Arthur Hayes: Why ETFs could “kill” Bitcoin

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Azuma
1 months ago
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Price and utility are two different things.

This article comes from: Blockworks

Compiled by: Odaily Azuma

Editors note: The expectation of approval of the spot Bitcoin ETF has ignited emotions throughout the Crypto industry, but in the view of Arthur Hayes, co-founder and former CEO of BitMEX, this may not be good for Bitcoin itself and its users. a good thing.

As a super OG in the Crypto industry,Arthur believes that growing institutional interest in Bitcoin could lead to “something that we wouldn’t like.”

Arthur Hayes: Why ETFs could “kill” Bitcoin

Recently, Arthur was a guest on the On the Margin podcast and was interviewed by overseas Crypto media Blockworks.

Arthur came up with a hypothesis in the interview,What would happen if Larry Fink (founder and CEO of BlackRock) led a group of traditional finance people to enter the market and absorbed a large amount of Bitcoin that could have been freely circulated?

Arthur predicted that after spot Bitcoin ETFs, these institutions may also propose Bitcoin mining themed ETFs, because BlackRock is the largest shareholder of some leading mining companies.

  • Odaily Note: What Arthur means here may mean that in the future, institutions will not only control a considerable part of the circulating supply of Bitcoin, but also control the computing power of the entire Bitcoin network (the basis of consensus) to a large extent.

Arthur warned that very large asset management companies like BlackRock are essentially agents of the state’s will, and they will act in accordance with the requirements of the state’s will.

  • “If the national will wants citizens to remain in the fiat currency system so that citizens can be taxed through inflation and used to repay the growing debt, then it is natural for very large financial institutions (who will essentially obey the national will) to get involved in Bitcoin ETFs. That makes sense.

  • Because under such a system, you can actually no longer use Bitcoin normally. With an ETF, all you get is a derivative financial asset, not the actual Bitcoin itself.

  • You need to use legal currency to purchase this derivative asset... Behind the scenes, institutions will buy real Bitcoins, and then find a custodian service provider to keep the real Bitcoins there.

  • If the ETFs of institutions such as BlackRock are too large, this may actually kill Bitcoin, because the real Bitcoins are not put into the hands of users, they will just be quietly placed there, and all users get is a Its just a derivative asset with a price bound to it.

In addition, Arthur further warned:A single entity holding a large share of computing power will also strengthen its control over network consensus.

In order for Bitcoin to always exist as a rock-solid Crypto asset, the network may need to perform a series of upgrades in the future (especially encryption and privacy-related functions), but traditional financial institutions may not agree with these concepts. If What happens if they object?

  • “Will they support these upgrades? This is a questionable question, and I don’t know the answer, but obviously when there are passive holders with large shares in the ecosystem, there will be more unknowns about this matter.

Arthur emphasized that from the beginning, Bitcoin has been a currency that is completely different from legal tender. Bitcoin was created to achieve inclusive finance, and its vision is to allow everyone in the world to safely transfer and trade money anytime, anywhere.

But what happens if most Bitcoins are controlled by one or a few institutions?

Of course, wider acceptance of Bitcoin will undoubtedly increase its price significantly, but is this really good for Bitcoin’s actual utility?

  • Are we indulging in short-term excitement and ignoring the huge disaster in the future? I dont know the answer.

Arthur concluded by saying that people need to think longer term about these issues.If ETFs are coming, the price of Bitcoin will obviously rise, but what will be the final outcome of this story?

This article is translated from https://blockworks.co/news/institutional-bitcoin-blackrock-otmOriginal linkIf reprinted, please indicate the source.

ODAILY reminds readers to establish correct monetary and investment concepts, rationally view blockchain, and effectively improve risk awareness; We can actively report and report any illegal or criminal clues discovered to relevant departments.

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