In a recent paper, the ECB argues that early Bitcoin holders exploited new holders to make more profits and sell at higher rates.
A recent paper published by the European Central Bank on October 12, 2024, asserted that older Bitcoin holders profit at the expense of newer holders. The paper also argued that the scarce decentralized currency should be regulated to prevent its price from increasing or outright banned.
According to the authors, those who purchased BTC at an earlier date or purchased at market lows and subsequently sold it to new investors at a profit were exploiting the newer buyers. This is, of course, the fundamental principle of all financial markets: investors endeavor to acquire assets at a low price and dispose of them at a high price.
The authors derived the following conclusion from this foundation: To prevent exploitation and the subsequent civil strife resulting from this unjust wealth distribution, Bitcoin should be subject to rigorous price controls.
“In any case, current non-holders should realize 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’s authors also claimed that Bitcoin is rarely employed as a payment method while referencing a false claim made by an earlier research paper that Bitcoin is the preferred method of transaction for criminals. Fiat cash remains the undisputed king of illicit transactions, as indicated by a May 2024 United States Treasury Department report.
Interestingly, the paper needs to address the reason for the substantial increase in the price of the supply-capped asset since its inception in 2009. The authors also neglect that Satoshi Nakamoto, the pseudonymous creator of Bitcoin, intended the scarce digital asset to serve as both a decentralized payment method and a store of value against rapidly depreciating fiat currencies.
The elephant in the room: the multi-trillion-dollar fiat debt
The paper’s numerous contradictory assertions, such as the assertion that Bitcoin has no real-world value but will subsequently reach such heights as to destabilize society, disregard the consequences of the staggering monetary inflation that governments and central banks impose on their citizens.
The United Kingdom‘s public sector debt for the 2023-2024 fiscal year has reached the highest level since the 1960s, at approximately 98% of the country’s gross domestic product, according to Statista.
In the Genesis Block, the first block ever mined on the Bitcoin network, Satoshi Nakamoto included a front-page copy of The London Times dated January 3, 2009, referencing this monetary and fiscal irresponsibility.
The M2 money supply in the United States has increased 41% since 2020 due to fiscal stimulus through money printing. This has contributed to the growing $35 trillion national debt and resulted in a corresponding loss in consumer purchasing power.
