How to Sanitize the Bitcoin Idea
Who’s to Blame?
The Western financial oligarchy has many interests in common. One of them is the containment of Bitcoin. To do this, they exploit Bitcoin’s three built-in flaws.
- Bitcoin is hard to own to remain law-abiding; it is also not easy to store securely.
- Bitcoin is designed so that whoever is richer can mine more; concentration results.
- Bitcoin has no hardware at its core and therefore is not clone-proof.
Four anti-bitcoin strategies are used:
- Value dilution: clones and analogs are encouraged, as well as “crypto-assets” that inherently have nothing to do with real cryptocurrency and discredit key ideas of the original Bitcoin (overpriced and commissions-loaded centralized Ethereum, idiotic ICOs and NFTs, meaningless digital assets aka security tokens, etc.).
- Massive withdrawal of bitcoins from the free market and concentration of mining.
- Discrediting the meanings of Bitcoin: efforts are made to keep its price in step with the U.S. stock market, while the natural apologist for the current order of things should go in the opposite direction, that is, rise in price when the system is bad (stocks fall), and fall in price when everything is good (stocks rise). Manipulation, corrupt media, and futures are used to do this.
- Restraining ordinary people from buying bitcoins. This is done by creating barriers to the registration of funds investing in bitcoins, while investments in bitcoin-damaging futures are welcomed; funds trading on official exchanges and investing in bitcoin futures are multiplying like mushrooms in wet weather.
So far, bitcoin is losing. However, the traditional financial system is rapidly collapsing, so all four mechanisms can stop working overnight. To help the great idea of Bitcoin, true Bitcoin holders and Bitcoin sympathizers around the world should work within point #4, because the struggles in the other three areas are beyond the reach of ordinary people.
Funds differ in three ways:
- What they invest in.
- How they invest and how they handle it.
- What jurisdiction are they registered in.
The funds invest in three types of assets:
- Bitcoin itself
- Bitcoin futures
- Shares of “blockchain-related” companies, whatever that means.
There are very few funds investing directly in bitcoin. They are the largest (up to $50B). They have not been allowed on traditional exchanges like NYCE Arca for 9 years and probably never will be.
The most famous of these is the American Grayscale® Bitcoin Trust (OTCQX: GBTC). This fund is a closed-end trust. This means that it issues a fixed number of shares when it goes public and then those shares are traded over-the-counter. The company is also notable because it has a dozen other funds investing in other cryptocurrencies — one fund for each. What is remarkable is that the selection of these currencies is very reasonable; most of the coins chosen make physical sense (BAT, LINK, FIL, ZEN, LPT, XLM, ZEC). There are hardly three other coins not represented by Greyscale that have real social engineering underneath them. The commissions are over 2%. That’s expensive. Three times as expensive as it should be. The reason is that regulators in the U.S. do not allow such funds to be registered in the convenient form of ETFs.
Nor was it possible to register a convenient Bitcoin fund in France. The French have repeatedly shown that they do not want to dance to the tune of the globalists headquartered in the United States, but not this time. Nor is there anything in the rest of continental Europe. Worse, there is nothing in the rest of the non-offshore world. Funds registered in Brazil, Canada, Germany, Switzerland and other countries invest in futures and shares of “blockchain companies”. There are only exchange-traded funds investing in physical bitcoins in offshore jurisdictions such as Guernsey. This does not change the investment climate, as there is little interest in accessing such tiny markets.
There are hundreds of funds investing in futures and companies. Once again, they may make sense for investors, but they are bad for the Bitcoin ecosystem. In addition, the competition in this segment is already monstrous. Quality information is scarce. The reputation of the segment leaves a lot to be desired.
There is also a category of structures that call themselves crypto-funds, but in fact are classic micro-cap scams. They invest in substandard stocks and bonds, using cheap licenses that allow them to sell fund units to qualified investors. After selling these units to their affiliates, they then issue ERC-20 tokens against these units and retail small “portions” of them to whomever they can. Without paperwork. As a result, they circumvent the regulators’ ban on selling shares and debts of small shitty companies to ordinary people who can’t assess the risks. For marketing effect they call themselves crypto-funds, although the crypto component there is insignificant, purely technical, and essentially illegal.
What to Do
There is a small but bitcoin-rich category of people who can make a difference. Those who mined and acquired a lot of bitcoins in the early years stand out because they understand the key ideas of Bitcoin. They root for those ideas. They are upset that Bitcoin has been essentially discredited.
Buying units in real Bitcoin funds makes a lot of sense, even for those who are not bad at direct investing in meaningful cryptocurrencies on their own. The reasons: it’s convenient, inheritable, and ok tax-wise.
In addition, owning units of funds investing directly in bitcoins can be more profitable than owning the coins themselves. Units can be traded at a premium. For example, for the Greyscale fund, the markup was once as high as 40 percent.
It is not necessary to convert bitcoins into fiat money to invest. Investors can contribute coins in-kind for fund shares. Each fund is treated as a trust-grantor for income tax purposes, so such contributions should be a tax-free event.
It makes sense to register a new fund in the UAE, because today it is the main financial alternative to the dying US. The more such funds there are and the bigger they are, the more public and institutional interest there will be in creating long positions in bitcoins.