New York, Monday, October 28, 2024 –A paper published by the European Central Bank (ECB) on October 20, claims that early Bitcoin investors are profiting at the expense of newer market entrants.
The paper argues that Bitcoin’s decentralized structure enables those who bought earlier to sell at a profit, thus exploiting new buyers.
The authors suggest that Bitcoin should either face strict price controls or be banned outright to prevent what they describe as an “unfair” wealth transfer.
They warn that current wealth distribution could lead to social unrest, stating, “Current non-holders should realize they have compelling reasons to oppose Bitcoin.”
The ECB also raises concerns about Bitcoin’s potential role in criminal activity, referencing prior studies that indicate it is often used for illegal transactions.
However, this view is contested by a May 2024 report from the US Treasury Department, which highlights that fiat currency remains the primary means for illicit activities.
Interestingly, the ECB paper titled The distributional consequences of Bitcoin does not explore why Bitcoin’s value has surged since its inception in 2009, overlooking its design as a hedge against fiat currency devaluation. With a capped supply of 21 million coins, Bitcoin’s scarcity has driven its price higher, especially amid increasing money supply from governments.
Interest in Bitcoin-related products is rising. A recent survey by Charles Schwab revealed that 45% of U.S. investors plan to invest in cryptocurrency ETFs over the next year, up from 38% last year, surpassing demand for bonds and alternative assets.
