A recent paper published by the European Central Bank (ECB) claims that early Bitcoin investors are profiting at the expense of newer entrants to the market. The paper argues that Bitcoin’s decentralized and limited supply structure has led to a system where those who bought the cryptocurrency earlier or at lower prices are selling at a profit, thereby exploiting new buyers. The authors suggest that Bitcoin should either be subjected to strict price controls or banned entirely to prevent what they describe as an “unfair” wealth transfer.
“Current non-holders should realize 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.”
According to the paper, the wealth distribution caused by Bitcoin could lead to social unrest.
This view is contested by a May 2024 report from the U.S. Treasury Department, which points out that fiat currency remains the most common means for illicit activities, not cryptocurrencies like Bitcoin.
The ECB report also raises concerns about Bitcoin’s role in criminal activity, citing previous studies that claim it is often used in illegal transactions.
It also overlooks the fact that Bitcoin’s pseudonymous creator, Satoshi Nakamoto, designed the asset both as a decentralized payment system and as a hedge against fiat currency devaluation.
Interestingly, the ECB paper does not explore why Bitcoin’s value has surged since its inception in 2009.
For example, public sector debt in the UK reached nearly 98% of GDP in 2023-2024, the highest level since the 1960s. In the U.S., the national debt has ballooned to $35 trillion, driven in part by a 41% increase in the M2 money supply since 2020.
Critics of the ECB’s stance argue that the paper fails to address the broader context of monetary inflation.
