From murrayrudd pro by Murray Rudd

Our paper below critiques the recent working paper by Bindseil and Schaff (2024), which presents a negative assessment of Bitcoin’s long-term viability, framing it as a speculative asset with limited intrinsic value and significant risks. The paper portrays Bitcoin’s volatility, lack of productive contribution, and wealth concentration as critical flaws, while positioning CBDCs as a superior solution for modern financial systems. In this critique, we explore Bindseil and Schaff’s core assertions, the methodological weaknesses in the working paper, and their framing of Bitcoin versus CBDCs.

Thanks to coauthors Allen Farrington, Freddie New, and Dennis Porter in helping to put this paper together! This was an initiative of Satoshi Action Education. Click the image below for a link to the full pdf.

Suggested citation:Rudd MA, Farrington A, New F, Porter D. 2024. Challenging bias in the ECB’s Bitcoin analysis. Working paper, Satoshi Action Education, Portland, Oregon. DOI: http://dx.doi.org/10.13140/RG.2.2.17555.28968

Introduction

Our paper critiques the recent working paper by Ulrich Bindseil and Jürgen Schaaf (2024), which presents a negative assessment of Bitcoin’s long-term viability, framing it as a speculative asset with limited intrinsic value and significant risks. Authored by European Central Bank (ECB) officials involved in developing Central Bank Digital Currencies (CBDCs), the paper portrays Bitcoin’s volatility, lack of productive contribution, and wealth concentration as critical flaws, while positioning CBDCs as a superior solution for modern financial systems.

The foundation of Bindseil and Schaff’s argument is that Bitcoin has shifted, from what they view as Satoshi Nakamoto’s (2008) vision for Bitcoin being a means of payment, to today’s focus on Bitcoin as an investment vehicle. This reflects Bindseil and Schaff’s misunderstanding or misrepresentation of Bitcoin’s evolution. This issue was central to the 2015-2017 “Blocksize Wars,” where a faction within the community sought to scale Bitcoin as a payment system by increasing block sizes, but the prevailing view—aligned with Satoshi Nakamoto’s original intent—prioritized decentralization and Bitcoin's role as a store of value (Bier, 2021). Satoshi himself highlighted Bitcoin's potential as a hedge against central banking policies, stating early on that “it might make sense to get some in case it catches on.”