Cryptocurrencies Are the Financial Crisis’ “Evil Spawn,” Says ECB Executive

European Central Bank (ECB) executive board member Benoit Coeure has recently revealed he believes cryptocurrencies like bitcoin are the “evil spawn” of the 2008 financial crisis. Per Coeure, bitcoin was an “extremely clever idea,” but not “every clever idea is a good idea.”

Coeure’s words, according to Bloomberg, came as he was speaking at the Bank for International Settlements in Basel. He noted that bitcoin was created in the aftermath of the 2008 financial crisis, and that the cryptocurrency’s creator Satoshi Nakamoto mined the genesis block months after Lehman Brothers went down.

He was quoted as saying:

Few remember that Satoshi embedded the genesis block with a Times headline from January 2009 about U.K. banks’ bailout. In more ways than one, Bitcoin is the evil spawn of the financial crisis.

The ECB executive board member reportedly also reminded his audience that the head of the Bank for International Settlements (BIS), Agustin Carstens, has in the past claimed bitcoin is a “combination of a bubble, a Ponzi scheme, and an environmental disaster.”

As CryptoGlobe covered, Carstens has advised crypto enthusiasts to “stop trying to create money” earlier this year. To the BIS chief, it would be better for them to use their talents on something else.

A report publish by the BIS earlier this year also argued that “cryptocurrencies promise a lot, but they don’t always deliver.” The reported mentioned the high cost of creating decentralized trust, cryptos’ inability to scale while dealing with an increasing number of transactions, and more.

Coeure’s words come shortly after the head of the International Monetary Fund (IMF), Christine Lagarde, claimed banks should “consider launching digital currencies.” While speaking at a conference in Singapore, the former French Minister of Economic Affairs noted blockchain technology is “safe, cheap, and potentially semi-anonymous,” and that central banks should explore the use cases for their own cryptos.

The ECB board members seemingly reacted to the proposal and outlined various experiments that have been done with cryptocurrencies and blockchain technology by financial authorities.

He noted, however, that while most central banks are studying the nascent technology “there is broad agreement that a central bank digital currency, in whatever form, is unlikely to be issued within the next decade.”

Notably back in September the European Commission’s Vice-President Valdis Dombrovskis stated that after changing their views on cryptoassets, the European Union’s finance ministers realized cryptos are “here to stay.”

The Monero Hard Fork – Did it Help GPU Miners?

Monero, the open-source altcoin created to provide fungibility, privacy and decentralization, successfully underwent a hard fork on 9th March, 2019, resulting in a hash rate plummet of over 80% and a purge of ASIC miners from the network. This is the latest development in Monero’s ongoing war against ASICs, which is designed to prevent too much centralisation of mining hash power. But what exactly does it mean for GPU miners?

The War with ASICs

Monero performed its first anti-ASIC hard fork in April 2018 to counter ASIC machines such as the Antminer X3. The Monero Core Team vocalized specific concerns over government manipulation or imposed regulation of the network and has consequently committed further to increasing ASIC resistance, building its strategy on making scheduled hard forks to prohibiting ASICs from engaging with the network.

In deliberately excluding ASIC mining, Monero is committed to CPU and GPU miners, and resisting centralisation. Preventing potential 51% attacks is doubly important for a privacy coin like Monero, and as mining farms grow in size and the number of hash-power-for-hire marketplaces increases, it’s important to remain committed to this path. The recent Ethereum Classic attack in January shows that it is possible to carry out a 51% attack, even on an altcoin with a fairly high market capitalization.   

The one danger is that over time, Monero’s commitment to its six-monthly hard forks may be unsustainable. This is because community consensus becomes increasingly harder to achieve – the last fork spawned four Monero spin-off projects.

 The Implication for GPU Miners

Monero’s introduction of the anti-ASIC Proof of Work protocol saw hash rates plummet by 83%, boosting profitability for GPU miners who typically mine other more profitable coins. However, the hash rate is already beginning to climb, recovering to 313.75 Mh/s from 95 Mh/s.

The drop in hash rate made Monero one of the most profitable coins to mine for a time, but through the laws of supply and demand, the hash rate is already equalizing. The market didn’t rally in response to the hard fork as one might have expected, the sluggish response may be because most mining farms and GPU mining rigs require too much manual effort to change mining algorithms – although software is becoming more sophisticated.

Monero Network Hashrate

Monero’s upgrade has also introduced further security-oriented changes to the dynamic block algorithm to help mitigate potential ‘big bang’ attacks. Sticking to its privacy coin roots, the upgrade further introduced a dummy encrypted payment ID, improving the homogeneity of each transaction.

The latest hard fork is therefore a significant improvement on Monero’s founding principles of privacy, security and decentralisation which should be welcomed. Plus, it’s a boon to GPU miners, and demonstrates that if you’re agile, there’s still money to be made through GPU mining.

Matt Hawkins, CEO at Cudo Ventures

Matt Hawkins is a distributed computing expert and entrepreneur. He founded and sold a data centre business and is now applying his knowledge, network and his enthusiasm for crypto market and technology developments in Cudo Miner. Matt believes decentralised computing is better for the environment, and Cudo’s vision is to help make computing more ethical and sustainable – whether its reducing waste or creating innovative ways to support good causes.