Does ETF Undermine the Essence of Bitcoin? Industry Debate Intensifies Over Custody Methods

Source: DigitalToday Original Title: Does ETF Damage the Essence of Bitcoin? Industry Debate Intensifies Over Custody Methods Original Link:

A fierce debate is raging within the Bitcoin(BTC) industry over custody methods. Industry veterans are clashing over asset custody, sovereignty, and the role of ETFs. Investor Fred Krueger(Fred Krueger) supports Nick Szabo(Nick Szabo)'s dual strategy, arguing that while ETFs can be utilized, the right to self-custody must be strongly protected.

The ETF versus self-custody debate began on November 30, sparked by Bram Kanstein’s remarks. Kanstein argued that gold was efficient as money, but due to custody issues, it was replaced by credit-based substitutes. Szabo pointed out the centralization and theft risks of gold, explaining that while Bitcoin has solved speed and verification issues, it remains vulnerable in terms of theft resistance. This is one of the reasons Wall Street prefers third-party custody.

Eric Balchunas questioned, “Why do Bitcoin purists oppose ETFs while allowing exchange custody?” In response, analyst Sam Wouters countered that ETFs are like “birds in a cage” that users cannot self-custody, emphasizing that the core of self-custody is the “exit strategy.” While ETFs can accelerate Bitcoin adoption, there is also the risk that corporations could exert influence over the protocol.

Although self-custody is sometimes said to be complex and expensive, many platforms offer free withdrawals and low fees. Given that Bitcoin was created out of distrust in corporations, the custody debate has emerged as a key issue that goes beyond a simple technical choice to the very identity of Bitcoin.