Dutch Regulator Says Bitcoin is Technology, Not Money

Bitcoin is not money, the deputy director of the Dutch Payments Association has declared.

Comparing the digital currency to tulip bulbs, which famously rocketed in price during the ‘Tulip Mania’ bubble of the early 1600s, Gijs Boudewijn dismissed suggestions that bitcoin could be currency:

The comments, made in a wide-ranging interview with Dutch bitcoin news site deBitcoin.org, come as European regulators begin to grapple with creating a unified approach to digital currencies.

Bitcoin has two almost distinct personalities. The first is the political revolutionary, destined to disempower government. The second is more prosaic; bitcoin is simply a better way of transferring money, a technology easily co-opted by a banking system seen by some bitcoiners as the enemy.

For the majority of society, Boudewijn argued, bitcoin will be the latter, a useful technology for specific transactions and no more than that:

The comments come weeks after the Dutch Minister for Justice and Security said bitcoin would not be banned, and echo a recent UBS report that suggests that banks can adopt “a bitcoin-like technology” to create a new foundation for payment services that would prop up, instead of pull down, the existing banking system.

Boudewijn said he doubts that bitcoin can become a widely-used currency, and argued that the need for government to provide confidence in a currency means bitcoin would be a limited prospect:

Of course, one of the core political arguments behind bitcoin is that the confidence provided by the government isn’t good enough.

The banking crash in 2008 and subsequent economic crisis have shown governments’ powerlessness and even complicity in failing to protect consumers, some argue, pointing to Cyprus’ 2013 levy of up to 10% on all savings accounts.

That event was attributed to a spike in popularity of bitcoin, as people looked to the digital currency as a way of controlling their money and keeping it beyond the reach of government.

In the same interview, Chris Buijink, Chairman of the Dutch Association of Banks (NVB), somewhat conceded the point, saying, “Well, we do everything we can to avoid this from happening again, and that’s the reason for what we’re now discussing in Europe around the bank union.”

Buijink admitted that banks need to start getting used to bitcoin:

Both Boudewijn’s and Buijink’s comments are not wholly unexpected. Across the world it is increasingly clear that governments and regulators are sceptical – perhaps doubtful for reasons of self-interested – about the idea that digital currencies could replace fiat currency entirely. At the same time they’re waking up to the opportunities offered by the bitcoin technology.

The problem, says Boudewijn, is that payments systems will never be able to move as quickly as a rapidly emerging new technology needs it to.