Bitcoin ETF is an idea from centralized system

[Satofan44]

False. Those that hold "Bitcoin" on centralized exchanges do not have any Bitcoin either, they have a Bitcoin IOU -- a number in a database. Is a Bitcoin IOU on a shitty CEX better than a share of an fully regulated ETF? How many exit scams, hacks and other shit need to happen before you learn your lesson about exchanges? Fully regulated ETFs are better than some shitty exchange ran by random scumbags from who knows where.

What is false about it? I want to differentiate between centralized exchanges/wallets and ETF companies which are also centralized. Both in managing keys.

I can withdraw bitcoin from the exchanges and centralized wallets, but I can not buy bitcoin from the spot ETF companies, I have to buy their shares.

On the exchanges and centralized wallets, their users do not have bitcoin on the blockchain, it is the exchanges and wallets that have the bitcoin on blockchain.

What I am only explaining is how private keys should not be discussed when discussing about the ETF shares at all because they have just shares which is not bitcoin.

There are one or two reasons I can make use of exchanges and the bitcoin end up on my noncustodial wallet. I can never buy shares from any bitcoin spot ETF companies.

This is where it started:

ETF investors prefer financial institutions for managing their private keys.

This is false, what do you not get about the word IOU? When you go with fiat to an exchange and buy Bitcoin, there is no proof that this Bitcoin exists. It is a number in the exchange's database, and as such it is not any better than an Bitcoin ETF share. The assumptions are identical, and actually the exchange situation is worse because the exchange is selling you a belief that you are buying and owning Bitcoin -- which is not what you are doing, you create a Bitcoin IOU, whereas the ETF is not misleading you in any way.

Furthermore, you are stuck in the past with false knowledge about ETFs. You are confusing ETFs that do not allow redemption in kind with ETFs that allow redemption in kind. Initially no ETF was allowed a redemption in kind, but this has changed last year: https://www.coindesk.com/markets/2025/07/29/sec-approves-in-kind-redemptions-for-all-spot-bitcoin-ethereum-etfs. This means that yes, you can absolutely buy Bitcoin through an ETF by redeeming in kind, the same way that you buy it from an exchange by redeeming the Bitcoin IOU.

Bitcoin IOU and Bitcoin ETF shares are not any different from this perspective of exposure to Bitcoin. Exchanges only give you a false illusion that something else is happening due to a lack of regulations and a nice yet manipulative UI, whereas the ETFs tell you exactly what is happening: That you are not buying Bitcoin directly -- which is the case in both exchanges and ETFs until you withdraw to your own wallet.

Bitcoin ETF companies buy bitcoin and tell their customers to by shares.

Correct, what I meant is that ETF companies buy bitcoin and promise exposure to bitcoin. If Bitcoin goes up, your are entitled to capital gain, and can sell the share anytime available and enjoy the fiat gain.

In order for this system to work, the ETF company must hold as many bitcoin as the shares equivalent it has issued, otherwise it is running on fractional reserves.

You can redeem in Bitcoin, you don't have to sell the share anymore.

Do you get it now? Don't make ETFs into boogeyman simply because some people wrote bad things about ETFs due to their bias, especially when centralized exchanges are just as bad if not worse.

[Charles-Tim]

Do you get it now? Don't make ETFs into boogeyman simply because some people wrote bad things about ETFs due to their bias, especially when centralized exchanges are just as bad if not worse.

I make some findings about it just now. Have you been able to redeem your shares in bitcoin and not in cash? According to my findings, this are for large financial institutions called authorized participants and not just any investors. I think I will create a topic about it and ask people to know if they are able to do that or only able to redeem it in cash, but let me first see if you will give me a satisfactory answer about it.

[shinratensei_]

I don't understand the misunderstanding.

Both a centralized exchange and an ETF promise you bitcoin. A centralized exchange allows you to withdraw, correct. On the other hand, an ETF is more regulated and secured to the owners than a centralized exchange. Regardless, when you use either, you trust they hold what they claim they hold. Both can practice fractional reserve banking.

Bitcoin ETF companies do not promise bitcoin, it is exchanges that promise bitcoin, doing like their customers can trust them, although which might be disappointing. Bitcoin ETF companies buy bitcoin and tell their customers to by shares.

I can not buy, sell, deposit and withdraw bitcoin from the ETF companies, I can only buy shares from them. I can buy, sell, deposit and withdrawal on centralized exchanges.

If only bitcoin ETF companies are existing, I can not make use of bitcoin every again because I know I am not dealing with bitcoin. Many people that are talking about privacy still make use of exchanges in one way or the other.

Exchange promise bitcoin only true in a sense that they will allow you to withdraw. However, many of these exchanges ToS write down that bitcoin you bought might still belong to them and the bitcoin that you bought still entitled to the estate claim. Just a little FYI, not all exchange are good, some write down the asset they received as just custodial on their behalf and you are beneficiaries, some consider your asset as theirs. Though, your bitcoin will truly become yours if you're able to withdraw.

[Satofan44]

Do you get it now? Don't make ETFs into boogeyman simply because some people wrote bad things about ETFs due to their bias, especially when centralized exchanges are just as bad if not worse.

I make some findings about it just now. Have you been able to redeem your shares in bitcoin and not in cash? According to my findings, this are for large financial institutions called authorized participants and not just any investors. I think I will create a topic about it and ask people to know if they are able to do that or only able to redeem it in cash, but let me first see if you will give me a satisfactory answer about it.

I do not use ETFs, and I do not use CEXes either so I can not say from personal experience Nevertheless, the argument holds even if you can not redeem in kind. Both situations do not provide you with Bitcoin, they provide you with Bitcoin IOUs:

• Exchange: Bitcoin IOU.
• ETF: Bitcoin Share IOU.

The only difference from this perspective is that if you are not able to redeem in kind, then there is on extra step to get your Bitcoin: redeem fiat, buy with fiat and take it to self custody. That it is. Nobody should make up some arguments that having this additional step suddenly makes centralized exchanges better, because it does not -- they still sell you a Bitcoin IOU, and nothing else and never the real Bitcoin. That is how they work.

Remember this approval is just 1 year old, so it may not be available to everyone -- someone who has bought from the big providers on their platform could confirm. Nevertheless, that means it is moving in the right direction. If there is demand, they can deploy it to more available participants.

[YOSHIE]

Bitcoin ETF is an idea from centralized system

Of course Bitcoin ETF is an innovative concept of a (centralized) financial system. This is different from Bitcoin itself where we know Bitcoin is a decentralized asset that does not need a centralized system.
What needs to be understood correctly is that the Bitcoin ETF is not an idea from the creator of Bitcoin itself, but rather the Bitcoin ETF is a bridge to cross so that people understand and get used to investing from the stock market into Bitcoin. The goal is one so that investors in the stock market can access Bitcoin legally, this system makes Bitcoin ETFs centralized, different from Bitcoin itself.

There are differences in management features between Bitcoin and a Bitcoin ETF, both in terms of storage, regulation, ownership and market operating hours, all of which are "centralized" Bitcoin is not.
Example:
Where Bitcoin can be purchased 24 hours without holidays, while Bitcoin ETF investors can only do so during stock exchange working hours, likewise Bitcoin storage has a wallet while Bitcoin ETF does not have a wallet.

[nelson4lov]

I don't think it really matters because investing in Bitcoin isn't a one-size-fits-all situation. I think you'd be really surprised about how many people don't really care about owning and managing their own keys. They just care about numbers going up and investing via an ETFs is one of the easiest ways for them to have skin in the game. A lot of people then really wanted ETF approval back in the day that's why any rejections and delays then used to be upsetting.

Unfortunately, we can't eat our cake and have it.

[Faisal2202]

I would say ETF and self-custody investors (like me) are not really in disagreement here. Both know the reward and risk ratio, and maybe both want different things from the same asset. One wants exposure and the other wants sovereignty, and I believe both are valid. I won't judge them as villains because we are assuming they are making a mistake by not understanding what they are giving up.

But I think most of them do know what they are going to give up.

They just decided the trade-off. The "not your keys" principle is a rule that is optional, so they are not obliged to follow it. They made their choice. But I stand firm, and I also believe we must hold it directly and it will benefit it the most. Still, ETF money is good haha.