The past months in cryptocurrency have all been around Bitcoin ETF’s, now that a big number of them have again been rejected without the price reacting too heavily, it might be time to talk about if we even need a so called Bitcoin ETF.
What is an ETF?
First, an ETF or Exchange Traded Fund is a financial product that tracks assets, commodities or an index. It essentially works as a basket, for example a basket with companies in a country to gain exposure to a country. For Bitcoin, this Basket would be actual Bitcoin which would therefore make the ETF track the Bitcoin price.
What is good about a Bitcoin ETF?
What’s the difference between a Bitcoin ETF and just buying Bitcoin? Well, for the average traditional investor buying Bitcoin safely is actually quite hard and takes some knowledge and time, with a Bitcoin ETF they would be able to speculate on the Bitcoin price without leaving their traditional market exchange. Would you trust your dad to buy Bitcoin on an exchange for a good rate without losing them or getting help? A Bitcoin ETF would significantly lower the barrier to entry of Bitcoin investing, and would normalize Bitcoin as an investment in the traditional investment world. Wether that’s a good thing or not is your personal opinion.
What is bad about a Bitcoin ETF?
There are a number of Bitcoin ‘fundamentalists’ that oppose a Bitcoin ETF. They see it as a bad thing because people dont actually hold their own Bitcoin, and instead rely on a middleman and Bitcoin on paper, which comes very close to the banking and currency situation some claim Bitcoin was going to solve. Because of this they see it as a stepback in the wrong direction we fought so hard to get away from. It would also make it easier to speculate and even go short on Bitcoin, which some people claim would increase manipulation.
There are positives and negatives of a Bitcoin ETF. While a Bitcoin ETF would make it easier to speculate on Bitcoin’s price for the general public, it might shift focus from it’s usecase to only price speculation. It comes down to if you only care about Bitcoin’s fundamental usecase and ideology, or if you also factor in exposure to the public and the price.
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