30s Summary

Big banking executives are calling Bitcoin “fundamentally unfair” and suggesting it’s causing financial problems. Several studies, however, indicate it’s actually the banks’ financial meddling, through over-printing money and causing financial inflation, that holds the real root of financial struggles. European Central Bank’s Jürgen Schaaf believes early Bitcoin investors gained at the expense of non-Bitcoin owners or late adopters. While he argues against Bitcoin and even suggests a total ban, others in the Bitcoin community see the banks’ action as an attack and point out policies like quantitative easing, which tends to benefit the rich, as the actual trouble-causer.

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Big banking bosses are saying that Bitcoin isn’t fair, and because of this, they’re pushing for higher taxes on Bitcoin — from the creation (mining) of Bitcoin to taxes on profits (capital gains) — and might even try to completely ban it.

But looking at most of the studies — even ones that they’ve published — it seems like these banking bosses are the real root of our financial woes through over-printing money and causing financial inflation.

In a recent paper from the European Central Bank (ECB), Jürgen Schaaf says that Bitcoin is fundamentally unfair. He suggests that those who got into Bitcoin early increase their wealth and spending at the expense of those who didn’t buy Bitcoin, or bought in later.

Schaaf, an Advisor to the Senior Management of Market Infrastructure and Payments, thinks that Bitcoin owners got rich off the back of non-Bitcoin owners. He says that the luxury cars, watches, homes, and investment portfolios that early Bitcoin investors can afford, are financed by reducing the wealth and spending of those who didn’t originally own Bitcoin.

Instead of blaming the inflationary policies of central banks for unfair distribution of wealth and general hardships, he believes that Bitcoin will end up causing economic hardships.

According to Schaaf, people who don’t own Bitcoin should be against it, and even push for laws against it, aiming to stop the price of Bitcoin from rising “or to make Bitcoin disappear altogether.”

Despite arguing for wealth to be moved away from Bitcoin owners, Schaaf still says it’s these Bitcoin owners who are doing the moving.

The paper also hints at how Bitcoin can’t be easily made — it comes with a graph showing that there won’t be much Bitcoin available for those who come to it late.

The Bitcoin community weren’t happy with the paper, with some people, like Tuur Demeester, seeing it as an attack against them.

Despite Schaaf blaming Bitcoin for causing financial problems, there seems to be more evidence showing that it’s actually the banks’ financial meddling causing more harm to everyday folks who don’t own Bitcoin.

Some policies such as quantitative easing — essentially printing more money — could potentially push up the value stocks, bonds and other assets owned by the rich.

A report by the UK Parliament House of Lords Economic Affairs Committee called “Quantitative easing: a dangerous addiction?” looked at the impact this had following the 2008 Financial Crisis. The report indicated that the policy overvalued asset prices and benefited the rich, creating a bigger gap in wealth during economic downturns.

Another study, by the University of Massachusetts, looked at the impact of the Federal Reserve’s policy of quantitative easing on income and wealth distribution. The authors concluded that quantitative easing somewhat increased inequality, despite having a minor positive impact on jobs and mortgage refinancing.

Ultimately, the true effects of quantitative easing could still be a mystery to even the big-shot economists.

Recent studies have shown inflation to be a significant concern for the less privileged — the poor, the uneducated, unskilled workers — as found in a survey of nearly 32,000 people in 38 countries.

Inflation hits low-income households hardest, as they spend more of their income on food, gas and rent — all areas where inflation is often higher. Unlike middle-income households, low-income families can’t switch to cheaper or non-brand goods, as they’re usually already buying the cheapest options.

This all suggests that Schaaf may not be right about Bitcoin being the cause of our financial troubles. Many studies, including ones done by central banks, suggest that maybe it’s Schaaf and his colleagues who are the problem.

Perhaps people who don’t own Bitcoin should actually be opposing the banks?

(Kadan Stadelmann is a blockchain developer, security operations expert and Komodo Platform’s chief technology officer. His career spans from government security operations and launching tech startups to app development and cryptography. Kadan started his blockchain journey in 2011 and joined Komodo in 2016.)

Source: Cointelegraph