Hypothetical ETF disaster hardfork

[Synchronice]

I think that there will not be any devastating disaster. They might try to test their power and influence but it doesn't mean they'll ruin the things if they are not 100% sure and even if they ruin, they'll be the only losers because Bitcoin is not the universal cryptocurrency, there are some other altcoins that can carry the weight that Bitcoin carries on their shoulders. For example, Monero. I bet this coin is going to become what people wanted Bitcoin to be.

To be honest, I think that the strategy of governments and financial institutes is to not destroy Bitcoin but to take it over. Imagine, the development of blockchain analysis companies will give them the possibility to track transactions easily. What's the next step? To push miners to accept regulations and confirm transactions according to the blockchain analysis firms, i.e. it will get censored and miners will reject transactions that BA companies don't want to be made. This will easily be possible, just build another hype about how Lazarus launders billions of dollars and how all the war and illegality is funded via Bitcoin, people will believe it and there won't be massive protest (but they'll happily use JP Morgan).

So, there is no necessity of disaster hard forks or something devastating. Just take it over, keep it in the corner like cat keeps mouse and that's all. They won't do anything dramatically terrible because there are billions of investments into Bitcoin, there is a huge sum of money made, they act very smart. They shout Massive Adoption, bring regulations and people are happy.

[LoyceV]

start pushing a campaign to engineer a rollback of the blockchain Vitalik style.

Vitalik hyped a centralized shitcoin that abandoned it's one USP ("code is law") the instant it was convenient for the rich creators. You can't compare that to Bitcoin.

If in the future ETF holders become the 99% and 1% are self-custodians, then it will be on their interest to push this agenda.

This will only be a concern if the ETF also owns 99% (or at least >51%) of the mining hardware. But, by the time they get into mining, they should also understand the importance of decentralization for trust in the Bitcoin network, and avoid this scenario from ever being possible.

What would happen? If in the future ETF holders become the 99% and 1% are self-custodians,

In a scenario where almost nobody owns bitcoin and things have gotten this centralized, we can say with confidence Bitcoin is already dead so who cares what happens!

Even if ETFs hold 99% of all Bitcoins in the future, I expect several competing ETFs to all have a fair share. Just like several mining pools have a large share of the market.

I expect we'll see another community split where new forked coin is created.

We'll get Bitcoin ETF (BTF), and normal real Bitcoin. One will be fully centralized and regulated, and one will be Bitcoin.

I think that the strategy of governments and financial institutes is to not destroy Bitcoin but to take it over.

Which governments and financial institutions? US? China? EU? BRICS? Bank of Japan? JP Morgan? HSBC? They'll all have their own interests, which will lead to decentralization again.

[Alpha Marine]

I think that the strategy of governments and financial institutes is to not destroy Bitcoin but to take it over.

Which governments and financial institutions? US? China? EU? BRICS? Bank of Japan? JP Morgan? HSBC? They'll all have their own interests, which will lead to decentralization again.

@Synchonice is not wrong. If governments and financial institutions have their way they will own it instead of destroy it because underneath all those disguises they know what Bitcoin really is and what it could still be and they're too greedy to destroy something like that. But since they can't own it and control it the best course of action is to fight it.

But just like you pointed out, no single government can claim it even if an entity could claim ownership of Bitcoin (I don't know how possible that is). Everybody wants it. China wants it, The U.S. wants it, Europe wants it, and the biggest banks and other financial institutions want it, so who is going to be in control of it and own it since they can't all own and control it?
They're so busy fighting each other on relatively smaller things, what do we think will happen when they all try to acquire something as grande as Bitcoin?

[philipma1957]

and now those same good samaritans that are funding developers start pushing a campaign to engineer a rollback of the blockchain Vitalik style. What would happen?

Nothing, core devs can't do rollback/reorg on the blockchain, only miners can, rollbacks are super expensive (usually cost more than whatever benefit you get from it) and miners who invest their hard-earned money in the space won't even risk going that route, Binance lost 7000 BTC (worth 40M $ at that time) and they didn't get away with a tweet that mentioned the word rollback, let alone trying to actually push that.

If in the future ETF holders become the 99% and 1% are self-custodians

That won't be possible, the majority of BTC is already in the hands of the people, what's left of it or what those large corps can buy will likely never make a majority, if that happens it means they must spend unrealistic amount of money to acquire them, and if they do -- they would be very careful when attempting anything that might hurt bitcoin and thus hurt their pockets.

IMO, we should not fear those who have skin in the game, people are always worried about miners doing some nasty shit to BTC which is a stupid assumption given that miners have the most skin in the game, others are worried about core devs (many people already claim core devs are controlled by Blockstream "or is it someone else today"?, to me, all of these entities have skin in the game and have more to lose than to gain if they decide to do anything stupid, if there is anyone we should fear would be those old farts in the government.

I should have said miners and developers. Of course you need the hashrate too, but that can be bought. If ETF-BTC can promise higher valuations, miners may follow, since they are economic actors that seek profit. If the majority of economic activity is happening on ETF-BTC, they may get more from the fees in there. As far as developers, we have developers fucking with our money in the form of Ordinals already. They could also buy people like Elon Musk type PR to pump their hardfork. They could also buy lobbyists to pass laws that outlaw non ETF-BTC for enabling money laundering or whatever. I'm sure that's their long term goal with all of this actually. Does anyone seriously think they have approved ETF's if they don't think they can use it to control BTC? Their motto has been "We'll tame Bitcoin" for years now. This is all part of the plan. The question is, if community of actual BTC holders will fall for it. At the end of the day, in any hardfork both sides get shares of each token, so we'll see who dumps on who.

Of course they will gain full control over BTC I give it under 32 years.

But I have often been wrong.

[Synchronice]

I think that the strategy of governments and financial institutes is to not destroy Bitcoin but to take it over.

Which governments and financial institutions? US? China? EU? BRICS? Bank of Japan? JP Morgan? HSBC? They'll all have their own interests, which will lead to decentralization again.

You can name any of them you wish, US, EU, China. They have a common interest that unites them all, governments want monopoly in every country. Look at governments like a group of criminals. In every country, there is a group of criminals that can ruin any rule they want but still get protected by police. Governments and their big (under shadow) supporters want to launder money back and forth, to avoid paying taxes and to control their citizens. So, when these people from the US/EU/China, etc, see that Bitcoin and some altcoins give possibility to average Joe to do things without their involvement, they start to unite for one major thing, to trace transactions and make things visible for them. In the end, they all have their own interest and that might lead to decentralization again but that decentralization will not be a decentralization for average Joe because each government in every country already restricts average Joe. The task just moved on another level.

[BlackHatCoiner]

Which governments and financial institutions?

In addition to Synchronice, even if we assume that governments do not share interests, each one can take it over for their people. The communist party of China forbade using Bitcoin. US followed by funding surveillance programs and is a matter of time until trading peer-to-peer or using bitcoin outside a KYC exchange becomes forbidden too. EU, same. Sure, Bitcoin isn't "destroyed", but governments have developed effective measures to control it.

[mikeywith]

Of course, they will gain full control over BTC. I give it under 32 years.

But I have often been wrong.

What type of control would they want to gain? It might be beneficial to examine gold's history, as both BTC and gold share some economic attributes. Gold has always been legal to mine and own, but there was a time when it was illegal to own and mine BTC. Then, buying gold became legal, while mining was restricted and heavily regulated.

While I haven't worked for any government or held a position of high authority, I can make a safe guess about what most governments have in common:

-They want to monitor your every move, including everything related to money.
-They aim to keep you as busy as possible, making life difficult and ensuring you stay at work or in transit for as long as possible, essentially keeping you financially restrained.
-They seek to increase the labor force, possibly pushing for more people to work. This could explain certain societal shifts(feminism and shit), and the emphasis on everyone working, even at a young age.

So, how does BTC impact any of that? BTC doesn't make everyone rich; it's only a handful of early adopters who were fortunate to accumulate BTC at a low cost. The number of people who would become wealthy from simply investing in BTC won't be large enough to disrupt any government. Therefore, BTC is unlikely to significantly impact points two and three above.

Is BTC private? No, it's not. Governments understand that, and the public ledger is a valuable asset for them. What they fear is the use of privacy tools that make tracking more expensive and potentially impossible. Hence, efforts to take down privacy enhancement tools and potential future requirements for users to KYC outside of exchanges, possibly even for wallet usage, all wallets need to impose KYC or be deemed illegal.

When that time comes, what do governments expect from their citizens, or what should we expect? The majority of people will comply because they are in BTC for wealth, have no issue with KYC, and are willing to share information with the government if required. The minority valuing privacy will be treated as outlaws and potentially terrorists.

It will become a matter of who gives up first. I recall a childhood memory when people woke up to a new law declaring firearms illegal. They had 7 days to turn in their guns or face serious consequences. Most complied, standing in line to surrender their firearms while expressing frustration at the government's decision  . However, a minority held onto their weapons unlawfully for 15 years. The government eventually changed the laws, requiring a firearms permit or an offer to buy those firearms at a premium. Buying guns remained illegal for citizens, but those who didn't hand in their weapons 15 years ago were not pursued unless a gun was found under their car seat for example. Laws changed, but people are still the same, the strong ones still have their weapons at home and the government can't do shit about it, or they have sold them to the government at a very high price (I recall they paid a few years worth of average salary for small arms like pistols), the weak gained nothing and probably most of them are already dead shaming themselves under the dust.

Governments have deep pockets and long reach, but they don't possess God's power. If they decide something, it doesn't necessarily mean it must happen. Sometimes, a small group of brave citizens can bring down an entire regime. Bitcoin might face a similar fate; the weak will comply, and the strong will resist until they end up in jail or forcefully secure their right to privacy and anonymity, so ya, it's going to be a long interesting journey for everybody onboard.

[TamariskDigitalAssetRecov]

I expect their efforts to pass such hardfork to fail, but who knows if like I said, most people in the future depend on ETFs and start pushing for laws to "protect investors" that force developers and miners to do rollback plans and so on. This sounds ridiculous now but you never know.

I'm not sure how anyone could write laws that force bitcoin developers/miners to do rollback plans or anything else. The jurisdictional nightmare of trying to force compliance would make the point moot. I'm pretty sure if a any city/state/country tried, Argentina and maybe other countries would come out with a law that made it illegal to comply...

[Wind_FURY]

What would happen? If in the future ETF holders become the 99% and 1% are self-custodians,

In a scenario where almost nobody owns bitcoin and things have gotten this centralized, we can say with confidence Bitcoin is already dead so who cares what happens!

then it will be on their interest to push this agenda. What if they have enough % of developers under their payroll, and enough people supporting it because they lost their money, and start pushing for a hard fork? What would be the game theory outcome scenarios at play here?

They'll need to get high percentage of the hashrate on their payroll and a high percentage of the community that includes full nodes, bitcoin users and the economy built on top of bitcoin.

Immutability is one of the fundamental principles of Bitcoin, people aren't gonna give it up that easily.

What's the threshold for Bitcoin to start becoming "that scenario"? How much of the total circulating supply must be in the vaults of a cabal of banksters/asset managers before we could say that Bitcoin is failing?

I have asked the same question before and made a topic about it, but it never had a direct answer, with most of the replies were dodging the issue.

[TamariskDigitalAssetRecov]

What would happen? If in the future ETF holders become the 99% and 1% are self-custodians,

In a scenario where almost nobody owns bitcoin and things have gotten this centralized, we can say with confidence Bitcoin is already dead so who cares what happens!

then it will be on their interest to push this agenda. What if they have enough % of developers under their payroll, and enough people supporting it because they lost their money, and start pushing for a hard fork? What would be the game theory outcome scenarios at play here?

They'll need to get high percentage of the hashrate on their payroll and a high percentage of the community that includes full nodes, bitcoin users and the economy built on top of bitcoin.

Immutability is one of the fundamental principles of Bitcoin, people aren't gonna give it up that easily.

What's the threshold for Bitcoin to start becoming "that scenario"? How much of the total circulating supply must be in the vaults of a cabal of banksters/asset managers before we could say that Bitcoin is failing?

I have asked the same question before and made a topic about it, but it never had a direct answer, with most of the replies were dodging the issue.

As of today...
Yellow light: I would start being concerned if one entity held 431k BTC (2.2%).
Red light: Any entity or cabal that could liquidate 1,600,000 BTC (~8% of the circulating supply) at the drop of a hat makes me think BTC is not the market to be in.
Get off the road: Any one entity that owns 6,860,500 BTC (35.01%) makes me consider BTC to be functionally centralized and a complete failure.

Reasoning:
Yellow light: Practically speaking, when should we start being concerned? I would say if any one entity owns enough BTC to fill the current open interest, that would be where I'd start being concerned. Right now that's 431,000 BTC.

Red light: When is Bitcoin potentially failing its vision? I would argue that any time any one entity owns enough BTC to cover the highest daily traded volume over the last month plus all current open interest (OI is currently around $18.3b), that is concerning. To me that seems like they could then completely collapse the market at any time. Based on where things stand right now with OI at $18.3b and the highest daily trading volume in the last month being around $50b, any single non-regulated or government entity or cabal owning 1,600,000 BTC or more makes this an extremely serious concern and makes me question if Bitcoin is failing. That's around 8% of circulating supply.

I would be slightly less concerned if ownership was in the hands of entities that can only survive and thrive if BTC keeps running strong.
I will say non-governmental regulated entities that are unable to practically divest their full supply of BTC at will would be less concerning.
Government actors possessing 431k BTC or more seems contrary to the purpose of BTC. I'm torn on whether government possession of BTC that is slated for sale as part of forfeiture for illegal cabals should be included or not, but lean toward "probably".

When we're done: I think the obvious starting point is 50.001% circulating supply is clearly too much to be in the hands of any one entity, that would give practical market control, since selling that much quickly would completely crash the market, liquidate speculators, etc. and refusing to sell that much freezes the majority of the market based on the decisions of one entity. That is completely centralized at that point.

If we take the assumption that 30% of BTC is functionally lost, then we'd have to bring that number down to 35.001% of circulating supply could theoretically have practical control of the market.

[BTCapsule]

The worst thing these corporations could do is convince Bitcoin Core devs to argue about every soft fork so that Bitcoin is ossified and cannot scale.

You make it sound worse than it should. If corporations manage to persuade Bitcoin Core developers to adopt a specific roadmap, they would likely succeed in convincing the broader community of its merit. In the event that Core developers receive compensation for a hardfork, they would need to persuade others to embrace the fork, not just themselves.

I can imagine a scenario where there is a contentious MASF, and popular Core developers insist this is an attack on Bitcoin. Economic nodes like Coinbase could attempt a new idea called a User Rejected Soft Fork (URSF) that will invalidateblock any blocks with upgraded transactions.

While a URSF is called a soft fork, it is actually a hard fork because it breaks the heaviest chain rule. Then suppose Core officially releases a real soft fork update, without the code from the other soft fork. This is still a hard fork.

The nodes that never updated have already confirmed the blocks, so any attempt to block a soft fork with 51% hash power is always a hard fork.

BlackRock says if there is a fork, they will decide for themselves which is the real Bitcoin. So imagine one soft fork gives us global scalability and privacy, but BlackRock wants an expensive rock that does nothing. While I don’t think BlackRock could single handily crash Bitcoin’s price, they could choose the rock and adequately effect the price enough to invoke fear.

[takuma sato]

To me it seems evident at this point that all the ETFs are is an attempt to control the network. They want to centralize the supply in the hands of a few actors (ETFs) which are ultimately all the same hand at play (the US government in this case) which then will proceed to attempt to fork the network for whatever agenda that is trying to be meet with that. It is literally on the documents:



So while this may be bullish for the price now, we'll see how this turns out eventually when shots start being fired.

[LoyceV]

Who is "the Sponsor" in this?

Even if they act in good faith picking the correct chain, I'm missing details on what happens to the value in a possible Fork chain. When the BCH Fork happened, the value of the Forkcoin varied, but could have been sold for 10-20% of the Bitcoin value. If they keep that instead of sharing it with the ETF investors, it just adds to the list of reasons to keep your own keys.

[ABCbits]

To me it seems evident at this point that all the ETFs are is an attempt to control the network. They want to centralize the supply in the hands of a few actors (ETFs) which are ultimately all the same hand at play (the US government in this case) which then will proceed to attempt to fork the network for whatever agenda that is trying to be meet with that. It is literally on the documents:



So while this may be bullish for the price now, we'll see how this turns out eventually when shots start being fired.

Whoever write that is stupid. They should choose all forks which have running network and doesn't have very low exchange rate. Although rather than attempt to control the network, IMO it's more plausible they want to rip-off ETF buyers.

[Wind_FURY]

Who is "the Sponsor" in this?

Even if they act in good faith picking the correct chain, I'm missing details on what happens to the value in a possible Fork chain. When the BCH Fork happened, the value of the Forkcoin varied, but could have been sold for 10-20% of the Bitcoin value. If they keep that instead of sharing it with the ETF investors, it just adds to the list of reasons to keep your own keys.

I raised that same concern before, but only a few wanted to share their thoughts and opinions.

That part in BlackRock's proposal is dangerous because they, and the rest of the "ETF Cartel" composed of their fellow asset managers, could come together with a combined holding of more than 50% of the total supply in the future. I believe with such amount of the total supply, they could push their weight on the network and they might start making demands on what path of technical development Bitcoin should follow. Possibly start a hash war.

That's probably a Doomsday way of looking at the situation, but perhaps that's the right way of looking at the situation because there are bad actors everywhere.

[LoyceV]

That's probably a Doomsday way of looking at the situation, but perhaps that's the right way of looking at the situation because there are bad actors everywhere.

I don't worry too much about it, because of the "in good faith" clause. Not that I trust them, but I trust the American claim culture enough to know it would end up in a lawsuit if they screw their customers.

[Wind_FURY]

That's probably a Doomsday way of looking at the situation, but perhaps that's the right way of looking at the situation because there are bad actors everywhere.

I don't worry too much about it, because of the "in good faith" clause. Not that I trust them, but I trust the American claim culture enough to know it would end up in a lawsuit if they screw their customers.

What they said in their proposal, very clearly, is that they have the right to choose which fork they consider "Bitcoin". It won't necessarily be the fork with the highest value, or the fork what the community considers Bitcoin, or what their ETF holders consider "Bitcoin", OR what ANYONE ELSE considers as "Bitcoin".

They are their own entity giving themselves the power to consider which fork will be "Bitcoin". They can use that to start a hash war in my opinion.

[LoyceV]

They are their own entity giving themselves the power to consider which fork will be "Bitcoin". They can use that to start a hash war in my opinion.

If they get away with that (after numerous lawsuits), they don't need to start a hash war. They can just sell the "not Bitcoin" they own, and if that happens to be the most valuable chain, it's pure profit for them.

[pooya87]

To me it seems evident at this point that all the ETFs are is an attempt to control the network. They want to centralize the supply in the hands of a few actors (ETFs) which are ultimately all the same hand at play (the US government in this case) which then will proceed to attempt to fork the network for whatever agenda that is trying to be meet with that. It is literally on the documents:

I don't agree with the conclusion you are trying to make. This document is not saying "they'll force a fork", it is just clarifying what they're going to do in case of one. For example in case 2017 is repeated where dozens of bitcoin forks are created, they basically tell their investors that THEY are the one deciding which one the ETF represents. That means they could decide that Bitcoin Diamond is the real bitcoin and reduce the price down to a fraction of a dollar and also sell the rest of the coins (bitcoin and the shitforks) and pocket the money with their investors having no right to any of that money

They are their own entity giving themselves the power to consider which fork will be "Bitcoin". They can use that to start a hash war in my opinion.

I wouldn't say it is impossible but that requires their control over a significant amount of bitcoin which they would dump on the market trying to crash the value of the other chain while having a significant amount of money to keep the value of the shitfork up. It also others not reacting to this maliciousness, and we already know how much shitforks like bcash are worth since people keep dumping them...

Kind of like what Ethereum guys did with their fork, they crashed the price of immutable ethereum called ETC while pumped the price of mutable ethereum called ETH. But they owned 70+ million premined coins and millions of dollars at their disposal in a much smaller market.

[LoyceV]

That means they could decide that Bitcoin Diamond is the real bitcoin and reduce the price down to a fraction of a dollar and also sell the rest of the coins (bitcoin and the shitforks) and pocket the money with their investors having no right to any of that money

So invest in the company that created the Bitcoin ETF instead of investing in the Bitcoin ETF itself Or do what they all try: create your own Bitcoin ETF.