ECB says early Bitcoin investors profit from newcomers

A recent report from the European Central Bank (ECB) argues that early Bitcoin (CRYPTO:BTC) investors are benefiting at the expense of newer participants in the market.

The paper claims that Bitcoin’s decentralised structure and limited supply have created an environment where early adopters, who purchased Bitcoin at lower prices, are profiting by selling to new buyers at higher prices.

According to the ECB, this results in an "unfair" transfer of wealth, and the authors suggest that Bitcoin should be either strictly regulated with price controls or banned entirely.

The ECB paper warns that the unequal wealth distribution stemming from Bitcoin could potentially lead to social unrest.

It asserts that “current non-holders should realise 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.”

The report also raises concerns about Bitcoin’s involvement in criminal activities.

However, it does not account for a May 2024 report from the U.S. Treasury Department, which states that fiat currencies, not cryptocurrencies, remain the primary means for illicit transactions.

Critics argue that the ECB report overlooks key aspects of Bitcoin’s design, including its role as a decentralised payment system and a hedge against inflation.

Bitcoin’s scarcity, with a supply capped at 21 million coins, has been a key factor in its price growth, especially as governments worldwide have increased money supplies.

Critics also highlight that the ECB’s focus on Bitcoin’s supposed lack of intrinsic value ignores its growing appeal as a store of value amid rising inflation.

Meanwhile, Bitcoin continues to attract interest from institutional and retail investors.

A recent survey from Charles Schwab revealed that 45% of U.S. investors plan to invest in cryptocurrency ETFs, reflecting growing demand for Bitcoin-related products in the investment market.

At the time of writing, the Bitcoin (BTC) price was $68,422.64.