Approval of Bitcoin ETF in U.S. May Contradict Satoshi's Original Vision, Warns Analyst
Summary:
Joseph Tetek, a Bitcoin analyst at Trezor, suggests that the potential approval of a Bitcoin exchange-traded fund (ETF) in the US may contradict Satoshi Nakamoto's original vision for Bitcoin, as it conflicts with the self-custody principle. Tetek warns of systemic risk and the scenario where massive quantities of Bitcoin would be stored centrally. He also raised concerns about the unchecked issuance of 'paper Bitcoin', not backed by real assets, which could distort the market and depress the value of genuine Bitcoin.
A Bitcoin analyst has warned that the potential authorization of a Bitcoin exchange-traded fund (ETF) in the United States could pose fundamental problems regarding the initial vision of Bitcoin's incognito creator, Satoshi Nakamoto. Josef Tetek, an analyst at the hardware crypto wallet company Trezor, argued that the very idea of a Bitcoin ETF, designed to mirror Bitcoin's price by possessing it, is a contradiction to the principle of self-custody. Distinct from a Bitcoin ETF, self-custodial crypto repositories give users the right to own Bitcoin fully by holding the private key or the actual assets. Tetek stated in a discussion with Cointelegraph that Bitcoin ETFs could pose systemic risk as they might seem superficially safer than standard exchanges, thus steering people away from self-custody. He also pointed out the potential for massive quantities of Bitcoin being held in centralized locations, vulnerable to governmental seizure, an event reminiscent of U.S. gold confiscation during the 1930s. Tetek queried the need for a Bitcoin ETF when acquiring Bitcoin through traditional methods offers the same exposure to its price fluctuations for institutions and individuals alike. He additionally noted that Bitcoin ETF holders wouldn't have the operational flexibility of withdrawing the underlying asset, giving rise to a possible unchecked release of 'paper Bitcoin' unsupported by actual Bitcoin, of which there is a fixed supply of 21 million coins. This scenario could result in the creation of millions of unbacked Bitcoin, manipulating authentic markets, depressing Bitcoin's real value, and giving more authority to the predominant figures in traditional, centralized finance - an outright contradiction to Satoshi Nakamoto's founding vision. These warnings about spot Bitcoin ETFs vs. self-custody surface amid rising market confidence, with various analysts and firms predicting that U.S. securities regulators could authorize a Bitcoin ETF as early as January 2024. However, not all market players are positive about this development. Arthur Hayes, BitMEX co-founder, has suggested that Bitcoin could be "utterly destroyed" if Bitcoin ETFs are too prosperous. Quantum Economics founder Mati Greenspan, on the other hand, envisages no direct conflict between self-custody and Bitcoin ETFs, as retail users will uphold self-custody. However, he also advocates maintaining Bitcoin rather than Bitcoin ETFs due to the lack of benefits and numerous drawbacks for retail investors.
Published At
12/27/2023 4:13:04 PM
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