ING Bank: Bitcoin remains a niche product

The chief analyst of the Dutch ING Bank, Teunis Brosens, assumes that in the long run Bitcoin has ‚little to offer‘ to the general public. Brosens also considers its value to be too high. Open source projects could also easily be copied by third parties or published in modified form.

The chief analyst of the Dutch ING Bank yesterday published his Reality Check des Bitcoin on his LinkedIn profile.

In the long term, Bitcoin has little to offer the general crypto trader public

Teunis Brosens believes that this will remain a niche currency for a few technology-crazy first-time crypto trader users in the long run: Brosens also has little to do with the open source idea. Since the Bitcoin platform is open source, anyone can copy it or create their own forks (i.e. modifications or enhancements). If the Bitcoin is a „digital gold“ as assumed, then all forks and copies would be successful forms of „digital alchemy“. The Bitcoin itself can become scarce on the basis of its own blockchain, which of course increases the value. But this blockchain can be copied indefinitely.

Similar to social networks, the dominance of the leading crypto currency can constantly change. Anyone who remembers SchülerVZ or MySpace in addition to the older readers is now all talking about Facebook or WhatsApp. The current value estimation of many adjoining owners consists in the conviction that the present Dominanz of the Bitcoin will remain eternally in such a way. But what is in 12 or 24 months? The market can change quickly.

A fall in prices could be followed by repressive surveillance measures.
The positive effects of the (decentralised) network would have a certain value, but these could be „much smaller than expected“. Governments, regulators or central banks will probably never really appreciate decentralized financial networks, says the economist Brosens. A negative event, such as a fall in prices followed by great public outrage, could trigger repressive „surveillance reactions“ from government agencies.

Bitcoin unsuitable as a means of payment

The realistic value of this virtual currency depends solely on its future use. You can only buy it as a currency and keep it as an investment in the hope that third parties will be willing to pay even more money for it in the future. It is unlikely that the Bitcoin will play a greater role as a global means of payment. As a means of payment it is simply unattractive for small payments due to its full network and the high transaction costs (in November it was on average 8 US dollars). In addition, there was the comparatively high power consumption generated worldwide by the nodes in the BTC network.

Value too unstable, open source as a brake on innovation?
Volatility: In contrast to fiat money (state money coins and notes), the value of the Bitcoin is not significantly influenced by the central bank of a state. In the case of Bitcoin, supply and demand fluctuate, which by nature makes the value volatile (changeable). Since there is no central control, the implementation of innovative measures would take place in a very slow and painful process. The analyst also fears that power lies in the hands of a few parties, which would result in an enormous power potential. Remember the current reports of about one thousand Bitcoin whales, who own about 40% of this crypto currency and who could theoretically do whatever they wanted with it, if they would coordinate among themselves.