The Long Awaited ETF — Should you be worried?
The true power of cryptocurrencies come from their ability to remove the intermediary. This has a lot of meaning for some people and very little meaning for others.
On one hand, you have individuals who would like an alternative path, one where money is not controlled and printed by the state, where you do not have intermediaries dictating fees, determining when, where, and how you can access your hard earned money. You hold your private key and you take it with you as you please.
“ETF’s fundamentally violate the underlying principle of peer to peer money, where each user is not operating through a custodian but has direct control of their money, because they have direct control of their keys. Your keys, your bitcoin, not your keys, not your bitcoin. An ETF is a multibillion-dollar “not your keys, not your bitcoin” vehicle. So that’s why I am against it.”
Andreas Antonopoulos — Bitcoin Q&A: Why I’m against ETFs
On another hand, you have people who see Bitcoin and digital currencies as something to trade, something that can enable them to rise on their path to financial freedom. They do not want the responsibility of storing or securing their private keys. They want to trade Bitcoin like any other stock. It would be comparable to the housing market. Some people want to live in their house and feel secure within their walls, others just want to buy and sell them to make money. They do not care for the maintenance, responsibilities or the roof over their heads.
The approval of Bitcoin Exchange Traded Funds (ETFs) would mean that, instead of walking into a future where people recognise the freedom that Bitcoin has to offer — a peer-to-peer monetary system without intermediaries, that is immutable, globally accessible and allows for innovation without permission — you would get just another stock to trade and speculate with.
In such a case, one would not own the private key, leading to a skewed vision of what cryptocurrencies have to offer, which in turn would lead to misunderstanding the fundamental rationale and principles of a decentralised, open-source digital currency.
As a result, people would hand over control to a third party. So then, why do people want to pursue this path? Well, put simply, they may lack the knowledge on how to safely operate within the cryptoshere or are purely attracted by its lucrative market. Others welcome this path as they believe it would allow for a much greater sum of money to enter the market, without grasping the consequences.
As mentioned in a video titled “Bitcoin Q&A: Why I’m against ETFs” by Andreas Antonopoulos — the globally recognised Bitcoin speaker — the introduction of ETF’s is damaging to the entire cryptocurrency ecosystem, and in particular to that of Bitcoin.
Take for example Bitcoin forks. Those who hold their own private key with direct access to the Bitcoin network can in such cases vote on how and when changes will take place, giving them direct control and access.
So then, what would happen if institutional investors were introduced as a result of ETFs? Who would take responsibility for their opinions or thoughts? It would be similar to our regular political voting systems. Imagine if hundreds of millions worth of votes were handed over to a few organisations. Would anyone feel good about that? In many ways, it would undermine the democratic function and power given to private key holders.
That is just a few examples of the benefit that an ETF promoter would be missing out on. Others include the ability to gain coins produced as a result of forks, such as the one we saw with Bitcoin Cash and Bitcoin Gold. In Bitcoin Q&A: Why I’m against ETFs, Andreas Antonopolous discusses this and other factors that were at play during the same period:
“we saw that large custodial exchanges had a very strong voice in the ecosystem. They were able to decide if they were going to support or not going to support on behalf of 10m customers and essentially moving opinion on a very large amount of currency. ETF will do on an even bigger scale, that will give institutional players access to Bitcoin but it won’t give them a voice in the consensus and governance of Bitcoin. That will be held by a centralised fund manager, who will speak on behalf of all of the people who have that exposure to the ETF’s. That is a very bad thing.”
There are also some who say that the reason ETFs have not yet been approved is that existing ‘whales’ don’t want to give up control to even bigger ‘whales’. It has been argued that they have achieved this through continuous manipulation of the market price.
It is clear — regardless of the perspective you have on this topic — that ETF’s will be introduced eventually. That is inevitable. It would divide the market between knowledgeable Bitcoin users — educated on the topic and technically skilled to operate it in such a way — and those who have given up their control to a centralised third party, exchanging personal sovereignty for high volume trades.
The power of decentralisation comes from individuals’ choices in seeking what they feel is correct, though one can hope that the decision is backed by a holistic view rather than a myopic approach.
Picture from Wikimedia Commons.
