It would seem that since its inception, cryptocurrency has been forced to defend its legitimacy on the public stage. This is because, in the initial stages, not a lot was known about cryptocurrency and as a result, many saw it as simply an Internet fat that would not last. The currency has since not only lasted but expanded its reach and many still do not understand what exactly it is and how a currency that is not backed up by Central Bank is legitimate in any way and should be trusted. This has led to many prominent people calling bitcoin and other cryptocurrency scams, Ponzi schemes or not real money.
It seems cryptocurrency will still have to defend its reputation into the near future as an official statement published on October 28, 2019 by the German federal parliament states that bitcoins and other cryptocurrencies are not legitimate forms of money.
A Lack of Legitimacy
The statement in question is titled “Crypto tokens are not real money” and according to it, cryptocurrencies such as bitch coin only provide a limited number of requirements of what constitutes real money. It is also based on answers provided by the German federal parliamentary to the Free Democratic Party parliamentary group.
In a bid to answer the question, the statement goes on to list the four basic requirements of money which are exchange and means of payment, store of value and unit of account and states that compared to fiat currency, the volume of transaction with cryptocurrency is limited and this is one of the reasons why it is not being recognized as money.
One of the issues raised up was the constant fluctuations in the values of most cryptocurrencies and this, the statement says, makes them an unstable store of value. Even though stable coins which are backed up by fiat currencies up to mitigate the situation to an extent, the statement goes on to clarify that the government intends to dissuade the adoption of cryptocurrency.
“It will be ensured that stablecoins do not establish themselves as an alternative to state currencies and thus call into question the existing monetary system,” the statement says.
The in now infamously Libra token is also touched on in the statement as it was said that the white paper does not provide enough information and as such, more data will be needed on Libra to decide whether or not it will be allowed to function with in Germany and falls in line with German law.