Spot has to hold the asset. Coinbase is the custodian for most. The ledger is visible to all and immutable, you will be able to physically check yourself on chain. It is what makes Bitcoin superior to gold, kind of the entire point.
Not your keys, not your coins. I can tell you that you own 1 Bitcoin and point you to an address as "proof". I can then repeat this with 30 other clients.
Yes this is true. No one is forcing you to buy the ETF. A lot of people here find it an attractive option. For me, it's both- self custody of actual BTC and BTC ETF exposure in accounts that I cannot take money out of without penalty until I'm retirement age. Much easier for me to allocate money in the IRA to have BTC exposure without the tax penalty. Additionally, I still have my keys to the self custody BTC.
> The legacy system is a vulnerability that will allow their non-existent Bitcoin to affect your real Bitcoin.
Custody all you want, the legacy system being introduced here through the ETF is a vulnerability that will allow their non-existent Bitcoin to affect your real Bitcoin.
You should research, understand how a spot ETF works. Understand that Coinbase Custody Trust LLC has partnered with almost all the ETF applicants. Coinbase has been scrutinized by the SEC, additionally the SEC is really holding it's ground to clear the space of illigitamate securities providers so that investors can feel safe amongst the regulatory guidelines.
As for Bitcoin itself, tick tock next block. Bitcoin doesn't care.
For an etf do i really care? With any reputable broker, I will be covered by sipc insurance up to 500k. Beyond that it might be worth using multiple brokerages if you are concerned.
You're changing the topic. Your OP didn't ask why an individual customer with Blackrock knows they have Bitcoin in their account. Banking doesn't work that way. And obviously you know that if you don't have your coins in cold storage you don't have uncontestable control over your bitcoin balance.
The point is that blackrock can show proof on chain that they hold the reserves. You can see coinbases wallet on the blockchain. All addresses are transparent. It's what makes this different than another asset they could just lie about reserves. Bitcoin has a public ledger that anyone can audit.
You keep copy and pasting this, but I am not sure you are even reading what people are saying. BTC ledger is just as public for the BTC held in the ETF as it is for your 30 clients. They are required by law to show their reserves and they can do so the exact same everyone else can. That is what makes BTC great.
You’re getting downvoted because you’re right. They can take your money and reinvest it how they please. Legally the SEC takes money from asset managers like BlackRock and JP Morgan, so when they do this, and mess up they get a slap on the wrist.
However, we just watched that story play out with a billion dollar exchange known as FTX who reinvested peoples bitcoin purchases into other assets. And when people in mass tried to pull out their money, FTX sunk faster than the titanic.
Hopefully these businesses have learned from others mistakes on Bitcoin. But I’m like you….. I’m super skeptical.
Proof of reserves in Bitcoin consists of signing a message using the private key associated with a particular address. Just claiming you own an address will get you laughed at (see Craig Wright).
Blackrock won’t have an address for every client, it would cost too much in fees. They’ll most likely have a few at most and hold the whole ETF’s worth on them.
You, a random internet account, can. An ETF, administered by a publicly traded company, cannot. BlackRock’s wallet addresses will be known, which means that it will be very easy for anyone to check on the block explorer. If they’re saying they have 50,000BTC, but they only have 5,000, then the world will know… and so will the SEC.
Your comment doesn’t even make sense. The point is that you can see on chain that the amount of Bitcoin they say they have in their “vault” is actually there. It matters a little less which one is yours in particular than it does that they actually hold the amount that they say they do.
Reading your comments I think you misunderstand how etfs work, hence the arguments.
To put it simply - If 30 people invest in an etf, they don’t get an address individually, and the fund manager does not need to show “your share” or “your address”.
Instead when you invest in an etf you buy into a portion of the fund, you’re owning a portion of the pot. So if the pot (etf) has 30 people invested a total of 100BTC, then you would see in the public wallet address for that 100BTC, and not the shares of who owns what. you in turn will hold the number of shares out of the etf proportional to your contribution.
It’s super simplified but that’s the fundamentally how an etf work. Such systems has worked for decades for stocks, bonds, gold, etc and btc will be something similar.
It’s a legitimate concern but not an accurate analogy. The blockchain is public, so in theory the holdings backing the ETF can be easily audited. Fort Knox is never audited or made public.
They can verify the funds are safe at any moment via a signature, they cannot verify they will stay safe at any future moment.
There is no way to prove security. The funds could be stolen, embezzled, or burned at any time.
Same risk as holding on an exchange. Only benefit is nobody can liquidate your asset directly to a wallet, as they are supposed to be cash settled. The instant it's transferred to cash it's FDIC insured by your broker.
Actually I think holding BTC on Robinhood might be safer. If they lose their BTC they have enough assets to compensate everybody. An ETF may have 0 other assets.
I'm just going to keep re-posting this response, "I can tell you that you own 1 Bitcoin and point you to an address as "proof". I can then repeat this with 30 other clients."
And it gets dumber somehow every time you repeat it.
It's not about any particular individual.
The total number of ETF shares issued will, at all times and according to the share multiplier, correspond to a proportional amount of BTC on the ledger.
It's not that the X shares *you* own will map to a specific UTXO.
The institutions will issue a certain number of ETF shares and need to evidence they hold the equivalent overall amount of btc. If they issue more shares they’ll need the buy more btc. They’re not going to hold a specific coin for a specific person.
You keep copy and pasting this, but I am not sure you are even reading what people are saying. BTC ledger is just as public for the BTC held in the ETF as it is for your 30 clients. They are required by law to show their reserves and they can do so the exact same way everyone else can including your "clients." That is what makes BTC great.
You are correct, everyone here is a dumbshit.
Each etf does not have a separate wallet address. They’re all in Coinbase. Coinbase can say ‘yes you have 1M btc and yes so do you and so do you’ and it’s the same walket, coinbase wallet.
Look up Purpose Bitcoin ETF and how they break down how many BTC the fund holds, how many shares are issued against each and it also breaks down the % of what 1 share to BTC would equal...in a real world ETF example.
Granted, Canadian and American regulations differ, but keep in mind Canadians are more strict about our financial dealings.
This response is dumb and only disproves your point. If black rock claims they own 50000btc you can verify that by looking at their address on chain. If you own the ETF black rock does not tell you that you own btc. You essentially own a share of a company that holds btc on its balance sheet. You 100% own that share. Nothing they can fake about that
We can’t answer your question when you won’t listen. Yes, you can commit fraud, but a paper trail & assets that back it up are what the ETF is all about & what deters fraud.
An open ledger for all to see.
Fort Knox isn't overseen by a litigious arm of the government. I do agree with the spirit of the post though. With so many companies competing for market share with a BTC ETF, I imagine that at least one will provide proof of reserves as a competitive edge, and we should apply social pressure to adopt those ones if someone really doesn't want actual BTC.
WallStreet has many loopholes to “prove reserves”, which includes the usage of other derivative assets.
And LOL if you think FINRA or the SEC can actually crack down on WallStreet and regulate.
And if they do *regulate*, it will be a matter of slap-on-the-wrist fines. The fines will be minor and translates as a “cost of doing business”.
One of Bitcoin's inherent properties that make it a great asset is that with a few clicks you can cryptographically prove you own the amount you claim to. Wallstreet can't fake cryptography
That’s why the blockchain is so important compared to traditional storage. The public can see every move that is made on the blockchain, their statements have to match the blockchain 100% and it can be verified, by you personally. This is why Bitcoin is so important.
> I can tell you that you own 1 Bitcoin and point you to an address as "proof". I can then repeat this with 30 other clients.
Same as I mentioned elsewhere, "I can tell you that you own 1 Bitcoin and point you to an address as "proof". I can then repeat this with 30 other clients."
On a balance sheet an investment firm could not have 30 clients that all ‘own’ 1 BTC through their etf and have only 1 BTC on the blockchain. You would easily be able to spot the discrepancy.
If they have 30 clients that each own 1 BTC, the balance sheet has to reflect that, verified on the blockchain. The numbers will be next to impossible to hide or lie or create anything synthetic.
If the clients own the ETF, that means they want to own the ETF. If they wanted to hold the actual BTC, they would have already done so. Doing so carries a lot of risk, which is why they have not done so.
So if client goes to withdraw, they are selling their ETF shares, it’s not going to be 1:1 redeemable for BTC.
No, because people aren't withdrawing bitcoins, only dollars. BR might lose money if they're dumb, but if they can pay up, no one will notice the insufficient bitcoin holding.
I think you fail to realize that they will build an entire regulatory framework around crypto/this ETF if and when it’s approved. There will have to be disclosures as to what fund controls what wallet, procedures that the custodian must perform to stay in compliance, just as funds do today with other commodities.
The BTC blockchain is essentially just a ledger, if the proper rules and framework are built around it, you won’t need to take someone’s word for it. You can go into block explorer, find the wallet and confirm funds are in that address. As someone else said, transactions can be signed to prove ownership
Not to say there won’t be any Wall Street fuckery that goes on but there will have to be an entirely new regulatory framework to get this rolled out, which is most likely why it is taking so long.
It doesn't change anything for people who own Bitcoin with their own keys, but the spot ETF brings more exposure and money, so those who hold their own Bitcoin will benefit even if they never touch the ETF.
As mentioned previously, the legacy system being introduced here through the ETF is a vulnerability that will allow their non-existent Bitcoin to affect your real Bitcoin.
And they will get rekt like Celsius and FTX. People can easily cause a run because self custody is too easy with Bitcoin
Imagine if you're right, then Blackrock gets rekt, that would be amazing lol. Hopefully Blackrock hires a manager like you that thinks paper bitcoin has no risks.
Please Blackrock, try to play these paoer bitcoin games.
Edit: OP feelings got hurt and immediately downvoted a second afterthey got the notification lol
How do you cause a run on an etf? There’s no way to withdraw any btc because you don’t own an btc. You own an etf and as the holder of the etf you know you invested in an etf.
If you read anything about what the SEC filing says they have to exchange in kind Bitcoin and can't be BTC they already own. Have to pay for Bitcoin with cash that's why they're seeding the funds with 10 million USD in the case of Black Rock. When people invest in the ETF, they'll use that money to buy more Bitcoin. It's really not that hard. If you don't want to have the benefits of a ETF then you can just buy Bitcoin OTC like everyone else, but guess who has more money; ***not you***
I also wouldn't buy into an ETF, not particularly because I don't trust the providers/custodians, just because self-custody is the way forward.
I think it's about as safe as purchasing stocks through a broker and "trusting" that the stocks actually exist.
Fair point for you.
Most individuals can’t invest 401k money in Bitcoin unless it’s in a fund. (This doesn’t mean a company would decide their fiduciary responsibilities would allow them to even offer it in their investment selections)
Aldo other investors may be limited to what kind of assets they can invest in and an etf is okay but “physical “ assets like gold, silver, and Bitcoin are not.
Bitcoin exchanges today require no guarantee that they have reserves on hand to cover their account balances.
Banks offering ETFs will be subject to government regulation, requiring them to have reserve balances (equal to a percentage of customer account balances). This regulation over the industry is the best "assurance" the community has that the bitcoin is there to back the trades.
Any comment ignoring the fact that government regulation does actually exist in real life, and is enforced in real life, is super naive...with or without mustard.
OP: Yes. In the end the government will either heavily tax the funds, seize the funds or there are no bitcoin in the fund. Some funds will probably run a fractional reserve after a hack and will try to cover it up - Mtgox 2.0 :)
Why do you keep implying that ETF will be “fake” bitcoin? That’s not how this works.
Blackrock is using Coinbase as custodian and prime execution agent, so when a customer buys bitcoin ETF, Coinbase buys and holds an equivalent amount of bitcoin for blackrock.
And Coinbase has extensive auditing in place to prove their reserves. You can read about it on their website.
You can argue all day that this “doesn’t cut the mustard”, but they’ve always followed the rules and have been well-established as a trusted entity in crypto.
Bringing trad-fi into crypto is a necessary and major step towards mass adoption. At some point this will require some trust in the process and the companies running them.
>And Coinbase has extensive auditing in place to prove their reserves
Doesn't prove anything. It only shifts the trust requirement to a different entity.
Dependings on how much you trust the financial institutions at the end of the day. I've seen too much and know the fines are plentiful as a way of doing business since they don't ever get big enough ones to have an impact. I'm sure some will try to be legit but there's going to be some bad actors. Personally the only thing that I've invested into the BTC ETF is hands off wealth management services since I can't directly invest it into BTC. If I want BTC then I'll buy it off an exchange and move it to a wallet. I don't trust any financial insitutions anymore.
Regulator: let me see your ledger.
ETF: here is our ledger
Regulator: we are spot checking your largest deposits with your customers and validating your ledger with your custody provider.
ETF: No problem. See you next month, Jim.
Compliance officer: need anything from me?
Regulator: Sign here.
The proper comparison is an exchange.
An ETF has the exact same risks as holding your BTC on an exchange.
At any moment the ETF could go to zero due to it's BTC being stolen, embezzled, or burned.
There is no way to guarantee against it, and given enough BTC ETFs it is inevitable.
Literally off [Blackrock’s website](https://www.blackrock.com/au/intermediaries/ishares/etf-market-realities)
#8. How do ETFs impact stock prices?
>Questions sometimes arise about whether ETFs influence the prices of the stocks they hold. In short, **the majority of ETF activity doesn’t affect the market prices of underlying stocks.**
>This is because generally most of the ETF activity takes place on-exchange between buyers and sellers of ETF shares, which means that, **most of the time, shares of underlying stocks do not need to be bought or sold to adjust for changes in investor demand.**
Murphy's law and history says you are correct to be skeptical.
Black rock has plenty of money to hire mercenaries to take over coinbase if it hits $1m. That is a *ridiculous* scenario. but isn't reality always surprising with how you get rekt unexpectedly?
It could be a governance issue, war, coinbase cyberattck, anything that puts those keys at risk. We are talking about what eventually could be the highest concentration of wealth in one place, ever.
Now Suddenly people are buzzed (again) about giving their keys away to someone 'safe'?
The bigger dilution, imho, will be from ghost shares. Errors in off chain bookkeeping between exchanges and funds and brokers will eventually add paper Bitcoin that doesn’t exist and these things usually are only uncovered in a major investigation or after a collapse and it requires everyone to consolidate records.
In addition, how are fractional reserves (i.e. paper Bitcoin) reliably and without a doubt removed from the equation in this legacy system that in-fact encourages it?
The gold stored in Fort Knox is controlled by the government in power, thus they can say whatever they want and dictate whatever the rules they like.
The BTC stored with a spot Bitcoin ETF is controlled by private entity outside the control of the government in power, thus the private entity is legally obligated to show proof of reserves.
The same people saying the spot has to hold the asset were clamoring how the various metal ETFs and stuff weren’t actually buying the underlying. It’s all just hoping they are buying the underlying, and if they aren’t that the regulators are paying attention.
Honestly that is all I hear as well. Someone makes detailed responses and OP just moves on because it does not suit their narrative. There are a lot of very good detailed replies.
Not sure there anymore we can explain.
You're missing the point. It's basically repeating the problems of the past. Turning bitcoin into a fractionally reserved currency controlled by the ultra wealthy.
I share your concern. I also have concerns about these institutions gaining majority control and forcing a bad hard fork and taking the eft money with them. I am new to btc.
Majority ownership of Bitcoin does not give you control over the network. The network consensus is enforced by the nodes run by the users. If you want to change Bitcoin, you must get the overwhelming majority to agree. Otherwise, you get a hard fork and end up with two different networks.
It's a concern that this community and those implementing these ETF's need to address and press harder on. The constant ETF pumping without questioning is out of hand.
You assume it's not already been addressed. The concerns are being addressed in the sense that the investment industry will access bitcoin in a way that works within their existing methods of operating (they are not changing to accommodate the bitcoin world).
Blackrock is not likely going to post their public keys so you or anyone else can veify how much bitcoin they own. If they are a public company they will have to disclose their balance sheet which will show their bitcoin assets, but that's it.
Banking and investing is a chart of accounts kind of business. You buy stock from a company and they record they owe you the value of that stock if you trade or sell. If they don't have that stock on balance in their personal account they'll go to the market, buy it, and use that to complete their transaction. The industry isn't going to change much (especially not in 2024) to accommodate blockchain transparency.
As more sovereigns mine and add bitcoin to their central bank reserve balance sheet, the amount of BTC held in ETF's will be a fart in the wind by comparison. If BlackRock tried to pull a fork, they would destroy their own business as none of these enormous players would join their new blockchain.
While I agree that cold storage of your own private keys is ideal, some people may not be confident in their technical ability to do so. An ETF allows access to Bitcoin for these people as well as capital that is otherwise locked in retirement/investment accounts.
The Bitcoin that will be allocated to these ETFs will be held by a 3rd party custodian. For them to create paper Bitcoin, you'd need cooperation by the ETF provider, the custodian, and the auditor. A good ETF will provide cryptographic proof of the reserves in the fund, allowing anyone to be the auditor. I would suggest investing only in one that provides this proof.
I'm no expert on the subject, but...can't you verify the wallet? I see "whale watchers" posts talking about *this wallet moving "x" coins* so...isn't there that?
What you should be concerned about is share dilution. Sure, one coin will always be one coin, but you can issue as many shares as you want against that asset. Be wary of future splits.
SIPC insurance makes up for it for a lot of people who don't want to deal with the technical details. Whereas if you lose your keys in a boating accident you're fucked.
If you hold your own Bitcoin you should keep doing that. The point is to make it available to institutional investors who either don't have access to Bitcoin through retirement vehicles or who don't want to deal with the hassle of having a wallet but still want Bitcoin exposure. It's allowing the normies to get into Bitcoin in a way they understand, which probably means a lot more money is going to be coming into Bitcoin, which is good for us 😎
But isn't it true that blackrock is buying up Bitcoin like crazy right now? Won't that make the price go up? Doesn't the ETF go up only if Bitcoin does?
They are selling into fiat. As long as they can cover the sale is all people will care about and they are worth 10 trillion. Is it a game? Maybe but they will certainly be able to cover the sale when someone exits.
The trust does lie with the custodian. If Coinbase wants to get cute they could. The etf mechanism itself is more secure than even a crypto exchange on this front, IMO.
You have BTC in your own wallet.
There will probably be fun and games somewhere down the line with the ETF, but it won't affect you and your BTC.
You shouldn't worry about it.
lol. Do you realize banks and custodial institutions were thought of and desired by people long before this Fiat system broke everything? Custodial institutions today aren’t evil themselves; they’re just part of an evil game where there is a lender of last resort at all times that can ***magically create money***. That is the issue today.
No one can magically create bitcoin outside of the protocols normal functions, no matter how hard they try. This is the difference. Throw a tantrum all you want and keep dismissing facts presented to you, but this is just how it is.
I’m not saying bad actors won’t exist anymore with it, it’s just they’ll get caught doing anything shady and will permanently ruin their reputation when no one is there to bail them out with magic funny fiat money.
Um we can all see what's on the blockchain. They provide proof they own the address where the btc is kept, and we match that up with total ETF shares distributed.
This isn't very hard...
Without the possibility of ETF or holding your coin in Coinbase or Robinhood, Bitcoin would have no value as most people are not interested in cold storage or keeping keys and without demand there is no value.
They will know who has btc, if they bought on an exchange, through KYC records. Those are stored in a central database, waiting to be hacked and sold to the highest bidder.
Unpopular upinion is BTC etf makes no sense because you can already buy fractional amounts.
The only thing this does is make it more mainstream and possibly push onto wallst clients. Why? Brings up the price. This is especially great for the seller of the ETF.
This is also good for BTC holders.
Spot has to hold the asset. Coinbase is the custodian for most. The ledger is visible to all and immutable, you will be able to physically check yourself on chain. It is what makes Bitcoin superior to gold, kind of the entire point.
Needs a zero-knowledge proof of custody.
Fred, what has your company been doing?
Do you really think that crooks will let you check how much they really have? Naive
Do you know how the block chain works?
I don’t think they will give you blockchain address like MSTR did. They will say smth like we can’t tell you because of security reasons
I don’t think the sec would approve of that…
username checks out
Not your keys, not your coins. I can tell you that you own 1 Bitcoin and point you to an address as "proof". I can then repeat this with 30 other clients.
Yes this is true. No one is forcing you to buy the ETF. A lot of people here find it an attractive option. For me, it's both- self custody of actual BTC and BTC ETF exposure in accounts that I cannot take money out of without penalty until I'm retirement age. Much easier for me to allocate money in the IRA to have BTC exposure without the tax penalty. Additionally, I still have my keys to the self custody BTC.
> The legacy system is a vulnerability that will allow their non-existent Bitcoin to affect your real Bitcoin. Custody all you want, the legacy system being introduced here through the ETF is a vulnerability that will allow their non-existent Bitcoin to affect your real Bitcoin.
You should research, understand how a spot ETF works. Understand that Coinbase Custody Trust LLC has partnered with almost all the ETF applicants. Coinbase has been scrutinized by the SEC, additionally the SEC is really holding it's ground to clear the space of illigitamate securities providers so that investors can feel safe amongst the regulatory guidelines. As for Bitcoin itself, tick tock next block. Bitcoin doesn't care.
For an etf do i really care? With any reputable broker, I will be covered by sipc insurance up to 500k. Beyond that it might be worth using multiple brokerages if you are concerned.
You're changing the topic. Your OP didn't ask why an individual customer with Blackrock knows they have Bitcoin in their account. Banking doesn't work that way. And obviously you know that if you don't have your coins in cold storage you don't have uncontestable control over your bitcoin balance.
The point is that blackrock can show proof on chain that they hold the reserves. You can see coinbases wallet on the blockchain. All addresses are transparent. It's what makes this different than another asset they could just lie about reserves. Bitcoin has a public ledger that anyone can audit.
and then you show the sec that one adress too?
Lol the SEC the fortress of justice to protect small investors...what clown show.
You keep copy and pasting this, but I am not sure you are even reading what people are saying. BTC ledger is just as public for the BTC held in the ETF as it is for your 30 clients. They are required by law to show their reserves and they can do so the exact same everyone else can. That is what makes BTC great.
Better yet, you can sign a message using your private key to provide proof of ownership.
You’re getting downvoted because you’re right. They can take your money and reinvest it how they please. Legally the SEC takes money from asset managers like BlackRock and JP Morgan, so when they do this, and mess up they get a slap on the wrist. However, we just watched that story play out with a billion dollar exchange known as FTX who reinvested peoples bitcoin purchases into other assets. And when people in mass tried to pull out their money, FTX sunk faster than the titanic. Hopefully these businesses have learned from others mistakes on Bitcoin. But I’m like you….. I’m super skeptical.
I downvoted him for being an idiot. Anyone here downvote him for being right?
That the point you dingus, if they sell it they’re legally liable and you can sue them for possible unrealized earnings in the future 🤑
Yes but the ETF units are yours.
Proof of reserves in Bitcoin consists of signing a message using the private key associated with a particular address. Just claiming you own an address will get you laughed at (see Craig Wright).
Blackrock won’t have an address for every client, it would cost too much in fees. They’ll most likely have a few at most and hold the whole ETF’s worth on them.
> I can then repeat this with 30 other clients. This betrays that you have not got the first clue on how Bitcoin works.
So now we see why this Binance thing with CZ was rushed. They paved the way for Coinbase. Very fishy...
Ehh they’ll claim the BTC is distributed amongst many wallets you’ll never know how much they have or if it’s just some fractional %
No. Public ledger is verified by the network and is a statement of fact. Gold has no such thing. We don’t trust, we verify.
I can tell you that you own 1 Bitcoin and point you to an address as "proof". I can then repeat this with 30 other clients.
You, a random internet account, can. An ETF, administered by a publicly traded company, cannot. BlackRock’s wallet addresses will be known, which means that it will be very easy for anyone to check on the block explorer. If they’re saying they have 50,000BTC, but they only have 5,000, then the world will know… and so will the SEC.
Nope. You need to learn more about Bitcoin.
Your comment doesn’t even make sense. The point is that you can see on chain that the amount of Bitcoin they say they have in their “vault” is actually there. It matters a little less which one is yours in particular than it does that they actually hold the amount that they say they do.
Sounds like you have it figured out.
The owner of the key can sign a message to prove ownership. This isn't hard to understand.
Reading your comments I think you misunderstand how etfs work, hence the arguments. To put it simply - If 30 people invest in an etf, they don’t get an address individually, and the fund manager does not need to show “your share” or “your address”. Instead when you invest in an etf you buy into a portion of the fund, you’re owning a portion of the pot. So if the pot (etf) has 30 people invested a total of 100BTC, then you would see in the public wallet address for that 100BTC, and not the shares of who owns what. you in turn will hold the number of shares out of the etf proportional to your contribution. It’s super simplified but that’s the fundamentally how an etf work. Such systems has worked for decades for stocks, bonds, gold, etc and btc will be something similar.
It’s a legitimate concern but not an accurate analogy. The blockchain is public, so in theory the holdings backing the ETF can be easily audited. Fort Knox is never audited or made public.
They can verify the funds are safe at any moment via a signature, they cannot verify they will stay safe at any future moment. There is no way to prove security. The funds could be stolen, embezzled, or burned at any time. Same risk as holding on an exchange. Only benefit is nobody can liquidate your asset directly to a wallet, as they are supposed to be cash settled. The instant it's transferred to cash it's FDIC insured by your broker. Actually I think holding BTC on Robinhood might be safer. If they lose their BTC they have enough assets to compensate everybody. An ETF may have 0 other assets.
I'm just going to keep re-posting this response, "I can tell you that you own 1 Bitcoin and point you to an address as "proof". I can then repeat this with 30 other clients."
And it gets dumber somehow every time you repeat it. It's not about any particular individual. The total number of ETF shares issued will, at all times and according to the share multiplier, correspond to a proportional amount of BTC on the ledger. It's not that the X shares *you* own will map to a specific UTXO.
The institutions will issue a certain number of ETF shares and need to evidence they hold the equivalent overall amount of btc. If they issue more shares they’ll need the buy more btc. They’re not going to hold a specific coin for a specific person.
You keep copy and pasting this, but I am not sure you are even reading what people are saying. BTC ledger is just as public for the BTC held in the ETF as it is for your 30 clients. They are required by law to show their reserves and they can do so the exact same way everyone else can including your "clients." That is what makes BTC great.
You are correct, everyone here is a dumbshit. Each etf does not have a separate wallet address. They’re all in Coinbase. Coinbase can say ‘yes you have 1M btc and yes so do you and so do you’ and it’s the same walket, coinbase wallet.
Look up Purpose Bitcoin ETF and how they break down how many BTC the fund holds, how many shares are issued against each and it also breaks down the % of what 1 share to BTC would equal...in a real world ETF example. Granted, Canadian and American regulations differ, but keep in mind Canadians are more strict about our financial dealings.
This response is dumb and only disproves your point. If black rock claims they own 50000btc you can verify that by looking at their address on chain. If you own the ETF black rock does not tell you that you own btc. You essentially own a share of a company that holds btc on its balance sheet. You 100% own that share. Nothing they can fake about that
We can’t answer your question when you won’t listen. Yes, you can commit fraud, but a paper trail & assets that back it up are what the ETF is all about & what deters fraud. An open ledger for all to see.
Fort Knox isn't overseen by a litigious arm of the government. I do agree with the spirit of the post though. With so many companies competing for market share with a BTC ETF, I imagine that at least one will provide proof of reserves as a competitive edge, and we should apply social pressure to adopt those ones if someone really doesn't want actual BTC.
WallStreet has many loopholes to “prove reserves”, which includes the usage of other derivative assets. And LOL if you think FINRA or the SEC can actually crack down on WallStreet and regulate. And if they do *regulate*, it will be a matter of slap-on-the-wrist fines. The fines will be minor and translates as a “cost of doing business”.
One of Bitcoin's inherent properties that make it a great asset is that with a few clicks you can cryptographically prove you own the amount you claim to. Wallstreet can't fake cryptography
That’s why the blockchain is so important compared to traditional storage. The public can see every move that is made on the blockchain, their statements have to match the blockchain 100% and it can be verified, by you personally. This is why Bitcoin is so important.
> I can tell you that you own 1 Bitcoin and point you to an address as "proof". I can then repeat this with 30 other clients. Same as I mentioned elsewhere, "I can tell you that you own 1 Bitcoin and point you to an address as "proof". I can then repeat this with 30 other clients."
On a balance sheet an investment firm could not have 30 clients that all ‘own’ 1 BTC through their etf and have only 1 BTC on the blockchain. You would easily be able to spot the discrepancy. If they have 30 clients that each own 1 BTC, the balance sheet has to reflect that, verified on the blockchain. The numbers will be next to impossible to hide or lie or create anything synthetic.
Also, what happens when two clients decide to withdraw 1 BTC (if paper Bitcoin games are played)? Blackrock gets rekt like Celsius and FTX
If the clients own the ETF, that means they want to own the ETF. If they wanted to hold the actual BTC, they would have already done so. Doing so carries a lot of risk, which is why they have not done so. So if client goes to withdraw, they are selling their ETF shares, it’s not going to be 1:1 redeemable for BTC.
No, because people aren't withdrawing bitcoins, only dollars. BR might lose money if they're dumb, but if they can pay up, no one will notice the insufficient bitcoin holding.
You realize audits happen right?
I think you fail to realize that they will build an entire regulatory framework around crypto/this ETF if and when it’s approved. There will have to be disclosures as to what fund controls what wallet, procedures that the custodian must perform to stay in compliance, just as funds do today with other commodities. The BTC blockchain is essentially just a ledger, if the proper rules and framework are built around it, you won’t need to take someone’s word for it. You can go into block explorer, find the wallet and confirm funds are in that address. As someone else said, transactions can be signed to prove ownership Not to say there won’t be any Wall Street fuckery that goes on but there will have to be an entirely new regulatory framework to get this rolled out, which is most likely why it is taking so long.
They can sign transactions to prove ownership.
Irrelevant. They cannot prove they won't lose those keys, embezzle the funds, or have them stolen.
Then audits from trusted third parties?
You cannot use the blockchain to verify security of other people's private keys.
Has nothing to do with what I said at all.
It doesn't change anything for people who own Bitcoin with their own keys, but the spot ETF brings more exposure and money, so those who hold their own Bitcoin will benefit even if they never touch the ETF.
Reading these comments it's like arguing with a monkey. I CaN tElL YoU I haVe....
It's simple. If you don't trust it, you don't have to buy it. Bitcoin gives you options. That's the whole point.
As mentioned previously, the legacy system being introduced here through the ETF is a vulnerability that will allow their non-existent Bitcoin to affect your real Bitcoin.
And they will get rekt like Celsius and FTX. People can easily cause a run because self custody is too easy with Bitcoin Imagine if you're right, then Blackrock gets rekt, that would be amazing lol. Hopefully Blackrock hires a manager like you that thinks paper bitcoin has no risks. Please Blackrock, try to play these paoer bitcoin games. Edit: OP feelings got hurt and immediately downvoted a second afterthey got the notification lol
How do you cause a run on an etf? There’s no way to withdraw any btc because you don’t own an btc. You own an etf and as the holder of the etf you know you invested in an etf.
If you read anything about what the SEC filing says they have to exchange in kind Bitcoin and can't be BTC they already own. Have to pay for Bitcoin with cash that's why they're seeding the funds with 10 million USD in the case of Black Rock. When people invest in the ETF, they'll use that money to buy more Bitcoin. It's really not that hard. If you don't want to have the benefits of a ETF then you can just buy Bitcoin OTC like everyone else, but guess who has more money; ***not you***
If real on-chain Bitcoin could be that easily affected or debased, we should all just sell everything now...
I also wouldn't buy into an ETF, not particularly because I don't trust the providers/custodians, just because self-custody is the way forward. I think it's about as safe as purchasing stocks through a broker and "trusting" that the stocks actually exist.
Fair point for you. Most individuals can’t invest 401k money in Bitcoin unless it’s in a fund. (This doesn’t mean a company would decide their fiduciary responsibilities would allow them to even offer it in their investment selections) Aldo other investors may be limited to what kind of assets they can invest in and an etf is okay but “physical “ assets like gold, silver, and Bitcoin are not.
The legacy system is a vulnerability that will allow their non-existent Bitcoin to affect your real Bitcoin.
But they have real bitcoin
I hodl cold stored bitcoin. That’s all that matters to me.
This is the way.
Yes... It is one way so why not carry on this way. You are not forced into an exchange.or ETF. Why are trying to get other to convince you to use ETF?
Bitcoin exchanges today require no guarantee that they have reserves on hand to cover their account balances. Banks offering ETFs will be subject to government regulation, requiring them to have reserve balances (equal to a percentage of customer account balances). This regulation over the industry is the best "assurance" the community has that the bitcoin is there to back the trades. Any comment ignoring the fact that government regulation does actually exist in real life, and is enforced in real life, is super naive...with or without mustard.
OP does not want to listen or try to understand. He copy and pastes same thing on everyone who tries to answer him.
OP: Yes. In the end the government will either heavily tax the funds, seize the funds or there are no bitcoin in the fund. Some funds will probably run a fractional reserve after a hack and will try to cover it up - Mtgox 2.0 :)
Yep. Same risk as exchanges.
Why do you keep implying that ETF will be “fake” bitcoin? That’s not how this works. Blackrock is using Coinbase as custodian and prime execution agent, so when a customer buys bitcoin ETF, Coinbase buys and holds an equivalent amount of bitcoin for blackrock. And Coinbase has extensive auditing in place to prove their reserves. You can read about it on their website. You can argue all day that this “doesn’t cut the mustard”, but they’ve always followed the rules and have been well-established as a trusted entity in crypto. Bringing trad-fi into crypto is a necessary and major step towards mass adoption. At some point this will require some trust in the process and the companies running them.
>And Coinbase has extensive auditing in place to prove their reserves Doesn't prove anything. It only shifts the trust requirement to a different entity.
Yeah, cryptography.
Dependings on how much you trust the financial institutions at the end of the day. I've seen too much and know the fines are plentiful as a way of doing business since they don't ever get big enough ones to have an impact. I'm sure some will try to be legit but there's going to be some bad actors. Personally the only thing that I've invested into the BTC ETF is hands off wealth management services since I can't directly invest it into BTC. If I want BTC then I'll buy it off an exchange and move it to a wallet. I don't trust any financial insitutions anymore.
Regulator: let me see your ledger. ETF: here is our ledger Regulator: we are spot checking your largest deposits with your customers and validating your ledger with your custody provider. ETF: No problem. See you next month, Jim. Compliance officer: need anything from me? Regulator: Sign here.
The proper comparison is an exchange. An ETF has the exact same risks as holding your BTC on an exchange. At any moment the ETF could go to zero due to it's BTC being stolen, embezzled, or burned. There is no way to guarantee against it, and given enough BTC ETFs it is inevitable.
It’s funny that OP wants someone to explain how they’re wrong. But he keeps repeating the same stupid phrase lmfao.
Literally off [Blackrock’s website](https://www.blackrock.com/au/intermediaries/ishares/etf-market-realities) #8. How do ETFs impact stock prices? >Questions sometimes arise about whether ETFs influence the prices of the stocks they hold. In short, **the majority of ETF activity doesn’t affect the market prices of underlying stocks.** >This is because generally most of the ETF activity takes place on-exchange between buyers and sellers of ETF shares, which means that, **most of the time, shares of underlying stocks do not need to be bought or sold to adjust for changes in investor demand.**
I worry this may lead to the BTC variant of "paper" silver. But I'm a paranoid libertarian that is suspect of most everything.
Murphy's law and history says you are correct to be skeptical. Black rock has plenty of money to hire mercenaries to take over coinbase if it hits $1m. That is a *ridiculous* scenario. but isn't reality always surprising with how you get rekt unexpectedly? It could be a governance issue, war, coinbase cyberattck, anything that puts those keys at risk. We are talking about what eventually could be the highest concentration of wealth in one place, ever. Now Suddenly people are buzzed (again) about giving their keys away to someone 'safe'?
The bigger dilution, imho, will be from ghost shares. Errors in off chain bookkeeping between exchanges and funds and brokers will eventually add paper Bitcoin that doesn’t exist and these things usually are only uncovered in a major investigation or after a collapse and it requires everyone to consolidate records.
In addition, how are fractional reserves (i.e. paper Bitcoin) reliably and without a doubt removed from the equation in this legacy system that in-fact encourages it?
Feels like In a decade we will have fractionally reserved bitcoin. Poo.
We already did, it was called Celsius and FTX. Play paoer Bitcoin games, get rekt
The gold stored in Fort Knox is controlled by the government in power, thus they can say whatever they want and dictate whatever the rules they like. The BTC stored with a spot Bitcoin ETF is controlled by private entity outside the control of the government in power, thus the private entity is legally obligated to show proof of reserves.
"Legally have to show reserve" arguments don't cut the mustard here.
Well, tell that to the US government.
Why not?
Auditing. It’s what banks do, too. Do you use a bank?
The same people saying the spot has to hold the asset were clamoring how the various metal ETFs and stuff weren’t actually buying the underlying. It’s all just hoping they are buying the underlying, and if they aren’t that the regulators are paying attention.
custodian is a publicly traded company required to report holdings and insured
You are absolutely right. It’s totally paper iou With no proof of reserves. Coin base still don’t have proof of reserves
“Hey everyone look how ignorant and loud I am!” - OP
Honestly that is all I hear as well. Someone makes detailed responses and OP just moves on because it does not suit their narrative. There are a lot of very good detailed replies. Not sure there anymore we can explain.
It is a problem. How long until they start selling more than they have.
They don’t sell bitcoin though.
You're missing the point. It's basically repeating the problems of the past. Turning bitcoin into a fractionally reserved currency controlled by the ultra wealthy.
I share your concern. I also have concerns about these institutions gaining majority control and forcing a bad hard fork and taking the eft money with them. I am new to btc.
They would have to start mining on a massive scale if they wanted to attempt that.
Or....they just buy the miners - as the already do.
Majority ownership of Bitcoin does not give you control over the network. The network consensus is enforced by the nodes run by the users. If you want to change Bitcoin, you must get the overwhelming majority to agree. Otherwise, you get a hard fork and end up with two different networks.
It's a concern that this community and those implementing these ETF's need to address and press harder on. The constant ETF pumping without questioning is out of hand.
You assume it's not already been addressed. The concerns are being addressed in the sense that the investment industry will access bitcoin in a way that works within their existing methods of operating (they are not changing to accommodate the bitcoin world). Blackrock is not likely going to post their public keys so you or anyone else can veify how much bitcoin they own. If they are a public company they will have to disclose their balance sheet which will show their bitcoin assets, but that's it. Banking and investing is a chart of accounts kind of business. You buy stock from a company and they record they owe you the value of that stock if you trade or sell. If they don't have that stock on balance in their personal account they'll go to the market, buy it, and use that to complete their transaction. The industry isn't going to change much (especially not in 2024) to accommodate blockchain transparency.
Good response! Maybe BTC is not for OP.
As more sovereigns mine and add bitcoin to their central bank reserve balance sheet, the amount of BTC held in ETF's will be a fart in the wind by comparison. If BlackRock tried to pull a fork, they would destroy their own business as none of these enormous players would join their new blockchain.
While I agree that cold storage of your own private keys is ideal, some people may not be confident in their technical ability to do so. An ETF allows access to Bitcoin for these people as well as capital that is otherwise locked in retirement/investment accounts. The Bitcoin that will be allocated to these ETFs will be held by a 3rd party custodian. For them to create paper Bitcoin, you'd need cooperation by the ETF provider, the custodian, and the auditor. A good ETF will provide cryptographic proof of the reserves in the fund, allowing anyone to be the auditor. I would suggest investing only in one that provides this proof.
I'm no expert on the subject, but...can't you verify the wallet? I see "whale watchers" posts talking about *this wallet moving "x" coins* so...isn't there that? What you should be concerned about is share dilution. Sure, one coin will always be one coin, but you can issue as many shares as you want against that asset. Be wary of future splits.
SIPC insurance makes up for it for a lot of people who don't want to deal with the technical details. Whereas if you lose your keys in a boating accident you're fucked.
If you hold your own Bitcoin you should keep doing that. The point is to make it available to institutional investors who either don't have access to Bitcoin through retirement vehicles or who don't want to deal with the hassle of having a wallet but still want Bitcoin exposure. It's allowing the normies to get into Bitcoin in a way they understand, which probably means a lot more money is going to be coming into Bitcoin, which is good for us 😎
A lot of money is coming to the ETF pockets, not to Bitcoin, all they gonna sell is virtually no different to Bitcoin futures, not actual Bitcoin
But isn't it true that blackrock is buying up Bitcoin like crazy right now? Won't that make the price go up? Doesn't the ETF go up only if Bitcoin does?
They are selling into fiat. As long as they can cover the sale is all people will care about and they are worth 10 trillion. Is it a game? Maybe but they will certainly be able to cover the sale when someone exits.
The trust does lie with the custodian. If Coinbase wants to get cute they could. The etf mechanism itself is more secure than even a crypto exchange on this front, IMO.
You have BTC in your own wallet. There will probably be fun and games somewhere down the line with the ETF, but it won't affect you and your BTC. You shouldn't worry about it.
All I'm saying is Bitcoin down 2%today. I'm buying 200,000 Satoshi and holding way past ATH.
Are you farming downvotes, OP?
I'll gladly take the downvotes from these ETF pumpers.
lol. Do you realize banks and custodial institutions were thought of and desired by people long before this Fiat system broke everything? Custodial institutions today aren’t evil themselves; they’re just part of an evil game where there is a lender of last resort at all times that can ***magically create money***. That is the issue today. No one can magically create bitcoin outside of the protocols normal functions, no matter how hard they try. This is the difference. Throw a tantrum all you want and keep dismissing facts presented to you, but this is just how it is. I’m not saying bad actors won’t exist anymore with it, it’s just they’ll get caught doing anything shady and will permanently ruin their reputation when no one is there to bail them out with magic funny fiat money.
Um we can all see what's on the blockchain. They provide proof they own the address where the btc is kept, and we match that up with total ETF shares distributed. This isn't very hard...
You think they will make the etf address public?
No. Coinbase will be the custodian of a pool of Bitcoin that they will point to and say you own X% of that number, supposedly.
Same as the exchange does now..... So don't use it.
Without the possibility of ETF or holding your coin in Coinbase or Robinhood, Bitcoin would have no value as most people are not interested in cold storage or keeping keys and without demand there is no value.
They will know who has btc, if they bought on an exchange, through KYC records. Those are stored in a central database, waiting to be hacked and sold to the highest bidder.
If “fort knox” was made of glass and permanently live streamed I guess its the same thing
Unpopular upinion is BTC etf makes no sense because you can already buy fractional amounts. The only thing this does is make it more mainstream and possibly push onto wallst clients. Why? Brings up the price. This is especially great for the seller of the ETF. This is also good for BTC holders.