You ask a good question, and you sound like an intelligent person. I think it boils down to your motive for owning bitcoin. If you just want to invest in it, then yes, an etf is a great way to go. But here’s the thing about bitcoin: it’s entire purpose is so that you can actually posses something that no one can take from you or interfere with. Ironically, one of the gripes I most hear about bitcoin is “it isn’t real because I can’t hold it in my hand.” Yet it is one of the few things you can actually own that no one holds for you. Banks hold your money. You don’t really own your house (taxes, building codes, municipal restrictions, liens). When you self custody bitcoin, it is yours, and no one can take it from you. No one can stop you from sending it across the globe. You don’t need to rely on a bank being open or setting limits. So if you want to own bitcoin for self sovereignty purposes, you self custody. If you just want it in your portfolio, then go with the etf.
Put in these terms it is much clearer to me. I understand that there is also a philosophy behind it but it largely escapes me because I am now approaching BTC. I definitely need to look into it further. Thank you
People like making fun of Saif for his view on modern art, but he's not even wrong lol. All that super valuable modern art is just a tax avoidance scam.
Another way to look at it - investing in a pork ETF is great but if there's a famine you'll want the bacon in your freezer well before everyone else realizes there's about to be a famine.
I have been buying bitcoin for a couple of years. I self custody half, but I leave half in the exchange, to mitigate risk of my user error losing all my value.
When an ETF exists, I will use that as my risk diversification. Hopefully by feeding it 401k/IRA money.
Good thing your exchange wasn’t ftx. I’d argue the risk is higher keeping it on an exchange. This is not a shot at you, but just an observation. We have become so accustomed to someone else holding our money, that we don’t trust ourselves. We’ve become so dependent on this bullshit system, that we cower at the thought of self sovereignty. We’ve become so dependent that we can’t imagine holding our own shit. Fortunately, you have broken that cycle to an extent. But there are millions of people so paralyzed by that fear that they don’t buy bitcoin.
Luke it or not, bitcoin won't ever be mainstream until the unwashed masses can use it like they do their bank.
When it does go mainstream, either half of my btc will make me happy.
Kinda surprised how triggering my risk diversification is to people...
I don’t think your risk diversification is “triggering” (the above comment seemed pretty level-headed), but rather people feel compelled to point out - especially when newbies are reading the thread - that the type of risk you are talking about regarding self-custody is qualitatively different from other asset risk in a very meaningful way.
Typical asset diversification advice is given in order to hedge against the market going or governments acting a way you didn’t predict - things out of your control. You buy *x* gold, *y* stocks, and *z* real estate in case one tanks.
The only risk in BTC self-custody vs exchange custody is *your own* error. It’s entirely within your control and how careful you are with your own property (e.g. keeping seed phrases secure, good anti-phishing practices, cold storage when possible, etc.). Putting your BTC on an exchange introduces another risk, one that is out of your control again and, further, depends on faith in more than the asset itself, but the specific institution holding it (which few people research).
I ultimately agree with you though; not everyone has the tech know-how to fully protect themselves or the time to learn (I actually lost my first .33 BTC to the Electrum phishing scam in 2019 when I was starting out…). Your strategy makes sense for those for whom exchange risk is worth the time it would take to learn proper self-custody.
*All this to say*: I think people respond uniquely to your “diversification” method because you’re ultimately taking a risk to hedge against your own actions, something that *may* make sense for the average joe, but is indeed a wholly unnecessary risk for those who know the tech better.
I wanted to be annoyed with your long response, but ilits a great response. Thank you for taking the time.
FWIW: I'm a strong believer in Murphys Law. That said, my keys have never been on my PC. It's backed up in titanium in a secure location. I'm doing everything I think I can, but there are always smarter people than me out there. I don't know what I don't know.
I feel like you didn't bother to understand my point about diversifying risk. I'm increasing my chance of a loss, but decreasing my chance of losing everything.
You make a good point in theory, but the risk is more lopsided than you realize. Let's say that you have a 99% chance of not losing your bitcoin that you keep directly, and a 30% chance of not losing the bitcoin that someone else holds. If you have 1 BTC then you can expect to end up with:
1 BTC 29.7% of the time
0 BTC 0.7% of the time
0.5 BTC 69.6% of the time
Whereas, if you kept 100% at home, your odds would be:
1 BTC 99% of the time
0 BTC 1% of the time
> but I leave half in the exchange, to mitigate risk of my user error losing all my value.
That's a bad idea. Just have back ups of your seeds. You can't lose them all.
In addition, with the ETF, you have a lot of counterparty risk. For example, if the Blackrock ETF is approved, you could buy the ETF at a broker, say Charles Schwab. Schwab holds your shares in “street name” at DTC which is the central depository for equities and other securities. Now for the counterparty risk:
*iShares Delaware Sponsor Trust LLC is sponsoring the ETF. You trust that they won’t screw up any registrations or legal aspects of the ETF.
*Blackrock Fund Advisors is the trustee of the trust (ETF) and you trust that they will manage the ETF with your interests in mind.
*Coinbase custodies the bitcoin held in the trust/ETF. You trust they will keep the bitcoin segregated from their own supply and not screw over the trust.
*BNY Mellon is the custodian for the cash component of the trust/ETF as well as the administrator, and you trust they will have proper accounting controls and not screw over the trust/ETF.
*Schwab holds the ETF in your brokerage account and you trust them not to hypothecate, loan out, lend, etc. your position and that they maintain good books and records of your ownership.
*DTC holds the actual shares on behalf of Schwab and you trust them not crash, misrepresent holdings and that they will settle trades correctly.
*There are other entities involved (e.g. prime brokers) with the trust/ETF. You trust them to be “good”.
You trust they do not have rogue employees looking to cause trouble. Also, each of those entities will need to get paid, so bitcoin held in the trust/ETF will be sold to cover all the management fees. As such, performance of the ETF will not be the same as that of pure bitcoin.
Yes, for the majority of people, investing in an ETF is “easier” and provides exposure in retirement plans and other types of accounts. But it involves trust and fees which degrades performance.
Saving in bitcoin, owning your keys/ storing in a wallet, only requires trust in yourself to keep it safe.
Good luck in your bitcoin journey - it’s a great trip!
Edit: I can’t format
Highly, highly recommend reading or listening to audiobook for Check Your Financial Privilege
That book will thoroughly convince you of the benefits of bitcoin as a utility and tool that empowers independence in communities all around the world.
It’s easy to not understand why anyone would hold BTC itself with all the risks when you live in a financially privileged society, but this book explains a lot.
I don’t have much to add, but I just wanted to say that I admire your attitude towards learning things, you didn’t argue back as if you just wanted to say something, I wish more people (including me) had such attitude towards things in general.
For me it's mostly counter party risk. It's small, but I want to own it myself.
Also I think if there is ever a chance that in the future certain transactions with bitcoin are exempt from paying cap gains taxes, then that would be a huge advantage of owning bitcoin vs. ETF.
There were already Senators proposing $200 transactions or less to be exempt. That alone would be incredible.
I would add 1 more thing. The more people that self custody, the larger the "returns." Self custody means 3rd parties cannot mess around with it to manipulate price. When its through on etf then the etf owns the ₿ and you own a promise. Just like with FTX. Not claiming here that Blackrock, ARK, et al. are shady like FTX. Counterparty risk in the same way.
Another thought for you: what do the people that know about ₿ do? There's around 70% of the total supply that hasn't moved in over a year. That means the vast majority of people are self custody, long-term hodlers.
Most importantly, it is the only form of wealth that, should things go badly, you can take with you. Even if you are forced to run at the witching hour you could take your financial freedom with you.
Just to add a bit to this - When you are just getting acquainted with Bitcoin, people normally look at it as a traditional investment. The ETF is a way to get exposure while you learn more about it. Most people in this sub are two or three stages ahead of you, so self custody is more important to them than it is to you - for reasons you probably have not even considered yet.
Get started with/when the ETF comes out and keep learning. Once it clicks, you'll never think of it the same way again. Good luck!
That's a great way to see, especially this one.
For the digital 🌎
If you need permission from a custodian for anything you are sending, then you don't really own that thing.
Or in other words if anyone can stop you from sending something, then you don't own that thing.
That's why stablecoins have their pros and cons
You know when I got into bitcoin in 2011 we talked about becoming financially free with crypto and unbanking the world, seems to me the community has pretty much just resigned to it being a store of value and little else. The VC companies pulled the scam of the century and used crypto to scam millions of people while the founders of these icos went to prison for defrauding people. They invested with the founder and dumped on the people who got hurt by these things. IMO we should be demanding that these VC groups who made hundreds of billions in crypto be held accountable as well and not just the patsy they put up to fronting these ridiculous “products”. Tokenization has severely ruined bitcoins image.
I doubt it, but they should make these VC companies who pretty much were the main driving force behind most icos be banned from that kind of thing. How it works is a founder approaches a VC says I got this token for x fiat I’ll give you 20% well the VC knows that nearly all these tokens are worthless but they know the mania is making them explode so they get their coins, wait for the ico and watch the price pump and dump coins all the way up they made billions this was in both the last 2 bubbles and no one put them in prison.
I bet anything these VC’s actively tried to push some of these cons into existence knowing they win no matter what. Why the Feds aren’t investigating the vcs role in many of these coins is crazy, guess they got the money and the lawyers. They’re just investors, ya right. They are just as guilty as these con men. There is only a handful of genuine use cases for these tokens, like exchange token for fees, these icos were just making crap up. “were the first blockchain coin to integrate fiduciary assets into real estate with a native token to power the ecosystem”, I just completely made that up, it’s nonsense but I coulda made a billion off idiots buying it cause they think they’re gonna get lambos… gen z is so dumb it blows my mind
In our current environment where fiat is required for most goods/services to service, yes. But even then you can route sats out to the rest of the world's 10,000+ nodes back to another one of your nodes (given the amount is small enough to undercut liquidity needs).
It's as difficult to stop as torrent downloads... Sure you can arrest everyone running pirate bay, but the software is open source and any 12 year old with a $100 raspberry pi can run a node anywhere on earth.
It becomes difficult to stop for this reason. The solution, similar to pirating movies/music, would be for the incumbents to offer an alternative that is better... Which is unlikely when it comes to money, because having a money printer suits human greed in an oh so enticing fashion.
I'm not talking about being invisible. Tbh if the government wants to find you then 99% chance they will.
I mean not having to rely on an individual or an institution to use your money
I kind of agree with what youre saying to some extent. Yeah Bitcoin is a bearer instrument but the ledger being public leaves your coins open to being blacklisted. It's not truly fungible from my understanding which is a bit disappointing. Unless there are some mixing services I'm unaware of but those seem to only be popular on other chains.
Uhh yep… only those who don’t understand it, mainly boomers, think it’s supposed to be anonymous and used exclusively by hackers because it’s so “private”
Bitcoin in an ETF: You have an IOU which is backed by the custodian of the IOU and the legal system.
Bitcoin on the blockchain: Once your transaction is confirmed, your bitcoin is validated by 16,000 independent nodes. If one or a thousand of those nodes fails, you still have thousands of other independent nodes. You paid for your transaction so your bitcoin exists as well as the mining fee that you paid which belongs to the miner. That means that your transaction was not only yours, it also in part belongs to the miner who received the fee. A transaction that is confirmed by a mined block has never been reversed and the protocol would not allow it. All you need to do is to hold on to your 12-24 word seed phrase and keep it safe. When you want to send out that bitcoin, you can send it to any bitcoin address you want.
As a spot ETF is secured by the underlying asset buying a spot BTC ETF might be a viable option but only if you are just speculating on BTC price: No self custody and no use for payment. Also there will be fees for the ETF as usual.
As the price of BTC is very volatile I am wondering how accurate those ETFs will track BTC price and if there is a spread which would make a BTC ETF even more pricey.
For people who are currently buying of Exchanges like TradeRepublic (no self custody, 2% spread on BTC) those Bitcoin ETFs might be of interest though.
ETFs all have management fees. Like the Canadian etf, BTCC, has a 1% management fee.
Now, most people don't care if it means they can hold bitcoin in their tax-free investment accounts. Also, if the etf is audited by the gov then there is little to no worries about the underlying asset. So the 1% fee takes all the worry out of owning bitcoin (ie. losing your wallet, or getting hacked, etc.)... all that is the etf's problem to worry about.
But if not for that primary reason (tax shelter), why give away 1% a year if you don't have to.
Additionally, etfs are sometimes pretty crappy at tracking the spot price. And good luck trying to understandt why the etf is 5% off the spot price... no one can ever give you a clear answer why.
One thing that is not mentioned yet is that you can sell or buy Bitcoin any second of the day.
With ETFs you can only buy or sell during market hours 9:30-4pm M to F.
So if Bitcoin dumps 40% at 8pm on a Tuesday and you want to panic sell you can’t.
Bitcoin Futures is a better option in my opinion since it’s open 23 hrs a day. But it’s closed Friday after 5pm till Sunday 6pm. But Bitcoin is kinda flat on the weekends.
1. Ownership and Control:
1. You don't actually own the Bitcoin if you have an ETF, and you potentially can lose it in an ETF if the EFT managing company goes under or faces financial difficulties. It partially depends on the structure, but you risk a lot letting someone else control it. = Not your keys, Not your Bitcoin. If they have financial issues in general or in other areas, it's possible you might be the person who gets screwed.
2. Additionally, what happens if they have an employee steal the Bitcoin?
3. What if a hacker obtains their keys? Your "IOU" doesn't mean jack to the thief. You're just screwed.
4. ETF's face a liquidation Risk. It's possible that in the middle of a Bear Market they will decide to close or liquidate the fund. Then you receive your net asset value of your shares which may be way less than your original investment
2. Custody and Security
1. Using an ETF means someone else handles custody for you. They might use a hot wallet vulnerable to hackers, they might give someone untrustworthy access to the key(s) and have no recourse if the BTC disappears in one way or another. Your ETF won't be as safe as owning it yourself.
2. If you secure it yourself, you can take it offline into a hardware wallet or other ways to keep it more safe.
3. Flexibility
1. If you own it can you use it as you see fit (there are lots of potential uses for Bitcoin), while an ETF might limit your ability to use it depending on their rules. They are unlikely to let you use it any way except to trade it to someone else who wants an ETF.
4. Fees
1. ETF's are likely to have maintenance fees, management fees and other expenses. Direct Ownership may incur transaction fees on the primary BTC network, but lower ongoing costs if you are managing your own storage. ETF's are likely to steal some of your gains to pay the people running the ETF.
5. Simplicity vs Control
1. It boils down to what is important to you. simplicity comes at the cost of higher risk, little to no control, reduced security guarantees, and potentially slightly lower long term gains due to paying someone to manage it for you.
owning Bitcoin directly gives you full control and exposure to the underlying asset’s potential, while Bitcoin ETFs offer convenience, regulatory oversight, and, in some cases, diversification.
What do you think of Dollar ETF's?
There is the DXY index, I suppose. But in a world where everyone's using dollars to buy things, would you rather have dollars or the DXY index?
I'm a world where Bitcoin is the money, an ETF priced in Bitcoin is gonna look silly, huh?
You have to live or know about living in a country with strong capital controls to understand the importance of owning and being able to do whatever you want with your own money. Bitcoin is not an investment, it's peer to peer money.
If you buy a Bitcoin ETF, in 20 years (or however long of a time), and you want to use "your" bitcoin to buy something, you will realize you in fact don't actually have bitcoin. You will have to trade your shares in the ETF back to dollars, which will be so worthless no one will accept them anymore. Or you could just buy actual bitcoin now and have the real asset and skip that headache.
The price and maintenance is not lower. That company will take a cut. Zero risk of loss? Absolutely not. If that company goes bankrupt will you get your btc back? Who knows. You may get a percentage back in cash years later. When you hold your own bitcoin in cold storage properly, nobody on earth can confiscate it from you. No one can take it. No company going bankrupt will make you lose it. No company with corruption can steal your bitcoin.
You own the bitcoin and you can take it to the grave with you!!!
If you buy a greyscale spot ETF you own a promise from greyscale and nothing more.
It's more convenient to buy an ETF than BTC, it's also nice if you want anyone to inherit your wealth if you die unexpectedly. You get extra perks in the brokerage account like being able to automatically invest or automatically sell at a target price. You might even be able to have the ETF in an account with deferred taxation or other incentives. Potential taxes are generally automatically calculated as well. If you are just after the price, don't consider buying BTC directly.
The only legal way to buy or sell BTC directly is to use a KYC crypto exchange, they are all terrible. The crypto on them are not insured, if someone breaks into the account and steals your crypto, you are out of luck, same if the company folds or just put your funds on hold.
Converting larger amounts of BTC back is also a headache, if you don't use the same exchange they will require some sort of proof of purchase, which will be hard to come by if the old exchange folded.
The upside of holding BTC directly is that you have a portion of your wealth in a form where only you can move it around. You can take it with you to the grave or give it to some stranger without exchanging any personal information directly. You might even find something you want that you can spend it on. You also have some BTC which is fun to think about. Also zero yearly fees on holding it in cold storage.
An ETF share basically is just a promise for something valuable you might recieve sometime in the future. BTC is the valuable thing itself. And when self-custodied you actually really own it and you're not dependent on anyone to fulfill any promise.
Usual people should always purchase usual bitcoin and store it on a hardware wallet.
Look what happened with gold. People no longer have to buy bullion and hide it under the bed and today physical gold ETFs control a third of the world's gold
But because Wallstreet is run by crooks, you can never know that any of the gold you bought in the ETFs actually ever existed. In other words, the gold price is believed to be greatly suppressed exactly by selling people worthless paper certificates for an unprovable commodity. You say *physical gold ETFs*. Can you show me that gold?
*(Edit: Thinking about it, gold ETFs are like the invention of fiat money all over gain: handing out paper certificates for gold claimed to be held somewhere. Insert "I'll Fuckin' Do It Again" meme. This is actually quite hilarious. People are so gullible.)*
The same danger looms with bitcoin ETFs. They are supposed to hold the BTC they say they do, but who’s going to make sure of that? In a bank run on the ETF (everyone withdrawing at the same time), you may or may not get back the value you thought you are owed.
Buying real bitcoin and self-custody is the only way to make 100% sure of what you own. It removes the counterparty risk. You can show me your BTC on the blockchain.
Look *what happened to gold in relation to fiat.*
If you want to laser in on something, checkout the sordid history of fiat money. The games being played always shift costs to the average citizen and what they're doing is unsustainable.
I own bitcoin because I know this fiat fuckery cannot continue indefinitely. Fiat is entirely debt-based, and its economic growth is reliant on the creation of exponentially more debt. At what level of debt do things begin to break in the economy?
And I'm not thinking "recession" here.
How long can we keep going like this before something breaks that renders the entire system significantly susceptible to near-complete inoperability?
Bitcoin is the safest haven I have found from the raging fiat storm that seems to intensify by the day. Only time will tell, but I have no faith in fiat anymore, after learning what I've learned, that's no longer possible. This is why I don't give a damn about convenience, because bitcoin is truly priceless to me.
There's a huge advantage to actually buy and self-custody BTC directly, which is you're taking coins of the market. This basically means you're actually creating upward price pressure of the asset that you hold.
If you buy an ETF, you are actually hurting your own investment, because the institution might not actually buy the underlying asset.
If the institution is well respectable and they say it's full replication then that's true. They won't put themselves in a position where they can get sued.
You're paranoid
Owning btc is not convenient I need to get a hardware wallet, roll my own seed, transfer my funds to the hardware wallet, generate a new address every time I want to buy, keep the seedphrase safe offline, these are too many steps for the average Joe, Joe could just buy the etf on his stock account and all the hard work is done by the custodians for a 2% cut/year of course
Because when you Invest in a spot ETF you still own zero Bitcoin. When you buy BTC and self custody you actually own the BTC.
If you have your money in the bank or with someone else and they lose it you are screwed because you never had custody of it. Same with BTC
People here are focusing on the idealogical reasons you should own Bitcoin over the ETF. I'll make the point that I think by the time the ETF is able to be purchased it will be significantly more expensive to buy.
Bitcoin is highly illiquid. 70-80% of it is in cold storage with no plans to be moved for decades (or even lost forever).
So when Blackrock, Fidelity, Van Eck, Wisdom Tree, Invesco, etc all get approval (which I believe will likely happen together) you could see a bit of a war as they're all trying to fund their Spot ETF.
If I didn't care about all the idealogical stuff others are mentioning here (which, I do) I'd be buying it on Coinbase and leaving it on there until I'm ready to sell. Then use that money to fund the ETF purchase. Because I think it will go up before then. Plus, Blackrock is using Coinbase for custody. So you're not trusting anyone you're not going to be trusting anyway.
I do plan on getting the ETF after the hype goes down for my Roth IRA. Those tax benefits through decades on an asset like Bitcoin are a no-brainer.
Because you can’t do anything with an ETF. You’re still trapped by the government. You don’t have the financial freedom that owning actual Bitcoin allows.
- You can’t spend your Bitcoin
- You can’t trade it peer to peer with no intermediary
- You can’t buy/sell it 24/7
- You can’t protect yourself from institution/bank collapse
You should take some time to learn what the use case of Bitcoin actually is and then you’ll hopefully understand why you would want to own it rather than a paper representation of it’s value in government issued infinite-printed dollarydoodilies.
Kinda like buying a Mercedes vs. buying stock in Mercedes-Benz.
Do you want to own the actual thing or just something that roughly tracks the value of the real thing? Both might have their place, that's up to you to decide.
The simplicity of buying an ETF you mentioned is highly subjective. Probably depends on if you feel more confident with your computer skills or with your financial skills.
Buying, transferring and self hosting BTC is simple, *for me*, I wouldn't know where to start with getting an ETF.
The stuff about taking custody and not having counterparty risk is true, if you self custody directly you can also much easier do what you want to with your bitcoin in a practical sense - e.g. spend it rather than having to wait for processing the ETF sale.
However the main thing that people are ignoring is if you self custody you don't have to pay management fees. These do add up, and there's just no need if you just make a one time investment in a hardware wallet.
As people mentioned, it depends on where you stand on self custody. Being your own bank comes with a lot of responsibility. The etf would be for trying to capture the gains without the self custody. Depending on the amount you’d be looking to invest, if you self custody you can look into a cold wallet like ledger or trezor. If you decide to buy on a cex like Coinbase, you can add extra security measures like whitelisted addresses, authenticator app, etc as well. Do some research into self custody and decide if it’s for you. Could always split 50/50 etf and self custody initially to try it out as well.
more convenient to buy directly? lol it's not
ETF is for investments only, but it's of course the most convenient.
directly holding is for, well, everything else.
\-being in full control
\-usability outside of investments only
\-privacy (depending on where you buy)
When you buy bitcoin and take self custody of the asset, there is an undeniable property right to that bitcoin recognized by the nodes enforcing the rule set of the network.
When you buy via an ETF, you are entitled to a promise of that bitcoin. Essentially an IOU. Aside from utilizing a spot ETF in a tax-advantaged account, you are taking on unnecessary counterparty risk versus taking self custody.
Can someone explain this difference to me, I can buy btc on fidelity right now. But they want a spot etf also. So what is the difference between buying btc through fidelity crypto vs buying their spot etf?
Since BTC supply is capped. It’s driving factor is demand. My assumption is that the ETF is being made so large companies can dump their money there and remove lots of demand from actual BTC. The more that ppl put their money into the actual supply of BTC the more value it gains. The ETF is just tied to that value
huge simplicity implies that without it theres a lot of complexity. When in reality its no more complex than sending a letter in the mail. Its also sort of a limited version of bitcoin which limits your options for how to move forward
No one says owning BTC is more convenient.
Locking your front door is not convenient, but you do it anyway.
Some of the benefits of BTC:
- freedom
- censorship resistance
- it can't be confiscated
- you gain technical knowledge that will be needed one day anyway, better to start learning now
- you can f*** the state
The etf only gives you exposure to the price, but doesn't offer any of the above benefits. And the exposure to price is only temporary, because you'll get rugged one day.
Immediate Ownership: When you buy Bitcoin directly, you own it right away. With an ETF, you're buying shares of a fund that holds Bitcoin, but you don't directly own the cryptocurrency.
Control: Direct ownership gives you more control over your Bitcoin. You can decide how to store it, when to sell it, and use it for various purposes like online purchases or investments.
No Counterparty Risk: With an ETF, you rely on the ETF issuer to hold and manage the Bitcoin. If the issuer encounters problems, it could affect your investment. Owning Bitcoin directly eliminates this counterparty risk.
Security: Properly securing your Bitcoin is crucial, but it's something you can control when you own it directly. You can choose secure wallets and storage methods.
I own bitcoin, because I like having custody and power over my own freedom. Why would you NOT want to buy it straight from the exchange without more third parties?
If you are planning to hold more than 1-2 years it’s cheaper to pay for the spread than pay the management fees. Counterparty risk is also a big one though less risky with black rock. I will hold half my 401k in the etf.
Depends on how you’re using the term “convenient.” To hold BTC itself is more convenient because I don’t have to worry that someone else will take my BTC. If you want BTC strictly to make fiat profit then you can say BTC is more convenient because you don’t have to worry about self custody.
You own it today at todays price. Not some future price which may be higher.
Custody of asset on coinbase or kraken or Gemini is not a big problem if you don’t want to self custody. Same as an ETF. It’s an IOU.
Self custody allows you to own it without any risk of confiscation if you live in a jurisdiction where you can not or do not trust the authorities to be honest and fair.
No different than gold ETFs... so you're simplying asking why hold the actual asset when there is a spot ETF. Or are you asking why hold BTC over other assets? Those are two completely different questions. You are confounding the two.
Possession. That's it. BTC was the first commodity you can actually possess without risk of confiscation or other means of loss.
I would not say that ETFs or Trusts have zero risk, they are only as safe as the entity that maintains them. Are they highly safe? WAY safer than crypto exchanges, yes. Are they 100% safe? No thats only possible if you hold your own keys
I think you just answered your own question. Old money who is interested in bitcoin but don't want to deal with keys, wallets, exchanges, lost bitcoins. Yes it's better to have bitcoin but some people just like doing like that. A similar example could be people who buy real state and rent it out vs people who buy REITs on stock market. There is no right or wrong here, it's the price you pay for convenience and lack of ownership. At the end of the day whatever gets that old money pouring into bitcoin it's good news.
Owning etf, gives u access to the price movements only. Owning the money itself gives you all of its attributes, especially if u hold it yourself and acquire it non-kyc
Situation 1) I buy BTC and move it from the exchange into my wallet. I can independently verify that my wallet address contains the BTC I purchased. Everyone in the world is capable of verifying that my wallet address contains the BTC that was purchased.
Situation 2) I buy a spot ETF. I cannot verify that they actually have that BTC. No one in the world can verify that they have that BTC. We simply have to trust that they aren't lying. They have my money, and I now own a 'promise' at best.
Financial fraud from big banks/organizations takes place regularly. Best case scenario is the SEC catches them, charges them, and then fines them a penny for every dollar they stole.
If you wish to put money into a spot ETF, that's fine. I personally wouldn't consider it the same as owning Bitcoin. It's more like a bet on the future price of Bitcoin.
An ETF is a natural evolution of bitcoin as an accepted financial product. Yes, Bitcoin started out as a way to have the hardest, most verifiably scarce asset humans have every known, but to be honest there is still a learning curve with buying bitcoin and wallet addresses. Most people have stock exposure through their 401k and not individual stocks and it will be the same with bitcoin. Most people will have exposure to bitcoin via an ETF vs custody of their own individual bitcoin. Buy the ETF and enjoy financial freedom.
The truth is, it’s not more „convenient“. Self custody is a lot of things, but it’s not convenient. It will involve you learning a lot of things as a layman, because if you mess up, your stack will be gone. You are fully responsible for securing and storing your own keys, your economic wealth. It’s a compromise between convenience and minimising or reducing counterparty risks and take ownership of an asset with strongest property rights ever invented.
The gamestop shenanigans showed that we can't prove who owns what, as assets can just be lent and resold. Bitcoin answers this with it's distributed ledger system, everyone knows where every bitcoin is at all times. The ETF get's around that. Yes, legally, they have to have all of they BTC they say they have. But why trust the legal system that has let us down, when you can just own your own bitcoin.
The whole point of btc is to be in control of your own funds, if you buy an etf you aren’t buying btc your buying an IOU.
If you hold your own btc the entire financial system can collapse and you’ll still hold your wealth in a sovereign manner.
Also, important to consider, since you’re looking at it from a purely investment strategy, you will miss a massive pump from the entrance of an etf.
Remember that institutional adoption will only happen once. So do you want to get into Bitcoin before that happens or after?
It’s a great question and I would cite only two reasons, which by the way won’t be valid anymore years down the line:
1. The price will likely pump ahead of the ETF.
2. Management fees will be high at first. Maybe close to 1% a year.
The whole point of getting into crypto is to abandon traditional contructs of finance. Why you ask? That is why.
Have you not looked into pump and dumps? The government could easily do it and it would be TOTALLY legal, "For the good of the economy".
Also, old people hold the reigns of America's government. Do you really think they care to actually learn and understand the space?
If crypto dies, they will not care. Throwing money into stupid ass contructs built buy barely functional people....
It really depends on how much work you want to do and how safe you feel for having someone be reliable for your Bitcoin.
I understand business and companies wanting to invest in BTC via ETF, there is already a big infrastructure and laws toward this and probably not every company will want to store their Bitcoin and suffer hacks or be able to lose the BTC and be done with it, so for those ppl ETF is better.
Now, If the person or the company/institution wants to hold BTC themselves they can do it and it won't depend on someone else and they know they will be holding Bitcoin, it won't need to rely on freaking Blackrock or Coinbase etc
It's basically how you want your custody to be
The spot ETF wasn’t designed for you. The vehicle is purpose built for those with legacy retirement/pension accounts that are stuck in their investment house walled gardens.
In simple terms, it's better to own the underlying asset rather than a paper claim of the asset.
Would you rather own bitcoin, or a Chuckie's Cheese ticket?
You ask a good question, and you sound like an intelligent person. I think it boils down to your motive for owning bitcoin. If you just want to invest in it, then yes, an etf is a great way to go. But here’s the thing about bitcoin: it’s entire purpose is so that you can actually posses something that no one can take from you or interfere with. Ironically, one of the gripes I most hear about bitcoin is “it isn’t real because I can’t hold it in my hand.” Yet it is one of the few things you can actually own that no one holds for you. Banks hold your money. You don’t really own your house (taxes, building codes, municipal restrictions, liens). When you self custody bitcoin, it is yours, and no one can take it from you. No one can stop you from sending it across the globe. You don’t need to rely on a bank being open or setting limits. So if you want to own bitcoin for self sovereignty purposes, you self custody. If you just want it in your portfolio, then go with the etf.
Put in these terms it is much clearer to me. I understand that there is also a philosophy behind it but it largely escapes me because I am now approaching BTC. I definitely need to look into it further. Thank you
The Bitcoin Standard is a great intro to BTC I highly recommend reading it
Must read
Just don't get too carried away when the author talks about fiat art etc.
People like making fun of Saif for his view on modern art, but he's not even wrong lol. All that super valuable modern art is just a tax avoidance scam.
You are right. However, bad art has always existed, but we don't see it after decades or centuries, only good art remains and the rest is forgotten.
cause it's what wins as top dog for money laundering lol
absolutely
Another way to look at it - investing in a pork ETF is great but if there's a famine you'll want the bacon in your freezer well before everyone else realizes there's about to be a famine.
Brilliantly put! Well played sir.
Bitcoin University on Youtube is a great place to learn more.
I have been buying bitcoin for a couple of years. I self custody half, but I leave half in the exchange, to mitigate risk of my user error losing all my value. When an ETF exists, I will use that as my risk diversification. Hopefully by feeding it 401k/IRA money.
Good thing your exchange wasn’t ftx. I’d argue the risk is higher keeping it on an exchange. This is not a shot at you, but just an observation. We have become so accustomed to someone else holding our money, that we don’t trust ourselves. We’ve become so dependent on this bullshit system, that we cower at the thought of self sovereignty. We’ve become so dependent that we can’t imagine holding our own shit. Fortunately, you have broken that cycle to an extent. But there are millions of people so paralyzed by that fear that they don’t buy bitcoin.
Luke it or not, bitcoin won't ever be mainstream until the unwashed masses can use it like they do their bank. When it does go mainstream, either half of my btc will make me happy. Kinda surprised how triggering my risk diversification is to people...
I don’t think your risk diversification is “triggering” (the above comment seemed pretty level-headed), but rather people feel compelled to point out - especially when newbies are reading the thread - that the type of risk you are talking about regarding self-custody is qualitatively different from other asset risk in a very meaningful way. Typical asset diversification advice is given in order to hedge against the market going or governments acting a way you didn’t predict - things out of your control. You buy *x* gold, *y* stocks, and *z* real estate in case one tanks. The only risk in BTC self-custody vs exchange custody is *your own* error. It’s entirely within your control and how careful you are with your own property (e.g. keeping seed phrases secure, good anti-phishing practices, cold storage when possible, etc.). Putting your BTC on an exchange introduces another risk, one that is out of your control again and, further, depends on faith in more than the asset itself, but the specific institution holding it (which few people research). I ultimately agree with you though; not everyone has the tech know-how to fully protect themselves or the time to learn (I actually lost my first .33 BTC to the Electrum phishing scam in 2019 when I was starting out…). Your strategy makes sense for those for whom exchange risk is worth the time it would take to learn proper self-custody. *All this to say*: I think people respond uniquely to your “diversification” method because you’re ultimately taking a risk to hedge against your own actions, something that *may* make sense for the average joe, but is indeed a wholly unnecessary risk for those who know the tech better.
I wanted to be annoyed with your long response, but ilits a great response. Thank you for taking the time. FWIW: I'm a strong believer in Murphys Law. That said, my keys have never been on my PC. It's backed up in titanium in a secure location. I'm doing everything I think I can, but there are always smarter people than me out there. I don't know what I don't know.
Or as I like to say, I'm smart enough to know that there is plenty that I do not know. Damn you Murphy (unbinds extension cord for the 5th time)...
It's easier for me to use cashapp than my bank. And cashapp runs the lightning network. So we are basically there, now it's just adoption.
We're definitely getting there, but until our parents are buying bitcoin without magic words like Lightening Network, we still have further to go.
If the exchange goes down, your half of the savings dissapear. Just my 2 cents.
And if I connect my wallet to my PC that has some clever unknown virus, the other half disappears.
That could happen with the exchange funds also.
I feel like you didn't bother to understand my point about diversifying risk. I'm increasing my chance of a loss, but decreasing my chance of losing everything.
Multiple wallets would be a better solution.
You make a good point in theory, but the risk is more lopsided than you realize. Let's say that you have a 99% chance of not losing your bitcoin that you keep directly, and a 30% chance of not losing the bitcoin that someone else holds. If you have 1 BTC then you can expect to end up with: 1 BTC 29.7% of the time 0 BTC 0.7% of the time 0.5 BTC 69.6% of the time Whereas, if you kept 100% at home, your odds would be: 1 BTC 99% of the time 0 BTC 1% of the time
Your numbers are completely fabricated though, flip the numbers and it makes just as much sense.
And that is exactly why hardware wallets exists. These devices are too dumb to be able to host viruses.
If someone asks a penny for your thoughts, and you put your two cents in, where does the other penny go?
That’s ducking crazy to me 7 years later I still have control of all my coins
Every other day there's a post on here of people who lost theirs. You do you. I wasn't suggesting otherwise
You keep it on an exchange you prob gonna lose it.
If that is true, then the majority of people out there will never touch it. You prob wrong.
> but I leave half in the exchange, to mitigate risk of my user error losing all my value. That's a bad idea. Just have back ups of your seeds. You can't lose them all.
Why?
In addition, with the ETF, you have a lot of counterparty risk. For example, if the Blackrock ETF is approved, you could buy the ETF at a broker, say Charles Schwab. Schwab holds your shares in “street name” at DTC which is the central depository for equities and other securities. Now for the counterparty risk: *iShares Delaware Sponsor Trust LLC is sponsoring the ETF. You trust that they won’t screw up any registrations or legal aspects of the ETF. *Blackrock Fund Advisors is the trustee of the trust (ETF) and you trust that they will manage the ETF with your interests in mind. *Coinbase custodies the bitcoin held in the trust/ETF. You trust they will keep the bitcoin segregated from their own supply and not screw over the trust. *BNY Mellon is the custodian for the cash component of the trust/ETF as well as the administrator, and you trust they will have proper accounting controls and not screw over the trust/ETF. *Schwab holds the ETF in your brokerage account and you trust them not to hypothecate, loan out, lend, etc. your position and that they maintain good books and records of your ownership. *DTC holds the actual shares on behalf of Schwab and you trust them not crash, misrepresent holdings and that they will settle trades correctly. *There are other entities involved (e.g. prime brokers) with the trust/ETF. You trust them to be “good”. You trust they do not have rogue employees looking to cause trouble. Also, each of those entities will need to get paid, so bitcoin held in the trust/ETF will be sold to cover all the management fees. As such, performance of the ETF will not be the same as that of pure bitcoin. Yes, for the majority of people, investing in an ETF is “easier” and provides exposure in retirement plans and other types of accounts. But it involves trust and fees which degrades performance. Saving in bitcoin, owning your keys/ storing in a wallet, only requires trust in yourself to keep it safe. Good luck in your bitcoin journey - it’s a great trip! Edit: I can’t format
Highly, highly recommend reading or listening to audiobook for Check Your Financial Privilege That book will thoroughly convince you of the benefits of bitcoin as a utility and tool that empowers independence in communities all around the world. It’s easy to not understand why anyone would hold BTC itself with all the risks when you live in a financially privileged society, but this book explains a lot.
I don’t have much to add, but I just wanted to say that I admire your attitude towards learning things, you didn’t argue back as if you just wanted to say something, I wish more people (including me) had such attitude towards things in general.
For me it's mostly counter party risk. It's small, but I want to own it myself. Also I think if there is ever a chance that in the future certain transactions with bitcoin are exempt from paying cap gains taxes, then that would be a huge advantage of owning bitcoin vs. ETF. There were already Senators proposing $200 transactions or less to be exempt. That alone would be incredible.
I would add 1 more thing. The more people that self custody, the larger the "returns." Self custody means 3rd parties cannot mess around with it to manipulate price. When its through on etf then the etf owns the ₿ and you own a promise. Just like with FTX. Not claiming here that Blackrock, ARK, et al. are shady like FTX. Counterparty risk in the same way. Another thought for you: what do the people that know about ₿ do? There's around 70% of the total supply that hasn't moved in over a year. That means the vast majority of people are self custody, long-term hodlers. Most importantly, it is the only form of wealth that, should things go badly, you can take with you. Even if you are forced to run at the witching hour you could take your financial freedom with you.
read the bitcoin standard u/Bazbar71 you'll understand bitcoin and what we're talking about : ) props to u for wanting to learn more
Or just do 50% 50%
Just to add a bit to this - When you are just getting acquainted with Bitcoin, people normally look at it as a traditional investment. The ETF is a way to get exposure while you learn more about it. Most people in this sub are two or three stages ahead of you, so self custody is more important to them than it is to you - for reasons you probably have not even considered yet. Get started with/when the ETF comes out and keep learning. Once it clicks, you'll never think of it the same way again. Good luck!
That's a great way to see, especially this one. For the digital 🌎 If you need permission from a custodian for anything you are sending, then you don't really own that thing. Or in other words if anyone can stop you from sending something, then you don't own that thing. That's why stablecoins have their pros and cons
This is a great answer. Come for the gains/ETF, stay for the empowerment of financial self sovereignty.
Great answer
chefs kiss response right here
These is the definition of BTC. , bravo 🔝
buy the ETF if you only care about the gains, buy the BTC if you care about financial freedom. Not your keys, not your coins
Though by the time the spot ETF comes out you likely would have missed out on a lot of gains compared to if you just bought BTC directly today.
🎯
You know when I got into bitcoin in 2011 we talked about becoming financially free with crypto and unbanking the world, seems to me the community has pretty much just resigned to it being a store of value and little else. The VC companies pulled the scam of the century and used crypto to scam millions of people while the founders of these icos went to prison for defrauding people. They invested with the founder and dumped on the people who got hurt by these things. IMO we should be demanding that these VC groups who made hundreds of billions in crypto be held accountable as well and not just the patsy they put up to fronting these ridiculous “products”. Tokenization has severely ruined bitcoins image.
I expect some laws to come out that can punish the ones scamming and hopefully the past scammers
I doubt it, but they should make these VC companies who pretty much were the main driving force behind most icos be banned from that kind of thing. How it works is a founder approaches a VC says I got this token for x fiat I’ll give you 20% well the VC knows that nearly all these tokens are worthless but they know the mania is making them explode so they get their coins, wait for the ico and watch the price pump and dump coins all the way up they made billions this was in both the last 2 bubbles and no one put them in prison.
It's a broken system what can we expect
I bet anything these VC’s actively tried to push some of these cons into existence knowing they win no matter what. Why the Feds aren’t investigating the vcs role in many of these coins is crazy, guess they got the money and the lawyers. They’re just investors, ya right. They are just as guilty as these con men. There is only a handful of genuine use cases for these tokens, like exchange token for fees, these icos were just making crap up. “were the first blockchain coin to integrate fiduciary assets into real estate with a native token to power the ecosystem”, I just completely made that up, it’s nonsense but I coulda made a billion off idiots buying it cause they think they’re gonna get lambos… gen z is so dumb it blows my mind
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You're confusing financial freedom with privacy.
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In our current environment where fiat is required for most goods/services to service, yes. But even then you can route sats out to the rest of the world's 10,000+ nodes back to another one of your nodes (given the amount is small enough to undercut liquidity needs). It's as difficult to stop as torrent downloads... Sure you can arrest everyone running pirate bay, but the software is open source and any 12 year old with a $100 raspberry pi can run a node anywhere on earth. It becomes difficult to stop for this reason. The solution, similar to pirating movies/music, would be for the incumbents to offer an alternative that is better... Which is unlikely when it comes to money, because having a money printer suits human greed in an oh so enticing fashion.
You're confusing the bitcoin protocol with centralized exchanges. Please lurk more and educate yourself before participating further.
I'm not talking about being invisible. Tbh if the government wants to find you then 99% chance they will. I mean not having to rely on an individual or an institution to use your money
who would accept your coins if they were on a global blacklist?
There’s no such thing
Financial freedom doesnt equal privacy.
I kind of agree with what youre saying to some extent. Yeah Bitcoin is a bearer instrument but the ledger being public leaves your coins open to being blacklisted. It's not truly fungible from my understanding which is a bit disappointing. Unless there are some mixing services I'm unaware of but those seem to only be popular on other chains.
There is no such list, this is pure FUD. Do a coinjoin or two via joinmarket if you’re worried about it.
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Bitcoin: Designed to be the most transparent currency on the planet Some guy on Reddit: “The biggest aspect of bitcoin being privacy”
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Uhh yep… only those who don’t understand it, mainly boomers, think it’s supposed to be anonymous and used exclusively by hackers because it’s so “private”
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You’ve missed the point.
If you steal obviously individual parties will take the decision whether to track or censor the coins. That's not a problem with Bitcoin.
Bitcoin in an ETF: You have an IOU which is backed by the custodian of the IOU and the legal system. Bitcoin on the blockchain: Once your transaction is confirmed, your bitcoin is validated by 16,000 independent nodes. If one or a thousand of those nodes fails, you still have thousands of other independent nodes. You paid for your transaction so your bitcoin exists as well as the mining fee that you paid which belongs to the miner. That means that your transaction was not only yours, it also in part belongs to the miner who received the fee. A transaction that is confirmed by a mined block has never been reversed and the protocol would not allow it. All you need to do is to hold on to your 12-24 word seed phrase and keep it safe. When you want to send out that bitcoin, you can send it to any bitcoin address you want.
Nice response
Counter party risk
As a spot ETF is secured by the underlying asset buying a spot BTC ETF might be a viable option but only if you are just speculating on BTC price: No self custody and no use for payment. Also there will be fees for the ETF as usual. As the price of BTC is very volatile I am wondering how accurate those ETFs will track BTC price and if there is a spread which would make a BTC ETF even more pricey. For people who are currently buying of Exchanges like TradeRepublic (no self custody, 2% spread on BTC) those Bitcoin ETFs might be of interest though.
ETFs all have management fees. Like the Canadian etf, BTCC, has a 1% management fee. Now, most people don't care if it means they can hold bitcoin in their tax-free investment accounts. Also, if the etf is audited by the gov then there is little to no worries about the underlying asset. So the 1% fee takes all the worry out of owning bitcoin (ie. losing your wallet, or getting hacked, etc.)... all that is the etf's problem to worry about. But if not for that primary reason (tax shelter), why give away 1% a year if you don't have to. Additionally, etfs are sometimes pretty crappy at tracking the spot price. And good luck trying to understandt why the etf is 5% off the spot price... no one can ever give you a clear answer why.
Self custody
One thing that is not mentioned yet is that you can sell or buy Bitcoin any second of the day. With ETFs you can only buy or sell during market hours 9:30-4pm M to F. So if Bitcoin dumps 40% at 8pm on a Tuesday and you want to panic sell you can’t. Bitcoin Futures is a better option in my opinion since it’s open 23 hrs a day. But it’s closed Friday after 5pm till Sunday 6pm. But Bitcoin is kinda flat on the weekends.
One of the most significant achievements of cryptocurrencies is that you do not need a trusted third party to own and transfer them.
1. Ownership and Control: 1. You don't actually own the Bitcoin if you have an ETF, and you potentially can lose it in an ETF if the EFT managing company goes under or faces financial difficulties. It partially depends on the structure, but you risk a lot letting someone else control it. = Not your keys, Not your Bitcoin. If they have financial issues in general or in other areas, it's possible you might be the person who gets screwed. 2. Additionally, what happens if they have an employee steal the Bitcoin? 3. What if a hacker obtains their keys? Your "IOU" doesn't mean jack to the thief. You're just screwed. 4. ETF's face a liquidation Risk. It's possible that in the middle of a Bear Market they will decide to close or liquidate the fund. Then you receive your net asset value of your shares which may be way less than your original investment 2. Custody and Security 1. Using an ETF means someone else handles custody for you. They might use a hot wallet vulnerable to hackers, they might give someone untrustworthy access to the key(s) and have no recourse if the BTC disappears in one way or another. Your ETF won't be as safe as owning it yourself. 2. If you secure it yourself, you can take it offline into a hardware wallet or other ways to keep it more safe. 3. Flexibility 1. If you own it can you use it as you see fit (there are lots of potential uses for Bitcoin), while an ETF might limit your ability to use it depending on their rules. They are unlikely to let you use it any way except to trade it to someone else who wants an ETF. 4. Fees 1. ETF's are likely to have maintenance fees, management fees and other expenses. Direct Ownership may incur transaction fees on the primary BTC network, but lower ongoing costs if you are managing your own storage. ETF's are likely to steal some of your gains to pay the people running the ETF. 5. Simplicity vs Control 1. It boils down to what is important to you. simplicity comes at the cost of higher risk, little to no control, reduced security guarantees, and potentially slightly lower long term gains due to paying someone to manage it for you.
owning Bitcoin directly gives you full control and exposure to the underlying asset’s potential, while Bitcoin ETFs offer convenience, regulatory oversight, and, in some cases, diversification.
What do you think of Dollar ETF's? There is the DXY index, I suppose. But in a world where everyone's using dollars to buy things, would you rather have dollars or the DXY index? I'm a world where Bitcoin is the money, an ETF priced in Bitcoin is gonna look silly, huh?
You have to live or know about living in a country with strong capital controls to understand the importance of owning and being able to do whatever you want with your own money. Bitcoin is not an investment, it's peer to peer money.
not your keys not your coin
If you buy a Bitcoin ETF, in 20 years (or however long of a time), and you want to use "your" bitcoin to buy something, you will realize you in fact don't actually have bitcoin. You will have to trade your shares in the ETF back to dollars, which will be so worthless no one will accept them anymore. Or you could just buy actual bitcoin now and have the real asset and skip that headache.
Lmao
The price and maintenance is not lower. That company will take a cut. Zero risk of loss? Absolutely not. If that company goes bankrupt will you get your btc back? Who knows. You may get a percentage back in cash years later. When you hold your own bitcoin in cold storage properly, nobody on earth can confiscate it from you. No one can take it. No company going bankrupt will make you lose it. No company with corruption can steal your bitcoin. You own the bitcoin and you can take it to the grave with you!!! If you buy a greyscale spot ETF you own a promise from greyscale and nothing more.
It's more convenient to buy an ETF than BTC, it's also nice if you want anyone to inherit your wealth if you die unexpectedly. You get extra perks in the brokerage account like being able to automatically invest or automatically sell at a target price. You might even be able to have the ETF in an account with deferred taxation or other incentives. Potential taxes are generally automatically calculated as well. If you are just after the price, don't consider buying BTC directly. The only legal way to buy or sell BTC directly is to use a KYC crypto exchange, they are all terrible. The crypto on them are not insured, if someone breaks into the account and steals your crypto, you are out of luck, same if the company folds or just put your funds on hold. Converting larger amounts of BTC back is also a headache, if you don't use the same exchange they will require some sort of proof of purchase, which will be hard to come by if the old exchange folded. The upside of holding BTC directly is that you have a portion of your wealth in a form where only you can move it around. You can take it with you to the grave or give it to some stranger without exchanging any personal information directly. You might even find something you want that you can spend it on. You also have some BTC which is fun to think about. Also zero yearly fees on holding it in cold storage.
An ETF share basically is just a promise for something valuable you might recieve sometime in the future. BTC is the valuable thing itself. And when self-custodied you actually really own it and you're not dependent on anyone to fulfill any promise. Usual people should always purchase usual bitcoin and store it on a hardware wallet.
Look what happened with gold. People no longer have to buy bullion and hide it under the bed and today physical gold ETFs control a third of the world's gold
But because Wallstreet is run by crooks, you can never know that any of the gold you bought in the ETFs actually ever existed. In other words, the gold price is believed to be greatly suppressed exactly by selling people worthless paper certificates for an unprovable commodity. You say *physical gold ETFs*. Can you show me that gold? *(Edit: Thinking about it, gold ETFs are like the invention of fiat money all over gain: handing out paper certificates for gold claimed to be held somewhere. Insert "I'll Fuckin' Do It Again" meme. This is actually quite hilarious. People are so gullible.)* The same danger looms with bitcoin ETFs. They are supposed to hold the BTC they say they do, but who’s going to make sure of that? In a bank run on the ETF (everyone withdrawing at the same time), you may or may not get back the value you thought you are owed. Buying real bitcoin and self-custody is the only way to make 100% sure of what you own. It removes the counterparty risk. You can show me your BTC on the blockchain.
There's also a lot of paper gold that could never truly be redeemed for gold.
Look *what happened to gold in relation to fiat.* If you want to laser in on something, checkout the sordid history of fiat money. The games being played always shift costs to the average citizen and what they're doing is unsustainable. I own bitcoin because I know this fiat fuckery cannot continue indefinitely. Fiat is entirely debt-based, and its economic growth is reliant on the creation of exponentially more debt. At what level of debt do things begin to break in the economy? And I'm not thinking "recession" here. How long can we keep going like this before something breaks that renders the entire system significantly susceptible to near-complete inoperability? Bitcoin is the safest haven I have found from the raging fiat storm that seems to intensify by the day. Only time will tell, but I have no faith in fiat anymore, after learning what I've learned, that's no longer possible. This is why I don't give a damn about convenience, because bitcoin is truly priceless to me.
There's a huge advantage to actually buy and self-custody BTC directly, which is you're taking coins of the market. This basically means you're actually creating upward price pressure of the asset that you hold. If you buy an ETF, you are actually hurting your own investment, because the institution might not actually buy the underlying asset.
Full replication ETF exist
Doesn't matter if they exist if it's not verifiable.
If the institution is well respectable and they say it's full replication then that's true. They won't put themselves in a position where they can get sued. You're paranoid
Unless you buy BTC and hold your own keys, you only have an IOU.
Owning btc is not convenient I need to get a hardware wallet, roll my own seed, transfer my funds to the hardware wallet, generate a new address every time I want to buy, keep the seedphrase safe offline, these are too many steps for the average Joe, Joe could just buy the etf on his stock account and all the hard work is done by the custodians for a 2% cut/year of course
Counter party risk versus zero counter party risk.
Because when you Invest in a spot ETF you still own zero Bitcoin. When you buy BTC and self custody you actually own the BTC. If you have your money in the bank or with someone else and they lose it you are screwed because you never had custody of it. Same with BTC
Because banks don’t have insurance?
Insured only up to 250k. If you have over that then sorry you fucked up.
‘We made bitcoin illegal, you can only forced sell to the government’ Did people learn anything from gold?
Most of these comments aren't even remotely true. DYOR and don't trust random redditors
People here are focusing on the idealogical reasons you should own Bitcoin over the ETF. I'll make the point that I think by the time the ETF is able to be purchased it will be significantly more expensive to buy. Bitcoin is highly illiquid. 70-80% of it is in cold storage with no plans to be moved for decades (or even lost forever). So when Blackrock, Fidelity, Van Eck, Wisdom Tree, Invesco, etc all get approval (which I believe will likely happen together) you could see a bit of a war as they're all trying to fund their Spot ETF. If I didn't care about all the idealogical stuff others are mentioning here (which, I do) I'd be buying it on Coinbase and leaving it on there until I'm ready to sell. Then use that money to fund the ETF purchase. Because I think it will go up before then. Plus, Blackrock is using Coinbase for custody. So you're not trusting anyone you're not going to be trusting anyway. I do plan on getting the ETF after the hype goes down for my Roth IRA. Those tax benefits through decades on an asset like Bitcoin are a no-brainer.
Because you can’t do anything with an ETF. You’re still trapped by the government. You don’t have the financial freedom that owning actual Bitcoin allows. - You can’t spend your Bitcoin - You can’t trade it peer to peer with no intermediary - You can’t buy/sell it 24/7 - You can’t protect yourself from institution/bank collapse You should take some time to learn what the use case of Bitcoin actually is and then you’ll hopefully understand why you would want to own it rather than a paper representation of it’s value in government issued infinite-printed dollarydoodilies.
Kinda like buying a Mercedes vs. buying stock in Mercedes-Benz. Do you want to own the actual thing or just something that roughly tracks the value of the real thing? Both might have their place, that's up to you to decide.
It’s not like that at all lol
The simplicity of buying an ETF you mentioned is highly subjective. Probably depends on if you feel more confident with your computer skills or with your financial skills. Buying, transferring and self hosting BTC is simple, *for me*, I wouldn't know where to start with getting an ETF.
It’s akin to holding dollars in the bank vs in your wallet. That’s it.
Which do you prefer a crisp 100$ bill or a check dated next week drawn on a bank from a different country....
The stuff about taking custody and not having counterparty risk is true, if you self custody directly you can also much easier do what you want to with your bitcoin in a practical sense - e.g. spend it rather than having to wait for processing the ETF sale. However the main thing that people are ignoring is if you self custody you don't have to pay management fees. These do add up, and there's just no need if you just make a one time investment in a hardware wallet.
As people mentioned, it depends on where you stand on self custody. Being your own bank comes with a lot of responsibility. The etf would be for trying to capture the gains without the self custody. Depending on the amount you’d be looking to invest, if you self custody you can look into a cold wallet like ledger or trezor. If you decide to buy on a cex like Coinbase, you can add extra security measures like whitelisted addresses, authenticator app, etc as well. Do some research into self custody and decide if it’s for you. Could always split 50/50 etf and self custody initially to try it out as well.
Zero risk of loss? That's certainly not true.
more convenient to buy directly? lol it's not ETF is for investments only, but it's of course the most convenient. directly holding is for, well, everything else. \-being in full control \-usability outside of investments only \-privacy (depending on where you buy)
When you buy bitcoin and take self custody of the asset, there is an undeniable property right to that bitcoin recognized by the nodes enforcing the rule set of the network. When you buy via an ETF, you are entitled to a promise of that bitcoin. Essentially an IOU. Aside from utilizing a spot ETF in a tax-advantaged account, you are taking on unnecessary counterparty risk versus taking self custody.
Keep the precious close... not your keys, not your precious....
When the etf basket or company suffers economically, you lose. When you own the BTC, you just don't care.
Can someone explain this difference to me, I can buy btc on fidelity right now. But they want a spot etf also. So what is the difference between buying btc through fidelity crypto vs buying their spot etf?
It's pretty simple, really. Do you want to own and possess actual BTC? Or do you want to own a claim to BTC that someone else possesses?
Since BTC supply is capped. It’s driving factor is demand. My assumption is that the ETF is being made so large companies can dump their money there and remove lots of demand from actual BTC. The more that ppl put their money into the actual supply of BTC the more value it gains. The ETF is just tied to that value
huge simplicity implies that without it theres a lot of complexity. When in reality its no more complex than sending a letter in the mail. Its also sort of a limited version of bitcoin which limits your options for how to move forward
Not more convenient, more secure. Not your keys, not your BTC
No one says owning BTC is more convenient. Locking your front door is not convenient, but you do it anyway. Some of the benefits of BTC: - freedom - censorship resistance - it can't be confiscated - you gain technical knowledge that will be needed one day anyway, better to start learning now - you can f*** the state The etf only gives you exposure to the price, but doesn't offer any of the above benefits. And the exposure to price is only temporary, because you'll get rugged one day.
Immediate Ownership: When you buy Bitcoin directly, you own it right away. With an ETF, you're buying shares of a fund that holds Bitcoin, but you don't directly own the cryptocurrency. Control: Direct ownership gives you more control over your Bitcoin. You can decide how to store it, when to sell it, and use it for various purposes like online purchases or investments. No Counterparty Risk: With an ETF, you rely on the ETF issuer to hold and manage the Bitcoin. If the issuer encounters problems, it could affect your investment. Owning Bitcoin directly eliminates this counterparty risk. Security: Properly securing your Bitcoin is crucial, but it's something you can control when you own it directly. You can choose secure wallets and storage methods.
I own bitcoin, because I like having custody and power over my own freedom. Why would you NOT want to buy it straight from the exchange without more third parties?
If you are planning to hold more than 1-2 years it’s cheaper to pay for the spread than pay the management fees. Counterparty risk is also a big one though less risky with black rock. I will hold half my 401k in the etf.
GBTC is a good buy still if you want cheap BTC at a large discount to NAV. I own 10,000 shares or about 9 bitcoins. GLTA!!!
Mainly the management fee/expense ratio. I don’t know what it will be, but it won’t be 0!
Depends on how you’re using the term “convenient.” To hold BTC itself is more convenient because I don’t have to worry that someone else will take my BTC. If you want BTC strictly to make fiat profit then you can say BTC is more convenient because you don’t have to worry about self custody.
You own it today at todays price. Not some future price which may be higher. Custody of asset on coinbase or kraken or Gemini is not a big problem if you don’t want to self custody. Same as an ETF. It’s an IOU. Self custody allows you to own it without any risk of confiscation if you live in a jurisdiction where you can not or do not trust the authorities to be honest and fair.
No different than gold ETFs... so you're simplying asking why hold the actual asset when there is a spot ETF. Or are you asking why hold BTC over other assets? Those are two completely different questions. You are confounding the two.
Possession. That's it. BTC was the first commodity you can actually possess without risk of confiscation or other means of loss. I would not say that ETFs or Trusts have zero risk, they are only as safe as the entity that maintains them. Are they highly safe? WAY safer than crypto exchanges, yes. Are they 100% safe? No thats only possible if you hold your own keys
Self custody of your very own bitcoin does make for a good night sleep…it’s kinda the only other sovereign $ besides PM ….funds are SAFU carry on
Self custody of your very own bitcoin does make for a good night sleep…it’s kinda the only other sovereign $ besides PM ….funds are SAFU carry on
It doesn't.
I think you just answered your own question. Old money who is interested in bitcoin but don't want to deal with keys, wallets, exchanges, lost bitcoins. Yes it's better to have bitcoin but some people just like doing like that. A similar example could be people who buy real state and rent it out vs people who buy REITs on stock market. There is no right or wrong here, it's the price you pay for convenience and lack of ownership. At the end of the day whatever gets that old money pouring into bitcoin it's good news.
ETF = rehypothecated fake bitcoin scam IOW: not your keys, not your coins.
Owning etf, gives u access to the price movements only. Owning the money itself gives you all of its attributes, especially if u hold it yourself and acquire it non-kyc
You can not spend your etf for goods or services. You can with btc now in some places all over the globe.
Situation 1) I buy BTC and move it from the exchange into my wallet. I can independently verify that my wallet address contains the BTC I purchased. Everyone in the world is capable of verifying that my wallet address contains the BTC that was purchased. Situation 2) I buy a spot ETF. I cannot verify that they actually have that BTC. No one in the world can verify that they have that BTC. We simply have to trust that they aren't lying. They have my money, and I now own a 'promise' at best. Financial fraud from big banks/organizations takes place regularly. Best case scenario is the SEC catches them, charges them, and then fines them a penny for every dollar they stole. If you wish to put money into a spot ETF, that's fine. I personally wouldn't consider it the same as owning Bitcoin. It's more like a bet on the future price of Bitcoin.
An ETF is a natural evolution of bitcoin as an accepted financial product. Yes, Bitcoin started out as a way to have the hardest, most verifiably scarce asset humans have every known, but to be honest there is still a learning curve with buying bitcoin and wallet addresses. Most people have stock exposure through their 401k and not individual stocks and it will be the same with bitcoin. Most people will have exposure to bitcoin via an ETF vs custody of their own individual bitcoin. Buy the ETF and enjoy financial freedom.
The truth is, it’s not more „convenient“. Self custody is a lot of things, but it’s not convenient. It will involve you learning a lot of things as a layman, because if you mess up, your stack will be gone. You are fully responsible for securing and storing your own keys, your economic wealth. It’s a compromise between convenience and minimising or reducing counterparty risks and take ownership of an asset with strongest property rights ever invented.
BTC eliminates counterparty risk 100%.
The gamestop shenanigans showed that we can't prove who owns what, as assets can just be lent and resold. Bitcoin answers this with it's distributed ledger system, everyone knows where every bitcoin is at all times. The ETF get's around that. Yes, legally, they have to have all of they BTC they say they have. But why trust the legal system that has let us down, when you can just own your own bitcoin.
The whole point of btc is to be in control of your own funds, if you buy an etf you aren’t buying btc your buying an IOU. If you hold your own btc the entire financial system can collapse and you’ll still hold your wealth in a sovereign manner.
Also, important to consider, since you’re looking at it from a purely investment strategy, you will miss a massive pump from the entrance of an etf. Remember that institutional adoption will only happen once. So do you want to get into Bitcoin before that happens or after?
It’s a great question and I would cite only two reasons, which by the way won’t be valid anymore years down the line: 1. The price will likely pump ahead of the ETF. 2. Management fees will be high at first. Maybe close to 1% a year.
Buy the rumor, sell the news. That’s pretty much it.
Freedom
The whole point of getting into crypto is to abandon traditional contructs of finance. Why you ask? That is why. Have you not looked into pump and dumps? The government could easily do it and it would be TOTALLY legal, "For the good of the economy". Also, old people hold the reigns of America's government. Do you really think they care to actually learn and understand the space? If crypto dies, they will not care. Throwing money into stupid ass contructs built buy barely functional people....
I'd avoid an etf due to taxation. If you wanted to move it in an etf the only way is via cash, it's highly unsalable, I think thats the word.
It really depends on how much work you want to do and how safe you feel for having someone be reliable for your Bitcoin. I understand business and companies wanting to invest in BTC via ETF, there is already a big infrastructure and laws toward this and probably not every company will want to store their Bitcoin and suffer hacks or be able to lose the BTC and be done with it, so for those ppl ETF is better. Now, If the person or the company/institution wants to hold BTC themselves they can do it and it won't depend on someone else and they know they will be holding Bitcoin, it won't need to rely on freaking Blackrock or Coinbase etc It's basically how you want your custody to be
Custody. Pure and simple. Sure they “say” they have the asset. But how will you ever ACTUALLY know?
The spot ETF wasn’t designed for you. The vehicle is purpose built for those with legacy retirement/pension accounts that are stuck in their investment house walled gardens.
In simple terms, it's better to own the underlying asset rather than a paper claim of the asset. Would you rather own bitcoin, or a Chuckie's Cheese ticket?