Key points:
- Arthur Hayes, former CEO of Bitmex and cryptocurrency market analyst, pondered about the success of an upcoming spot bitcoin ETF and its effect on the future of bitcoin. Hayes states that the popularity of these ETF derivatives might concentrate the custody of all the bitcoin in a few hands that won’t move it, forcing miners to capitulate due to a lack of activity in the blockchain.
Arthur Hayes Believes ETFs Might Cause the Demise of Bitcoin
Former Bitmex CEO Arthur Hayes believes that the success of an upcoming spot bitcoin ETF might endanger the existence of the Bitcoin network. In his most recent blog post, “Expression,” Hayes presents a hypothetical situation in which bitcoin is all in the hands of a few financial firms, like Blackrock.
If this happens, Hayes anticipates this will destroy bitcoin as a store of value, given that it is different from all of the assets traded in financial markets until now.
Hayes argued:
Bitcoin is the first monetary asset in human history that exists only if it moves. But if there was never another Bitcoin transaction between two entities, miners would be unable to afford the energy it costs to secure the network.
The result of this would be the shutdown of the whole Bitcoin network due to the starvation of miners who will receive fees only from bitcoin transactions after the subsidy ends circa 2140.
Hayes adds that this could happen if users come to value bitcoin as a financial asset more than a store of value, favoring the purchase of derivatives instead of the cryptocurrency. However, if bitcoin suffers this fate, Hayes anticipates the birth of a similar asset to allow people to transact in a non-state-owned financial system.
“Hopefully, the second time around, we will learn not to hand our private keys to the baldies,” he concluded.
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