What do you all think about the institutionalization of Bitcoin?

[SilverCryptoBullet]

- Bitcoin was never designed to be truly anonymous, if you're concerned about privacy, then you know Lazslo told the guy who bought his coins his address so his pizza could be delivered there, right?

And this one is not for privacy too.
https://web.archive.org/web/20090303195936/https://bitcoin.org/

Post your static IP.
It was no longer possible since 2011.
[pull] Remove send to IP address and IP transactions support.
can we send bitcoin to ip addresses?

[Cookdata]

Of course, today we’ve started to feel the effects on liquidity and price stability. It’s very different from when institutions weren’t interested in the Bitcoin industry. It does seem like there are more upsides than downsides that we’re experiencing. The Bitcoin space has become a regulated, officially sanctioned instrument so more people are trusting it. The bigger the funds coming in and circulating, and with clear regulations, the more people trust it. On the other hand, there’s obviously some worry that institutions might monopolize the market by manipulating it for personal gain. But so far, I still feel comfortable with the current rules and order that are in place, though of course, they keep changing with global conditions.

We have more liquidity to go round and less circulating supply, better stability. We have few sats in the market, even the exchanges that hold more supply held most on their cold storage and few moving around between users and customers. The good part is institutional doesn't even use the regular market, they use OTC for trades unlike retailers that move between exchanges to study order book for days before they can liquidate their supply in the market.

However, I don't understand what you mean by regulations, as far as Bitcoin is concern, there is no regulations that I can remember. It's recognized as a commodity, holding it as an asset makes you mandatory to report for tax and this regulations differ from countries to countries. I don't think there is a country in 2026 that has Bitcoin banned status, they don't just recognize it but it doesn't make it illegal.

[Junii]

So....I'm just curious, what does the forum think about the institutionalization of Bitcoin, do the pros outweigh the cons? And why?

Bro honestly sometimes i also confused with this institutionalization because it looks like a double edged sword on one face they kiss the bitcoin while on other side of the face they slaps the bitcoin. Bitcoin was made that not a single entity has control over it but right now some big institutions trying to accumulate the majority of the quantity of bitcoin because in the case of bitcoin the supply is limited if the supply in the future is in hands of some few people they will easily manipulate the market also  on the other side they bring liquidity to the market and because of this the market of bitcoin is on the way to maturity. So i am also confused but because of this post and the opinions of the people i will also solve my confusion as well.   

[Donneski]

So many people believe that the advantages outweighs the disadvantages, however I think that's to a certain extent. The presence of institutions and the liquidity they pour in Bitcoin attracts attention to Bitcoin which as result, increases adoption as people can no longer ignore it. That said, it's important we differentiate Bitcoin becoming more popular from Bitcoin becoming more decentralized which I think their involvement has somehow reduced the decentralization effect as they now influence short-term price movement using the strength of their liquidity. Well, the important thing is that at the end of the day, every Bitcoiner still have the option to hold and use their coins without depending on those institutions.

[Zoomic]

Reading the posts under this thread, it's safe to say that majority of us believes that the benefits of institutions exceed the risks.

While my opinion isn't totally contrary to the popular view, let's not ignore the risks attached to institutionalization of Bitcoin.

Yes, they bring liquidity, increase adoption and more legitimacy to Bitcoin which are all positives but how about the downside?

The more institutional ownership we record, the more these big players gets more influence in the Bitcoin market. I just hope we don't end up with a Bitcoin market that's largely controlled by a certain group of big players

[Jewan420]

Just as a person who loses his personality is only a body, if Bitcoin loses its decentralization, it will remain only a coin, with no special features. Seeing Bitcoin institutionalized to increase acceptance would be tantamount to defeat. Again, we will have to sacrifice privacy, accept financial subjugation, and be under the control of a third party.
Although I will not claim to be completely decentralized, I have the freedom to use a decentralized financial system when necessary, and I do.

If Bitcoin takes institutional control, it will definitely be the defeat of Satoshi and the defeat of the decentralized financial system. We cannot accept the defeat of Bitcoin decentralized only for the temptation of acceptance and investor profits.

[The Cryptovator]

Recently, I've found myself in conversations mentioning the institutionalization of Bitcoin—spots ETFs, cooperate treasuries, reserve, and regulated custody. Some of us do have a negative view of it, and that is justified. But, there are some upsides to it too, right?

I am positive so far about institutional investors. I know why a few people are disappointed by the institutional investors, because their sell pressure dumps the market. But what happens when they start purchasing? Isn’t the market growing when they announce buying a significant amount of Bitcoin?

Aren’t we getting more investors in the Bitcoin ecosystem? Can’t they sell their holdings when they really need liquidity? That’s why we shouldn’t hate them, remember, we have been seeing bull markets again and again for the big investors, including institutional investors.

[batang_bitcoin]

There is no way to stop it. We have no control over that matter and why there's no need to think of it whether it continues to happen or if some people think that it isn't right because that's not why bitcoin was made. If some of you are disappointed about it, there is nothing we can do about it. Embrace it, and think of ways on how we're going to capitalize the situation and make the most out of it. Just go wherever this is heading, you hold and reap the profits later. They'll help to push the prices up since they're now part of the game.

[Cryptomultiplier]

Institutionalization of Bitcoin is what made Bitcoin a hybrid alternative in the first place. That's why we see bigger companies and wealthy people own larger amount of Bitcoin while the retail investors who still doubt themselves sell to these whales due to fear or other reasons without remembering that today, institutionalized Bitcoin has become an advantage to takeover and use freely mostly as new policies are being enacted by governments just to ensure it is more of a currency that is acceptable and used.

Still, institutionalization don't stop the decentralized blockchain network from being and maintaining the original protocol of design and functionality, but it makes it more important for holders with a long term investment plan and for those who run their own nodes to still interact with the system regardless.

The world may in time to come have more institutionalized Bitcoin users than decentralized retail users because of the ease which centralization created by institutional adoption has created and we may see more divergence into the layer 2 protocol due to cheaper fees and less congestion of the network, occasioned by larger layer 1 users which are comprised more of the institutional adopters.

[Hamza2424]

- Centralization doesn't happen because someone owns more coins that another one!
- Bitcoin was never designed to be truly anonymous, if you're concerned about privacy, then you know Lazslo told the guy who bought his coins his address so his pizza could be delivered there, right?
-Political influence is everywhere; once a thing becomes too important, it's impossible to ignore it from a political view

You people keep seeing problems where there is none!

Well said bro, these are not the problems unless we make them, and these days everything can be turned into a problem, but the way you see it, many don't. They see it the completely opposite way. But we can't convince them and change their minds.

If they don't like it, think it is controlled by CIA or Mossad haha, or it is used for dirty money, then well, they may have their reasons to believe. I just think that's their business. It is a currency that can be used in any way. People are sometimes delusional.

[Rengga Jati]

- Centralization of Bitcoin.

There are several concerns we often have regarding this matter. Even now, I am convinced that many nations desire the centralization of Bitcoin, yet I am certain they cannot achieve it. They can only control certain aspects related to Bitcoin. Such as purchasing platforms or specific national regulations. But they cannot directly centralize it.

Bro honestly sometimes i also confused with this institutionalization because it looks like a double edged sword on one face they kiss the bitcoin while on other side of the face they slaps the bitcoin. Bitcoin was made that not a single entity has control over it .......

They have their own vested interests. They want to profit from Bitcoin, yet they do not want to lose power or control over it. Ideally, they want to dominate and regulate Bitcoin as much as possible. Individually, they may hold significant amounts of Bitcoin, but institutionally, they have specific agendas. Ultimately, they desire power above all else, even over Bitcoin, which has so far proven uncontrollable. They also seek to control their citizens. One of their apparent objectives relates to taxation and state revenue.

[m2017]

Recently, I've found myself in conversations mentioning the institutionalization of Bitcoin—spots ETFs, cooperate treasuries, reserve, and regulated custody. Some of us do have a negative view of it, and that is justified. But, there are some upsides to it too, right? Things like:

- Increased adoption.
- Acceptability.
- Price increase. etc.

- Mass adoption implies that a large number of people hold small amounts of bitcoins.  Yet, the reality is the opposite: how can one speak of mass adoption when large volumes of bitcoin are concentrated in the hands of a small number of institutional investors?

- Recognition by whom? Regulators? With the aim of legally restricting the use of bitcoin? In that scenario, would the asset really remain an alternative, independent means of payment?

- Large institutional BTC-holders could just as easily crash the price whenever it suits them (for instance, to raise funds by selling off these assets). They wouldn't sell just one or two units of bitcoin; they could sell million's worth, which would undoubtedly impact market conditions.

There may be more, but these are the ones I've observed. And, some of the reasons most of us are frowning at it—from my observation—stem from concerns like:

- Centralization of Bitcoin.
- Privacy.
- Political influence. etc.

- It is unlikely to lead to a good outcome when a large amount of bitcoin is concentrated in the hands of a small circle of people. How would this differ from the traditional financial system?

- How will institutional ownership of bitcoin affect privacy? After all, they aren't capable of introducing new features to bitcoin.

- It seems inevitable, given that countries are already accumulating bitcoin reserves.

Yeah, I know, most of us value the disadvantages more than the advantages—I mean, those are the essence of Bitcoin, right?—but then again, we all want the benefits nonetheless .

Because the benefits of this institutionalization are, frankly speaking, questionable.

So....I'm just curious, what does the forum think about the institutionalization of Bitcoin, do the pros outweigh the cons? And why?

I think it’s inevitable - just one of the stages in the evolution of bitcoin. Even if you don’t like it, what can you actually change? Are you going to stop Michael Saylor from buying bitcoins?

[BlackBoss_]

Recently, I've found myself in conversations mentioning the institutionalization of Bitcoin—spots ETFs, cooperate treasuries, reserve, and regulated custody. Some of us do have a negative view of it, and that is justified.

The fact is most money belongs to the minority, and it's same with bitcoin distribution. It's true with fiat currencies and most money are in the minority, billionaires and millionaires, while the majority are the average, middle and poor classes don't own considerable money.

With this fact about fiat currency distribution, do you consider that fiat currencies are not massive adopted?

https://en.wikipedia.org/wiki/Pareto_principle

The Pareto principle says The Pareto principle (also known as the 80:20 rule, the law of the vital few and the principle of factor sparsity) states that, for many outcomes, roughly 80% of consequences come from 20% of causes (the "vital few").

Bitcoin rich list
https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html

[Royal Cap]

So....I'm just curious, what does the forum think about the institutionalization of Bitcoin, do the pros outweigh the cons? And why?

Everyone talks big about decentralization or privacy, but at the end of the day, everyone wants to see the price of Bitcoin increase. When large institutions come up with ETFs, no one complains about centralization when they see portfolio balances increase. The biggest advantage of institutional investment is that it brings a lot of new funds into the market. However it is true that when large corporate institutions take control of a large supply of Bitcoin, this market will also fluctuate at their behest, just like the stock market. But you have to accept that, they have a lot to contribute to Bitcoin adoption. However, no matter how much they hold Bitcoin or shares, at the end of the day, no one can change the actual technology of Bitcoin, I mean the P2P nature.

[OsaiEmma]

Just days ago, I've read in the news that even Jack Dorsey, who was a Bitcoin maximalist, a champion of decentralization and self-custody, has applied for a banking charter. He wants to establish a bank and custodies Bitcoin. It seems in the end we're all the same; says one thing, does another.

Hmmm, this is worth noting. If a Bitcoin maximalist can actually accept institutionalization, and even follow that trend, then I'm sure he's not the only one. A banking charter will be regulated, and centralized. Although, using Bitcoin for this won't create the inflation problem fiat does, but this represents what Nakamoto was fighting against.

So....I'm just curious, what does the forum think about the institutionalization of Bitcoin, do the pros outweigh the cons? And why?

I think it’s inevitable - just one of the stages in the evolution of bitcoin. Even if you don’t like it, what can you actually change? Are you going to stop Michael Saylor from buying bitcoins?

Yeah, I'm gonna kidnap him to a cattle wrench with my cowboy hat and boot, with his tailored suit, tie his hands behind his back, get him down on his knees with a shotgun to his head and say, "stop buying Bitcoin bro. Next time you do, it will be a bullet on your head" . Just kidding, I guess there's actually nothing we can do about Saylor buying or selling. All I really wanted was to know what we here in the forum really do think about the whole fiasco, nothing more—thanks for sharing your thoughts though.


Thank you all for sharing your thoughts, I've read most of your comments, and I've seen that most of us here do lean towards being neutral and positive about the whole thing—only few are against, and I wish we had all cast a vote so as to have an easy reference.

Anyways, let's address some points—especially those criticizing the OP.

When I said centralization, I meant how people onboard the network, not the network itself being centralized. No doubt, I don't think individuals or institutions can actually change the codes—that's for the devs— but, they can change how adopters decide to onboard the space: which is, in a centralized manner—building a centralized system on a decentralized protocol.

Adoption has indeed increased, not just because of institutions buying in bulk, if you check the data, the number of active wallets have been increasing periodically—this post I made gave a little reference to this claim. When the spot ETF was approved, more trust was generated, more adoption and users were recorded. And this Centralization strips users of privacy in terms of KYC and registration during onboarding.

These institutions establish cooperation with government, which in turn creates regulations, which in turn create a sense of legitimacy and legalization, which in turn fosters acceptance.

BTW, my OP was never about Bitcoin is dead all thanks to institutions, neither was it that institutions controls a large chunk of money, so it has changed the decentralized nature of Bitcoin. It was about what we think about this and why do we think that. Thank you.

I hope these explanations clarifies my OP.


Now, there are a lot of interesting perspectives here, most of us believe the pros outweighs the cons, and some believe otherwise, while some say it really doesn't matter, afterall, we can't do a damn thing about it.

If we say it's ok and normal for government to intervene in Bitcoin, doesn't this defeat the whole purpose of Nakamoto? (I know, this is the second time in this post I'm asking this) Satoshi created this technology to combat the government's control and institution's control like banks, over our finances. Isn't this new development undermining that fact?

But then again, on the flip side, Bitcoin is no longer just a peer-to-peer payment system, it has evolved into something that can't be ignored—especially by the government, so, it is just a natural thing to have this type of intervention. As a poster said, it's a double-edge sword, we just have to compromise for the "greater good".

And we all are forgetting a very crucial point here. The Bitcoin system is made up of 4 unique sectors:
- The nodes
- The miners
- The devs
- And most importantly, the end users.

If the majority or higher percentage of users—which is the most crucial part of the network—undermines the essence of Bitcoin, don't you think they can influence the system as a whole?

P.S:  I know the other 3 are users too—because I know some of us will pick on that—but we all know what I mean by the "end users", right? They are the majority group in the protocol who are not actively participating in the direct running of the system, but rather invest and use the product daily.

[bitLeap]

Even if Bitcoin is adopted by such entities, the Bitcoin network does not become centralized. Rather than getting caught up in the debate between proponents and opponents, I believe it is better for people to focus on raising awareness about the importance of securing their Bitcoin holdings, as the institutionalization of Bitcoin is inevitable whether now or in the future. As individuals, we simply need to accept it, leverage it, and position ourselves as advantageously as possible amidst the wave of mass adoption coming from all directions.

[free-bit.co.in]

Reading the posts under this thread, it's safe to say that majority of us believes that the benefits of institutions exceed the risks.

While my opinion isn't totally contrary to the popular view, let's not ignore the risks attached to institutionalization of Bitcoin.

Yes, they bring liquidity, increase adoption and more legitimacy to Bitcoin which are all positives but how about the downside?

The more institutional ownership we record, the more these big players gets more influence in the Bitcoin market. I just hope we don't end up with a Bitcoin market that's largely controlled by a certain group of big players

I understand your concern. But I'd say market manipulation is not something that only started after institutions got involved in Bitcoin. Bitcoin has been influenced by whale, exchange, market maker and big player with deep pockets for a long time already. With institutions getting involved, its basically just shifting from smaller whales and sharks to bigger ones.

Bitcoin's price has never really been decentralized, and manipulation is just part of the financial market.

[Fiatless]

So....I'm just curious, what does the forum think about the institutionalization of Bitcoin, do the pros outweigh the cons? And why?

Government and other institutional involvement in Bitcoin is unstoppable. Nobody can stop any individual or organization from investing in or using Bitcoin the way they want.

My stance in this matter is that everyone should be free to use Bitcoin the way they want. The government should not start making laws that will force Bitcoiners to use centralized platforms. Let the system continue to remain decentralized and users be allowed to enjoy the freedom Bitcoin offers.  

[Leon Zimmer]

Both of them saw potential of Bitcoin, and want to get richer with Bitcoin but they chose different ways to do that: custodial through Bitcoin Spot ETFs and self custodial with Bitcoin wallets.

The second way is safer because they are their own custodians, fully control of their bitcoins but requirement is they must be fully responsible for their coins storage.

The first way does not require that full responsibility and people who only mind of potential profit from Bitcoin investment but don't want to secure bitcoin by themselves, will rely on Bitcoin Spot ETFs. Bitcoin Spot ETFs in their turns, mostly rely on Coinbase as custodians. It's risky for such investors but if you can not change them, previous bankruptcies of exchanges, deaths of exchanges, scam exits were not enough to change them, you only have to let them be.

You can also lose agency with ETFs. Say there’s stress with the custody managers or fund managers of various ETFs. As an ETF holder you’re on your way to learn about that and watch NAVs change. As an individual holder you could self-custody and choose your exit.

Systemic market risks are also exacerbated by ETFs. If a majority of BTC in the ETF is controlled by 1-2 custodians, such as Coinbase, then that poses a BTC-wide market price risk. If that Coinbase has an issue it may lead to cascading redemptions for a number of BTC-ETFs that rely on them. Self-custody insulates you from that.

[Faisal2202]

Institutional adoption can't really replace self custody, but there are ways to brainwash new generations.

What if they somehow manage to convince the new generation that the best way to buy Bitcoin is via the ETFs and banks? Then most of them won't be owning any Bitcoin, and this way they might replace retail traders and investors and can own most of it. And if this happens, then brother, the cons have outweighed the pros here because BTC is not supposed to be like this.

But a recent post of Hal also makes more sense when he said, in times of high rates when the fee will be high, there will be a centralized body to combine and manage your transactions, meaning they will do the transactions on your behalf by being the intermediary, like centralized exchanges.

But that time has not come yet, and I can only see the pros. The cons are not hurting me at this time, so.