Bitcoin versus bitcoin ETFs: Not all crypto is Open Money

Not all crypto products are created equal. Here's why a bitcoin ETF isn’t the same as owning bitcoin — and what that means for Open Money.

Let’s use another comparison to talk about how not all crypto or crypto-related products fall within the Open Money framework.

Take a look at bitcoin compared to a bitcoin ETF, for example, and we can start to see that even though they both have the word bitcoin in them, they are vastly different in terms of Open Money.

Here’s a breakdown:

Bitcoin:

Bitcoin is permissionless: Anyone can participate in the bitcoin network and send or receive bitcoin. In extreme cases, you don’t even need the internet — you could trade bitcoin using a paper wallet or a hardware wallet. In most mainstream cases, moving bitcoin requires setting up a wallet and usually going through a know-your-customer (KYC) process to move money back and forth between bitcoin and fiat rails.
Bitcoin can be owned directly and stored in a non-custodial wallet, which means that only the person with the private key has access. This property means you can truly own bitcoin.
Bitcoin is open source: Anyone can inspect bitcoin’s code and fork or modify it. One of bitcoin’s strengths is that there is a global community of people working to improve its source code — and many others building new technology on top of it. While the code is open, it’s also incredibly difficult to get the community to adopt changes into bitcoin’s main source code.
Bitcoin is accessible 24/7, and can be accessed anywhere on the planet.

Bitcoin ETFs:

A bitcoin exchange-traded fund, or ETF, allows people to get exposure to the price of bitcoin.
An ETF is a useful tool for people and institutions that need to make investments through a brokerage — this could be for tax reasons (like a retirement account) or for institutional investing accounts that require working with a broker or a qualified custodian.
Bitcoin ETFs are not universally accessible — you need a brokerage account and must meet the criteria to open or maintain one.
You don’t actually own bitcoin when holding a bitcoin ETF, which means the ETF functions more like a traditional financial product and less like Open Money.

The takeaway here is that not all crypto-sounding products are actually Open Money. That’s not necessarily a bad thing. In some instances, it might make sense to use financial products that aren’t completely open or permissionless.

As the drive toward the financialization of everything accelerates, this distinction becomes increasingly important. The language of crypto is being borrowed, repackaged, and relabeled — sometimes in service of access, sometimes in service of control.

Open Money is not about financial products with crypto seasoning. It’s about reimagining the infrastructure of value — who can access it, who can own it, and who decides the rules. A bitcoin ETF might help more people speculate on the price of bitcoin, but it doesn’t help more people access the principles behind it.

This post is part of the Open Money Project, an ongoing series that forms the basis of a longer work. Subscribe to get a weekly update as it unfolds.

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