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'Netherlands must now ban bitcoin' - Central Planning Bureau

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(Kitco News) - Warning that cautious regulation can backfire, Netherland's Central Planning Director said Netherlands must act fast and ban bitcoin now.

Pieter Hasekamp warned about bitcoin in an essay published last week.

He writes that cryptocurrencies are crippled as a money replacement since they perform much worse than government money on all counts. He ticks off money's general qualities that make it useful as a currency: unit of account, means of payment and store of value.

"There is no value retention [with cryptocurrencies]. Ease of use suffers from a lack of acceptance and security is undermined by outright scams. Cyber ??transactions only score well on the aspect of privacy – and that anonymity is exactly what makes them attractive to criminals," writes Hasekamp [translated from Dutch by Google Translate]. 

Unable to properly function as a currency, Hasekamp said cryptocurrency solutions are oversold, and a crash is inevitable when promises can't be fulfilled.

"Cryptocurrencies are...unsuitable as a unit of account and means of payment outside the criminal circuit; its use as a store of value is based on the hope that cryptocurrencies will one day replace real money," writes Hasekamp. 

"But that's not going to happen. Cryptocurrencies are essentially neither money nor a financial product, but an example of what Nobel laureate Robert Shiller calls a contagious narrative: a contagious story in which people believe because other people believe in it. Gresham's law is replaced by Newton's law: what goes up, must come down. The ultimate collapse of the crypto bubble is inevitable. The following applies to investors and governments: whoever moves last is the loser. The Netherlands must now ban bitcoin."

In May, Macquarie Capital's Head of Asian Strategy and Global Strategy Co-ordinator Viktor Shvets told Kitco worries that a cryptocurrency crash could cause the next financial crisis.

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