A paper published by the European Central Bank spoke negatively of Bitcoin, mentioning it could drastically impact society.
The European Central Bank (ECB) published a paper on October 12 that took a very critical approach to describing Bitcoin. Essentially, it spoke of how Bitcoin redistribution depends on older holders profiting from newer holders due to the asset’s rising prices. The ECB feels rules must be adopted to prevent Bitcoin’s price rise and even ban the asset.
“In any case, current non-holders should realise that they have compelling reasons to oppose Bitcoin and advocate for legislation against it, aiming to prevent Bitcoin prices from rising or to see Bitcoin disappear altogether,” the paper read. “Failing to do so could skew election results in favour of politicians who advocate pro-Bitcoin policies, implying wealth redistribution and fuelling the division of society,” it concluded on a highly critical note.
However, it fails to recognize that all asset classes work that way, with older investors selling their holdings to newer ones for profits. Furthermore, the ECB paper talks about Bitcoin not being adopted as a payment medium, which Satoshi Nakamoto envisioned it to be. On top of that, it spoke of how the asset has become a go-to for criminals and has made the group a big user base of the asset.
These narratives, again, are incorrect, considering the Bitcoin whitepaper, authored by Nakamoto, mentions the asset to be a store of value that safeguards users from the pitfalls of the TradFi system. He coupled that with its use case of being utilized for daily payments. Then, the claim of Bitcoin being mostly to launder criminal funds could not be further from the truth—fiat cash remains the way for criminals to derive profits from their enterprises. A report from the US Treasury Department backs it up.
“Overall, Nakamoto’s (2008) understanding of retail payments was inaccurate. It is therefore doubtful whether his invention effectively addressed the problems he perceived in e-commerce and it is therefore also hardly surprising that Bitcoin was never significantly used in legal e-commerce,” the paper mentioned.
The ECB Paper Makes Contradictory Claims
It also made multiple contradictions, with the most notable being its claims about Bitcoin’s lack of value in the real world while mentioning the asset’s price increments hold the power to destabilize society. “This redistribution of wealth and purchasing power is unlikely to occur without detrimental consequences for society,” it read.
