Why are millions buying ETFs tied to Bitcoin and not owning Bitcoin themselves?

[Exitoral]

So this topic was inspired by this person.

The original definition of "decentralized" in the context of Bitcoin was a network that could not be easily controlled by the US government because there was no central legal entity or small group of entities to prosecute.

By that definition, Bitcoin is no longer decentralized.

First off, what is bitcoin ETFs? A Bitcoin ETF is a financial product that tracks Bitcoin's price and trades on traditional stock exchanges. Instead of buying and holding actual Bitcoin you buy shares of the ETF through a normal broker just like buying company stocks.

Bitcoin as we know it is decentralised. Good. Also, it is also accessible to everyone. We all know that. Now institutions created Bitcoin ETFs because they couldn't directly own bitcoin. The problem now is that a lot of people are actually buying these ETFs rather than buying bitcoin directly. Of which these institutions are under the US. The US has indirectly taken control of the road used to access bitcoin. Controlling how to get bitcoin still holds great power as the protocol itself.

The main question is why would people take that route knowing fully well or maybe they don't that bitcoin aims for decentralisation and buying Bitcoin ETFs defeats that notion.

[Charles-Tim]

Some people do not want to know what cryptocurrencies are. In fact, some people are telling them that it is gambling, or telling them that they are very risky, or scam. Some people just do not know about cryptocurrencies, but they have much knowledge about stock markets. So the ETFs bring more exposure.

[joniboini]

The US has indirectly taken control of the road used to access bitcoin.

I haven't keep up with the news, but do the US forbids people from buying Bitcoin through exchanges or other means? As far as I know, people can choose to get their Bitcoin through other means still. Sure, some of them will force KYC to you, but if you're fine with some hassle like searching for a good P2P offer, it's not impossible to buy your coins and save it on Electrum or other wallets.

We just to accept the fact that the majority of people aren't here for the value that Bitcoin brings, at least not all of it. Most of them only view it as investment vehicle, not an alternative tool to prevent double spending that doesn't rely on a centralized entity.

[BIT-BENDER]

Some people do not want to know what cryptocurrencies are. In fact, some people are telling them that it is gambling, or telling them that they are very risky, or scam. Some people just do not know about cryptocurrencies, but they have much knowledge about stock markets. So the ETFs bring more exposure.

It's just crazy the things you hear when you actually try hearing what people thinks about Bitcoin or Crypto-currency, I have experienced it myself severally and amongst the craziest one is those who think that Crypto-currency is a Ponzi scheme where you just put in money do tasks and expected an unexplained returns

[Yamane_Keto]

Will this change the fact that Bitcoin is decentralized? Absolutely not.

The main question is why would people take that route knowing fully well or maybe they don't that bitcoin aims for decentralisation and buying Bitcoin ETFs defeats that notion.

Because they aren't interested in Bitcoin itself, but rather in the profits generated from Bitcoin's price fluctuations. These institutions buy Bitcoin and hold it on their behalf.

[Alpha Marine]

First of all, you need to understand that people who buy Bitcoin EFTs are not regular people like you and me; they are mostly institutional investors and people who want to grow their wealth. These are people who can give their assets to asset managers to manage. The asset managers make the decisions of how to grow the wealth and reduce risk. This doesn't mean normal folks don't buy ETFs instead of Bitcoin itself, though.

Also, these people don't care about self-custody; they just want to grow their wealth (I can't fault them for that). They don't have to deal with private keys or wallets. It's convenient for them. Some of them do it for regulatory reasons and easier tax filings.

[Bushdark]

Some people do not want to know what cryptocurrencies are. In fact, some people are telling them that it is gambling, or telling them that they are very risky, or scam. Some people just do not know about cryptocurrencies, but they have much knowledge about stock markets. So the ETFs bring more exposure.

This might be as a result of not taking any risk at all leaving the company that is providing the service to be the one taking the risk.
This could be what has been responsible for so many short rang prices in the market. If these companies are aware that their investors are expecting certain profits from them at the end of each month or every 6 months, they'll gonna do anything that is going to make them profitable so that investors can have a share of it. ETF conpanies may be responsible for the huge adoption in the crypto market lately and this will only bring too many competitive move in the market because most of these companies wants to be profitable by all means.

[BitGoba]

Most wealth is held by older people, and they are used to doing everything through their broker. I know many older people who do not even use a mobile phone properly. They never got used to that, let alone learning how Bitcoin works, how to hold their own keys, and so on.

For them, it is simply easier to let someone else do it for them.

But once you go down the rabbit hole and understand how the fiat system works and how it is basically one big Ponzi-like scheme that will eventually collapse under hyperinflation  you start to see things differently.

When banks stop working and the dollar no longer has any real value, only Bitcoin or gold will allow you to buy food, fuel, and other real goods.

At that point, your ETF will mean nothing.Many people will learn that lesson the hard way.

[ColdLava40]

The main question is why would people take that route knowing fully well or maybe they don't that bitcoin aims for decentralisation and buying Bitcoin ETFs defeats that notion.

Not everyone is drawn to Bitcoin because of decentralization.

It's all around the profit making. Investors wants to make profits both on long and short term, they don't want to worry about keeping their seed phrase or keys safe.

To them it feels like a hurdle, stressful cause you have to be security cautious, keep your privacy and many others. But real Bitcoiners have no issues protecting what matters the most. Profit might be everyone's goal, but decentralization should be the reason for our adoption.

[Doan9269]

Not everybody is making the right move towards bitcoin adoption and use for their own profits realization when it comes to asset investment, it is also important that we should be able to understand the glaring difference between investing in Bitcoin ETF and Bitcoin, I don't know the perception at which some people are investing towards centralized stocks and assets in this manner, we have the great opportunity of investing in Bitcoin under a decentralized network without having to go through the normal protocols from this financial institutions.

[Lucius]

The main question is why would people take that route knowing fully well or maybe they don't that bitcoin aims for decentralisation and buying Bitcoin ETFs defeats that notion.

Because they aren't interested in Bitcoin itself, but rather in the profits generated from Bitcoin's price fluctuations. These institutions buy Bitcoin and hold it on their behalf.

What do you think is the percentage of those who choose non-custodial wallets for their private keys and are interested in Bitcoin as a cryptocurrency? I would dare to say that this percentage is very small (less than 20%), and the difference between those who invest in Bitcoin through ETFs and those who buy through CEXs and withdraw to their wallets is only that the former have money and are not intelligent enough to download and install a wallet and do everything that needs to be done - while the latter somewhat understand what "not your keys, not your coins" means.

By the way, spot ETFs are supposed to buy BTC based on which they sell shares in the fund, but who says that's always the case? So-called stablecoins are supposed to be backed 1:1 by some fiat currency, and we know that's not always the case.