In recent weeks, newly approved U.S. bitcoin ETFs have had stunningly popular launches, judged by trading volume and flow metrics. However, these ETFs have nothing to do with the true utility of Bitcoin, which is to facilitate peer-to-peer transactions and circumvent traditional intermediaries.
Bitcoin ETF investors merely get exposure to the price of Bitcoin. They never own the asset. ETF participants don’t benefit from what Bitcoin stands for in the first place, which is to allow anyone to experience financial ownership and sovereignty. This is precisely what Bitcoin’s anonymous inventor Satoshi Nakamoto aimed for when writing the Bitcoin white paper 15 years ago.
The main problem with Bitcoin ETFs is that they merely replicate the functioning of our outdated financial system built on old technologies. By relying on intermediaries, Bitcoin ETFs reintroduce counterparty risks that have underpinned finance for decades. Take Lehman Brothers, and more recently FTX or Silicon Valley Bank. These are just a few examples of traditional players mismanaging their clients’ assets and wiping out billions of dollars in the snap of a finger.
Crypto is the way out of this flawed, archaic system, which currently satisfies only 9% of Americans. In addition to facing counterparty risks, Bitcoin ETF investors are also locked within the confines of the U.S.-centered financial system, while crypto’s core attribute is to enable anyone to access a permissionless network and benefit from an unparalleled level of decentralization.
ETFs have frontiers, while crypto is permissionless. The two stand radically opposed.
Importantly, Bitcoin ETF investors don’t own what truly matters in crypto: a “private key” or a secret, algorithmically-generated code mathematically proving that users are their digital tokens’ sole owners. Holding these keys is the only way for people to interact with the world of crypto, own Bitcoin, get involved with decentralized finance, and leverage decentralized apps with ownership and freedom. Private keys are entry points to the future of finance and the future of the Internet. That’s something ETFs will…