As a researcher who has witnessed the financial landscape evolve over the past few decades, I find myself both amused and dismayed by this recent paper from the European Central Bank. The argument that Bitcoin should be regulated or even banned due to perceived exploitation is nothing new; it’s akin to suggesting that the stock market should be shut down because some traders make profits at the expense of others.
A newly released report dated October 12, 2024 by the European Central Bank posits that established Bitcoin (BTC) owners benefit at the cost of newer investors. The paper further suggests that due to Bitcoin’s scarcity and decentralized nature, it may need regulation to prevent its value from increasing or even outright prohibition.
The authors noted that individuals who purchased Bitcoin earlier or capitalized on market bottoms by selling their Bitcoin to subsequent buyers at a higher price were essentially taking advantage of newcomers. It’s important to remember that this is a common strategy in all financial markets, as investors strive to buy assets at lower prices and sell them at higher ones.
Based on these principles, the authors suggested that Bitcoin needs stringent price regulations to avoid exploitation and potential social unrest caused by an unequal distribution.
“In any case, current non-holders should realize that they have compelling reasons to oppose Bitcoin and advocate for legislation against it, aiming to prevent Bitcoin prices from rising or to see Bitcoin disappear altogether.”
In their study, the authors additionally argued that Bitcoin is seldom employed for making payments; however, they referenced a misleading statement from a prior research paper stating Bitcoin is commonly used by criminals for transactions. Contrarily, a May 2024 report by the U.S. Treasury Department affirms that fiat currency continues to dominate illicit transactions.
Interestingly, the paper overlooks the reasons behind the significant rise in the price of the supply-limited Bitcoin since its launch in 2009. Moreover, it’s noteworthy that Satoshi Nakamoto, the anonymous creator of this scarce digital asset, designed it to serve as a dual purpose: a decentralized means for transactions and a hedge against rapidly depreciating traditional currencies, acting as a store of value.
The multi-trillion fiat debt elephant in the room
In the article, several conflicting statements are presented, such as Bitcoin having no practical worth yet expected to soar so high it could disrupt society. However, this overlooks the immense monetary inflation that governments and central banks inflict upon their populations through their actions.
As a crypto investor looking at economic trends, I find myself concerned about the UK’s public sector debt for the upcoming 2023-2024 fiscal year. According to Statista, this debt is projected to reach nearly 98% of the country’s Gross Domestic Product. This is the highest level since the 1960s, a worrying sign that could potentially impact the UK’s financial stability and my investment decisions.
In the very first block ever mined on the Bitcoin network (known as the Genesis Block), Satoshi Nakamoto implicitly criticized financial mismanagement and recklessness by incorporating a headline from The London Times newspaper dated January 3, 2009, which served as the front page.
Since 2020, the U.S. has seen an approximately 41% boost in its M2 money supply due to fiscal stimulus measures that involve printing money. This inflationary tactic contributes to the already substantial $35 trillion national debt and leads to a reduction in the overall purchasing power of the currency.
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2024-10-19 22:46