Ulrich Bindseil, Director of the Market Infrastructure and Payments Department of the European Central Bank (ECB), and Jürgen Schaaf, Senior Management Advisor, jointly released a paper on Bitcoin, which stated that Bitcoin failed to become a global payment method and instead became an investment asset. If Bitcoin cannot create productivity, its price increase will be a zero-sum game, leading to the redistribution of wealth.
Bitcoin fails to become a global payment method
The author has been in the market infrastructure and payment department of the ECB for many years, but he advocates that Bitcoin has failed to become a global payment method, which is different from the original design concept of Satoshi Nakamoto. In fact, more people view it as an investment asset, and Bitcoin has not achieved significant success in the payments field. However, Bitcoin does not generate cash flow like real estate, bonds and stocks. Most of its main value comes from speculation rather than its economic function, which leads to the redistribution of wealth.
Bitcoin is unproductive and a zero-sum game will lead to wealth redistribution
The paper specifically uses multiple diagrams to express Bitcoin's productivity and asset prices. Among them, the green box represents productivity, while the red box represents asset price. A typical productive technology or asset might look like Figure 2 above. However, Bitcoin, as an investment unrelated to any use case, is identified by the author as an increase in wealth without increasing production potential. As the price of Bitcoin continues to rise, the increase in wealth has gradually increased over the years (the middle of the figure below Figure 4) , the first few years may be similar to the previous year.
However, the price of Bitcoin fluctuates violently, and its impact on society may be negative. If the price continues to rise, the assets of early entrants will increase significantly, while non-holders and latecomers will suffer huge losses. Because early adopters may sell their Bitcoins to late adopters, this amounts to a zero-sum game, meaning early adopters benefit entirely at the expense of late adopters or non-holders.
In a worse case scenario, if Bitcoin turns into a bubble, it will be like Figure 5 at the bottom of the figure below, causing heavy losses to latecomers and even poverty.
Is the era of the “jealousy tax” coming?
This paper aroused fierce criticism from cryptocurrency investors. Tuur Demeester called it the most radical paper published by regulators so far. He believed that these central bank economists regarded Bitcoin as an existential threat and joked that it was a "jealousy tax." The time has come when people must enjoy a future scenario with poverty, confiscation, and greater power from Bitcoin-friendly countries.
Crypto venture capitalist Marc van der Chijs also said that Europe seems to be preparing for a war against Bitcoin holders: including higher taxes on Bitcoin in Italy, an exit tax proposed by the Netherlands, etc. The papers, although coming from the European Central Bank (ECB), sound more like a communist China.
This article ECB experts criticize Bitcoin: Prosperity for early investors, poverty for latecomers first appeared on Chain News ABMedia.
