Bitcoin academics challenge ECB’s critical report

A recent European Central Bank (ECB) paper that criticised Bitcoin (CRYPTO:BTC) has faced sharp backlash from crypto academics. 

The controversial ECB report, published on Oct. 12, raised concerns over Bitcoin’s volatility, lack of intrinsic value, and wealth concentration, while advocating for Central Bank Digital Currencies (CBDCs) as a superior alternative. 

In response, a group of academics led by Dr. Murry Rudd from the Satoshi Action Fund released a rebuttal on Oct. 22, challenging several of the ECB’s key claims. 

According to Rudd, the ECB’s paper fundamentally misunderstood Bitcoin’s core purpose and its technological framework, particularly proof-of-work and decentralisation. 

“By focusing on early limitations, the ECB fails to acknowledge significant progress in Bitcoin’s scalability and efficiency,” Rudd explained. 

He added that the ECB’s portrayal of Bitcoin as merely a speculative investment misses its evolving role as both a store of value and a payment network. 

The rebuttal highlighted what it considered “fundamentally flawed” arguments by the ECB, pointing out that many large Bitcoin wallets belong to exchanges holding funds for millions of users. 

Furthermore, it argued that the ECB’s critique of Bitcoin’s lack of intrinsic value overlooks the cryptocurrency’s established network effects and utility in financial inclusion and cross-border payments. 

Rudd’s response also addressed the ECB’s criticism of Bitcoin’s wealth concentration, contending that it fails to recognise broader issues related to inflation in traditional financial systems. 

The rebuttal included a chart from the Federal Reserve Bank of St. Louis showing the decline in the US dollar’s purchasing power since 2000, contrasting it with Bitcoin’s role as a hedge against inflation. 

Additionally, the rebuttal suggested a potential conflict of interest, given that the ECB’s authors, Ulrich Bindseil and Jürgen Schaaf, are involved in developing the digital euro. 

“It is reasonable to infer that the authors have a vested interest in portraying Bitcoin as an inferior asset,” it stated. 

The co-authors concluded that the ECB paper’s “methodological weaknesses and personal or institutional biases” undermine its academic credibility and fail to present an objective analysis of Bitcoin’s utility or future.

At the time of writing, the Bitcoin price was $67,066.22.