Bitcoin ETFs: Even worse for crypto than central exchanges

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Opinion: Are you ready for millions of 'paper Bitcoin' to flood the market — just like U.S. dollars? It could happen with Bitcoin ETFs.

And again, as it goes, the seemingly bad news — FTX collapsing and losing a lot of money for its users — will become positive in the long run, as people will take better care of their Bitcoin in the future, thus limiting the systemic risk of large custodian blow-ups.As we saw with the implosion of FTX and the subsequent market contagion, centralized exchanges were never the answer for everyday investors looking to benefit from the immense promise of Bitcoin. Neither are ETFs.

That likely wouldn’t be the case with ETFs. Without the possibility of withdrawing the underlying asset, paper Bitcoin can be printed at will. If Bitcoin ETFs become the dominant way of investing in Bitcoin, it could very well lead to millions of paper Bitcoin flooding the market, suppressing the price of Bitcoin.In the context of Bitcoin, ownership is very closely linked to control over the cryptographic keys associated with specific Bitcoin addresses.

Some might welcome a possible short-term price pump associated with an approval of a major Bitcoin ETF , but the long-term impact on Bitcoin adoption would be likely negative . The only adoption that actually matters involves self-custody — everything else is a trap.is a Bitcoin analyst for Trezor. A long-time Bitcoiner with a background in Austrian economics and political philosophy, he founded the Czech and Slovak Ludwig von Mises Institute in 2010.

 

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