“Drop Bitcoin:” ECB fears highlighted in latest anti-BTC run

In a post on X on October 20, the ECB’s Senior Advisor to the Market Infrastructure and Payments Business Area, Jürgen Schaaf, called Bitcoin “a speculative bubble that will eventually burst” .

It claimed that this would leave behind “substantial social damage amid its high energy use and facilitating illicit payments”.

The anti-Bitcoin rant follows a European Central Bank paper, co-authored by Schaaf last week, which claimed long-term BTC holders were making new market entrants poorer.

Central Bank Bitcoin Tirade

Schaaf stated that even if Bitcoin prices continue to rise and the bubble doesn’t burst, “wealth gains for early adopters come at the expense of latecomers or non-haves.”

This leads to “significant redistributive effects,” he added, before making an even wilder claim:

“Wealth and consumption of early holders increases, while others become poorer, regardless of whether they ever own Bitcoin.”

He also claimed that such a redistribution of wealth could “destabilize society”, as laggards will be frustrated as their purchasing power erodes.

The central bank adviser’s solution was simple: eliminate Bitcoin.

“Non-incumbents should recognize that the rise of Bitcoin is driven by the redistribution of wealth at their expense. There are compelling reasons to advocate policies that slow Bitcoin’s growth or even eliminate it.”

11/ In democracies, Bitcoin could influence elections. Crypto-friendly candidates can gain support from early adopters, swinging the results in favor of policies that hurt non-incumbents.

— Jürgen Schaaf (@schaaf_jurgen) October 20, 2024

Steven Smith, CEO of Celestial Mining Management, made a good counterargument that the value of BTC is determined by marginal sellers and buyers.

“The point is, we don’t have bureaucrats standing around or stepping in at everyone else’s expense based on what they think is ‘fair’ or ‘good’ or whatever.”

He added that simple properties like this make BTC so valuable that enough of humanity will choose to store their wealth in it “unlike other instruments that people like you (central banks) control directly or indirectly through the debt-money systems.”

Why Central Banks Hate Bitcoin

Central banks aim to control debt and monetary value, so people-controlled decentralized assets are a major threat to them.

Additionally, the ECB is pushing for a programmable digital euro CBDC (central bank digital currency) that will be highly controlled and used only for payments, not investing or holding.

The US Federal Reserve Bank of Minneapolis suggested something similar in a document last week. Bitcoin should be taxed or banned because it prevents the government from effectively managing its debts through “permanent deficits,” he claimed.

In reality, central bank and government money printing and questionable tax policies make people poorer through inflationary cycles and the gradual devaluation of their fiat currencies, not Bitcoin.

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