By
Temitope Olatunji
April 26th, 2024
European Central Bank’s head Christine Lagarde dismisses Bitcoin’s positive sides but admires stablecoins and calls for large-scale competition.
European Central Bank’s head (and former International Monetary Fund’s head) Christine Lagarde said that the stablecoins market is gaining momentum and the officials need to keep up with changes:
“My personal conviction is that giving the developments we are seeing, not so much in the bitcoin segment, but in the stablecoins projects. And we only know of one at the moment but there are others, being explored and underway at the moment. We’d better be ahead of the curve if that happens. Because there is clearly a demand out there that we have to respond to.”
Recent developments in blockchain space have sparked bonfires. In 2019, ten years since Bitcoin‘s inception, the regulators are examining the potential benefits of using the decentralized tech to accumulate and distribute wealth. Despite the cryptocurrency space is moving on its own, the governments try taking control or compete.
From Christine’s words, we can presume that ECB prefers stablecoins and blockchains over the original Bitcoin, despite the obvious similarity of principles. Then she notes of some “one stablecoin” that they know of, this is presumably Tether.
If the reports saying that Tether is not backed by dollars are true, then USDT is somewhat similar to USD in the way that both currencies are backed by nothing but someone’s promise.
Then Christine notes that the banks need to be ahead of the curve when “it” happens. When what happens? Scary apocalyptic pictures of people fighting for stablecoins (and food) on the streets immediately come to mind.
It Is Hard to Control the Open Source Developers Owning Cryptocurrencies
Why did they pick to compete? Even if you ban Tether, Libra, TON with its GRAM, and every major crypto-related project, there’s still China with its own stablecoin. And there are Russians who love to compete with Americans… You cannot fully take control of such a market. And there’s also a strict control of professional coders, like the ones working at Blockstream and Chaincode Labs, for instance. You know, the programmers who have been in this field for years, the ones who sometimes charge million dollars per each line of code and hold the GitHub commit access keys.
Even if you use force to seize them, you’ll need to somehow convince coders to write bad code or shift development efforts to something loud, but useless. The Lightning Network is a good example of unstable code being developed for years. However, LN development is not over and the dev team still has the chance to fix all the major bugs, according to Andreas Antonopoulos.
But the FED programmers cannot become Bitcoin Core members just like that. Outsiders of any kind can’t compete with the Monero cryptocurrency developers when it comes to the privacy of P2P payments in 2019. The field has its own stratification. So the governments worldwide can call free developers and try to invent something new. They will have to attract huge talent with huge rewards. In such an authoritarian field, there is no democracy or people working for ideology. Only the meritocracy, ad, profit are legit “tokens” here, so the governments must propose own developments and pay to talents to attract bright headlines.
Cryptocurrencies Will Not be Banned, but Stablecoins are Cooked
European, Chinese and American regulators will probably restrict large-scale blockchain projects, like Telegram‘s TON or Facebook‘s Libra. They don’t need someone from aside taking control of the stablecoins market, which they preserved for themselves.
The European Union already restricted the usage of Facebook’s Libra stablecoin, which means many other stablecoins can follow this path. Facebook hasn’t even released their “coin” yet, but European regulators already took precautions. This is due to their understanding that the world is slowly moving towards cyberpunk from the books of 20th-century writers.
In that world, corporations, not the people, are the main enemies of the government. Corporations will sneak around seeking to find weak spots and strike them hard. It will be the biggest boxing round in history. But there are many stablecoins already in circulation, like the Gemini dollar. Why they gather no negative attention from the regulators like Bitcoin or Tether do? Because Gemini follows the law and they have the auditors and the papers and the license and all the crap to protect themselves from a regulatory swamp. What they don’t have, is control over a large piece of the market, that’s why their stablecoin is not dangerous to China, EU or the U.S.