In a post on X on Oct. 20, adviser to the Senior Management of the Market Infrastructure and payments business area of the ECB, Jürgen Schaaf, labeled Bitcoin “a speculative bubble that will eventually burst.”
He claimed that this would leave behind “substantial social damage amid its high energy use and facilitating illicit payments.”
The anti-Bitcoin tirade follows a paper from the European Central Bank, co-written by Schaaf last week, claiming that long-term BTC holders were making newer market participants poorer.
Central Bank Bitcoin Tirade
Schaaf claimed that even if Bitcoin prices keep rising and the bubble doesn’t burst, “the wealth gains by early adopters come at the expense of latecomers or non-holders.”
This leads to “significant redistribution effects,” he added before making an even wilder claim:
“Early holders’ wealth and consumption rise while others get poorer, regardless of whether they ever own Bitcoin.”
He also claimed that this wealth redistribution could “destabilize society” as latecomers will feel frustrated as their purchasing power erodes.
The central bank adviser’s solution was simple: eliminate Bitcoin.
“Non-holders should recognize that Bitcoin’s rise is fuelled by wealth redistribution at their expense. There are compelling reasons to advocate for policies that curb Bitcoin’s growth or even eliminate it.”
11/ In democracies, Bitcoin could influence elections. Crypto-friendly candidates may gain support from early adopters, swaying outcomes in favour of policies that harm non-holders.
— Jürgen Schaaf (@schaaf_jurgen) October 20, 2024
Steven Smith, CEO of Celestial Mining Management, made a good counterargument in that the marginal sellers and buyers determine the value of BTC.
“The whole point is that we don’t have bureaucrats bloviating or intervening at everyone else’s expense based on what they think is ‘fair’ or ‘good’ or whatever.”
He added that simple properties such as this make BTC so valuable that a sufficient portion of humanity will choose to store their wealth in it “as opposed to other instruments which people like you [central banks] directly or indirectly control through the debt-money systems.”
Why Central Banks Hate Bitcoin
Central Banks are all about controlling debts and monetary value, so decentralized assets controlled by the people are a major threat to them.
Furthermore, the ECB is pushing a programmable digital euro CBDC (central bank digital currency) that will be highly controlled and used only for payments, not investing or holding.
The United States Federal Reserve Bank of Minneapolis suggested something similar in a paper last week. Bitcoin should be taxed or banned because it prevents the government from effectively managing its debts through “permanent deficits,” it claimed.
In reality, central bank and government money printing and questionable fiscal policies make people poorer through inflationary cycles and the gradual devaluation of their fiat currencies, not Bitcoin.
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