Shower thought. Bitcoin ETF bad?

[BitHodler]

I'm not sure if I agree with 'the community' when it comes to being your own bank. Sure, it's preferred in terms of having full control over your coins, but some people just don't care enough about the values we consider important.

People here have a hard time looking at the other side of the story because they find it necessary to promote their vision without taking into consideration that not everyone has a problem with third parties.

Bakkt exists because there is a demand for their service. Coinbase custody exists because there is a demand for their service, and so forth. If people consider these services valuable to them, then good luck to them.

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[figmentofmyass]

Shouldn't the communty discourage the creation of anything that gives up the custody of Bitcoin to third parties?

Although it might be good for its price, would it be good for Bitcoin as a censorship-resistant hard money?

it wouldn't affect bitcoin's censorship resistance or hard money qualities, would it?

the only problem in principle is people employing third party trust and sadly, that's inevitable. from both philosophical and security perspectives, i really don't think the world was ready for bitcoin. nevertheless, it's here. those who don't value trustlessness will eventually pay the price.

[squatter]

Bakkt exists because there is a demand for their service. Coinbase custody exists because there is a demand for their service, and so forth. If people consider these services valuable to them, then good luck to them.

I tend to agree -- it's a free market and all that. Although it does make me uncomfortable when I think about how much of the circulating supply is in the possession of a handful of entities like Coinbase, BitMEX, Bitfinex, Xapo, etc.

[ene1980]

The freedom to do what one wants with one's bitcoins necessarily includes the freedom to give custody of them to a third party. Some (such as those who are unwilling or unable to safely manage their own private keys) will find such an arrangement beneficial.

That is a good valid point, majority of the people will find it difficult to safe guard their private keys and people will find it useful to invest in ETF.

Shouldn't the communty discourage the creation of anything that gives up the custody of Bitcoin to third parties?

Having more options when it comes to bitcoin is a welcoming thing. People take their individual decisions when it comes to investment and there is no point in discouraging, but letting them know about the pros and cons is the idle process. After all bitcoin is meant to be financial freedom from the clutches of centralized oppressive government.

[pooya87]

i actually don't think ETF is bad, at least it is not as bad as futures and margin trading where they let people short bitcoin specially when they are whales and can manipulate the market and cause unreasonable volatility at times which is more damaging to bitcoin that it may look like.
in the end things like ETF can help introducing bitcoin to more people. which means it can even help those who don't want to "be their own bank" to enter bitcoin. maybe in time they realize what bitcoin offers and switch to directly using bitcoin.

[figmentofmyass]

i actually don't think ETF is bad, at least it is not as bad as futures and margin trading where they let people short bitcoin specially when they are whales and can manipulate the market and cause unreasonable volatility at times which is more damaging to bitcoin that it may look like.

i haven't looked at any of the bitcoin ETF specs too closely, but you can generally short ETFs. there are also leveraged ETFs (both bull and bear funds). if any ETF is approved, im sure short and ultra-short ETFs will be approved too. and any ETF with an open-ended creation/redemption process will affect the spot market via arbitrage, so shorters could affect prices.

[DooMAD]

majority of the people will find it difficult to safe guard their private keys and people will find it useful to invest in ETF.

Do the "majority of people" use a broker service, though?  With the exception of some free shares I was given by my employer, I sure as hell don't, but that might just due to my distrust of traditional finance.  Because if people aren't using a broker, that's the only way casual investors can access an ETF.  I'm guessing most banks offer such services, but I suspect the majority of people are currently more concerned with putting food on the table in an age of ever increasing disparity between rich and poor.  Unless you meant the "majority of people with access to disposable income looking to invest in something", perhaps?

Then there's the generational gap to consider.  Are brokers keeping up with current trends?  I don't feel like brokers have made much of an attempt to engage with me, so I'm seemingly not their target audience.  Who else are they overlooking?  And where will those people look to store their wealth?  I get the impression younger generations feel that crypto is quite accessible to them, so perhaps they're more likely to want to hold their own private keys.

I suspect brokers will also be required to mention that crypto ETFs will be on the higher end of the risk spectrum, so that may also prompt casual investors to look at other options.  It's a widely held assumption here on the forums that a Bitcoin or other crypto ETF will unfold just like previous ETFs, but I'm not convinced of that.  A Bitcoin ETF won't be like a precious metals ETF in terms of volatility.  It will be an altogether different beast.

And then there's obviously that pesky first hurdle of how long it will actually take one of these things to get the green light from the bureaucrats.  Could easily be a few more years yet.  Will investors be prepared to wait, or will FOMO force them to download a wallet and do it the "proper" way?

There's just so many variables to consider.  There's no way to know how it's going to unfold.

[1Referee]

The reality is that a minority thinks of it as a bad development for Bitcoin, while the (far) majority thinks of it as a positive development because price gains is all they care about. Majority will get what it wants in this case. I can understand both camps though, because there are definitely tradeoffs and benefits to be pointed out.

I'm leaning more towards the camp that wants to see the price go up. People can pretend to not find the price an important aspect all they want, but deep down they like it. It's just hard to admit for some because they're more worried about what other maxis think of them.

In the end, higher price leads to a more secure network, and more liquidity that can be used to invest in development or the ecosystem around it to make Bitcoin an even bigger phenomenon.

[hatshepsut93]

Shouldn't the communty discourage the creation of anything that gives up the custody of Bitcoin to third parties?

How? We can write angry posts on this forum or on twitter, but it won't prevent people from launching such platforms. It's also impossible to change the rules of Bitcoin to prevent creation of these platforms, because Bitcoin's protocol doesn't know anything about how the coins are used, and it can't know.

Although it might be good for its price, would it be good for Bitcoin as a censorship-resistant hard money?

If all it takes to defeat Bitcoin is just launch an ETF, then Bitcoin is not that resistant. But I believe it's not the case.

[electronicash]

we know its heading that way, regulation and adoption and ETF is just one of the approval we all need here. if you care so much of privacy and this ETF isn't how it must be then there are always option. i go to that option as well like getting more into the privacy coins but more of us are into making profit which isn't bad at all. BAKKT already started, we're almost there.

[BitcoinFX]

The freedom to do what one wants with one's bitcoins necessarily includes the freedom to give custody of them to a third party. Some (such as those who are unwilling or unable to safely manage their own private keys) will find such an arrangement beneficial. And some will not benefit from such an arrangement, and choose not to use it. That's what freedom means.

If you give custody of your bitcoins to a third party - then they are no longer your bitcoins.

- https://en.wikipedia.org/wiki/Possession_is_nine-tenths_of_the_law

Freedom isn't free. Not your keys, not your coins.

- https://en.wikipedia.org/wiki/Exchange-traded_fund

Yes. Bitcoin ETF bad.

[BitcoinFX]

Shouldn't the communty discourage the creation of anything that gives up the custody of Bitcoin to third parties?

What is this "Bitcoin community" you speak of?

Unfortunately, an ETF or other custodial Bitcoin securities is inevitable. Wall Street doesn't care about our principles. Besides, this space has been overrun by people more concerned about getting rich than being their own bank. Investors believe that an ETF or Bakkt = institutional money driving prices up, and that's what matters to them. I consider this a lost battle.

It'll all end in tears when an ETF trust or Bakkt's vaults get cleaned out, or trustees get caught "printing" custodied bitcoins. Real bitcoiners will be unaffected, though. That's what matters.

Hear, hear ...

In one word ... Rehypothecation (bad). Example, ...

The Rehypothecation Of Gold, And Why It Matters
- https://www.zerohedge.com/news/2015-04-24/rehypothecation-gold-and-why-it-matters

Mt. Gox anyone ?

[franky1]

The freedom to do what one wants with one's bitcoins necessarily includes the freedom to give custody of them to a third party. Some (such as those who are unwilling or unable to safely manage their own private keys) will find such an arrangement beneficial. And some will not benefit from such an arrangement, and choose not to use it. That's what freedom means.

If you give custody of your bitcoins to a third party - then they are no longer your bitcoins.

- https://en.wikipedia.org/wiki/Possession_is_nine-tenths_of_the_law

Freedom isn't free. Not your keys, not your coins.

- https://en.wikipedia.org/wiki/Exchange-traded_fund

Yes. Bitcoin ETF bad.

again the bitcoins of an ETF were never the customers. the customers did not buy btc and then give them to a custodian.

a company buys the bitcoin from an exchange/private OTC and its the companies property. fully owned legitimately by the company. they then separately collateralise the holdings, and sell shares.
those buying shares dont own the bitcoin, before during or after.

as for the accounting/auditing. easy. just show the public keys of the companies holdings. anyone can check that the company is holding what it says.
EG if 20 shares is measured as 1btc. and the company has released 2million shares. then the company has to sign a message linkd to a hoard of 100k coins

[BitcoinFX]

The freedom to do what one wants with one's bitcoins necessarily includes the freedom to give custody of them to a third party. Some (such as those who are unwilling or unable to safely manage their own private keys) will find such an arrangement beneficial. And some will not benefit from such an arrangement, and choose not to use it. That's what freedom means.

If you give custody of your bitcoins to a third party - then they are no longer your bitcoins.

- https://en.wikipedia.org/wiki/Possession_is_nine-tenths_of_the_law

Freedom isn't free. Not your keys, not your coins.

- https://en.wikipedia.org/wiki/Exchange-traded_fund

Yes. Bitcoin ETF bad.

again the bitcoins of an ETF were never the customers. the customers did not buy btc and then give them to a custodian.

a company buys the bitcoin from an exchange/private OTC and its the companies property. fully owned legitimately by the company. they then separately collateralise the holdings, and sell shares.
those buying shares dont own the bitcoin, before during or after.

as for the accounting/auditing. easy. just show the public keys of the companies holdings. anyone can check that the company is holding what it says.
EG if 20 shares is measured as 1btc. and the company has released 2million shares. then the company has to sign a message linkd to a hoard of 100k coins

Exactly, one can ... "never own paper metals bitcoins."

...

- https://youtu.be/UxvmdR7oYdQ

[franky1]

bitcoinFX..
an ETF is not somthing people use to own bitcoins. just like going to a betting shop is not somewhere people go to own a horse/greyhound

an ETF/betting shop is just used for people to buy a certificate that says thy put certain value in. and then bet on the results of the movements of the other thing they do not own and never did.


however those buying bitcoin via proper bitcoin buying means. can buy bitcoin and own bitcoin. but an ETF is not the tool to own bitcoin. its just a fiat betting/investment tool based on the results of bitcoins price movements

[pawanjain]

Although it might be good for its price, would it be good for Bitcoin as a censorship-resistant hard money?

A Bitcoin ETF defeats the purpose of being your own bank, because you're effectively letting another company hold the funds for you. It's pretty much an oxymoron. But the thing is, not everyone that buys bitcoin is buying it for financial freedom/sovereignty. Some are simply buying because they're betting that the price will go up in a certain timespan. Here's where the Bitcoin ETF comes in: the investor wouldn't need to risk holding their own funds and securing it on their own. Instead, they let a company that supposedly knows how to secure the funds, hold it for them.

You explained Bitcoin ETF propose very good, however, can we say for sure that such a company will definitely safe Bitcoin funds and be able to increase its amount?

You are gonna risk your account for plagiarism if you do not quote the post properly. There are bots that identify a post for plagiarism automatically. Hence I would recommend you to quote the post properly.

The freedom to do what one wants with one's bitcoins necessarily includes the freedom to give custody of them to a third party. Some (such as those who are unwilling or unable to safely manage their own private keys) will find such an arrangement beneficial. And some will not benefit from such an arrangement, and choose not to use it. That's what freedom means.

And that's how the third parties take advantage of your situation and thus scam you.
Freedom does mean to do anything with your coins, but it also invites scammers and hackers to your den.

[avikz]

Shouldn't the communty discourage the creation of anything that gives up the custody of Bitcoin to third parties?

Although it might be good for its price, would it be good for Bitcoin as a censorship-resistant hard money?

No, bitcoin ETF is not necessarily a bad thing that can happen to crypto market. After all we all want to see bitcoin is being adopted everywhere in the coming future and at the same time we all know it doesn't going to happen overnight! We have to take baby steps to reach the goal and I see ETF as one of those baby steps which can fuel the adoption across the world.

However, I only support ETFs that are physically settled. Means, the ETF provider is going to deal in physical bitcoins and not just on the price of bitcoins. Physically settled bitcoin ETFs are actually useful to the market as it gives additional liquidity to the market.

I understand, that difference in opinion will be there as many people wouldn't want to comply with KYC norms or give up their identities and wealth in the hand of third parties! But being a law abiding citizen, I would personally want to see more and more physically settled bitcoin ETFs or investment assets to come to the market. It will not only increase the adoption rate but also make bitcoin more useful to the real world.

[Slow death]

Shouldn't the communty discourage the creation of anything that gives up the custody of Bitcoin to third parties?

Although it might be good for its price, would it be good for Bitcoin as a censorship-resistant hard money?

I believe bitcoin ETF may be beneficial, but it seems to me that we are far from seeing some bitcoin ETF... look at this news:

VanEck’s New Bitcoin Trust Assets Total Just $41K in First Week

only 4 bitcoins, this shows that investors want things well regulated and by the past news:

SEC Postpones Decision on Three Bitcoin ETF Rule Change Proposals



Source: https://cointelegraph.com/news/sec-continues-to-stall-on-btc-etfs-all-in-wait-for-breakthrough

maybe in the next 2 years we'll see some bitcoin ETF getting approved, because I highly doubt that before 2 years the SEC approves some  bitcoin ETF

[BitcoinFX]

bitcoinFX..
an ETF is not somthing people use to own bitcoins. just like going to a betting shop is not somewhere people go to own a horse/greyhound

an ETF/betting shop is just used for people to buy a certificate that says thy put certain value in. and then bet on the results of the movements of the other thing they do not own and never did.


however those buying bitcoin via proper bitcoin buying means. can buy bitcoin and own bitcoin. but an ETF is not the tool to own bitcoin. its just a fiat betting/investment tool based on the results of bitcoins price movements

@franky1

You don't say!  

... and your telling me this is a good thing ?

[squatter]

majority of the people will find it difficult to safe guard their private keys and people will find it useful to invest in ETF.

Do the "majority of people" use a broker service, though?  With the exception of some free shares I was given by my employer, I sure as hell don't, but that might just due to my distrust of traditional finance.  Because if people aren't using a broker, that's the only way casual investors can access an ETF.

The most interesting thing that could develop from an ETF is people investing tax-free through their 401(k)s. It wouldn't be available at first through most employer plans, but it could be done through self-administered accounts. Eventually, who knows? Maybe Blackrock and similar firms will be offering exposure through regular employer plans within a few years. If there's demand for it, they'll make it happen.