Perspective

ETF what is it and how it effects Bitcoin

An exchange-traded fund is a vehicle in which to trade a commodity or index without literally purchasing the physical good. This means you can buy or sell physical goods like crude oil without having the greasy oily barrels stacked up in your backyard next to the lemon tree. This opens up the doors for an institutional sized amount of money to be freely traded back and forth between parties. This creates a speculation market on a scale that previously was not possible.

So how does this effect Bitcoin? An argument thrown around the crypto sphere is that for Bitcoin to become mainstream and see its true potential, it needs to be accepted by “big brother” which is a governmental authority. This is what has been happening for the last year in crypto. Many big names in the industry like the Winklevoss twins who became famous for their dispute with Mark Zuckerberg over Facebook are now pushing the paperwork forward to the Security Exchange Commision which overseas the legitimacy of new assets or commodities that are proposed for mainstream trading through an ETF. Up until now every proposition from private companies to push Bitcoin into the publicly traded arena has failed. This is for some people considered to be the last step in Bitcoin going mainstream because of the safety of Institutional money (trillions of dollars) trading Bitcoin without having to worry about storing the private keys to their crypto wallets and risk making a mistake and losing their large sums of money through a typo.

Up until now the institutional money which dwarfs the current market cap of Bitcoin immensely by the trillions is being kept at bay, but for how long? There are multiple other big-name institutions applying for Bitcoin to be traded as an ETF and hence grasp its legitimacy that is recognized by a governmental authority and possibly reach prices of $100,000 per Bitcoin.

The question that is debated that overlooks all of this is, “Does Bitcoin even need this when its true reason for creation was to step over corrupt government systems anyway?”. Time will tell but the main thing to remember is that ETF or not, Bitcoin isn’t going away no matter how much world governments ignore its progression or decline its right to be traded by everyone, anywhere, freely.

3 thoughts on “ETF what is it and how it effects Bitcoin

  1. I enjoyed reading this post. What I think interested me the most was that Bitcoin was intended as a way to step over corrupt governments. This was news to me considering I am not hugely familiar with this currency. If this was its intention then it does seem risky moving into ETF. But as you said time will tell. 🙂

    Like

  2. I agree I am not sure the ETFs are a good thing there appear to be a few disadvantages to buying them whether they a cheap as chips or not. This blog has sparked a curiosity that I did not think would interest me at all. I look forward to future posts.

    Like

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