Does Bitcoin’s “sharp drop” echo “no economic demand”?

Author: Daii Source: mirror

Today's title is an imitation of an article in Newsweek 30 years ago, "The Internet? Bah!".

Today, Bitcoin has fallen below 80,000, and you will soon be surrounded by various voices criticizing and questioning Bitcoin. This article of mine wants to play the role of a little ideological vaccine so that you will not be surprised.

Although the title of the article is a bit humorous, the topic we are going to discuss today - economic demand - is very academic.

The reason why we have to talk about this very academic topic is that a heavyweight expert took the opportunity of the sharp drop in Bitcoin to criticize it, and used a very academic tone, saying that "Bitcoin has no real economic need."

The expert is named Jürgen Schaaf, an advisor to the European Central Bank. In an interview with Cointelegraph, he said, "Bitcoin reserves at the national level are a very risky idea." Although it is reasonable for governments to maintain reserves of energy resources such as oil and natural gas, "there is no real economic demand for Bitcoin" because this cryptocurrency has no "actual economic necessity or relevant use."

1. Bitcoin's "sharp drop" echoes "no economic demand"

Obviously, he said this to deny that Bitcoin can become a central bank reserve asset. Because, before, the governor of the Czech Central Bank had expressed the opposite view.

In order to support his point of view, Schaaf also pointed out other shortcomings of Bitcoin, such as extreme volatility, possible illegal use, and easy manipulation. He believes that Bitcoin is not suitable as a central bank reserve asset because it cannot provide guarantees for monetary stability, but may encourage speculation and wealth redistribution.

As an advisor to the European Central Bank, Jürgen Schaaf has a deep financial background and high authority. His views have received widespread attention in the industry because he is not only the voice of a theorist, but also an important member of the European financial system. As one of the most important financial institutions in Europe, the decisions and positions of the ECB directly affect the economic policies of the entire eurozone. As an advisor to the bank, Schaaf undoubtedly plays a pivotal role in monetary policy and economic governance. When he said this, Bitcoin had just fallen below 90,000 (February 25). Two days later (February 27), the price of Bitcoin fell below 85,000 again. Today (February 28), it fell below 80,000 again, which seemed to perfectly echo Schaaf's point of view.

However, I don’t know if you have noticed that Schaaf’s assertion has a fundamental cognitive bias - he completely equates "economic demand" with the dependence of industrialized society on physical energy. His thinking still remains in the traditional paradigm of "oil is power" in the 20th century, but ignores the demand leap in the era of digital civilization.

2. The value of Bitcoin comes from the new system

The emergence of Bitcoin is not to meet the "use value" in the traditional sense, but to deconstruct and reconstruct the value consensus in the global economy. Bitcoin's contribution to human civilization will far exceed that of oil.

Bitcoin is rewriting our definition of "demand". It does not represent dependence on physical energy or traditional financial instruments, but a deep need for trust, decentralization and security in the digital age. Just like when the Internet was first born, it was also questioned that it "cannot produce food", but it is the Internet that has promoted global information flow, innovation and economic development.

Bitcoin has created a value transfer system that can cross borders, is decentralized, and does not require trust, which is almost unimaginable in the traditional monetary system.

Especially in developing countries, Bitcoin has become a financial haven for many people. Especially in the face of the crisis of hyperinflation and currency devaluation, many families have begun to use Bitcoin to save wealth.

In Argentina, the peso has depreciated very rapidly in the past few years, and many people and companies have chosen to convert their funds into Bitcoin to cope with the rising inflationary pressure. According to statistics, in Argentina, the penetration rate of Bitcoin is close to 10%, while in Venezuela, the proportion is even higher, exceeding 20%. These figures reflect the huge "economic demand" for Bitcoin for the people of these countries.

In Venezuela, an ordinary family began to invest in Bitcoin in 2016, and over the years, their funds have increased by more than 4,000%. Bitcoin has helped them not only successfully preserve the wealth that should have evaporated in the currency depreciation, but also created opportunities for wealth appreciation.

In Nigeria, since 2019, despite the Nigerian government's repeated adjustments to its regulatory policies on cryptocurrencies (including a bank ban in 2021 and a policy relaxation in 2023), Bitcoin's trading volume has continued to grow, reflecting the public's strong demand for it. Of course, the Nigerian government is angry about this and has taken Binance to its own court, claiming $79.5 billion.

Not only that, the decentralized nature of Bitcoin gives it a strong cross-border payment capability worldwide. According to data, the number of users of Bitcoin cross-border payments increased by more than 200% between 2018 and 2023.

Of course, not everyone sees the potential of Bitcoin, just as the value of the Internet was not always recognized in 1995.

3. The revelation of "Internet? Bah!"

The famous article in the US "Newsweek" is famous for its pessimistic predictions about the Internet. He questioned the commercial potential and social value of the Internet, making the following specific criticisms:

"No online database will ever replace your daily newspaper." - Questioning the threat of the Internet to traditional media.

"No CD-ROM will ever replace a capable teacher." - Doubting the role of technology in education.

"No computer network will ever change the way government works." - Denying the impact of the Internet on politics.

"We are promised instant catalog shopping - good deals with just a click. We will book flights, make restaurant reservations and negotiate sales contracts online. Stores will become obsolete. So why does my local mall do more business in an afternoon than the entire Internet does in a month?" - Questioning the feasibility of e-commerce.

Now, as you know, all of the above criticisms have become reality.

Clifford Stoll is the author of the article, an astronomer, who is 74 years old this year. Stoll is not an old stubborn. As early as 2010, he reflected on his article and admitted his mistakes.

The reason why I mention Stoll's article again today is that it perfectly reflects the current logic of criticism of Bitcoin.

When European Central Bank adviser Jürgen Schaaf declared that "Bitcoin has no real economic demand", its essence was exactly the same as Stoll's underlying thinking of denying the commercial value of the Internet - using the "demand" of industrial civilization to frame the paradigm revolution of digital civilization.

Just as Stoll could not imagine Amazon's trillion-dollar market value, traditional financial elites also find it difficult to understand how much productivity the new economic demands created by Bitcoin, such as "anti-censorship transactions", "algorithmic trust", and "time sovereignty", will stimulate.

Conclusion

History never repeats itself, but it always rhymes.

The value of all disruptive technologies will eventually lay the foundation for growth in the cracks of the old paradigm.

The plunge and doubt of Bitcoin are just like the darkest moment when the Internet bubble burst. In 2000, the Nasdaq index plummeted 78%, Amazon's stock price shrank 95%, and the Wall Street Journal asserted that "e-commerce is destined to be short-lived." But 24 years later, the scale of global e-commerce transactions has exceeded 6 trillion US dollars, and Amazon's market value is 30 times that of the peak of that year.

Price fluctuations can never negate the revolution of value, just as tsunamis cannot negate the existence of the ocean.

The steam engine did not bring faster carriages, but the entire railway era; Bitcoin did not change the existing currency, but a new value network based on mathematical consensus.

Looking back from 2025, Stoll's misjudgment always reminds us:

The real power of technological revolution has never been what it replaces, but what new world it creates.