The ECB paper from October 12 criticizing Bitcoin for its volatility and lack of productive contribution has sparked negative reactions among academics.

ECB's Arguments on Bitcoin

The ECB paper describes Bitcoin as an asset with high wealth concentration and instability, making it unviable for long-term use. The rebuttal highlights that ECB analysts misinterpreted Bitcoin's primary purpose, seeing it merely as an investment tool, ignoring its technological foundations like proof-of-work and decentralization. Dr. Murry Rudd argues that Bindseil and Schaaf focused on Bitcoin's early limitations while overlooking its progress in scalability and efficiency. The ECB's arguments also overlook Bitcoin's role as a store of value and network effects.

Conflict of Interest

The rebuttal notes that ECB report authors are involved in developing a central bank digital currency (CBDC), which presents a conflict of interest. Given the ECB's strategic development of a CBDC, the authors may be biased towards portraying Bitcoin as a low-quality and speculative asset. The ECB also overlooks key benefits of Bitcoin, such as financial inclusion and international payment capabilities, especially in countries with unstable currencies.

Academics' Conclusion and Findings

Co-authors of the rebuttal, including Axiom Capital's partner Allen Farrington, Freddie New from Bitcoin Policy UK, and Dennis Porter from the Satoshi Action Fund, concluded that methodological weaknesses and personal or institutional biases undermine the ECB paper's objectivity. They assert that the analysis presented is not credible or justified for evaluating Bitcoin's future.

The ECB paper has sparked significant discussion in academic circles, with many researchers questioning its objectivity and analytical correctness.