EU Parliament report shows how banks could defeat Bitcoin

A recent European Parliament report explains how a crypto currency issued by the central bank could surpass the decentralised currency Bitcoin.

European Parliament vs. Bitcoin

The current report entitled “Competition Issues in the Area of Financial Technology (FinTech)” lists some challenges Bitcoin has to overcome.

The report requested by the ECON Committee claims that the digital currencies issued by the central banks could have a significant impact on the current crypto currency market.

The introduction of authorised crypto currencies promoted by banks, including central banks, will change the current competition in the crypto currency market and increase the number of competitors.

The report also distinguishes between privately issued digital currencies such as Bitcoin and those issued by central banks and compares them.

Banks vs. Bitcoin
According to the study, commercial and central banks could easily bring english down the bitcoin rate and the rates of other crypto currencies by blocking access to exchanges or wallets for users or by performing a denial of access attack.

In addition, the report found that the influence of banks can be used for traditional banking services to “limit competition in the crypto currency market through preventive measures or predatory practices”.

Bitcoin’s competition problems with banks
The study distinguishes between two types of competition problems:

Crypto currencies as part of the inter-crypto market

Service providers (stock exchanges, mining and wallets) as part of the intra-crypto currency
The first problem is described as complex and concerns, for example, the fact that once a crypto currency has a large community, it becomes difficult to create a new crypto currency that is larger than the first.

This could lead to high market entry barriers for new crypto currencies and “in the future […] may have consequences for possible agreements between members of hypothetical cartels”.

The second problem includes preventive measures or predatory practices by banks that could abuse your influence and act anti-competitively.

For example, banks could easily exclude deposits from or withdrawals to bitcoin exchanges, which would make it impossible to buy or sell crypto currencies.

Alternatively, they could charge surcharges for the settlement of crypto transactions or extremely slow down their service for such bookings so that users of crypto currencies are discouraged in order to better market their own central crypto currency.