How Upcoming Bitcoin Soft Fork Will Prove ETF Bad for Ecosystem – Andreas
The proposed Bitcoin soft fork that will enhance anonymity in Bitcoin transactions is one of the ways that would highlight how terrible the idea of an ETF would be for the ecosystem, notable Bitcoin speaker, Andreas Antonopoulos, has said.
His views against ETFs are slightly different from those of many market insiders who hinge their opposition to the idea solely based on institutional investors being in control. Describing how a Bitcoin ETF would operate in a video release, Antonopoulos explains that the fund will hold Bitcoin and sell shares in the Bitcoin reserve to represent the price of Bitcoin that people can buy as a stock from their regular brokers and traded on the stock market. Though the ETF will allow traditional and institutional investors to trade Bitcoin without actually going through the cryptocurrency exchange which, like in the case of gold, will make the price increase, he adds that the custodian will hold the actual Bitcoin while the people get shares in the fund but not Bitcoin. This is where he foresees a problem in the future.
“…I know a lot of people really want to see an ETF happen because of ‘to the moon and lambo’ and all of that. I think it’s a terrible idea. I still think it’s going to happen. I just think it’s a terrible idea. I’m actually against ETFs. I think a Bitcoin ETF is going to be damaging to the ecosystem and here is why: A Bitcoin ETF is basically going to be a very very large custodial holder of Bitcoin. That large custodial holder of Bitcoin will hold Bitcoin on behalf of the shareholders and give them a traded share in that Bitcoin but they don’t give the owners of the ETF any responsibilities and rights that a keyholder of Bitcoin has. As someone who holds keys to Bitcoin, I have more rights and responsibilities than someone who is simply trading in an exchange or has an exchange traded fund. I can do things like, for example, I can use my Bitcoin to vote, I can choose which exchanges to send my Bitcoin to if I want to send it to an exchange.”
He adds that if there is a fork debate which is likely to happen again, the funds that control Bitcoin will have a very large voice over the shareholders’ who would not be able to choose which debate the fund would follow. He cites the influence such had in the cases of last year’s UASF and Bitcoin Cash scaling debates where large custodial exchanges used their strong voices to decide on behalf of milions of users.
“An ETF would do that and even do that on a bigger scale. So it would give institutional players access to Bitcoin but it won’t give them a voice in the consensus and governance of Bitcoin. That would be held by a centralized fund manager and that centralized fund manager would speak on behalf of all of the people who have the exposure to ETFs because they actually hold the keys to Bitcoin. That’s a very bad thing…It is going to cause the manipulation of the prices, it is going to cause the manipulation of the debates about scaling decisions and if there are forks, it is going to give these parties a very large determining voice in forks which probably means that eventually you’re going to see them split off and form their own corporal bitcoin, a corporate version of Bitcoin.”
As an example, he cites whether an ETF manager would be willing to adopt a new change being proposed currently in the Bitcoin ecosystem as a soft fork that will allow completely anonymous confidential transactions with encrypted values, senders and recipients. He says ETFs would have a problem if the authorities really push against anonymity which could lead them into not adopting the change thus leaving many Bitcoins with no anonymity and privacy protection. This leads to having two kinds of Bitcoin – private and non-private. He argues that though ETFs would happen because there is enormous market appetite with little technical knowledge, they violate the fundamental principle of P2P money where each user is in direct control of their money.