Crypto Bomber

Satoshi Nakamoto, the elusive and pseudonymous creator of Bitcoin, introduced the world to a decentralized and peer-to-peer electronic cash system with the publication of the Bitcoin whitepaper in 2008. While Nakamoto’s identity remains unknown, the impact of (his/hers/their) creation on the financial landscape is undeniable. 

If we were to imagine what Satoshi Nakamoto might say about spot Bitcoin Exchange-Traded Funds (ETFs), it’s important to consider the fundamental principles that guided the creation of Bitcoin. Satoshi’s vision, as outlined in the Bitcoin whitepaper published in 2008, emphasized decentralization, censorship resistance, and the removal of intermediaries from financial transactions.

Satoshi Nakamoto’s BTC plan overturned

Bitcoin exchange-traded funds (ETFs) have been a hot topic within the crypto community and traditional finance sectors. The idea behind a Bitcoin ETF is to provide investors with exposure to the price movements of Bitcoin without directly owning the cryptocurrency. In this context, spot Bitcoin ETFs, which are backed by physical Bitcoin holdings, have been particularly scrutinized. 

In this context, the introduction of spot Bitcoin ETFs might be viewed with a degree of skepticism or even disappointment from a purist perspective. Here’s a speculative statement based on this notion:

1. Decentralization and Control

One of the fundamental tenets of Satoshi Nakamoto’s vision for Bitcoin was decentralization, allowing individuals to have control over their financial transactions without relying on central authorities. 

The introduction of spot Bitcoin ETFs, which are subject to the oversight and regulations of traditional financial institutions, could be viewed as a departure from this vision. Satoshi Nakamoto might express concern over the potential centralization of Bitcoin’s influence within traditional financial systems, potentially compromising the essence of decentralization.

2. Financialization vs. Utility

Satoshi Nakamoto designed Bitcoin with the primary intention of creating a peer-to-peer electronic cash system, promoting financial inclusivity and independence. Spot Bitcoin ETFs, while increasing accessibility for institutional investors, may prioritize financialization over the utility of Bitcoin as a means of direct exchange. 

Satoshi Nakamoto might lament the shift towards speculative trading instruments and the detachment of Bitcoin from its original purpose as a decentralized currency.

3. Custodial risks

Spot Bitcoin ETFs require custody of physical Bitcoin, entrusting third-party entities with the responsibility of safeguarding these assets. Nakamoto’s vision emphasized the elimination of trust in intermediaries. The reliance on custodial solutions poses inherent risks, as witnessed in the history of cryptocurrency exchange hacks and fraud. 

In this context, Satoshi Nakamoto might express disappointment in the compromise of security and trustlessness introduced by relying on external custodians.

4. Regulatory dependence

The regulatory landscape surrounding cryptocurrencies is dynamic and varies globally. Spot Bitcoin ETFs, being subject to regulatory approval and compliance, introduce a level of dependence on traditional financial systems that Nakamoto sought to circumvent. 

The need for regulatory approval may be seen as antithetical to the original ethos of Bitcoin, as it places control and validation in the hands of government entities rather than the decentralized network of users.

5. Market speculation and volatility

Spot Bitcoin ETFs, like any financial instrument tied to the volatile crypto market, can contribute to increased speculation and price volatility. Satoshi Nakamoto’s initial vision aimed at creating a stable and practical alternative to traditional currencies. The potential for heightened market speculation may be seen as detracting from the stability and reliability that Nakamoto envisioned for Bitcoin.

Crypto community reactions tied to Satoshi

According to one analyst, the potential approval of a spot Bitcoin exchange-traded fund in the United States will raise fundamental questions about Bitcoin’s original goal by enigmatic creator Satoshi Nakamoto. The concept of a spot Bitcoin ETF contradicts the concept of self-custody.

However, not everyone has been bullish about spot Bitcoin ETFs. Arthur Hayes, co-founder of crypto exchange BitMEX, says that spot BTC ETFs could “completely destroy” Bitcoin if they become too successful. According to some Bloomberg analysts, if not Bitcoin, such ETFs will most likely compete with centralized crypto exchanges like Coinbase, as ETF fees are expected to be lower than exchange fees.

Arthur Hayes predicts a 30%-40% correction in $BTC by early March if the ETF approval takes Bitcoin close to its 2021 ATH.A 30%-40% correction would bring prices back to around $40K by March, aligning with the 50-day EMA.What do you think?

— Lark Davis (@TheCryptoLark) January 9, 2024

One user on Reddit when asked what position Satoshi would take on BTC ETFs, said: “Obviously not. He presented BTC as a currency, not as an investment vehicle. The fact that it became one is a severe perversion of the original intentions already.”

The user continued to say, “But on the other hand, it was designed to be decentralized and out of even his control. The users have decided that cryptocurrency is more useful as an investment than a currency, so here we are. I personally think it is a gigantic waste of potential.”

Other users on Reddit have called on crypto critics to read Satoshi Nakamoto’s Bitcoin white paper and understand the current state. One says, “Satoshi didn’t invent a currency, he invented a payment system. Seems even crypto bros don’t even understand crypto. Read the white paper.[…] Explain to me how you can create a payment system that doesn’t use an already existing currency without creating a new currency.”

Others have hailed the investment vehicle by suggesting Satoshi knew of the investment faculty of BTC when he said: 

When someone tries to buy all the world’s supply of a scarce asset, the more they buy the higher the price goes. At some point, it gets too expensive for them to buy any more. It’s great for the people who owned it beforehand because they get to sell it to the corner at crazy high prices.

Satoshi