Bitcoin appears headed on 'road to irrelevance'

A year ago, Bitcoin fever was raging, and the hype around it extended beyond it being a hot investment favored by young people reaping triple-digit gains. Financial experts touted the cryptocurrency as the future of monetary transactions, ready to compete with the dollar as legal tender for business, personal and government payments.

Some government officials also caught Bitcoin fever. In November 2021, newly elected New York City Mayor Eric Adams said he would take his first three paychecks in Bitcoin and vowed the city would become “the center of the cryptocurrency industry.” Earlier that year, Miami Mayor Francis Suarez said he was “exploring” paying city employees in Bitcoin and even investing some of the city treasury in the cryptocurrency.

But now, the fever has broken. Bitcoin has lost 70% of its value and, after the spectacular collapse of cryptocurrency exchange FTX, the entire crypto industry is teetering. So, what about those predictions Bitcoin would become legal tender?

In a new blog on the website of the European Central Bank — one of the traditional monetary overseers crypto fans believed Bitcoin would supplant — the cryptocurrency was pronounced dead as legal tender. Noting that Bitcoin has “never been used to any significant extent for legal real-world transactions,” the blog said the cryptocurrency was “neither suitable as a payment system nor as a form of investment” and concluded that it was on “the road to irrelevance.”