BlackRock's Paper Bitcoin \ stacker news ~bitcoin

1097 sats \ 21 comments \ @siggy47 19 May bitcoin

This shouldn't be a shock to anyone, but it still makes me angry: https://primal.net/e/note1nqs4hc4g68lcg39fmgkehzs2u83r5s09uxtpf0mr8yklrexe2acsexp3mt

They can borrow bitcoin, and then sell it short without anyone knowing.

Self custody is the only defense to institutional control.

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213 sats \ 2 replies \ @grayruby 19 May

Proof of reserves should be the standard and the community should be shaming issuers into providing it. If they want to transact off chain then they should be proving they hold what they say they hold.

202 sats \ 1 reply \ @siggy47 OP 19 May

I'm wondering who is the community, though? MY community self custodies and wouldn't buy an etf to begin with. Their community is guys like Fred Kreuger who don't see anything wrong with paper bitcoin. Right now "they" only control <10% of bitcoin, but that may change as more of us sell out because of unimaginable profits over the years.

75 sats \ 0 replies \ @grayruby 19 May

Even those that don't buy the etfs can put social pressure on the issuers to show proof of reserves. Ark has committed to it. Hopefully other issuers will as well which might put pressure on Blackrock to do so too but probably not. They would likely just have Coinbase attest to the bitcoin being there.

125 sats \ 0 replies \ @bitties 19 May

It comes down to responsibility. If you trust someone else, then it’s on you.

96 sats \ 2 replies \ @riberet19 19 May

This was known is going to happen, I never celebrated these actors coming to Bitcoin...

40 sats \ 1 reply \ @siggy47 OP 19 May

I know. Same here. We're stuck living with the ramifications, though.

54 sats \ 0 replies \ @riberet19 19 May

They destroy everything in their path, they are big players in the fiat system, what can we expect...

75 sats \ 0 replies \ @cryotosensei 20 May

Michael Saylor is doing this via MicroStrategy too, right?

75 sats \ 0 replies \ @cristaiji 19 May

I guess we are the ones that have the responsibility to continue to call out these big institutions and convince the masses to self custody. And I take your point about Krueger.

55 sats \ 0 replies \ @OT 19 May

It's on the investors to learn more about reserves.

How long can they do this for? Its still risky to short over a 30 day window.

54 sats \ 5 replies \ @grayruby 20 May

Hey @siggy47 thought you might find this interesting. I saw James Lavish retweeted it on twitter. Teddy Fusaro- President of Bitwise wrote a thread explaining the mechanics of Blackrock's IBIT etf, what is recorded on chain and what is not.

https://twitter.com/teddyfuse/status/1792535008021790813

100 sats \ 4 replies \ @siggy47 OP 20 May

Yes. Thanks. Someone else posted the initial tweet without the thread. Thanks

EDIT: Can you post the thread? I'm not on twitter so can't view much. If not, can you post a summary?

54 sats \ 3 replies \ @grayruby 20 May

I tried to use the threadreaderapp but didn't work. Maybe you need to be a premium member for that. He was essentially saying blackrock has two accounts at coinbase a trading account which it uses to buy and sell bitcoin otc and a vault account that it custodies the bitcoin for the etf for. Vault account is with a separate entity owned by coinbase but not affiliated with the trading platform. Trading activities are not recorded on chain but transfers to and from the vault account are. The trade credits mentioned in the tweet is essentially credit extended to them by coinbase to cover the the T1 or T2 settlement blackrock has with authorized participants.

50 sats \ 2 replies \ @siggy47 OP 20 May

Thanks. So the credits don't need to be settled in cash for 30 days?

54 sats \ 1 reply \ @grayruby 20 May

Not sure. I guess it is whatever is agreed between coinbase and blackrock but he seemed to imply they get settled as soon as trades between blackrock and authorized participants settle.

0 sats \ 0 replies \ @grayruby 20 May

Here is what he said about that part.

It's: (a) get creation order (b) borrow cash in form of trade credits (c) buy bitcoin (d) exchange cash for btc (e) btc settles into trading balance (offchain).

In a regular end-of-day sweep process, the bitcoin that was acquired in the step above gets transferred from the trading account to the "Vault Balance."

^^ this transaction is on-chain ^^ remember: transactions from the Prime entity to the Custody entity are onchain.

Once the AP that started the process delivers cash to the ETF (which I believe happens on T+1 but we'd need to ask Blackrock to be sure, could be T2) IBIT takes the cash & repays the loan to Coinbase (cash in the form of trade credits) and that leg of the txn is complete.

54 sats \ 2 replies \ @moneyball 20 May

Response from Bitwise ETF https://x.com/teddyfuse/status/1792535008021790813

0 sats \ 1 reply \ @siggy47 OP 20 May

I am not on twitter. Would it be possible to post the whole thread?

1 sat \ 0 replies \ @anon 20 May

https://threadreaderapp.com/thread/1792535008021790813.html

54 sats \ 0 replies \ @TNStacker 20 May

43 sats \ 0 replies \ @0xbitcoiner 19 May

For these and other reasons, I do not buy or recommend that anyone buy paper bitcoins or use bitcoin as collateral for loans.