Some people have it in for bitcoin.
They didn’t like this upstart money when they first learned about it. The more they investigate it, the less they like how it’s challenging the fiat money monopolies, and the worse, paradoxically, their perspective becomes. And if you’re an established economist at a central bank, your obvious conflict of interest clouds your vision even more.
In November 2022, Ulrich Bindseil and Jürgen Schaaf of the European Central Bank were fast to gloat over bitcoin’s demise. From its all-time high a year earlier, bitcoin suffered what every other asset class did as monetary conditions tightened. 
Add on the sector-specific blow-ups of crypto-related exchanges and hedge funds (FTX, Celsius, Three Arrows Capital etc., etc.), and bitcoin traded down 75 percent from its dollar high. Bindseil and Schaaf confidently declared that this was the end of bitcoin, its “last stand.” It was always a bubble, and now it had burst.
Nearly two years later, they came back — not with an apology given that bitcoin hit new all-time highs in early 2024 and is comfortably back at pre-FTX prices, but with a paper investigating “The Distributional Consequences of Bitcoin.”
The paper received a lot of undeserved slack — mostly, I believe, from people reading the title, skimming the abstract, and concluding from these authors’ employer (the ECB) that it must be junk.
Junk it may be, but not for the reasons the online commentariat assumed.
Throw the First Two Sections Out the Window
The authors try — horribly and unsuccessfully — to describe what bitcoin is and does. They play word games with Satoshi Nakamoto’s early writing and redefine terms to argue over mediation in PayPal transactions(?!). They quote prominent bitcoiners and try to connect them to America’s election campaigns. The paper was full of errors and reeked of someone who has never made a Bitcoin transaction.
With a straight face, these otherwise well-respected monetary scholars state: “Even 16 years after its inception, real bitcoin payments, i.e. effectively ‘on chain’, are still cumbersome, slow and expensive.”
A quick look at mempool space in late 2024 (5 sats/vbyte, or $0.30 or so for a standard transaction) would have dispelled this idea. (Let alone the Lightning network which allows for convenient retail, day-to-day payments.) Neither of these value-transferring methods can be considered “slow” or “cumbersome” compared to the legacy patchwork that is fiat payments: $5-25 dollars for ACH payments? International wiring fees? Tried sending bank money over the weekend?
What the Paper is Actually About
Bindseil and Schaaf have written a good overview of the state of the economic literature for speculative bubbles. We’re also treated to a nice, two-page summary of the lean-vs-clean debate in macroprudential policy.
But that’s not their point. What they deliver is a small, easily understandable model for what happens to the distribution of real goods when an asset appreciates forever.
They begin by assuming that bitcoin is an infinitely appreciating asset without productive improvements to society, i.e., its existence and usage does not enrich the economy. Under this assumption — which they think “seems reasonable,” apparently along with “most economists” — a world running on Bitcoin does not improve economic affairs.
For serious readers who hadn’t been put off by the incorrect, level-zero-type objections in the first half of the paper, most have now stopped reading. After years of monetary mismanagement by central banks, extreme fiscal excesses, censorship/debanking efforts, and money printing that shot “inflation” to the top of consumers’ worries, dismissing a system of non-discretionary monetary policy and uncensorable, fixed-supply money as having no productive purpose whatsoever would seem an elaborate exercise in shit-testing.
And as of mid-2025, bitcoin continues to reach new highs, further highlighting the disconnect between traditional critiques and the real-world evolution of decentralized money.
