Fabio Panetta argues that Nakamoto’s dream of creating trustworthy money remains illusory.
“Satoshi Nakamoto – or rather the software developers using that pseudonym – created the source code of what they thought could be decentralized digital cash. Their 2008 white paper shows a great fascination with technology, notably cryptography, but not necessarily an in-depth understanding of payment and money issues. They aspired to realize an anarchistic utopia of a stable currency free from public scrutiny.”
Panetta argues that most participants in the crypto market still rely on intermediaries, contrary to Nakamoto’s goal of decentralization.
He also compares the crypto market to the subprime mortgage meltdown that led to the 2008 Financial Crisis.
“Indeed, the crypto market is now larger than the subprime mortgage market was when – worth USD 1.3 trillion – it triggered the global financial crisis. And it shows strikingly similar dynamics. In the absence of adequate controls, crypto assets are driving speculation by promising fast and high returns and exploiting regulatory loopholes that leave investors without protection. Limited understanding of risks, fear of missing out and intense lobbying of legislators drive up exposures while slowing down regulation.”
The global crypto market cap currently sits around $1.8 trillion.
Panetta calls for globally coordinated regulatory action to address the illicit use of digital assets, as well as the environmental impact of crypto.
“Regulation should balance the risks and benefits so as not to stifle innovation that could stimulate efficiency in payments and broader applications of these technologies.”