Key Takeaways
- ECB officials argue that Bitcoin’s rise redistributes wealth from latecomers to early adopters.
- The report urges non-Bitcoin holders to advocate for legislation against Bitcoin to protect their wealth.
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According to a recent report, people who were late to Bitcoin or do not own the coin have good reasons to oppose it and advocate for legislation to protect themselves from the negative consequences of wealth redistribution. analyze Written by ECB officials Ulrich Bindseil and Jurgen Schaff.
Bitcoin’s February price rally was as follows, the authors said: due to price manipulation Previous reports have claimed that Bitcoin has transitioned from its original vision of being a decentralized payment system to primarily an investment asset.
This argument is supported by growing support for Bitcoin from high-profile figures such as BlackRock CEO Larry Fink and Galaxy Digital founder Mike Novogratz, who see Bitcoin as a pure investment asset. Their view is that Bitcoin’s limited supply and growing demand will cause its price to rise, just like gold.
However, ECB officials argue that contrary to popular belief among cryptocurrency supporters, Bitcoin’s limited supply does not guarantee sustained price rises.
“There are countless assets on the planet that are in limited or finite supply, and the idea that any one of them can sustain a continuously increasing valuation over the long term, regardless of the services or benefits they provide to society, is particularly implausible. “The report says.
“Proponents of the Bitcoin investment view ignore the fact that “scarcity” describes the relationship between supply and demand. Limited and finite supply is not the same as scarcity. In the context of Bitcoin, where supply is limited and fixed, the non-economic term “scarcity” seems more appropriate. If supply is fixed, price depends only on demand. And when demand disappears, the price will be zero.”
The authors warn that even in a scenario where Bitcoin’s value continues to rise, there could be negative economic consequences if it is not justified by the underlying fundamentals. They argue that Bitcoin does not increase the productivity of the economy and that the wealth created by Bitcoin holders comes at the expense of others in society.
The report argues that “redistribution of wealth and purchasing power cannot occur without harmful consequences for society.”
“Early adopters have a vested interest in promoting Bitcoin value to redistribute the wealth and consumption of latecomers to themselves, perhaps without being conscious of the redistributive nature of their vision,” it states.
“In any case, current non-holders should realize that there are compelling reasons to oppose Bitcoin and advocate for legislation against it, with the goal of preventing Bitcoin prices from rising or causing Bitcoin to disappear altogether. Laggards and non-holders, and their political representatives, must emphasize that the idea of Bitcoin as an investment is to be redistributed at their expense,” he added.
The authors also note that failing to do so could lead to electoral outcomes that favor politicians who support Bitcoin-friendly policies, which could lead to wealth inequality and social division by promoting a system that benefits early adopters and disadvantages latecomers and non-holders. Warn that it may worsen.
Is the ECB declaring war on Bitcoin?
This is not the first time ECB officials have expressed skepticism about Bitcoin. As Crypto Briefing reported, ECB officials previously likened the approval of a U.S. Bitcoin ETF to the ‘naked emperor’s new clothes.’
The ECB faced social backlash as soon as the paper was made public. Wall Street veteran Max Keizer criticized the paper for making false claims about Bitcoin’s original purpose.
that @ecb It is a novice mistake to claim that Bitcoin originated as a means of payment. This is false. In the white paper, the word ‘cash’ refers to money such as gold, not fiat currency. Bitcoin has always been digital gold.
Satoshi made this clear in subsequent posts and messages. pic.twitter.com/qEMhoNDWpE
— Max Keiser (@maxkeiser) October 19, 2024
Tuur Demeester, the Blockstream advisor who first brought the paper to public attention, believes the ECB’s paper is a “true declaration of war” and that authorities will use it to justify harsh taxes or bans on Bitcoin.
Demeester warned that the paper could have serious consequences for Bitcoin and its supporters, urging holders to take steps to protect individuals’ rights to hold their bitcoins.
1/ This new document is a veritable declaration of war. The ECB initially #Bitcoin Adopters steal economic value from latecomers. I firmly believe that the authorities will use these absurd claims to enact harsh taxes or bans. Find out why in 🧵. pic.twitter.com/qg31YenTSC
— Tuur Demeester (@TuurDemeester) October 19, 2024
Following the ECB’s critical comments in February, Bitcoin hit new highs in mid-March. After the rally, Bitcoin experienced a price correction but held firm above $45,000.
Bitcoin is currently trading around $68,100, up more than 60% year-to-date, according to TradingView.
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