The number of monthly active open source software developers in the cryptocurrency space has fallen by a quarter, according to a new report. Illustration by Fortune; Original photos by Getty Images
The recent decision by the Securities and Exchange Commission (SEC) to approve nearly a dozen bitcoin ETFs has been hailed as a major win for cryptocurrencies. But not by everyone. On X/Twitter, a disgruntled faction of the cryptocurrency community took issue with the alleged heresy of a Bitcoin product held and marketed by the likes of BlackRock. The most common objection seems to be that “Bitcoin does not require an exchange-traded fund (ETF).Using intermediaries to buy them – especially Wall Street intermediaries – subverts the idea of decentralization.
On the more extreme side, people like self-described researcher Chris Blake have gone even further Suggest That BlackRock and others may be conspiring to change the fundamental features of Bitcoin. And OG Bitcoiner Max Keizer to caution For a scenario where bitcoins held by ETFs are confiscated by the US government.
This cry is misleading. A Bitcoin exchange-traded fund is great for furthering the original mission of the Bitcoin project, and Satoshi Nakamoto – wherever he is – is certainly nodding happily to this new tool to get his creation.
Remember, Bitcoin is meant to be a type of peer-to-peer digital money that cannot be usurped by the whims of any intermediary. If Bitcoin is meant to enable individuals to be their own bank, ETFs strengthen its case as a store of value. The way a store of value works is that you buy it with excess savings and then sell it when you need to consume it later. The way a censorship-resistant store of value works is that you buy it when you need the protection it provides, and then sell it when you don’t. In other words, people who are willing to hold Bitcoin Without needing a reason for its existence Providing a valuable service to those who need it.
I buy Bitcoin largely because others will accept it. If I lived in an authoritarian regime, I would prefer to buy Bitcoin over the local currency because I know it has a global market outside of capital controls which would destroy my wealth. Knowing that there is a market for Bitcoin that caters to even the most vocal investors in the world’s largest capital market strengthens this argument.
Bitcoin is designed to be censorship-resistant and portable, meaning it can be taken from anywhere in the world. Keeping Bitcoin safe is a matter of keeping a series of characters secret, which can exist in your head if necessary. It’s a sad sign that this feature of Bitcoin is becoming more important as capricious government policies leave more and more people “unbanked.” What is even sadder is that Bitcoin use cases have grown due to armed conflict and massive capital flight in recent years.
Bitcoin holders have always provided a service to those in need of Bitcoin. Over the past decade, companies like Coinbase and Kraken have made it easier to create accounts on their exchanges to buy Bitcoin or a fraction of Bitcoin. It’s fair to wonder what the market will be for buyers of Bitcoin ETFs in 2024.
Under current regulations, it is much easier to hold an ETF in an IRA or 401k than it is in any type of crypto token because the issuers of these assets are audited in a way that is consistent with modern financial services requirements. Thus, ETFs can expand the market by attracting a different segment of potential consumers. Furthermore, fewer bad experiences with security and liquidity for the average Bitcoin owner means better reputational outcomes for the industry. For years, journalists have been relentlessly covering stories about lost fortunes made due to user errors (and coming up with creative accounting methods to exaggerate their impact).
In other words, Bitcoin ETFs help solve the last mile problem for cryptocurrencies. The cryptocurrency market has, so far, been saturated with ideologues and gamblers. The emergence of controlled vehicles that hold Bitcoin creates more liquidity globally without alienating potential users by burdening them with esoteric stuff, which early theorists (like me) would have easily tolerated. Instead of committing to creating security solutions that typically resemble a Rube Goldberg machine, the marginally interested consumer curious about cryptocurrencies can now enjoy easy entry into this grand experiment. Bitcoin may not need an ETF, but it certainly needs an alternative to safe deposit boxes and ledger machines.
Everyday people, not just techies, who are curious about Bitcoin can now contribute to Bitcoin liquidity by dipping their toes into the ETF pool. Ultimately, even the most old-school Bitcoin believers should celebrate this — not to mention the people who use it as a lifeline.
Kathleen Breitman is a co-founder of Tezos. The opinions expressed in Fortune.com reviews are solely those of their authors and do not necessarily reflect the opinions or beliefs luck.