ETF, possible to create more than 21 million btc?

[soy1003]

I apologize if this is the wrong forum but this handle doesn't have enough posts to post in serious discussion.

I hate futures.  The hedgefunds got what they deserved with the Gamestop scandal.

I see Canada has approved a Bitcoin ETF and the US is expected to follow.

Will a Bitcoin ETF allow ad hoc creation of btc?

Futures make their money by shorting stock, borrowing stock high, selling, then forcing the market down and buying back to return the now less valuable stock and pocketing the difference and cheating real owners of the stock.

75% of the US money supply has been created since 2002.  That's borrowing tomorrow's money to spend today.

Can a Bitcoin ETF cause more than 21 million btc to be created?

soy1003

(previously soy and soy39 until the handle soy was stolen and soy39 blocked)

[tinopener]

Basically, no, it doesn't create more bitcoin, it just buys it from from exchanges.

The new Canadian ETFs started off with, say, 10,000 BTC ready to go and as money flows in, they simply buy more and hold it with a custodian.

These ETFs are massive news, and I'm wondering why they aren't being discussed. Maybe because they lessen the need to hold Bitcoin in wallets.

I started a thread about them yesterday, but to not much interest  

https://bitcointalk.org/index.php?topic=5318477.0

[bitmover]

Will a Bitcoin ETF allow ad hoc creation of btc?

Futures make their money by shorting stock, borrowing stock high, selling, then forcing the market down and buying back to return the now less valuable stock and pocketing the difference and cheating real owners of the stock.

75% of the US money supply has been created since 2002.  That's borrowing tomorrow's money to spend today.

Can a Bitcoin ETF cause more than 21 million btc to be created?

Short answer: No.

Long answer: Yes, it may happen but not like you are suggesting.

There is no way to create more than 21 million BTC. That's a fact.

However, financial institutions are getting into BTC now, and they might start to fractional reserve their bitcoins, just like banks do with their Fiat.
They will not creating more bitcoin out of thin air, but they may sell an ETF of 5 million BTC while they only hold 3million BTC, for example.

Hal Finney has already foreseen this. Look at this discussion:

Actually there is a very good reason for Bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases.

Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.

George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self-regulating.

I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash. Most Bitcoin transactions will occur between banks, to settle net transfers. Bitcoin transactions by private individuals will be as rare as... well, as Bitcoin based purchases are today.

A bitcoin ETF is a Bitcoin Backed up bank product. I think it is safe to say that it might be already happening in some funds. There are a lot of funds buying bitcoin now, such as grayscale. Do they actually hold all bitcoins they say they hold in their funds? Probably yes, but we cannot be sure (at least I cannot now)

This is why it is much better to buy bitcoin directly, instead of using an ETF (which has a financial institution as an intermediary). If you buy bitcoin directly, you know you have a fraction of those 21 million.

[soy1003]

The reason I got into Bitcoin was the argument that because there will never be more than 21 million btc, Bitcoin can't suffer the printing press fate of fiat currencies.  On social security, I could see that devaluation of the dollar meant my social security dollars were losing value.  I had some 501k dollars from my last job.  I saw that with my skills in electronics I could make mining work.  My sister talked me out of it and I waited 9 months to a year before getting in.  I ran to Walmart for a money order and bought btc.  I started mining.  I got tempted to sell and buy hoping to make money trading and lost quickly like they were reading my mind.  I vowed not to do that again and didn't.  Then my gear became outdated but I kept mining and made the mistake of cashing in btc to pay the electric and was losing money as the value was low.  This was well after a bitcoin theft from an exchange was followed by Marc Kapales advertising that his exchange was safe.  I had my btc in three wallets and move them to MtGox.  I had a Merc and upgraded to a Saturn by adding a module.   KnCMiner saved my ass from getting completely wiped out with MtGox.  I wanted their next miner and if I remember sent them $10k in btc but demand was so high they couldn't get it to me in a reasonable time and refunded my btc which I put in a local wallet rather than MtGox.  I earlier got ripped off as an early investor on a Jalepeno.  They kept putting off getting it to me and then sent me a miner that by that time ran at a loss.  Anyway that's my story.

What concerns me is Bitcoin has enemies.  Forbes really sh*ts on Bitcoin.  I've assigned the Forbes news website an ip of 127.0.0.1.

Seems to me if banks can destroy Bitcoin they will.

soy1003

[odolvlobo]

Will a Bitcoin ETF allow ad hoc creation of btc?

Yes it will, but not directly.

There are different measures of the money supply:

Monetary base: amount of money printed by the central bank, plus bills and coins. The U.S. monetary base is currently  $5.2 trillion
M1: All the money in all the bank accounts. This is what people consider to be their money. The U.S. M1 is currently $7.1 trillion
M2, M3, ...: time deposits, loans, ETFs, derivatives, etc.

Now, here is what bitcoiners who believe in the only-21-million-bitcoins myth overlook: While the Bitcoin monetary base is (or will be) 21 million, the Bitcoin M1 will be much higher when banks, exchanges, and lenders lend out the bitcoins that they hold.

[tbct_mt2]

In fact, bitcoin has less than 21 million bitcoins.

No one can create more than 21 million bitcoins but if you are considering about derivatives, people might buy or sell more representatives of bitcoin. The amount of derivative bitcoin will be higher than 21 million. However, they are not real bitcoin. They are simply credited figures to accounts, not real bitcoin.

If you use leverages for your margin trades, you will be able to trade x2, x5 of the bitcoin you have. You don't trade your real bitcoin and what you use to trade is the credited bitcoin that is unreal at the time you are trading.

Don't fear about that drama as only less than 21 million bitcoin for all people on the planet or even aliens. 

[odolvlobo]

No one can create more than 21 million bitcoins but if you are considering about derivatives, people might buy or sell more representatives of bitcoin. The amount of derivative bitcoin will be higher than 21 million. However, they are not real bitcoin. They are simply credited figures to accounts, not real bitcoin.

That may be a misconception, depending on what you mean by "real". If you deposit bitcoins into your Coinbase account, are the bitcoins in your account "real"? If so, then if those bitcoins are then lent out, are those bitcoins "real"? The issue is that both effectively appear to be real bitcoins.

[soy1003]

Will a Bitcoin ETF allow ad hoc creation of btc?

Yes it will, but not directly.

There are different measures of the money supply:

Monetary base: amount of money printed by the central bank, plus bills and coins. The U.S. monetary base is currently  $5.2 trillion
M1: All the money in all the bank accounts. This is what people consider to be their money. The U.S. M1 is currently $7.1 trillion
M2, M3, ...: time deposits, loans, ETFs, derivatives, etc.

Now, here is what bitcoiners who believe in the only-21-million-bitcoins myth overlook: While the Bitcoin monetary base is (or will be) 21 million, the Bitcoin M1 will be much higher when banks, exchanges, and lenders lend out the bitcoins that they hold.

Exactly.  And those loaned btc could be sold in a way that can panic some, driving the price down after which the perps buy back the btc at a lower price and repay the loaned btc with less valuable btc while pocketing the profit.

[soy1003]

What possible reason would a person or business have to borrow bitcoin?

[Sithara007]

Only a hard fork will be able to alter the 21 million BTC limit and there is only a very remote chance that something like that would ever happen. 99% of the users are going to oppose this step, because it will decrease the value of the coins they own. And also, if the core developer group goes ahead with this plan, then there is no guarantee that similar steps will not be taken again in the future. That will destroy Bitcoin's claim that it is protected against inflation. Miners are going to support this move, as they will benefit from it. For the past several years, they have blocked several initiatives that could have benefited the Bitcoin ecosystem, for their own selfish motives. In this case also, it is not going to be any different.

[pooya87]

Seems to me if banks can destroy Bitcoin they will.

You can't destroy bitcoin by selling fake money to gullible people. Bitcoin simply doesn't care.
Keep in mind that bitcoin is also not like other things like fiat or gold for example. You can't store either of them on your own so you need a centralized third party, then they turn into fractional reserve. But you can always store bitcoin on your own no matter the amount. So these services are already unnecessary.

There is a hype about them right now because bitcoin is being seen more and more as an investment and newcomers coming from the "old world" don't yet know they don't need third parties.