Bitcoin ETF with huge inflows
We reported already yesterday that the Bitcoin funds currently have a weekly inflow of almost 1 billion USD. This is the best performance since mid-March – or since the hype surrounding the launch of Bitcoin ETFs died down. This is why Bitcoin price was able to rise from $62,000 to $69,000.
It is clear that the influence of ETF providers on the market is growing. Now almost over 1 million Bitcoin or over 5% of all Bitcoins ever available have been accumulated. Many observers, including the authors and founders of this platform, see the introduction of Bitcoin ETFs as an important milestone for the implementation of Bitcoin in the financial sector. Nevertheless, developments could turn in the wrong direction.
How Satoshi warned against centralization through Bitcoin ETFs
In his White paperwhich was published in 2008, Satoshi Nakamoto introduced the first decentralized cryptocurrency. The following excerpt, which introduces the white paper, should be mentioned.
The following sentence is essential for the criticism of excessive centralization through Bitcoin ETFs
Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending.
Translated to German (loosely):
Digital signatures are part of the solution, but the key benefits are lost when a trusted third party is required to prevent double spending.
Bitcoin’s solution is that values can be exchanged over the Internet without a central party. This enables a community-driven project that positions itself under the influence of central actors (primarily the central bank). Satoshi explained at the time that if a third party exerts too much influence over the Bitcoin network, double spending cannot be prevented.
In traditional banking transactions, double expenses are managed through so-called double-entry bookkeeping (account systems). By accounting for assets and liabilities on the balance sheet, credits or debits can be made. By simultaneously carrying out deposits and withdrawals from a respective account, the bank can guarantee the holdings.
This double-entry bookkeeping system is achieved in Bitcoin through the decentralized system. However, if central parties use too large a contribution from all Bitcoin holdings, they could issue fake Bitcoin, also known as paper Bitcoin. A central party could thus gain control over the availability of Bitcoin (but not the decentralized network). The centralization through Bitcoin ETFs therefore entails a risk of such paper Bitcoin.
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Personal responsibility keeps your Bitcoin alive
But how can you protect yourself from paper Bitcoin manipulation? This is where personal responsibility comes into play. If you have real Bitcoin, you have to keep it safe yourself. This custody requires personal responsibility. This is of course accompanied by increased training and processing effort. Nevertheless, maximum security – but more importantly – the permanent availability of decentralized Bitcoin can be maintained.
Since the institutions control less than 5% of the total maximum possible supply with around 1 million Bitcoin, we are still a long way from that. New investors in particular can be warned about the risks of paper Bitcoins by providing information and can thus set up simple self-custody.