Finance

Will Bitcoin (BTC) ETFs Remove the Power From the Hands of the Investors?

Not Holding Private Keys - Not Your Bitcoin

As the commotion surrounding the already infamous Bitcoin (BTC) ETFs (Exchange Traded Funds) is reaching its climax, The Blockchain Land, moved by the recent argument brought to us byAndreas M. Antonopoulos, is giving you another thorough analysis of this highly anticipated “bringer of institutional investments”.

Is Everyone Able to Trade Bitcoin Without ETFs?

The answer is – yes!

Anyone, even those highly anticipated institutional investors, with some internet connection and any kind of Bitcoin wallet can buy and trade Bitcoin.

It may not be legal in some countries like Saudi Arabia, but the beauty of the blockchain technology behind the biggest cryptocurrency is the exact one that doesn’t allow much centralization.

Therefore, it isn’t controlled by any centralized entity, like some central bank. Thus, online exchanges enable Bitcoin transactions for everyone, without the government’s interference.

So What are ETFs Bringing to the Table?

Firstly, let’s put the mysterious, all-powerful ETFs into a context.

ETFs will present the easy way to invest in the trendy Bitcoin so new investors will not be obligated to learn how to store their own private keys, pick a wallet, or find the right exchange. ETFs, controlled by the large financial businesses, would make it easier for them and, by providing custodial services, lure in much desired institutional investments.

The company providing ETFs, for starters, acquires a certain amount of Bitcoin as a reserve and then offers investors the possibility to buy the share of that reserve on the stock market.

The investor, however, becomes a mere speculator, deprived of all the rights and obligations that come with owning a crypto asset, who expects that the price of the asset he doesn’t truly own will grow.

In other words, the only truth is that the ones who have already invested in Bitcoin (or any other cryptocurrency) hope that the eventual SEC rule change, which would allow Bitcoin ETFs, would pull the recently destroyed price of Bitcoin ($6,466) back towards its all-time high of almost $20.000.

As the majority of us would agree that history is our best teacher, we could easily deduce that if ETFs caused the price of gold to skyrocket, they would do the same for Bitcoin, and fulfill the already panicking early investors’ hopes.

And we would probably be right.

But What Would be the Cost?

Holding your Bitcoin’s private keys gives you specific rights, which can hardly be exercised through the ETF.

Andreas M. Antonopoulos, in his most recent YouTube podcast, gave us an example of the hypothetical soft fork by which Bitcoin holders would be given more private transactions.

As the ETF manager will hold all the private keys, he would be considered as the real owner of all ETF’s Bitcoin by the network, and therefore, have all the voting rights that come with owning coins.

Given the current US government’s stance towards privacy oriented cryptocurrencies, the regulator would be able to force the ETF manager to “downvote” the proposed soft fork with all the Bitcoin held, despite the possibility that not all ETF investors agree with that path.

The conclusion is obvious; if you don’t own the private key, you don’t own Bitcoin.

Such a centralized system, which is allowed or disallowed by the government, is inevitably in a collision with the very foundation of the basic postulates of the first cryptocurrency – decentralization.

Furthermore, such unhealthy, centralized practices could also lead to another Bitcoin hard fork, which would divide those institutions from the rest of the Bitcoin investors who hold their private keys by themselves, and we would be left with the first cryptocurrency highly dependable on the government, tragi-comically, also called – Bitcoin.

If such a turn of events would come to pass, it’d be as in the Terminator movies – the very thing created to heal the shaken world of finance would be transformed and redirected against its own creators and early adopters.

Or, as the user Oliver Li said in the comments section under Antonopulous’ video: “I’m really concerned too. Satoshi gave us the gun, but we seem to point it at our own heads…”

 

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Luka Kapetanic

An ex-restaurant business owner turned cryptocurrency fanatic, with over 12,000 followers on investfeed.com. Miner, Investor, trader and, above everything else - a writer, with coinlive.io, and cryptodigest.com in his jobs portfolio.

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