- European Central Bank economists think Bitcoin has deviated from the original vision.
- ECB economists think Bitcoin is a speculation tool that benefits only early adopters.
- Bitcoin’s perpetually rising price would negatively affect the rest of the society.
European Central Bank economists think Bitcoin has deviated from the original vision of its founder, Satoshi Nakamoto, as a global payment system. In a recently published paper, the economists stated that the pioneer cryptocurrency has become a vehicle for speculation that benefits only the early adopters.
The Central Bank economists highlighted that Nakamoto intended for Bitcoin to become a global peer-to-peer payment system. However, they argue that the system has failed, leading to a repositioning of the flagship crypto as an investment asset primarily used for speculation.
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Meanwhile, the economists further argued that Bitcoin’s perpetually rising price would negatively affect the rest of society beyond benefitting only the early adopters. According to their paper, the economists think Bitcoin’s trajectory would impoverish society and endanger cohesion, stability, and democracy.
The economists compared Bitcoin with other mainstream assets, noting the differences and limitations of the flagship crypto. According to them, Bitcoin does not generate cash flow like real estate or interest like bonds. They also highlighted its limitations when compared with stocks, noting it does not generate interest and cannot be used productively like commodities.
From the economists’ perspective, most established ways of calculating or estimating the fair value of an asset fail when applied to Bitcoin. In their opinion, Bitcoin does not constitute a traditional asset. Instead, they consider it a product celebrities and thought leaders promote as an investment asset with the potential to increase perpetually.
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The economists cited celebrities like athlete Tom Brady, actors Gwenyth Paltrow and Ashton Kutcher, and blockchain industry thought leaders like BlackRock’s Larry Fink and Galaxy Digital’s Mike Novogratz. They consider these individuals, among others, the top campaigners promoting Bitcoin’s potential as an investment instrument.
Bitcoin reached an all-time high of $73,794 last March, shortly before the latest halving event. The flagship crypto traded for $68,362 at the time of writing, with many analysts predicting a newer high soon for the cryptocurrency. The perpetual growth impression the economists highlight remains a dominant idea among Bitcoin users, even though many may not agree with the negative implications suggested by the economists.
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