Economists at the European Central Bank (ECB) are sounding the alarm about the potential social impact of rising Bitcoin prices. They believe that virtual currency is based on Satoshi Nakamoto's vision of a global payment system.n investment assets.
In a recent paper, ECB economists Ulrich Bindtheil and Jürgen Schaaf expressed concern that Bitcoin's rise in value would primarily benefit early adopters. This trend could result in significant financial challenges for subsequent investors and those who do not hold Bitcoin.
ECB calls for measures to counter Bitcoin investment perception
The authors highlight how thought leaders and celebrities have contributed to Bitcoin's image as an investment with limitless growth potential. Figures like Larry Fink see Bitcoin primarily as a financial asset, separating it from Nakamoto's original narrative as a transactional currency.
However, rather than positioning BTC as a means of payment, these proponents liken it to gold, a finite resource that is considered a long-term investment. This perspective raises questions about society's motivations for choosing Bitcoin as an investment vehicle. Despite Bitcoin's volatility, proponents predict that its value will trend upward over time, although it has little social utility.
“In absolute terms, early adopters are making their own investments at the expense of the real wealth and consumption of those who do not hold Bitcoin or who only invest in Bitcoin at a later stage. ’s real wealth and consumption,” they write.
Read more: Bitcoin (BTC) Price Prediction 2024/2025/2030
Additionally, the paper warns that early adopters may give up their Bitcoin holdings to buy luxury goods, putting latecomers at a disadvantage. This dynamic can lead to a redistribution of wealth from new investors to those who first enter the market, exacerbating the poverty of non-holders.
“The constant rise in the price of Bitcoin, driven by the vision of Bitcoin as an investment, means a corresponding impoverishment of the rest of society, putting cohesion, stability, and ultimately democracy at risk. '' argued the economists.
To counter these risks, Bindtheil and Scharf advocated strict price controls for BTC. They argued that this would prevent exploitation and the potential social unrest that would result from such an inequitable distribution of wealth.
They also urged current non-holders to recognize the need to oppose Bitcoin. In addition, non-holders were advised to support legislation aimed at reducing or completely eliminating price increases.
“Late movers and non-holders, as well as their political representatives, should emphasize that the idea of Bitcoin as an investment relies on redistribution at their own expense. “This could be biased in favor of politicians advocating pro-Bitcoin policies, implying a redistribution of wealth and increasing social division,” they concluded.
Meanwhile, the ECB paper has drawn harsh criticism from industry experts. Market analyst Tour Demeester warned that the document could give governments the power to impose strict taxes and restrictions on cryptocurrencies. He noted that central bank economists see Bitcoin as an existential threat that must be countered.
“Many of us have been warning that Bitcoin will become a major political fault line in both domestic and international elections. Now, here’s the thing: We HODLers have been warned that Bitcoin will become a major political fault line in both domestic and international elections. This means we must take action to ensure that fundamental rights are respected,” Demeester warned.
Read more: How to trade Bitcoin ETFs: A step-by-step approach
Similarly, Mark van der Chaijs, co-founder of listed BTC mining company Hut8, also expressed concern about the ECB's stance. He argues that early adopters should not be criticized for their foresight and willingness to take risks.
“If Bitcoin were to double or triple in 2025, I would not be surprised if more politicians opposed BTC and tried to overtax it,” van der Chaijs argued.
Disclaimer
In accordance with Trust Project guidelines, BeInCrypto is committed to fair and transparent reporting. This news article is intended to provide accurate and timely information. However, before making any decisions based on this content, readers are encouraged to independently verify their facts and consult a professional. Please note that our Terms of Use, Privacy Policy, and Disclaimer have been updated.
