The paper received a lot of undeserved slack over the last few days — mostly, I believe, from people reading the title, skimming the abstract, and concluding from these authors’ employer (the ECB) that it must be junk.

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 is full of errors and reeks of someone who has never made a Bitcoin transaction.

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.

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.

hinging their entire argument on this assumption (that bitcoin is useless), the conclusion also becomes trivial (that wealth is redistributed from late adopters to early adopters).

We don’t need models, ECB affiliations, heck even a high school diploma, to grasp that

the wealth effects on consumption of early Bitcoin holders can only come at the expense of consumption of the rest of society.