116 sats \ 4 replies \ @Gjoni OP 16 Jun 2023 \ parent \ on: Blackrock spot ETF - let’s talk bitcoin
I don’t think ETFs are scams, this is a way for institutions to gain exposure to bitcoin without actually having to custody it themselves
...and these institutions won't know if their "Bitcoin IOUs" are backed by real Bitcoins, or only created out of thin air
and even worse: we won't know if the whole market is not trashed by "paper Bitcoins" like gold market is with "paper gold"
from the other side:
https://en.coin-turk.com/what-happens-to-crypto-if-the-spot-bitcoin-etf-is-approved-here-is-the-gold-example/
BlackRock is too big to waste their time, imo.
So they already know it will be approved, probably before the halving ;)
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You are correct however consider that if the bitcoin ETF is not backed by bitcoin and the price goes up, what do they account for the change in value of the ETF. (E.g. I sell you a paper bitcoin, price goes up and you come to redeem but I never had the bitcoin, I’m out of pocket)If the prices goes down and the bitcoin is not backed then they essentially have made money by selling you paper bitcoin.
So yes they can manipulate but not to excessive levels, at least I think
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and you come to redeem but I never had the bitcoin, I’m out of pocket
but not all will want to redeem "BlackRock Bitcoins" in the same time - and that's the same trick which allows banks with fractional reserve to exist still ;)
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IMO they are scams, because custody of BTC can never be guaranteed.
What if they lose it, suffer a hack or a rogue employee drains the stash? They won't be able to recover it. The government won't be able to bail them out, because they can't print bitcoin. They can print fiat shitcoins and buy BTC with them, but that will increase the price, which will become a runaway train and no amount of money printing will buy the lost coins.
Imagine there was a drought and there is no food in your country, I.e. it's very scarce and therefore expensive. You can print money and give it to people, following the logic that if you give everyone $1m they will be able to buy the expensive food. But they won't, the food prices will go up and soon that $1m won't buy a bag of pasta. Because in a famine it's food people need, not dollars. If there is no food there is no food and no amount of green pieces of paper will make food magically appear.
In the case of a bitcoin ETF that lost people's bitcoin it's bitcoin they will need, not dollars.
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