Bitcoin vs. Bitcoin ETFs: Here’s What I’m Buying

The arrival of Bitcoin (CRYPTO: BTC) exchange-traded funds (ETFs) is a complete game changer. Not only do they legitimize Bitcoin, but they also provide a new means for investors seeking exposure to the cryptocurrency.

Previously, buying Bitcoin meant going through a cryptocurrency exchange, which could be a challenging task for those not proficient with technology. However, with the introduction of ETFs, investing in Bitcoin is as simple as buying stocks of your favorite company, effectively democratizing access to the cryptocurrency.

While the Bitcoin ETFs have already proven to be one of the most successful launches in ETF history, you won’t see me buying them. Here’s why.

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Why it’s better to own the asset

You could think of Bitcoin ETFs as very similar to gold ETFs. When you buy a gold ETF, you don’t get gold bullion. You essentially get a receipt saying you own a certain amount of shares within the ETF. The fund sponsors are the ones buying and selling physical gold.

In the same way, when you buy a Bitcoin ETF, you are not provided with actual Bitcoins. While you can’t hold a Bitcoin like you can a gold coin or bullion, there are still implications to be aware of.

When you own actual Bitcoin and not an ETF equivalent, you benefit in three significant ways. First, you are eliminating any counterparty risk and preserving autonomy. The firms offering these ETFs are the ones that hold the Bitcoins. What if there is a security breach? What if the government orders the seizure of all Bitcoin? This may sound hysterical, but it happened with gold in the 1940s. If a similar situation unfolded, those companies holding your Bitcoin would likely comply, and you would be left with nothing.

When you own actual Bitcoin, you have complete control over your private keys and can store your assets in a secure hardware or software wallet of your choice. This eliminates the need to trust a third-party custodian or intermediary to hold your Bitcoin on your behalf, reducing the risk of hacking, fraud, or other security breaches associated with ETF providers.

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Second, you are in direct control of…



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