The post ECB Warns Bitcoin’s Rise Risks Societal Wealth Inequality appeared on BitcoinEthereumNews.com.

Economists at the European Central Bank (ECB) have raised alarms about the potential societal impact of Bitcoin’s rising price. They argue that the cryptocurrency has shifted from Satoshi Nakamoto’s vision of a global payment system to an investment asset. In a recent paper, ECB economists Ulrich Bindseil and Jürgen Schaaf express concerns that Bitcoin’s increasing value primarily benefits early adopters. This trend could leave later investors and those who do not hold Bitcoin facing significant economic challenges. ECB Calls For Action Against Bitcoin’s Investment Perception The authors highlight how thought leaders and celebrities have contributed to Bitcoin’s image as an investment with limitless growth potential. Figures like Larry Fink regard Bitcoin primarily as a financial asset, disconnecting it from Nakamoto’s original narrative of a currency for transactions. However, instead of positioning BTC as a means of payment, these advocates liken it to gold—a finite resource viewed as a long-term investment. This perspective raises questions about society’s motivation to choose Bitcoin as an investment vehicle. Despite its volatility, proponents expect Bitcoin’s value to trend upward over time, while offering little societal utility. “In absolute terms, early adopters exactly increase their real wealth and consumption at the expense of the real wealth and consumption of those who do not hold Bitcoin or who invest in it only at a later stage,” they wrote. Read more: Bitcoin (BTC) Price Prediction 2024/2025/2030 Moreover, the paper warns that early adopters might liquidate their Bitcoin holdings to purchase luxury items, leaving latecomers at a disadvantage. This dynamic could lead to wealth redistribution from newer investors to those who entered the market first, exacerbating poverty among non-holders. “The consequences of the Bitcoin-as-an-investment vision with perpetually increasing Bitcoin prices imply a corresponding impoverishment of the rest of society, endangering cohesion, stability and ultimately democracy,” the economists argued. To counteract…

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Filed under: News - @ October 20, 2024 11:06 pm