Key facts:
- Bitcoiners prefer to hold the private keys in a self-custody wallet.
- The goal of those who invest in the bitcoin ETF is to make profits in dollars.
The growing popularity of spot bitcoin (BTC) exchange-traded funds (ETFs) raises a fundamental question among investors: do you really own BTC if you own a bitcoin ETF?
The answer to this question delves into the dichotomy between the financial convenience that ETFs provide and the decentralized philosophy that has defined the essence of the leading digital currency.
ETFs are essentially like depository receipts that represent ownership of an underlying asset which, in this case, is bitcoin.
In itself, what investors have under their power with ETFs are shares that represent ownership or ownership over a portion of the fund. In short, they are not owners of bitcoin, what they can do is generate profits with variations in its price, as defined by Criptopedia, the educational section of Market Times.
The premise “if it’s not your keys, it’s not your coins” is pretty clear. Having bitcoin is having the 12 or 24 words of the private key that enable you to sign a transaction and, therefore, move those BTC. There is no other way to be in power of digital currency. If you have an account on an exchange with bitcoin, you do not own the asset either.
The preference for BTC ownership aligns with the core idea of decentralization and the elimination of intermediaries.
In contrast, those who choose to invest in bitcoin ETFs often do so to make dollar profits. These investors seek to take advantage of the volatility of the cryptocurrency market without the need to deal with the technical and security complexities associated with the “physical” possession of Bitcoin.
This is confirmed by Bloomberg Intelligence analyst Eric Balchunas who, although he is optimistic about the possibilities that ETFs open, adds: “no one who uses an ETF wants to recover BTC; I would rather have dollars. “That is the goal of funds in general, to outsource all of this to someone else,” he stated.
For some, the question of acquiring bitcoin on their own or investing through ETFs probably arises, given the euphoria that financial instruments have unleashed in recent months.
At the moment, 7 companies requesting ETF approval are fine-tuning the final details, given that the United States Securities and Exchange Commission (SEC) has until next Wednesday to approve or reject ARK Invest’s application.
There is a possibility that the SEC will approve several applications on the same day to avoid favoring any one company over the others.
The dilemma between owning bitcoin and investing through ETFs highlights the duality of objectives in the cryptoasset space. While some embrace the philosophy of being their own banks and having complete control over their digital assets, others seek the convenience and accessibility offered by traditional financial instruments such as ETFs.
