However, as with many financial products on Wall Street, the people of Main Street should tread with caution.
The biggest hidden danger of a bitcoin ETF, though, goes deeper than the big banks.
Why? Mostly because regulation stipulates who can hold what assets and how that ownership is proven and governed, leading to a lack of innovation in old, paper-based processes.
Can you imagine if you had to bring a stock certificate to a bank branch every time you wanted to sell a share? Using regulated custodians in the back with a digital interface on top makes trading much more convenient for everyone, but it does mean someone else holds your assets.
Bitcoin on an exchange is a bit like cash in the bank, except without the physical part where you have to go to the ATM or branch to withdraw the cash then cut a hole in your mattress to tuck it away.
Bitcoin’s purely digital nature makes it vastly easier to self-custody bitcoin than it is to self-custody dollar bills or stocks.
In a first world country where institutions work well, it’s hard to see why this question matters.
However, if you work in an industry that’s “on the margin” of acceptability for banks and the governments that govern them — think adult entertainment or gambling — you may be familiar with the hassle and anguish of frozen bank accounts or seized funds.
The Great Depression drove the government to print money, but their ability to flood the market with cash and prop up prices was reaching its limit.
However, the Fed’s money printing created another problem: By debasing the value of cash, they destroyed existing savings and made holding cash a bad way to save up for the future.
Of course, the Federal Reserve would give everyone dollars in return for their gold, at the current market rate of $20.67 per ounce of gold.
Those Americans who held gold coins under the floorboards of their house had some chance of protecting them from seizure.
First, it’s important to understand that bitcoin was designed purposefully to combat the inflationary tendencies of governments and central banks.
This is why bitcoin has come to be known as “digital gold.” It provides the same protections for savers that gold provided in past inflationary periods, with vastly improved accessibility and portability.
For governments to have any reason to seize Bitcoin — or any other store-of-value asset — there would need to be a major crisis at the end of a long accumulation of debts, like in the 1930s.
This would punish those who hold or receive salaries in fiat currencies by debasing their savings and earnings.
Governments can either watch their currency — and the power that comes with it — evaporate faster and faster as a result of their own debasement and the selling it caused, or they can use the power they have left to do what Roosevelt did in 1933.
This is a classic marker of “running for the exit” — anyone with cash is looking to buy anything else that’s a better store of value than cash.
We are living in unprecedented times, in a situation that the vast majority of us have never experienced before in our lives.
Owning bitcoin but failing to hold it yourself is like buying a helmet but refusing to wear it when you ride.