According to a report from CoinDesk, the newly approved U.S. Bitcoin ETFs have been gaining immense popularity, with their trading volumes and flow metrics skyrocketing. However, it is important to note that these ETFs have nothing to do with the true utility of Bitcoin. The real purpose of Bitcoin is to facilitate peer-to-peer transactions and eliminate traditional intermediaries.
Investors who buy Bitcoin ETFs are merely getting exposure to the price of Bitcoin. They do not actually own the asset and therefore, do not benefit from the true essence of Bitcoin. Satoshi Nakamoto, the anonymous inventor of Bitcoin, intended for it to allow anyone to experience financial ownership and sovereignty.
However, the ETFs are just replicating our antiquated financial system built on dated tech and presenting counterparty risks that have supported finance for decades.
The problem with Bitcoin ETFs is that they rely on intermediaries and reintroduce counterparty risks. Traditional players like Lehman Brothers, FTX, and Silicon Valley Bank have mismanaged their client's assets, losing billions of dollars in a blink of an eye. This flawed and failed system currently satisfies only 9% of Americans, and crypto offers a potential way beyond it.
Moreover, Bitcoin ETF investors are locked within the confines of the U.S.-centered financial system, while crypto's core attribute is to enable anyone to access a permissionless network and benefit from an unparalleled level of decentralization. ETFs have frontiers, while crypto is permissionless, making them polar opposites.
Another crucial point is that Bitcoin ETF investors don't own what truly matters in crypto: a "private key," or a secret, algorithmically generated code mathematically proving that users are their digital tokens' sole owners. Having these keys is the only way to engage the world of crypto, own Bitcoin, take part in decentralized finance, and leverage decentralized apps with ownership and freedom. Private keys are entry points to the future of finance and the future of the Internet, something ETFs are unable to offer.
Besides opposing crypto's utility, Bitcoin ETFs are more expensive than the unrestricted alternative of secure self-custody. People pay fees ranging from 0.2% to 1.5% to invest in ETFs, not to own the underlying asset. Moreover, the necessity of security is as critical for corporate players as it is for individuals onboarding crypto. Financial intercessors taking part in ETFs must employ adapted security and governance frameworks to avoid FTX-like disasters.
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