Bitcoin’s price has been on the rise, but according to a recent study by the European Central Bank (ECB), the main winners aren’t everyday investors like you and me. Instead, they claim it’s the early adopters who are cashing in. The ECB goes as far as to suggest that a rising Bitcoin price could be a bad thing for society. But let’s take a closer look at their claims and ask ourselves if they really hold up. (Spoiler-alert, it doesn’t)
The Early Birds Get the Profits
In their October 12 analysis, ECB economists Ulrich Bindseil and Jürgen Schaaf argue that Bitcoin was initially meant to be a global payment system. However, they say that vision never panned out. Instead, Bitcoin has become a speculative asset, where people bet on the hope that its value will continue to climb. The ECB suggests that Bitcoin isn’t like traditional investments such as stocks, bonds, or real estate, which generate income or serve productive purposes. Since Bitcoin doesn’t fit into these categories, they claim it has no “real” value and warn that believing its price will keep rising could be dangerous.
According to the ECB, the big winners are those who got in early and know how to time the market. They buy low, sell high, and walk away with enough profit to splurge on luxury cars, watches, or even houses. Meanwhile, those who joined later or never invested at all end up bearing the costs. But is that really a problem, or just how investing works?
The Zero-Sum Game Argument
The ECB takes it further by labeling Bitcoin as a “zero-sum game.” They claim that one person’s gain is another’s loss, meaning no new wealth is created, and the economy doesn’t grow from Bitcoin. They suggest that the profits made by early investors come directly from those who join later or never participate, which, in their view, increases inequality and threatens social cohesion, stability, and even democracy.
But this argument doesn’t quite hold up when you consider that all investments carry risk. Whether it’s real estate, stocks, or even starting a business, there will always be winners and losers. Singling out Bitcoin as a problem without applying the same logic to other investments seems inconsistent.
Political Bias?
The report doesn’t stop at economics; it also dives into politics. The ECB criticizes politicians who have promoted Bitcoin, including former President Trump, who brought up Bitcoin during his 2024 campaign. According to the researchers, he never clarified why Bitcoin should hold any value. They claim that early investors have a vested interest in keeping Bitcoin’s price high, while those without Bitcoin would be better off with stricter regulations to stop its rise.
But let’s be real, should governments step in and impose regulations just because some people might not benefit? Such an approach feels less like protecting society and more like controlling a decentralized market they can’t otherwise manage.
Backlash From the Crypto Community
Unsurprisingly, this report sparked a lot of backlash, especially from the crypto community. Bitcoin analyst Tuur Demeester believes it to be the most aggressive report he’s seen from an official body, calling it even a ‘declaration of war’. He says that central banks now see Bitcoin as a genuine threat and are willing to do whatever it takes to curb its rise.
https://twitter.com/TuurDemeester/status/1847512241173582058
Let’s ask the obvious question: is it fair for governments to “penalize” Bitcoin investors just because others haven’t invested? And how would they attempt to “correct” this perceived imbalance? If you guessed more taxes, you’re probably right. Just look at what happened in Italy last week, where they raised the capital gains tax on Bitcoin from 26% to 42%(!).
The Bigger Picture
Where this all leads is still uncertain. What’s clear is that the debate around Bitcoin is heating up, and it’s no longer just about profits. The ECB wants to frame the issue as one of broader social impact, but we can’t help but wonder if it’s more about their own concerns. After all, why would a financial institution, with its own interest in maintaining control, be so eager to convince us that Bitcoin is a problem?A massive price increase of Bitcoin will also see the world affairs and hierarchy change. It potentially can be an entirely different world out there if Bitcoin adoption continues. And eventually, Bitcoin will still become the world’s new global payment system, as the ECB economists state it is supposed to be. And if that happens, isn’t everyone a winner to be using a global currency that can withstand the endless printing of money and therefore the never ending inflation?
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