In response to the latest anti-bitcoin article from the European Central Bank (ECB), a new academic article titled “Challenging bias in the ECB's bitcoin analysis” has been published. Written by Murray A. Rudd, along with co-authors Allen Farrington, Freddie New and Dennis Porter, the article offers a comprehensive critique of a recent working paper by ECB officials Ulrich Bindseil and Jürgen Schaaf.
Dennis Porter, CEO and founder of Satoshi Action Fund, who initiated the document a few days ago. x.com/Dennis_Porter_/status/1848818272650858909″ target=”_blank” rel=”noopener nofollow”>announced the post on
The original ECB document by Bindseil and Schaaf presents btc as a speculative asset with limited intrinsic value and significant risks. He criticized btc's volatility, lack of productive contribution, and wealth concentration, while defending central bank digital currencies (CBDCs) as a superior solution for modern financial systems, as Bitcoinist reported.
The rebuttal systematically addresses and refutes the key claims made by Bindseil and Schaaf:
#1 Influence of the bitcoin political lobby
Bindseil and Schaaf argue that the industry lobby exercises disproportionate influence, biasing regulatory policy in its favor. The rebuttal counters this by highlighting the decentralized nature of bitcoin. “It does not have a CEO, nor legal or marketing departments, nor lobbyists: it is a neutral, global and leaderless protocol. “bitcoin proponents typically operate without the institutional backing enjoyed by the corporations that dominate the crypto industry,” the authors write.
They point out that traditional financial institutions spend much more on lobbying than the nascent industry and point out that in 2023, cryptocurrency-related lobbying expenditures in the US constituted less than 1% of financial sector lobbying expenditures.
#2 Concentration of wealth
Addressing the claim that ownership is highly concentrated among a small number of big players, the rebuttal emphasizes that this view overlooks the widespread dispersion of btc holdings. “Institutional and exchange portfolios represent the holdings of diverse investors rather than single entities,” the authors explain. They note that many of the largest wallets are owned by exchanges like Coinbase and Binance, as well as ETF issuers like BlackRock and Fidelity, which hold btc on behalf of millions of users.
The authors also challenge the notion that the concentration of wealth in coins is inherently unfair. “They imply that any form of inequality is unfair, but do not explain why this applies: a free market for bitcoin has been available to everyone since its inception,” they write. “Unlike the vast majority of cryptocurrency tokens ('altcoins'), bitcoin had a public and fair launch. “There was no pre-launch distribution of bitcoin, no ‘founder shares,’ no venture capital backers buying bitcoin at a discount.”
#3 Lack of productive contribution
The ECB document states that the increase in the price of btc creates positive effects on the consumption of holders, but does not increase overall productivity or economic growth. The rebuttal challenges this by highlighting btc's important role in driving financial innovation and efficiency. “bitcoin functions as a technological protocol, similar to the TCP/IP protocol that underpins the Internet, allowing the development of new financial services,” they argue.
The authors also emphasize the impact on developing regions, particularly on the remittance market. “For countries that derive a large proportion of their GDP from remittances, cutting transaction costs could have dramatic impacts among the poorest households, which are traditionally excluded from banking services,” the document notes.
#4 bitcoin Wealth Redistribution
Bindseil and Schaaf suggest that bitcoin's price appreciation results in a redistribution of wealth, benefiting early adopters at the expense of non-holders and newcomers. The rebuttal responds that this argument ignores the voluntary nature of btc markets, where participants freely choose to enter based on their own assessment of the asset's potential.
“Like early investors in stocks or venture capital, early adopters of bitcoin assumed significant risk in exchange for potentially high returns, an inherent characteristic of emerging technology markets,” they explain. They also highlight the broader implications of inflation, which redistributes wealth from savers to debt holders through inflationary policies. “bitcoin's fixed supply and deflationary characteristics counteract this erosion, offering a long-term store of value,” they say.
#5 Lack of intrinsic value
The ECB document states that bitcoin has no intrinsic value and cannot be priced using traditional asset pricing models. The rebuttal argues that this narrow definition ignores the role that scarcity, decentralization, and utility as a store of value play in asset valuation.
“bitcoin works in a similar way to gold, providing an alternative store of value, particularly in periods of monetary instability,” they say. They further state: “Their argument is fundamentally flawed: they claim that btc cannot be considered money because it cannot be valued as a security, while the reality is that it cannot be valued as a security precisely because it is money.”
#6 bitcoin is a speculative bubble
Addressing the claim that btc price movements are indicative of speculative bubbles, the rebuttal notes that volatility is a characteristic of emerging technologies. “bitcoin's price appreciation is driven by its scarcity, adoption, network effects, and recognition of its usefulness as a hedge against fiat currency debasement,” they explain.
#7 Failure as a payment system
The ECB document argues that bitcoin has not fulfilled its original promise as a global payment system due to high fees and scalability issues. The rebuttal counters this by highlighting technological advances like the Lightning Network, which have dramatically improved bitcoin's scalability, reducing fees and increasing transaction speeds.
“By focusing on the initial limitations, Bindseil and Schaaf fail to recognize the important progress made in improving its scalability and efficiency,” they argue. They also address the authors' criticism of Nakamoto's analysis of financial transactions, stating: “Nakamoto's argument does not address the optionality of mediation in certain types of transactions; rather, it is about the costs and risks inherent in a system where transactions depend on third-party lending institutions.”
The authors also question the ECB document's formulation that CBDCs are superior to btc. They highlight the risks of centralization inherent in CBDCs, including concerns about privacy, political manipulation and surveillance. “bitcoin's decentralized architecture guarantees censorship resistance and financial sovereignty,” they say, contrasting it with the centralization of CBDCs.
The rebuttal raises concerns about potential conflicts of interest due to the authors' roles within the ECB. Both Bindseil and Schaaf are deeply involved in the development of the digital euro, a CBDC project that directly competes with decentralized digital currencies like btc. “Their personal interest in promoting CBDCs likely distorts their description of bitcoin as a speculative asset,” Porter et al. conclude.
At the time of this publication, btc was trading at $66,465.
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