The Potential Destruction of Bitcoin
According to Arthur Hayes, the founder of BitMEX, the success of Bitcoin exchange-traded funds (ETFs) could ultimately result in the demise of the leading digital network. In his recent blog post titled “Expression,” Hayes suggests that if all BTC ends up in the hands of traditional finance asset managers who are eagerly awaiting ETFs, Bitcoin could die.
Bitcoin’s Unique Nature
Hayes bases his prediction on the unique characteristics of Bitcoin compared to other monetary instruments. Unlike physical assets like gold and fiat currency, BTC only exists if it is in motion. Once Bitcoin reaches block 2140, miners will no longer receive rewards and will rely solely on transaction fees. If there are no more transactions, miners won’t be able to cover energy costs, leading to the network’s demise.
Accumulating Bitcoin for ETFs
Traditional asset managers such as BlackRock are accumulating BTC in preparation for spot Bitcoin ETFs. These managers plan to store the bitcoins in a metaphorical vault, issue tradable securities, and charge management fees without utilizing the assets they hold. This accumulation could result in a future where Western and Chinese asset managers control all circulating BTC.
The Death of Bitcoin as a State-Controlled Asset
If a few firms hold all BTC and investors prefer Bitcoin ETF derivatives over actual BTC, there will be no practical use for the blockchain. Miners will shut down their machines, turning Bitcoin into another state-controlled financial asset that is not actively used. However, this scenario could pave the way for a new crypto network that operates independently from state control.
A Potential Future
In closing, Hayes suggests that if Bitcoin does die, it may lead to the development of a non-state-controlled monetary asset. He concludes by stating, “Hopefully, the second time around, we will learn not to hand our private keys to the baldies.”
Hot Take: The Risk of ETFs and Bitcoin’s Fate
The success of Bitcoin ETFs could have a significant impact on the future of the digital network. Arthur Hayes, the founder of BitMEX, warns that if all BTC ends up in the hands of traditional finance asset managers vying for ETFs, Bitcoin could be completely destroyed. This is due to Bitcoin’s unique nature as a digital currency and its reliance on transaction fees for miner income. Hayes envisions a future where BTC becomes another state-controlled financial asset with no practical use. However, this potential demise could pave the way for a new crypto network that operates independently from state control.
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