This article restates the reasons why the observed Bitcoin valuation is unlikely to be sustainable. In November 2021, the market capitalisation of crypto assets exceeded for the first time USD 3 Trillion, of which around USD 1.3 trillion were contributed by Bitcoin (see Figure 1). As it is difficult to find arguments supporting the sustainability of Bitcoin, and as the social fall-out of its collapse would be significant, authorities should (1) strengthen global implementation of AML/CFT standards and broaden measures to stop Bitcoin being a vehicle for illicit purposes (2) avoid measures that invite additional investment flows into Bitcoin. Nevertheless, Bitcoin has reached new valuation records in November 2021, maybe also because of perceived or actual supportive legislative measures facilitating investment inflows into Bitcoin.
Likewise, growing concerns on Bitcoin’s climate footprint have now led to calls of some authorities to address or even ban essential elements of Bitcoin’s technology. Illicit usage will be further hindered, and compliance costs added to the Bitcoin ecosystem. While so far authorities seemed to have insufficiently addressed the negative effects of Bitcoin for society, this is eventually changing. It is unsuitable as an investment asset and neither empowers, nor relieves the sovereign individual from the state. It is unfitted and inefficient as a means of payment but used extensively for illicit activities.
While Bitcoin raised the attention for the potential of distributed ledger technology (DLT), it fails to deliver on its promises but comes at high costs.
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