I didn’t really have big plans to create three posts that all focus on various elements of the recent bitcoin exchange traded fund approvals.
After all, I’ve been alluding to and discussing this possibility for months — years even. It’s been on the horizon that long. And while I understand the general excitement about the bitcoin ETF, even understand the necessity on some levels, it also feels like a “if you can’t beat them, join them,” kind of moment.
So when I started writing about the bitcoin ETF approval last week, it turned out I had a lot to say.
I shared the first post in this series in last week’s issue. This post looks at the reason’s why a bitcoin ETF is a good thing and why it might be bad for bitcoin. Or bad, anyway, for the dream of an alternative financial system that’s based on the principles of self-custody and peer-to-peer interaction rather than corporate control.
If you remember, bitcoin was founded on the premise that programmable money and decentralized networks can be used to build a backbone of a new kind of system that leverages the internet in a more individual and freedom-preserving way.
That’s a big promise to deliver on, but the major innovation behind bitcoin is its tech stack — mainly the Bitcoin blockchain (a distributed ledger, accessible by anyone) and a system of digital wallets controlled by encrypted private keys.
While thinking about this context, I thought it would be helpful to understand how a bitcoin ETF will actually work. I boiled down the process into a handful of simple steps (I’ve oversimplified it ,probably). The idea is to illustrate that an ETF is actually a really complicated process — all to make access to bitcoin’s price easier.
The more I write about the approval of the bitcoin ETF, the more I realize how big of a deal it really is. It also raises more questions about whether this is an overall good thing for the movement to build something that challenges the status quo rather than fits neatly within it.
With that in mind, I wrote the final post in the series. This one is more of a big picture take about bitcoin and the financialization of everything. The basic idea: Will the narrative of bitcoin as hard money hold up against the push to make everything a financial product?
Maybe this is the “markets have spoken” kind of moment. The reception to the bitcoin ETF has been historic on a number of levels. The inflows, in the first week of trading are telling their own story:
Next week, we move past the ETF and get back to our regularly scheduled program.