Earlier this month, the European Central Bank (ECB) released a study in which the authors argue that the presence of Bitcoin could disadvantage non-holders and late adopters.
They specifically stated:
“Because Bitcoin does not enhance the productive capacity of the economy, the expected continued rise in value is fundamentally redistributive; that is, the wealth impact on the consumption of early Bitcoin adopters will occur at the expense of the rest of society.”
This statement incited criticism from many Bitcoin enthusiasts, including Frank in his Take… but isn’t this fundamentally what hyperbitcoinization represents? If Bitcoin becomes the global currency, HODLers would become the new wealthy class while those holding fiat would potentially face financial ruin, correct?
The essence of the argument, I believe, lies in the initial part of the quote. Numerous Bitcoin advocates, myself included, are convinced that Bitcoin actually would boost the productive capacity of the economy. (This belief is supported by several factors, one of the main ones being that it mitigates the Cantillon effect of fiat currency, which predominantly benefits governments.)
If it had been feasible in 2009 to convert all fiat currency into Bitcoin so that everyone received a proportional share (thereby eliminating redistributive consequences), it might have been more favorable… yet the ECB economists would still oppose it: they simply fail to acknowledge the advantages of Bitcoin from the outset.
Since Satoshi Nakamoto had no means of converting everyone’s fiat to Bitcoin, even if he had wished to, it is logical that he initiated the project as he did, permitting anyone to embrace this superior currency at their own risk tolerance.
If the ECB economists propose a more effective way to distribute this new currency, I suggest they utilize their Cantillon-funded salaries to produce a paper addressing that.
This article is a Take. The views expressed are solely those of the author and do not necessarily represent those of BTC Inc or Bitcoin Magazine.
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