I thought this post would be relevant for today, because according to the coindesk article here (http://www.coindesk.com/winklevoss-bitcoin-trust-departs-nasdaq/) , the SEC has only 45 days to either respond or extend the date for a longer comment period on the Winklevoss Bitcoin ETF and today is the 43rd day. Most likely we will be hearing from the SEC in the next week or so about their decision, which in my opinion will be to extend the comment period, but enough of a background, let’s talk about why a bitcoin ETF would change everything for all cryptocurrencies.
Helping Mainstream Adoption Through Ease Of Use
I have always said for the last 3 years that the biggest “killer apps” for bitcoin is store of value and speculation, a belief that I still stick to. In my opinion both of these apps are being hindered by the bitcoin not being user friendly. If you believe that bitcoin is user friendly I would strongly disagree with you. Until my 90 year old technologically impaired grandmother can use bitcoin I don’t think it is user friendly. The fact remains that every day coins are stolen from wallets around the globe and there is zero recourse if this happens. These things can be avoided with strong passwords and security, but if the most recent twitter hack where around 125,000 people used the password 123456, teaches us anything it is that mainstream users don’t take security seriously. An ETF allows people to take part in the two largest killer apps, speculation and storing a value without having to worry about any security at all. Many people want to do things by the book and are ok with having someone hold their keys and I think this is fine is some situations. Not only do they not have to worry about security, but they don’t have to worry about going to a sketchy exchange to get their coins, when they can just purchase them via a stockbroker. If you look at the GBTC fund which is currently trading at an 80% premium on the price, largely because of the aforementioned arguments, you can see what people are willing to pay for ease of use. For a layman the best way to get their feet wet with cryptocurrencies in general would be through the ETF.
Adding Legitimacy To All Cryptocurrencies Through Reputation
Despite what we here might think about Wall Street and organizations like NYSE, the great majority of people believe in the reputation they carry. People honestly believe that if a company is listed there then it can’t be a total scam. Whether or not this is true, being listed on a main exchange would silence many naysayers who are calling crypto in general a ponzi scheme or worthless in value. Having a bitcoin ETF would not only add legitimacy to bitcoin, but it would add legitimacy to other cryptocurrencies as well. People will slowly be “Trojan Horsed” into the idea of blockchain based solutions because they can see the value of bitcoin. Much like the precious metals market we have now, we could have a vast cryptocurrency trading market on Wall Street within 10 years.
Adding Much Needed Liquidity For Big Players In the Market
There are many big players who currently don’t want to take the risk purchasing on exchanges and storing the coins by themselves, as well as exchanges not having enough liquidity to purchase or sell in large amounts. Before the Gold ETF was launched, big players had the same problem and as soon as it was, the price of gold skyrocketed because the market became much more liquid and easier to trade with. Large exchanges with access to institutional investors would increase the much needed liquidity to the bitcoin or crypto space in general. With Wall Street, comes hundreds of billions in untouched resources that could enter the market and a more robust bid and ask spread to accompany it.
An ETF Could Frame Future Regulation
If an ETF were to launch, the potential for it to frame the debate for regulation would be huge. Right now politicians see it as something used by scum in the underbelly of the internet, but the reputation that would come with the SEC approval could change that. There could be a movement for massive deregulation like there was for the internet so this technology and startups around it could prosper. In addition other foreign governments who usually follow the US on these types of regulations will start to endorse cryptocurrency which makes everyone better off in the long run.
My goal for bitcoin and other cryptocurrencies was always to get the technology into as many hands as possible, so they could see the real benefit for themselves. I truly believe an ETF will help accomplish these goals and more. I think we can accomplish them even without an ETF, but with one we can accomplish them much faster and more effectively. If you have any comments or anything else you wanted to add, feel free to reply and I will respond!
-Calaber24p
The NSA says no the bitcoin ETF
An ETF will provide an on-ramp for fiat value to enter the crypto economy. This will be by far the biggest benefit of the ETF. Existing on-ramps are way too small and sketchy to handle any meaningful amount of fiat value; once a listed security is available on a major exchange we will witness billions and likely trillions of fiat wealth pour into the crypto economy. GBTC and XBT Tracker are only available to a small slice of the investment world as they are OTC and on a Nordic exchange, respectively.
It is really the ripple effect that will revolutionize the crypto economy: let's say the Wink ETF goes live and BTC skyrockets to $40k/BTC. As someone with real BTC in a real wallet, what do I do? Leave it all in BTC? Nah. Now I want to diversify. But I despise the fiat markets, so I'm not going to diversify into Treasuries or SPY. I'm going to buy BTS, SP etc. And boom! Rising tide lifts all ships.
The only thing that sucks is that for low to mid value BTC users, we wont actually be able to move our coins into the ETF. Im not 100% sure what the minimum is right now but I believe it is somewhere around 1000 btc.
Just hodl the real thing.
Which one would you rather have? Gold ETFs, or the real deal?
Prescient.
And yes, you get it man. Guys this is an explanation of what's happening that really puts it all together in 4 minutes.
There are benefits to having both. Personally even if I could, I wouldnt move all the bitcoin I have into a bitcoin etf, but I would move a portion, maybe around half. Each offers a different advantage.
If the ETF is listed, you just buy it through a broker on the exchange like any other stock. To get your money out, you would sell for fiat on the market. It has nothing to do with any BTC in a wallet where you would continue to control the keys, or BTC that you would use for personal transactions. You wouldn't be buying BTC. You would be purchasing a security - same as how the gold & silver ETFs are structured. The ETF is not the same as owning BTC. It is a derivative that tracks the price movements of BTC.
Yes, but that is if they truly believe all cryptocurrencies are created equal. We need steem to keep gaining traction as well. Having the 4th highest market cap in the crypto universe certainly helps... if we can hold onto it.
Sure but Bitcoin has a bad reputation. Why should anyone with a lot of money from the legitimate world want to hold Bitcoin? Bitcoin isn't stable like gold and is known to drop in value. Also Bitcoin held in vaults get hacked regularly and the developers choose to do nothing to prevent it. This means to most people Bitcoin is basically just a hacker currency.
Bitcoin is now more associated with Mr. Robot than with investments. It's not likely to ever change because once a brand name is damaged it's just gone. I think it's time to move beyond Bitcoin if you're trying to do an ETF and just have a digital currency ETF.
Negative interest rates, inflation and diversification. We will see fiat value flood into BTC as soon as the ETF pipeline opens up.
Thanks. Nice Job!!!!!!
well thought out article. I think the ETF/s will eventually be the vehicle for a very large influx of capital. A brand new asset similar to gold coming onto Wall Street has got to have some investors salivating to get in early and beat the rush.
Yeah I think it will incite a lot of excitement on Wall Street and I really hope it comes to fruition
This would be great news for cryptocurrencies! I am a long time stock trader and you are exactly right what ETFs did for the price of gold.
The big players feel much safer when they know they can unload if they need to. The importance of increasing liquidity can't be overstated enough!
Yeah we can only hope what happened to gold with GLD to happen to bitcoin. Definitely agree with the liquidity statement. Big players need to be able to move in and out of positions without tanking/pumping the market and an etf, or 2 etfs like the ones that are in the process of applying can help this greatly.
Yep. It will also add a layer of legitimacy to the entire cryptocurrency universe, thus benefiting Steem.
As you mentioned above many investors do trust the stock exchanges and this would be a huge windfall in gaining trust.
Thanks for the analysis and looking forward to its uprise! All for one and one for all! Namaste :)
But what if the ETF gets hacked ?
Good article @calaber24p. The Winklevoss twins will never sleep until they get full revenge on Mark Zuckerberg for stealing their idea for Facebook. A Bitcoin ETF is new currencies in a old wrapper. The first BTF (blockchain traded fund) is more significant to financial markets and everyday investors.
This is the year of adoption! Buy while you still can!!!
Good food for my mind. That's the read I will wake up next morning. Cheers and good night.
I have already felt the bit changes, human moving from the atomic age to bit times.
Depending on the success of steemit, there will be many more bitchain-social medias and perhaps other bitchain shopping sites. Who knows, but since most of you are reading this here on steemit, that proves how fast idea can become successful in this technology age.
Will read it soon. looking great article
When Bitcoin came on the scene it looked as though it was a fad... it lost some momentum for a while but now has regained it and looks like it is here to stay. I would be surprised if there is not a Bitcoin ETF in the very near future.
Excellent posts, you make many great points, some of which I cannot comment on because of my lack of knowledge on how ETFs would affect the market.
I do understand how HSBC and JPMC are printing paper gold and silver, buying and selling their paper BETWEEN themselves to push the price down.
A BTC ETF would be created by ?? And how can they be kept honest?
HSBC is certainly not. And JPMC ceo Dimon says BTC will "eat his lunch".
They should not be involved, IMO.
But something tells me they'll pay off whomever is necessary to be the BTC "market makers".
I trade my Bitcoin and Ether on the Gemini platform owned by the Winklevosses. Being a resident of New York, more and more companies are not joining the regulations that we have here (For example, I cannot have an account on Poloniex).
I think getting Bitcoin and all Crypto into mainstream ease of use would be ideal for its further acceptance and growth. An ETF will definitely expedite further growth. These are just my opinions.
-bigedude
I'm all for a crypto ETF! Thank you for sharing!
You have a point, but don't really see any concrete ideas on why it makes it easier for the average user. You can make a lot of money in crypto but also there's serious risk involved which is why the two principles are in balance. This sounds like something more as a lucrative opportunity for the old school investor while most people who are more current already know how to reach access to this on the internet are up to date and have holdings or watching things on the sideline.
I guess this sounds like a monetary opportunity for the industry mainly depending on how other institutions look upon this, but don't see this as much of a mainstream thing as technology is changing and the best investment platform is one that attracts a lot of users which is something I think we're already on the right track currently.
Nice work once again my friend, and good content. I appreciate your hard work and your thoughts.
Interesting article. Much food for thought!
Great work, good information - keep it up!
This certainly would be useful for when I do work out of the country.
Awesme article
I just have a criticism we in the bitcoin ecospace are passionate about the libertarian anarchocapitilist aspects of bitcoin. Being a decentralized non controled ledger thats corruption proof is i believe a lot more important than popularity or fast adoption. Creating an etf may be fine but creating massive amounts of derivitives where by those can be used to control the price through market manipulation would be just like the system a lot of us are trying to avoid in the first place by using bitcoins.
an etf would be great, so grandma will stop calling me to help her restore her wallet.
Great article @calaber24p but Im still unsure about all this. Need to research this a bit more, Cheers!
ETF may attract many, but at what price long term... we see that GLD and SLV are not so good, too much between you and your holdings.
great post :) very informative
It is now unlikely Bitcoin will ever receive "mainstream adoption"*. I used to think it was probable, but then there was the blocksize debate, then the DAO hack, and then the Bitfinex hack, and finally the NSA hack.
Bitcoin development is not geared toward achieving mainstream adoption and now the brand is not associated with anything that mainstream people are interested in. It's not even going to be mainstream among hackers and sex workers, and if it's not popular with those groups what chance does it have?
Why should I buy and hold Bitcoin using an ETF mechanism? Bitcoin wont scale, the brand is currently damaged beyond repair, so why would I buy it?
Personally, ive never understood the appeal of widespread adoption in the first place, at least on the merchant side. SO many of my BTC friends are convinced that its somehow crucial to the platform that they can buy their morning coffee or a pack of smokes with btc.
That said, among the unbanked countries and countries where banking is very risky, , its still (and almost certainly will always be) the coin o the realm.
GBTC you have to be accredited investor with networth more than 1 million. I want the general public to have a chance to invest in ETF and be able to have your own private keys the SEC will not be able to protect BTC. This article has very good points but the market will no longer be decentral.
Couldn't big banks use paper bitcoin and alts to manipulate the value of the underlying asset, just like they do with gold and silver?
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i hope so mate. do you really believe that etf thing will spike up bitcoin price?