There is no denying that BlackRock’s filing for a Bitcoin exchange-traded fund (ETF) has provided a boost to the Bitcoin bulls. They believe that it could be a sign of a shift in regulations and provide access to Bitcoin to the general public.
Though there may be some accuracy in these statements, we should take a step back and consider the broader perspective. We shouldn’t be in a situation where the mere chance of a Bitcoin ETF being established in the US causes markets to become overly excited. The potential influence of BlackRock on Bitcoin’s (BTC) price should make the Bitcoin community pause for thought instead of being a cause of joy.
A Bitcoin ETF would certainly make it easier for U.S. retirement funds to benefit from the potential gains of Bitcoin, and it is highly likely that a sanctioned ETF in the U.S. would bring about substantial price increases in the years ahead. However, what would it do to advance Bitcoin’s mission of decentralizing finance, providing financial access for those without banking services, and transforming how we handle money around the world? Not much, if anything.
The TradFi invasion
The application from BlackRock and the conversations surrounding it have certainly highlighted the lack of trust between certain members of the crypto community and the world of traditional finance.
The outcome of the Ripple case could potentially initiate a new bull market, or alternatively cause further malaise.
The timing of BlackRock’s entrance into the Bitcoin ETF sector has been particularly captivating and has caused conspiracy theorists to go wild. Given the Securities and Exchange Commission’s legal actions against Binance and Coinbase, some think the agency is weakening crypto-native businesses to make way for companies like BlackRock to take the lead in the crypto space.
Claims of this kind are not supported by evidence, but they show how, as traditional financial institutions become more involved in the digital assets industry, we may miss out on Bitcoin’s intended purpose and true worth.
When you examine the particulars of BlackRock’s filing more closely, the warning signs become louder. The filing stipulates that in the event of a hard fork, BlackRock has the authority to “exercise its judgment to decide which network should be deemed suitable for the Trust’s objectives.” This could be of great importance, allowing BlackRock to influence Bitcoin’s trajectory – or at least direct institutional investments and widespread adoption.
The large effect on what is supposed to be a decentralized monetary system is obviously a problem, but the more comprehensive issue with ETFs is that investors can’t take out the fundamental Bitcoin. It is in the possession of Bitcoin that the real advantages lie.
Upholding Bitcoin’s ethos
Do not forget that Bitcoin was designed as an answer to the bailouts and quantitative easing that occurred after the 2008 financial crisis. Unlike regular currencies, Bitcoin has a finite amount, is truly scarce, and is managed without a centralized authority.
Fifteen years after the crash, central banks all over the planet are still unable to kick the practice of producing money, viewing it as a “get out of jail free” solution. However, it is anything but free. Ordinary, hard-working people everywhere are feeling the consequences as their currencies are devalued, now further worsened by skyrocketing, lasting inflation.
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As central banks take risks with public funds, Bitcoin’s purpose is to give people authority by giving them a type of money that can’t be censored or restricted by country. As a free-source financial network, Bitcoin has the capacity to change how we use money. It could significantly reduce the significance of centralized organizations – perhaps even make them unnecessary – which the theorists would argue that the traditional finance industry is well aware of.
Bitcoin ETFs appear to be in opposition to the idea of giving people more control. El Salvador, with its bold approach to Bitcoin acceptance, is more in line with the main goals of Bitcoin than any ETF could ever be. El Salvador is attempting to give the unbanked more power by encouraging ownership of Bitcoin, while Bitcoin ETF investors will not gain any of the advantages of Bitcoin and will only help to strengthen the power of traditional financial institutions.
Ownership over price speculation
ETFs related to Bitcoin spot are expected to become more widespread in the cryptocurrency world in the upcoming years and attract a certain group of investors, but their influence should not be greater than Bitcoin’s trajectory. If we only emphasize on providing people the opportunity to experience price changes without actually owning the asset, then we will have failed to recognize the potential of this groundbreaking monetary system. Moreover, if a rule is ever proposed that requires retail investors to invest through ETFs instead of direct possession, this is not “consumer protection” – it is a form of disempowerment.
We in the industry should be wary, recognizing that the increased involvement of ETFs and traditional finance in the crypto world could bring potential dangers to the core purpose of Bitcoin. To be aware of these risks means not getting caught up in the excitement, but remaining dedicated to the fundamental ideals of Bitcoin – a means of revolutionizing the world’s financial systems, not just a commodity for speculation.
This article is for informational purposes only and should not be interpreted as legal or investment advice. The views expressed in this article are solely those of the author and do not necessarily represent the views of Cointelegraph.
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