Topic: Arthur Hayes Believes ETFs Might Cause the Demise of Bitcoin (Read 302 times)

I believe "the issue" that everyone should become more informed AND POSSIBLY afraid of is the paragraph that mentions BlackRock and how it might choose which fork it considers "the Real Bitcoin".

I don't know if the contents in this paragraph was made as a mere protection mechanism for BlackRock and its ETF, but if they form a cabal with other ETF issuers and hold more than 50% of the total supply, they may accumulate too much influence over the network.

Tin-foil hats on, probably start a hash war and have their chosen fork as "Bitcoin"?



¯\_(ツ)_/¯

I think more so I would be afraid of the bitcoin market manipulation via ETF/Futures contracts trading. But at the same time these markets are completely stand alone from bitcoin and shouldn't have that much affect on the coin price but it honestly probably will have a huge impact. As good as it will be at the start for new money flooding into bitcoin i'm not so sure on the long term outlook if you're looking at it from that perspective and how they have manipulated markets like the precious metals markets.

But he does have a point. Because what's the threshold in how much of the total supply should be stored in centralized vaults before Bitcoin is considered "a failure"? If more than 50% of the total supply are held and controlled by a cabal, it would definitely NOT be good for Bitcoin from a supply distribution/decentralization viewpoint. That cabal would have the market cornered. Who would want to start a company built on top of Bitcoin under such a situation? The environment could be manipulated against those that want to compete against the cabal.

No, that's what it is. Bitcoin market price always experiences new ATH price whenever it's halving effect market but the BlackRock and others just want to take advantage of this for their benefit.
Meanwhile, these are the feelings I had ever since the spot ETF proposal started but the majority of the crypto community never looked into the negative effect of the spot ETF despite the billions of dollars inflow that it will generate for the crypto market.

Yes, but they are already buying as we speak even before the listing of iShares on Nasdaq if could remember correctly. Bitcoin investors just need to be clever and never sell their holdings to them.

It is repeatedly said in the article the words too successful

Most of us are already anticipating the approval of ETF for we believe that this can cause more people to want to invest in bitcoin and therefore will hike the prices up and if this really happens as said in the article too well, i think it is not something to be feared because for sure seeing that the price is going up some people are going to want to sell already due to various reasons we have all different goals and strategies it can not happen that there is no more bitcoin for anyone else to buy

I disagree with Hayes. For starters, Bitcoin ETFs weren't approved yet. Furthermore, it's a centralized solution for traditional investors, the way I see it, so it won't really compete with proper Bitcoin and its usage by people who care about privacy and decentralization. If the number of transactions goes down due to ETF popularity, I think it's fantastic news because the fees would go down as well. As for miners, if some decide to leave, it's totally fine because the difficulty rate will adjust. Bitcoin will be just fine, no matter how popular ETFs get.

Why on earth would anyone listen to someone like Arthur Hayes? He is not a voice for Bitcoin and never will be.

Arthur Hayes has been screwing investors over with his shady, Seychellen-based exchange and has even gotten in legal trouble over it. BitMEX was ordered in 2021 by federal court to pay $100 Million USD for illegally operating an exchange and for anti-money-laundering violations.

A Bitcoin ETF has the potential of ruining or improving the public image of Bitcoin, but for all intents and purposes, it is nothing but "Paper-Bitcoin" with no technical connection to the real Bitcoin other than an on-paper promise that it is backed by actual BTC. ETFs are basically NFTs.

Wow, before we don't like this if it's happening. But we're starting to see that there's really a need to see something like this for the sake of going up for Bitcoin's price.

I think that they're anticipating that when the price goes up, most of us are going to sell and they're going to buy all of those when we're done selling it.

Many don't want to miss this opportunity and likely gonna sell when ETF's effect is there and already approved.

the more immediate threat is the numbskull's telling people to stop using bitcoin now and instead lock their value into channel hubs/factories(custodians) of subnetwork fund managers. where funds will be unlocked by the fund manager after X months(after the customer of the custodial wallet has spent all their 'inbound balance')

this will be the true path that corporations will accumulate majority of coin supply

most subnetwork nodes are designed to be annoying to sway people into using custodian managed lite wallets

the bitcoin network is becoming annoying to use due to corporate sponsored junk tactics to sway people away from self managing value onchain and using centralised services and subnetworks to avoid the annoyances caused by sponsored devs

..
as for the fear of miners diminishing returns.. the spot market economics of deflation will continue to compensate miners smaller sat rewards for many many decades. so is not a fear to concern your minds about for many decades

we should not be trying to over compensate miners now with silly fears of many decades in the future. because paying more fee's now is more reason people will stop transacting daily onchain

even if just 2mill btc was circulating and 19m were locked to custodians

if blocks were
2028: Reward=1.56250000 (1btc=$400k:=$0.625m)
2032: Reward=0.78125000 (1btc=$800k:=$0.625m)
2036: Reward=0.39062500 (1btc=$1.6m:=$0.625m)
2040: Reward=0.19531250 (1btc=$3.2m:=$0.625m)
2044: Reward=0.09765625 (1btc=$6.4m:=$0.625m)
2048: Reward=0.04882812 (1btc=$12.8m:=$0.625m)
2052: Reward=0.02441406 (1btc=$25.6m:=$0.625m)
2056: Reward=0.01220703 (1btc=$51.2m:=$0.625m)
2060: Reward=0.00610351 (1btc=$102.4m:=$0.625m)
2064: Reward=0.00305175 (1btc=$204.8m:=$0.625m)
2068: Reward=0.00152587 (1btc=$409.6m:=$0.625m for 0.00152587)

in 2068 total fees of blocks only need to be 152587 sat to double the reward where a block gets $1.25m total ($180m a day network security cost total)

meaning with say 2m coins circulating at a 1% fee it only needs
160,000 tx a block paying 1sat fee each ($4) to move value of $400+

where if users were only holding say $100k of value each (0.00025000)
2m coins (2000000.00000000) is enough for 8,000,000,000 users

and again before a numbskull chimes in about 160k tx is alot of blockspace needed.. this is not something we need to leap to in 1 year
we can easily decludge and make tx in blocks lean to get to 16k tx average without scaling blocks
then over next 40 years to scale the blocks by only 10x

so dont chime in shouting it needs gigabyte blocks by 2024 to dissolve numbskull fears

..
also any numbskull that thinks the network needs billion dollars a day network security doesnt understand bitcoin

many people need to buy machines that operate for 2 year lifespan, not one day.. . meaning the actual cost is actually 131billion cost of devices with 2 year shelf life(replaced every 2 years)

no single entity will be able to buy $131billion every 2 years to outpace the network.
and the network can mitigate risk by having lots of pools of only 10% of the network per pool where miners can jump if one pool does anything nefarious

Agree with you but we are still saying the same thing and if you notice what I pointed out about the Bitcoin spot ETF you'll see that I also said that will greatly affect the CEX business while giving more power and profit to the institutional banks because investors will have more trust in the BlackRock spot ETF than CEX derivatives.

Maybe since most investors only care about making a profit, not the legacy led by Satoshi. However, I'm strongly sure that people from the crypto community will prefer the real BTC over the spot ETF fungible token


BlacRock's latest spot proposal amendment shows that institutional banks will be the major players in everything that has to do while CEX is not involved. I mean the latest proposal is something that boosts the bank and this is why the SEC chairman made a statement that they have no reason to block the ETF approval days ago.  

No, just a change in the crypto ecosystem that could make BTC to be centralized if all BTC holder and investor sell their bag to BlackRock

That's his opinion and that's fine.
Everything can have a positive impact and a negative impact and vice versa.
Even Bitcoin has a positive and a negative impact on the society and the economy. So there's nothing new when somebody points out the negative impact of something. What we should look at is how the positive impacts weigh against the negatives.

In my opinion, what would be the demise of Bitcoin are ordinals.
Bitcoin NFTs should never have been allowed to happen on the same network as Bitcoin. It has made things so difficult for the average Bitcoin user to use Bitcoin.
This discourages people from Bitcoin because transactions because expensive and take more time.
It doesn't matter if Bitcoin is a global legal tender when it's more expensive and more time-consuming than other payment methods.

Some analysts say that most people who wanted to buy spot bitcoin already did it. Those who are interested in buying ETF are only those who wanted to buy but were legally denied the ability to do so, like some pension funds, but how many of them will decide to do it after that one fund lost money on FTX?
So, this is a valid point by you and total fear mongering by Hayes.


That's another problem. How many small retail investors who want to buy their first $1k worth of bitcoin will pay 5% of the transaction to move it to a private wallet? Not many, but Hayes doesn't care. He wants you to hold money on his exchange, so fees are in his favor.


He's worried that ETFs will beat him in both safety of storing coins with them and transaction fees, which can result in all whales and institutions who used to trade on exchanges moving out and that's going to decrease his revenue.

The only way there's too little transactions to sustain the sufficient level of hashrate is if Bitcoin becomes unpopular and falls into obscurity. ETF just can't put all coins into centralized hands, and there will still be a lot of activity on the network regardless if it will be private users or institutions. The current fee spikes caused by ordianals is just a glimbpse of what will come when there will be more players on the market with deep pockets, because they will come with increased on-chain activity.

No problem buddy.

That's what I am thinking as well. It's because his business will be certainly affected if these ETFs will get an approval? How? maybe another competition on the rise and that's why he's too skeptic about it.

We have to wait for it because it seems that there's a huge chance that most of them will be finally approved.

I disagree with the thought that EPF will destroy Bitcoin. There is no way Bitcoin can be destroyed just because a centralised ETF is available in the market. Every precious metal has multiple ETFs, did it destroy the physical precious metal market? Not at all!

Rather the most concerning issue is the height transaction fees. If that isn't fixed soon enough, Bitcoin will surely suffer from decreasing adoption rate. Bitcoin is mainly used as an investment but some people definitely use it as a payment method. The transaction fees is a pain right now. That needs to be fixed on priority by expelling the ordinals from the network.

Thanks for the assistance. Still learning the forums icons for posting.
Exactly my thoughts. Maybe he's just been too pessimistic but Atleast he didn't say will but used might..CEX is different from ETFs though.

It's probably the demise not of bitcoin but more like the demise of the future potential whales, they would be getting less bitcoin value for their money compared to how much the older whales have spent. I mean there's a lot of us retail investors right now and with ETFs potentially pumping up bitcoin, it's a possibility that if it goes up and people still think it can go higher then they'll hodl more and the whales that's trying to accumulate more will be paying for so much than they should and it ends with a lot of us retail investors selling at a really profitable price.

From now until 2140, miners are still able to mine new coins, so it's still long to go. Moreover we don't have to wait BlackRock to accept Bitcoin ETFs to see that since most of people already use and hold their coins in centralized exchanges.

The total volume (24 hours) Bitcoin transactions is 472,038 BTC in CMC while in Bisq there are around 200 BTC traded., it's around 0.04% people choose to trade via P2P instead of CEX.

Half a valid point I'd say. As of today you can also buy Bitcoin derivatives without buying the actual Bitcoin and only as an investment, which is what he is concerned about. And it hasn't been the end of the world. That ETF spots can delve further in that direction? Maybe, but there will still be a lot of people transacting with the real Bitcoin.

He missed a fact, big fact, that Ethereum Spot ETF applications have no chance to be approved if there is no approval for Bitcoin Spot ETF application.

Ethereum Spot ETF applications, in other words, rely on SEC. decisions on Bitcoin Spot ETF applications, so it's untrue to say Ethereum can beat Bitcoin.

This narrative occurs many times, in 2017, 2021 and you see Ethereum is always a second biggest cryptocurrency, it did not take over the first position of Bitcoin. It will not succeed to do it in future too.

I agree that this is really a valid point and since I believe that ETF approval is already coming it would be interesting to see how things will play out in the years to come. I am also wondering if by the time when mining rewards will end if there would be a big scarce of miners to participate in the network...anyway all of these things can still be classified as speculations but I am hoping that ETF will be a good thing for BTC and not the other way around.

Arthur Hayes has a valid point. However, there's no way that the spot ETF will lead to the demise of Bitcoin although most of the BTC ETF spot services filed by Fidelity, BlackRock, and others spot ETF service will treat BTC like a fungible token and will also make the institutional banks the major players but this will cause the demise of BTC. I just hope 95% of people in the crypto community won't sell their BTC to them.
I believe Arthur made the demise statement because the CEX will be hugely affected

I think that is a pretty silly take on ETFs.

First of all the vast majority of bitcoin will not be held in ETFs.

And I think it is pretty clear that not enough bitcoin transactions occurring on-chain is not a future worth worrying about. In fact, we have the opposite problem. People already complain about block space being too limited today (just look at any one of the hundreds of complaining threads started this year on tx fees) while Bitcoin adoption is still very early. When Bitcoin adoption is 10x or 20x what it is today, and bitcoin actual usage is 100x or 1000x what it is today, a million or even a few million bitcoin held in ETFs doesn't change anything to alleviate the block space crunch, and its laughable to say it would actually reverse the problem creating the opposite problem.

Most transactions in the future will be done off-chain / on L2s, not because people will just be using bitcoin as a TradFi investment vehicle through ETFs (though obviously there will eventually be trillions of dollars of bitcoin held in ETFs), but because people will be forced off-chain due to transaction costs, which is precisely how Bitcoin was designed.


Hayes is literally worried about the opposite of reality haha, doesn't make any sense.

We will never know until we see it. But on this community, everyone can speculate what they think about as long as there's some valid points being said just as what Arthur has said.

I think that this is all about people will be having lots of choice to touch the market without actually touching it, like the logic is that and he's into this business for so long.

@OP, you can copy this link and code as it looks troublesome with that link you posted: Spot Bitcoin ETFs could ‘completely destroy’ Bitcoin: Arthur Hayes

Arthur Hayes made a valid point considering the fact that spot ETF would be based on derivatives with transactions that aren't recorded on chain. I didn't look at it from this perspective but it's a valid point. The reason i don't think it would matter so much is because this would only become a  matter for concern a century from now when the Bitcoin block rewards cease to exist and miners have to settle for transaction fees to make ends meet let alone, make anything close to what they earn when block rewards still exist.

Firstly Op you shouldn't post links as bulky as this just like that. Instead, make use of the forum url element to embed them .Also Most time forum members are not much of fans of topics of this nature due to the fact that most topics like this are just either some random news , or some kind of blog article.

ETF to me seems to be stock traders scared of trading with Bitcoin. They hodl just for the benefits they get from using investment schemes just to gain from the Bitcoin ecosystem without actually investing in it.
The article has a section which to be some sort of quote saying Bitcoin is an asset. Which I would presume true due to the fact that Bitcoin is gradually losing its P2P adoption especially because of frequent mempool conjestions.

If more people do not sell, that means the price will go up as it would become scarce. I do not know how this would be negative for bitcoin but positive because if bitcoin become scarce, satashi (sat) will not become scarce but become more valuable. You do not have to buy 1 BTC.

Merry Xmas you all I came across a news today that pick my interest, it was about author Hayes view on Bitcoin ETFs approval which I found as a breath of fresh air of someone thinking about the negative impact ETF might have on Bitcoin. IMO I think that Can only happen in the worse case scenario.

Checkout the link: https://cointelegraph.com/news/spot-bitcoin-etf-could-completely-destroy-bitcoin-arthur-hayes

And let me hear your thoughts