Topic: What's the difference between Coinbase and an ETF? - page 2. (Read 299 times)

OK, that's what I thought. This is a problem, because if Bitcoin becomes the global reserve currency or asset, then we can't rely on other currencies or assets to insure it. At the moment, if 100,000 BTC are lost, they can pay $6B on paper and that's it. They can't buy what they can't insure, so even if they have $20T, they can't use half of it to buy bitcoin.

Am I wrong anywhere?

I get it, I'm just thinking what happens in a scenario where these people get ripped off by a hacker. It has happened before, just not with BlackRock.

You're comparing apples to oranges.

Trading incurs a one-time fee, while ETFs charge you a yearly fee for merely keeping your assets (no CEX does that).

It's even worse when you're not even allowed to withdraw BTC, so you're forced to keep it there.

So every year BlackRock (or even worse Grayscale) take a certain amount of satoshis from you.

Most investors don't mind it though, because they measure their wealth in USD, not BTC.

The only difference is that Coinbase allows you to withdraw BTC to a personal wallet, while ETFs only allow you to withdraw USD. That's why Grayscale ETF holders have to convert to USD first and then send those dollars to BlackRock to buy BTC ETF.

It's quite tedious in a sense, but for people who don't intend to ever use a BTC wallet it sounds rather convenient.

Besides that, the ETF marketing makes it more appealing to institutional investors. These folks treat BTC ownership like they treat home/car ownership (they don't mind custodians keeping their property titles). In general I'd say they blindly trust the Military - Industrial complex (the state and multinational corporations/Mega Corps).

Reputable exchanges have Proof of Reserves these days. That wasn't a thing before the FTX meltdown.

Also, with the crackdown on mixers a thief will have a hard time to launder stolen BTC... assuming that someone can find a mixer with a huge anonymity set, which is highly unlikely.

What worries me about BTC ETF is that they'll try to turn it into CBDC.

BlackRock will attach ESG variables into it, whether it's carbon credits and/or social credit score.

If you're Bill Gates or Klaus Schwab, that shouldn't worry you (for obvious reasons).

But what if you're an Average Joe ETF investor?

What if AI catches you "misgendering" (that's just one example of "hate speech") someone on social media and that gives the necessary power to BlackRock to legally confiscate your BTC ETF share?

What I'm trying to say is that you shouldn't worry about ordinary thieves. You should worry more about legalized thieves wearing suits, if you get my drift...

Even banksters won't steal you like an ordinary thief would do. They have legal ways to steal your wealth and there's nothing you can do about it (apart from not using these institutions).

I sincerely hope I'm wrong, even though I'm not an ETF investor. But what if I'm right?

Do you honestly expect no-coiners/woke/SJWs to criticize BlackRock for their dubious business practices? Rest assured they won't. They will support TechnoCommunism with a passion.

Again: I hope I'm wrong, but feel free to bookmark my post for future reference.

The biggest difference is the level of regulation
ETFs are more regulated by the government and SEC than CEX like Coinbase
Many investors believe anything under the government is safer than a private enterprise.
Another reason I can think of is the fee
I think some ETF collect fee as low as 0.1% to 0.25% not including Grayscale and this fee is smaller than Coinbase trading fee.
Besides there are companies that wouldn't want or are held back in buying bitcoin
But they can option to buying shares from companies that do.

they aware of the risk but buying ETFs seems fairer to them
It's a stock and SEC and the government will protect them(Lol) in case of a breach in Coinbase. If anything so happen I think they should be an insurance fund set aside for unprecedented situations.


-An alt account of Ambatman

ETFs are not moved but completely stored somehow safe. It is good for multisig and cold storage together which can be more layers of protection if done well than Coinbase that their customers can decide to withdraw their coins at anytime. I am not saying that the storage will be better for ETFs but it will likely be better because the coins remain not moved unlike Coinbase that still have to move some coins. Because of how exchanges are and customers moving money is the reason exchanges make use of hot wallet but which is not needed at all for ETFs. I have not gone deeper into ETF because I do not like it at all than for more bitcoin adoption but I think if I want to set up an exchange or bitcoin ETF, I see the bitcoin holding safer with bitcoin ETF.

This is not good at all. I did not know it is like this. I am using my knowledge to discuss it before. If they have it with Coinbase, I see no difference. But Coinbase may agree with Blackrock to hold the coins on cold storage with multisig. Bitcoin for ETFs should be very easy to protect.

The main thing would be that BR is too big and not that dependent on the crypto business to let their customer bleed for a mistake by their partner, if Coinbase (their custodian) goes down they have enough in insurance and additional funds to cover the losses, if Binance is hacked and drained for all their coins they have zero funds with which to cover the loss despite all that safu bs.


Coinbase is the custodian for Blackrock.

Regarding how confident investors are in their Bitcoin entrusted to them, it is not much different when they invest under the protection of the institution that provides the service. They have been investing long before Bitcoin, and still provide proven security and guarantees. So offering an ETF is the same step as placing confidence that Bitcoin is as safe as other assets.
If we look at crime and risk, there is almost no difference. Several times centralized exchanges have been attacked and the assets in them have also been drained. In banking, we have also heard of certain banks being attacked by a group of criminals like in the movies. But all of this has strong collateral at stake by third parties. There's a lot of accountability, so it's just a matter of trust that's been built over time.

Not an expert in ETF, what I found is ETFs aren't insured, this same to centralized exchange. But when the company fails, the shareholders can still receive the money that they invested, even though not in full amount.

So when it comes to getting cyberattack, there's no difference with centralized exchange. It just depend on the company whether they willing to return the money or not.

My understanding is that in ETFs, the safety of funds is ensured. When investors invest in ETFs, they are assured that their funds are secure. Investing in the S&P 500 offers certainty, providing assurance that investments are secure. The same principle applies to gold or real estate investments. It's reasonable because these assets can be confidently secured (some even just on paper, see S&P 500). However, with Bitcoin, only the knowledge of a number can swiftly move those funds. And the difference with the previous assets, is that the thief can be anonymous, or doesn't risk their physical well-beingness as a gold thief would.

Bitcoin ETF has bitcoins in reserves. These bitcoins may be stored either inside a fund, or a centralized exchange, doesn't make much difference. The only difference I can think of, is that Coinbase holds its clients' coins in a hot wallet, where the ETF's bitcoins are stored in a cold storage.

My question is essentially, what difference does it make to make an agreement with Coinbase to hold your bitcoins in their cold storage, than buying an ETF? An ETF can't provide more "funds safety" than a Coinbase cold storage. How is the ETF more significant than that?

The ETFs are more secure than the bitcoin on centralized platforms like Coinbase because they can only be traded on the centralized exchanges, unlike bitcoin on Coinbase that can be moved to a noncustodial wallet address by a scammer or a hacker which can not be freezed by the central authorities like the exchanges.

But the reason I do not like bitcoin ETF is because it is not bitcoin itself. I will prefer to hold bitcoin instead. I mean the coins that is fully controlled by my own private keys and not those centralized platforms private keys or ETFs.

There is no certainty for their fund safety if they don't go self-custodial by themselves.

It's not their private keys, it's not their bitcoin.

Reminder: do not keep your money in online accounts

With Bitcoin Spot ETFs, investors take different risks from the company that launch Bitcoin Spot ETF shares, to the custodian entity that is Coinbase. They never know what will happen with either the Bitcoin Spot ETF company or the custodian entity like Coinbase.

The main argument of the ETF is that it makes it more appealing to investors who don't want to hold their own coins, which I get it, to an extent. An investor may want to gain capital appreciation from Bitcoin long-term, without worrying about losing access to their keys. It's been also said that ETFs are convenient in terms of regulation.

Before Bitcoin, legislation is what protected your property. Examples following.

• If you buy a car, and a thief steals it, you have all the papers to prove it belongs to you.
• A thief can't just steal your house, because it's yours on paper.
• You can't have your company stolen.

This "mechanism" attracts investors. An investor won't buy a million dollars worth of gold, to keep it to their basement. Instead, they would buy a promise of that gold, because in the end, all they want is the capital appreciation, not the gold per se. The real gold is guarded and kept on secure vaults, inside banks. A thief can't just steal that gold.

How certain can investors be for the security of a Bitcoin ETF? What's the difference between that, and a centralized exchange? Both are supposed to safeguard their setups, yet we frequently notice centralized exchanges suffering from cyberattacks, resulting in clients' funds being stolen.