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A European Central Bank (ECB) paper has mischaracterized Bitcoin, while also failing to highlight similar problems with fiat, a crypto executive says. The paper, “The distributional consequences of Bitcoin,” published on Oct. 22 by ECB director Ulrich Bindseil and advisor Jürgen Schaaf, claims Bitcoin needs to be regulated to prevent its price from rising or should be outright banned. Bindseil and Schaaf argue, among other things, that early Bitcoin adopters profit at the expense of new adopters, which hurts the economy and worsens economic inequalities. Speaking to Cryptopolitan, John Haar, managing director at Bitcoin platform Swan Bitcoin, says the ECB paper has mischaracterized digital assets and failed to highlight the problems of “perpetually inflated fiat currencies.” In one section, the authors argue that Bitcoin doesn’t increase the economy’s productive potential and that the only ones benefiting from the digital asset are early adopters. ECB senior management adviser Jürgen Schaaf agreed with his colleagues. Source: Jürgen Schaaf Haar says that widely used fiat currency, a government-issued currency that’s not backed by a physical commodity such as gold or silver, has the same issue. “The reality is that the creation of fiat currency out of thin air does not increase the productive potential of the economy,” he said. Instead it serves as a stealth redistributive tax, where recipients of the newly created money benefit, along with wealthy asset owners, at the expense of existing holders of money who do not receive the newly created money and/or those who do not already hold significant wealth in financial assets. Depreciating fiat currencies the issue, not Bitcoin Another central argument in the paper is that if the price of Bitcoin keeps rising, its existence will impoverish both non-holders and latecomers. The pseudonymous creator of Bitcoin, Satoshi Nakamoto, outlined in the Bitcoin whitepaper how it could function as…

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Filed under: News - @ October 23, 2024 7:22 am