2024 started with a bang as the SEC approved Spot Bitcoin ETFs halfway through January. They were a revelation, with tens of billions in investment dollars flooding into the space and completely rewriting the face of cryptocurrency (forever). Finally, the big institutions that had bullied, criticized, and squashed the potential of the blockchain were now looking to capitalize on it. It appeared a huge victory for the millions of crypto professionals, traders, and enthusiasts who had poured so much energy into this space over the last 15 years.
In the spring, Ethereum ETFs were to approved by the SEC, and while this news didn’t quite excite the masses in the same way, it continued to prove that crypto cannot be ignored. It’s now a major consideration for traditional finance (TradFi) investors, who have an exciting new asset class they can easily access in the US through their favorite brokers.
Crypto is in the mainstream, and ironically, that might just be its downfall. Let’s explain.
Understanding The Core Values of Decentralization
Decentralized offers a number of key benefits, such as:
- Speed in settlements
- No intermediary delays
- Upfront identification and reputation
- Flat structure with no overhead
- Permission-less user access
- Resiliency against attacks
- No censorship
- No central point of failure
- Governance decisions by consensus
- Peer-to-peer communications
Which of the values listed above do BTC & ETC ETFs threaten? All of them. Investing with a professional broker is slower, delayed by intermediaries, requires identification to satisfy KYC & AML checks, is part of a hierarchical structure with considerable overheads and commissions, and requires permission to access. Hackers can steal from brokerage accounts, censorship exists, each broker is the central point of failure, governance is decided by senior management, and communications are absolutely not peer-to-peer.
The founding values of crypto, the blockchain, and decentralization are completely and utterly compromised by Bitcoin and Ethereum ETFs.
Pumps & Gains vs The Bigger Picture
Most investors have one goal in mind – big profits. They’re looking to take risks, find assets that can quickly increase in value, sell for a profit, and quickly move on. That’s the aim of new investors, particularly those coming from TradFi, as they look to capitalize on BTC and ETH volatility. Unfortunately, that has a knock-on effect on those who have developed and contributed to the blockchain industry. The more people engage with centralized crypto ETFs, the more we move towards a more centralized future for the crypto space.
“People get so caught up in get-rich-quick schemes, moon shots, and pump-and-dumps, that they fail to see the bigger picture. Some investors are harming, more than helping this industry, but it’s not their fault. Most are unaware. Most investors don’t realize they could make a few simple changes and support a new financial system for a better financial world. ” – Takashi Nakamoto, BloomBeans.
Why is More Centralization a Bad Thing?
For the same reason you probably aren’t a big fan of your boss or government, centralization causes power to pool in certain places, and for some can overpower you and make you feel small. Centralized entities give all the power to a central figure, turning the structure into a pyramid, instead of distributing power and keeping operations flat. In a centralized system innovation, hard work, and creativity are not properly encouraged or incentivized, leaving everyone to suffer the consequences. Things become slow, bureaucratic, and inefficient. Eventually, centralization will give birth to decentralization, if permitted.
If we apply bigger-picture thinking to Bitcoin and Ethereum, then the act of packing them neatly into ETFs, along with some financial regulations, and trading them through brokers on stock exchanges, just turns crypto into another boring asset class for average investors. It attacks the ability of crypto to drive the future of money, to exist as decentralized digital currencies, and places their performance and ownership under large asset managers like BlackRock, instead of being distributed globally.
ETFs hand over the trust of our beloved crypto to intermediaries, brokers, and institutions, when it should be held in a sovereign and self-custodial manner by individuals seeking liberation from centralized ideologies.
A New Financial System
One project trying to educate investors about an alternative way forward is BloomBeans. It argues that if Bitcoin had developed a native financial system, it would look like BloomBeans, with blockchain-backed Crypto Financial Assets such as pensions, insurance, income streams, and interest-free loans. Their new financial model is based on math and code, not centralized power, manipulation, and discrimination. BloomBeans is for all, and that’s the message of its Founder, who goes by the alias Takashi Nakamoto.
If, in the future, you are tempted by Spot Bitcoin ETF investments or the Ethereum equivalent, cast your mind back to this article, the dangers we’ve presented, and the alternatives that exist, and consider whether that investment is genuinely as progressive as the world’s biggest trillionaire wealth managers would like you to believe.
