Several Bitcoin ETFs have been denied over the summer. People thought that ETFs were finally going to get approved, but they weren't. The hype is that if ETFs are approved, it will end the bear market and boost Bitcoin and crypto values to save current investors as new money poors in and make a lot of people happy. It's looked at as taking crypto to the next level in the financial markets.
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But Andreas Antonopoulos doesn't think ETFs are good thing for crypto. In a video from two weeks ago, he explained that an ETF means an exchange-traded fund, which is a fund that has a custodian or manager creating a financial "instrument" similar to a stock. Bitcoin ETFs would hold Bitcoin and sell shares in a Bitcoin reserve representing a price of Bitcoin as a stock. This "stock" is then traded through the stock market.
The custodian ETF creator holds the actual Bitcoin, while customers buy a share of those funds. The selling point is that the customer would go through the custodian, instead of having to register at a cryptocurrency exchange, validating user identity through Know Your Customer (KYC), getting encrypted key and using wallets.
Antonopoulos correctly states the dangers of this money game, citing what happened to gold as an example, as well as issues with consensus for forks where the people who buy shares in an ETF won't actually own any BTC and won't have any ability to decide what happens with BTC fork debates:
I'm going to burst your bubble. I know a lot of people want to see Bitcoin ETFs because 'lambos' and 'to the moon' and all that. I think it's a terrible idea. I still think it's going to happen, but I think it's a terrible idea. I'm actually against Bitcoin ETFs.
If there is ever a fork debate, which is very likely to happen again in any cryptocurrency, then the fund that controls that Bitcoin now has a very large voice. Their shareholders don't. They don't get to choose which fork the fund is going to follow in a Bitcoin debate...
We already saw that level of influence during the August 1st fork, user activated software forks, Bitcoin cash, the scaling debate… Large custodial exchanges had a very strong voice in the ecosystem. They were able to decide if they were going to support or not on behalf of 10 million customers… an ETF will do that and it will do that on an even bigger scale
ETF custodians will be centralized fund managers and will hold a lot of power with millions of votes. This can position them to manipulate the price, influence debates on forks, scaling issues and transaction fees. Antonopoulous sees disagreements between centralized fund managers of major ETFs leading to "corporate Bitcoin" and a separate corporate Bitcoin market.
With Wall Street getting more involved in Bitcoin, yes there is more potential for investment and that means the value of BTC and other coins will rise. But at what cost? What will this mean for the future of crypto in general?
Crypto was an alternative to the bad practices of Wall Street. Crypto was supposed to change the world and bring more freedom to the individual. The future of crypto might be worth more with ETF and other Wall Street involvement, but it might mean the hopes and dreams of crypto changing the world for the better will go down the drain.
What do you think? Do you care about the future potential of crypto to bring greater freedom to the world, or do you just care about the money to be made from crypto?
Thank you for your time and attention. Peace.
- Bitcoin Q&A: Why I'm against ETFs
- Bitcoin ETFs Are a 'Terrible Idea', Says Bitcoin Advocate Andreas Antonopoulos
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