Central Banks go After Bitcoin

Source

Last week, Ulrich Bindseil and Jürgen Schaaf of the European Central Bank (ECB) published a paper entitled “The distributional consequences of Bitcoin” in which they made a host of dubious claims about Bitcoin.

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Here are the claims:

1. The main premise of the paper is that if bitcoin’s price continues to rise, early bitcoin investors — the “early birds” (the authors’ term) — will gain wealth at the expense of the “latecomers.” While this is true if the early birds hold all of their coins to no end, the dynamic is no different with any other publicly-traded asset. The bigger point that the researchers miss, though, is that some of us are both “early birds” and “latecomers.” I first bought bitcoin in January 2018, and I also bought some last week. Did I impoverish myself in this scenario? No, I didn’t. Nor has anyone who has dollar-cost averaged into bitcoin over any period of time.
2. One of the other primary arguments in the paper is that Bitcoin has failed as a payment technology. In making this claim, the authors fail to even mention the Lightning Network, a layer built on top of Bitcoin that enables fast, cheap bitcoin payments. In recent years, the Lightning Network has grown exponentially. 
3. Throughout the piece, the authors bring up how bitcoin and other cryptocurrencies are the preferred currencies of criminals and bad actors worldwide.
4. The authors also make the claim Bitcoin is a threat to democracy because crypto PACs now donate to politicians. The presupposes that every other lobbying group out there isn’t a threat to democracy, which is laughable…
   Alexei Navalny, Vladimir Putin’s former opposition, popularized using cryptocurrencies for donations when the Putin regime limited its access to traditional financial rails.
5. The authors also suggest that central banks can just tighten monetary policy to counteract the “bubble” forming in bitcoin’s price.

Imagine that, an asset appreciates. I hope you are stacking those sats my friends. BTC is actually used as payment in places where banking system is not very developed. In the EU, the adoption of BTC as a payment system is of course much slower. BTC is not a good option for criminals as the ledger is open and transactions can be traced to specific names.

The US Federal Reserve is not far behind in the stuck up dinosaur, legacy finance race…