Why we should avoid the Bitcoin ETFs…

We’ve been talking this week about why the new Bitcoin ETFs are a misdirection play.

The Securities and Exchange Commission (SEC) approved them with two ulterior motives in place:

  • Funnel people into the ETFs so that they don’t buy and self-custody any bitcoins themselves.
  • Gain more influence over the dollar price of Bitcoin.

Sure, the ETFs will give investors upside exposure to Bitcoin.

If Bitcoin increases in value relative to dollars over time – which I’m quite sure it will – those who own a Bitcoin ETF will make money in dollar terms. They will find themselves with more dollars than they had before.

But the ETFs convey no ownership in the underlying asset – Bitcoin. They are nothing more than a paper claim to Bitcoin’s value priced in dollars.

Now let’s think about this for a minute…

As we discussed yesterday, I see Bitcoin as both a reserve asset and as sound money. It holds enormous utility.

Bitcoin is both a payment network and a currency wrapped into one. That makes it unique. To my knowledge there has never in history been a payment network that also supplied its own independent currency.

Instead – outside of in-person cash transactions – we’ve always relied on intermediaries to facilitate monetary transactions for us.

Whether its banks, credit card companies, or financial technology (fintech) companies like PayPal and Stripe – we’ve always needed third parties to move money for us. That introduces friction. And it exposes us to several risks.

What if the third-party engages in fraud? What if it gets hacked?

And what if it decides that it doesn’t like us or the entity we’re transacting with… so it chooses to freeze our funds? Sadly, that kind of thing has been happening quite a bit in recent years.

Bitcoin eliminates those risks. Because as long as we hold our bitcoins in self-custody, we can always send any amount of value to anyone else at any time and for any reason over the Bitcoin network.

That’s why Bitcoin’s true value is in the independent network.

And as a reminder, nobody owns or controls the Bitcoin network. It’s powered by independent mining rigs operating in relative secret all over the world. They run 24 hours a day and 7 days a week. We talked about that on Monday.

So Bitcoin gives us true monetary independence.

If we own bitcoins in self-custody, we’ll always have economic energy available to us within this new system. And that’s exactly what the power structure behind the SEC does not want. Liberty and independence are dirty words to these people.

This is why we should avoid the Bitcoin ETFs.

Let’s not sacrifice our independence for just a paper claim on Bitcoin’s dollar value. Instead, let’s accumulate bitcoins and learn how to use them.

Because it’s the big picture that truly matters… not the size of our brokerage accounts. And that will be our topic for tomorrow.

Stay tuned…

-Joe Withrow

P.S. My friends at Bitcoin Bay are putting the big picture into practice right now. One step at a time.

They are doing this by educating local farmers and small businesses in the Tampa Bay area on Bitcoin – what it is and how to use it. In so doing, they are building a directory of local businesses that accept Bitcoin as payment for goods and services.

Ranchers… berry farmers… contractors… auto mechanics – they even have an accounting firm signed on to the project. This is creating a circular economy where people in Tampa can deal with one another exclusively in Bitcoin – without needing to move back and forth into dollars.

This is a localized solution to all the fiscal irresponsibility and coming turmoil we see in Washington DC. The more self-reliant our local communities are, the less exposed we are to bad economic policy.

If you’re curious, you can see Bitcoin Bay’s business directory right here.