A leading French academic and central bank policymaker has called bitcoin (BTC) a “myth” and a “pseudo-currency,” and dismissed the token’s chances of becoming money in the future, claiming that it fails to meet criteria currently fulfilled by fiat.
The claims were made in a paper released by the Banque de France, the country’s central bank. The paper was authored by Christian Pfister, an associate professor of economics and cryptocurrencies at the prestigious Pantheon-Sorbonne University. Pfister is also the director-general of the central bank’s Financial Stability and Operations department.
Pfister is thought to be one of the chief architects of the Banque de France’s central bank digital currency (CBDC) policy, which he also discusses in the document.
Pfister is generally dismissive of bitcoin’s chances of long-term success, claiming that “first-generation” tokens like BTC are part of a “search for a myth.”
He claims that bitcoin is primarily used to make “speculative investments” and for “carrying out payment transactions under a pseudonym, which helps to protect privacy but also facilitates the financing of illicit activities.”
Quoting research published in The Review of Financial Studies late year, he echoes the claim that “an estimated quarter of the total number of bitcoin transactions, and nearly half in terms of value, are thought to be linked to illegal activities.”
He also says that BTC is used to transfer funds abroad, but adds,
“The downside for users, however, is that the associated fees are difficult to evaluate ex-ante due to price volatility in both legs of the transaction. The infrastructure may also become congested as it is ill-equipped to process mass payments.”
And like many before him, he rolls out the claim that bitcoin fails on all three counts to meet the three requirements of money as defined by classical economic theorists.
“Overall, bitcoin does not fulfill, or only partially fulfills the three functions of money. It is not a unit of account (it is rarely if ever used to price goods and services, in particular, labor and capital), nor is it a payment instrument (very few purchases of goods and services are settled in bitcoin), or a store of value (its exchange rate against other currencies, and hence its value in terms of goods and services, is too volatile).”