ECB Report Criticizes Bitcoin, Highlights Wealth Gap and Volatility

According to BlockBeats, a recent report by the European Central Bank (ECB) on October 23, 2023, suggests that Bitcoin's appreciation is exacerbating wealth inequality, benefiting early adopters at the expense of latecomers. The report highlights Bitcoin's volatility and categorizes it as a speculative asset with minimal productive economic contribution. Additionally, the paper positions central bank digital currencies (CBDCs) as a superior alternative to Bitcoin, citing their stability and financial inclusivity. This characterization portrays Bitcoin as a potentially destabilizing force within the existing economic order. However, critics argue that the ECB's analysis misunderstands Bitcoin's development and its role in the financial system. They contend that the focus on Bitcoin's volatility overlooks its function as a store of value, similar to gold. The rising price of Bitcoin, they argue, indicates its growing recognition as a hedging tool rather than merely a speculative asset. Freddy, the policy director at Bitcoin Policy UK, expressed regret that the authors of such papers often fail to review the latest research and developments in the field. He pointed out Bitcoin's increasing importance for activists working under oppressive regimes where other payment methods may not be available, and its role in providing cheap, fast, and secure cross-border remittances. Freddy emphasized that neglecting the latest research significantly diminishes the value of any such report.