Norwegian bankers tell why Bitcoin is unlikely to become a popular means of payment

And although Norway is the country with the highest share of non-cash payments, it is “unthinkable” that Bitcoin will be able to gain high popularity among Norwegian citizens. This statement was made yesterday by the governor of the Norges Bank Oystein Olsen.

In an exclusive interview with Bloomberg, Olsen noted that securing the mainstream cryptocurrency network «requires too many resources and is rather unstable . «

Note that the version of the Norwegian bankers may not come true soon enough. Elon Musk today confirmed that Tesla has begun accepting bitcoins as payment for its cars. So far, only residents of the United States can do this, but by the end of the year the function will be extended to other countries. Accordingly, the residents of Norway will have much more reasons to purchase and use cryptocurrency.

Here’s a screenshot from Tesla’s website showing the option to pay with Bitcoin.

In addition, Elon Musk confirmed this information on his Twitter.

tweet musk elon bitcoin

Elon Musk’s tweet about Bitcoin

In addition, the entrepreneur clarified that the received cryptocurrency will not be converted to fiat. Accordingly, Tesla will store the received bitcoins.

The main disadvantages of Bitcoin

Here is one of Olsen’s quotes from an interview in which he shares his attitude towards the first blockchain asset.

The main property and task of the central bank and the central bank currency is to ensure the stability of the value of money and the system, which Bitcoin does not.

Indeed, the cryptocurrency is not stable in terms of value. However, this can hardly be considered a problem, because serious blockchain projects at the stage of market growth not only return to their former highs of the exchange rate, but also update them. Specifically, Bitcoin hit $ 61,711 on March 13, 2021. And this is at least three times more than the maximum value of December 17, 2017, after which BTC rushed down.

Oystein Olsen Norway bank

Oystein Olsen, Governor, Bank of Norway

At the same time, Norges Bank does not reject the potential use cases of innovation in the monetary system – it simply does not see much benefit in the existing ones. This is especially important as only 4 percent of all payments in Norway are made in physical banknotes and coins, making it the most popular country for non-cash payments.

Norwegian kroner currency

Paper money in Norway continues to lose popularity

By the way, the very «provision» of the Bitcoin network with miners is also one of the main arguments of the cryptocurrency critics. For several years in a row, they never tire of claiming that mining BTC consumes too many resources.

And this is true, especially considering the fact that most of the electricity for miners is provided by sources that are not environmentally friendly from China. However, miners are actively switching to renewable energy sources and are gradually making the industry cleaner.

Here is a graph of the electricity consumption of Bitcoin miners as of the last week. It is noticeable here that in 2021 this indicator increased by tens of percent. We believe that the reason for what is happening is the current rise in the BTC rate, which attracts a huge number of people who want to make money – including from mining.

bitcoin mining costs

Electricity consumption by Bitcoin miners

Norges Bank is currently working on its own digital currency (CBDC). The next progress report is due to be published in April, said Ida Walden Bach, Deputy Governor of the Bank of Norway. Here is his line, quoted by Decrypt.

Users should be able to pay efficiently and securely in NOK. CBDC will not change private sector credit intermediation.

At the same time, Norway is far from the only country that is working on its own CBDC. In the US, Boston’s Federal Reserve Bank and MIT are slated to release their digital dollar research «as early as July» 2021 as China moves into the final stages of the digital yuan release.

However, while central banks are definitely interested in efficient digital means of payment, Bitcoin is not one of them, Olsen repeated.

I don’t think Bitcoin will be a threat to central banks in the end. Although some people talk about it. Digital currencies in general are more promising innovation in many ways.

We believe that in the world of finance, innovation will always have the last word, so that in the end central banks will have to take the path of progress or step back from history. Bitcoin and blockchain as a whole have every chance of becoming one of the foundations of the finances of the future, and this fact cannot be ignored. Therefore, in this case, the correctness of the bankers’ version seems doubtful. Moreover, it will most likely be possible to make sure of this soon enough.

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