Bitcoin 'Spot ETF'

ETF is the abbreviation of “exchange-traded fund”. It is a type of security that follows – or “tracks” – the value of an index, a good or another type of asset. An ETF trades like a stock. Usually it tracks through brokers who allow the buying, selling and holding of securities. Exchange-traded funds have gained a lot of popularity in recent years.

A bitcoin spot ETF means that the underlying fund that manages the ETF is required to actually own the bitcoin. When a participant leaves the ETF, he or she can choose to receive the bitcoin and put it in their own wallet, or have the value paid out in fiat.

We do not recommend this construction of owning bitcoin. This is because of rule #1: not your keys, not your coins. An ETF is managed by a third party, which creates counterparty risk.

The costs will also be high: entry - management - exit.

Wealthy parties and companies benefit more from services that facilitate multi-signature to secure their bitcoin. In this way, the organizations retain control of the private keys themselves, along with an additional key set that the service manages. This is the safest and most cost-effective way to protect large assets in bitcoin.

Due to regulation and accounting restrictions, most pension funds are not allowed to use this construction. As a result, they have to rely on an ETF.

Bitcoin adoption occurs in several phases. We are now about to enter the next “adoption phase”. From the “pioneers” who mined the first bitcoin on a laptop, even before a fiat value was assigned to bitcoin, to the “adoption” phase we are in now. You can compare this with the introduction of the internet around 1995.

A new group will join in this new phase. They are exposed to bitcoin through bitcoin spot ETFs. Consider: institutional investors such as pension funds, asset managers, (private) banks, etc. This will change the bitcoin landscape.
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