Yet another of the world’s central banks has publicly “warned” citizens of Bitcoin. The Argentinian Central Bank has posted a statement about Bitcoin on their official website, warning of the lack of legal tender status, volatility, and Bitcoin’s use in fraudulent activities and money laundering. It seems as if the Bank issued this warning simply to remind the citizens of Argentina that if they use Bitcoin, they are dealing in a currency not authorized for use under Argentina’s legal tender laws. Of course, as Bitcoin becomes more prevalent in the world economy, the central banks of the world will scramble to reign in the crypto-currency and put the citizens of the globe back on their supply of inflationary, constantly depreciating currency:
“Therefore it is suggested to the user public to note that so-called ‘virtual currency’ are not issued by the Central Bank or other international monetary authorities, therefore, have no legal tender nor possess endorsement.”
Note: this quote is a translation of the original Spanish document posted on the central bank’s website. Therefore, this quote may not be 100% accurate.
To see the original statement in Spanish, you can find it here.
The warning issued by the Argentinian Central Bank is similar to the recent statement issued by Yves Mersch, a member of the European Central Bank Executive Board. In this statement, Mersch argued that Bitcoin is not a viable monetary system for some of the same reasons that have elicited the warning from central bank of Argentina.
This statement from the central bank of Argentina seems ironic considering the country’s history of hyperinflation and economic instability. If the Bank believes that Bitcoin is volatile, then they should take a look at their own economic history.
Argentina has historically been plagued with economic instability and inflation; here are some historic inflation rates for Argentina:
Inflation Rates for Argentina:
Historic low (Feb 1954)……………………………-7%
Historic high (Mar 1990)………………………….20262.80%
Given these wildly unstable rates of inflation, which necessarily means great volatility in the purchasing power of the Argentinian currency, it seems darkly humorous that the Argentinian central bank would go as far as to warn the citizens of Argentina about using a volatile currency.
Why are Central Banks so Afraid of Bitcoin?
These central bank warnings are an indicator that Bitcoin is spreading. The world’s central banks are afraid of Bitcoin, and they should be. As Bitcoin continues to grow in popularity and more businesses begin accepting Bitcoin as a means of payment, government controlled fiat money will become increasingly irrelevant. Furthermore, as Bitcoin grows in value, fiat currency will necessarily decline in value compared to Bitcoin. What does this mean for the central banks? It means that they are being threatened by Bitcoin with a loss in power, a loss in their monopolized control over the monetary structures of their respective countries. Naturally, these power-hungry bankers are terrified of this prospect. This fear is what motivates these central banks to issue these “warnings” about Bitcoin to try and discourage people from using the digital currency. But the people are not listening, that much is resoundingly clear.
The people are no longer entranced by the false sense of complexity in economics that has been created by the Keynesian school of economics. Average citizens are starting to wake up and realize that all of these “economic” equations are based in false assumptions and a desperate desire to move economics from a social science into the sphere of the natural, empirical sciences. This attempt comes from a desire of these economists to feel important and an arguably natural tendency in humans to attempt to plan and control everything. It seems that the average citizens of the world are starting to turn away from the fallacious methodology of the Keynesian and other institutionalist schools of economic thought. We can see this shift in the status-quo in the growing popularity and acceptance of Bitcoin and the resurgence of the Austrian school of economics. If this growing trend of change continues, then soon central banks will fall. And not necessarily because of the global economic disaster they have set us up for, central banks could fall long before that due to a simple loss in popularity. The people won’t want what the central banks are selling; inflation, currency debasement, and bad economics are starting to lose their mainstream appeal. These changes are why Bitcoin has such a bright future. Bitcoin offers a way to escape the disastrous central bank policies. In fact, the more that central banks destroy their currency, the more appealing Bitcoin will become.
This isn’t to say that Bitcoin supporters should wish for or celebrate the coming economic collapse. This author does not wish to paint the collapse as another case of the cliché, “this is actually good news” that seems to pop up everywhere in the Bitcoin community. The transition between the fall of fiat and the ultimate rise in Bitcoin will not be a smooth one, and many people feel the pain of the economic collapse. However, at this point such a collapse seems inevitable thanks to the world’s central banks. This statement is not an attempt at being alarmist or sensationalist, this economic collapse is simply the logical conclusion of central bank-induced business cycles. Granted, the sooner the bust phase of the business cycle occurs, the less intense the depression will be. However, there is no way to actually reverse the damage that will be inflicted by the inflation that has already been injected into the markets.
Hopefully, Bitcoin can minimize the pain of the economic crisis that is likely to happen at some point in the future. But it is doubtful if Bitcoin will allow us to completely avoid the pain that will be inflicted by current central bank policies. Regardless of what happens to the economy in the future, it is clear that central banks across the globe are terrified of Bitcoin. That much is clear. They will work with the national governments to discourage Bitcoin’s wide acceptance. Although, it seems very unlikely that they will see any substantial success in limiting the growth of Bitcoin.