Bitcoin Transition from Payment System to Speculative Asset Raises Concerns

The initial goal of Bitcoin—becoming a distributed worldwide payment system—has mainly failed. For regular transactions, Bitcoin is useless because of its poor transaction rates, high cost, and limited usage as a payment method.

The European Central Bank (ECB) has raised concerns over Bitcoin's soaring value, highlighting its implications for wealth distribution and broader society.

In a recent working paper, ECB economists argue that Bitcoin's rapid price increase is primarily benefiting early adopters, leading to a transfer of wealth that can be harmful to new investors and non-holders.

Unlike conventional assets that contribute to economic productivity, Bitcoin is viewed as a zero-sum game, with its price appreciation not adding to society's overall wealth. This redistribution of wealth, as the ECB economists warn, could have severe social implications, including financial hardship for the majority who do not own Bitcoin.

The ECB also suggests that this widening disparity could pose a threat to society's stability and potentially even democracy.

Shift from Payment System to Speculative Asset Raises Concerns

The ECB economists emphasize in their paper that Bitcoin's initial aim — becoming a distributed global payment system — has largely failed. Due to its slow transaction rates, high costs, and limited use as a payment method, Bitcoin is impractical for everyday transactions.

Instead, it has transformed into a speculative asset, where early investors' gains are realized through the losses or foregone opportunities of later participants. This has raised concerns about civil unrest, as those who missed out on Bitcoin's price surge experience financial difficulties relative to early investors.

Moreover, the paper criticizes how celebrities and influencers portray Bitcoin as an irresistible investment, a portrayal that distorts its nature and fuels speculative bubbles detached from economic fundamentals.

According to the ECB, the飆漲 of Bitcoin benefits a small group of people while depriving the majority of society. It concludes that latecomers and non-holders may be justified in supporting legislation that restricts Bitcoin's further spread or even bans it outright.

This warning comes at a time when governments around the world are increasingly considering the implications of cryptocurrencies. Critics of the ECB's stance argue that the central bank overlooks Bitcoin's potential value as a form of digital gold.

However, the ECB maintains that the implications of Bitcoin for the distribution of wealth cannot be ignored and should be a central focus in upcoming policy discussions.

Meanwhile, CNF previously reported that the ECB is set to introduce offline payments for the digital euro, allocating €1.3 billion to contractors that are qualified to create this capability for the digital currency. The bank has confirmed that providers specializing in risk management, information security, and user applications will be tasked with carrying out these functions.

The above is the detailed content of Bitcoin Transition from Payment System to Speculative Asset Raises Concerns. For more information, please follow other related articles on the PHP Chinese website!