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Bitcoin Futures-Based ETF Likely To Be Approved in the US (thestreet.com)
The race is on: who will be the first to launch a Bitcoin exchange-traded fund in the United States? From a report, shared by a reader: In Europe, there is already a Bitcoin exchange traded note (ETN) available to investors. In the U.S., it is widely anticipated a Bitcoin ETF will be be approved by the U.S. Securities and Exchange Commission (SEC) very soon. In Europe, ETNs are designed to track the movement of Bitcoin against the U.S. dollar. The ETNs are Bitcoin Tracker One, which is traded in Swedish krona and Bitcoin Tracker EURO, which is traded in euro. Both ETNs are issued by XBT Provider AB and traded on Nasdaq OMX (Stockholm). Dave Nadig, CEO of ETF.com and previously the director of ETFs at FactSet Research Systemsm believes we can expect to see Bitcoin Futures-based ETF launched in the U.S. by the end of this year. "Yes, you can already trade a derivative in Europe, an exchange traded note which tracks Bitcoin," Nadig adds. "Then the race in the U.S. is the race to see what gets approval first. Will it be a Bitcoin future or a straight up Bitcoin holding ETF? My bet is that we will see Bitcoin futures approved fairly quickly."
This will actually be a plus for the woefully slow blockchain, as it allows speculators to move to real markets: an ETF will be far easier to trade than actual bitcoin, just as currency futures are mush easier to trade than schlepping physical currency around. The ETF can trade many times per day (or per second) without the underlying bitcoin changing owners.
But it's also the beginning of the "BTC money supply" becoming disconnected from the amount of issued BTC. Once we start seeing BTC-denominated savings accounts and currency derivative swaps, the BTC money supply will be many times larger than the actual issued BTC, and BTC will see many of the same behaviors as "fiat currency". Just as fixing the supply of physical USD currency would mean almost nothing to inflation or the USD money supply, the fact that the issued BTC will son become fixed will mean almost nothing. Welcome to modern finance.
Did you know there the total value of currency and credit derivatives is now half a quadrillion dollars? People worried about the Fed's control of the money supply are only seeing one tree in the forest. Currency derivatives for BTC already exist - what fun.
Socialism: a lie told by totalitarians and believed by fools.
Bitcoin is a demonstration of the absurdity of fiat currency, taken to excess. Its basis is already-performed work on a computer to come up with a number based on previously-computed numbers. The numbers generated have no practical value except in reference to each other.
Some people are, absurdly, willing to exchange such numbers for things of real value. But this odd behavior is far from guaranteed to persist.
Similarly US dollars are based upon the faith in, and credit of, the government of the United States. Said government currently has a head of state who engages in behavior that does not inspire faith, and repeatedly threatens to renege on agreements - thus not providing any operational basis for credit.
All of this points toward a time in the future at which confidence in currency that does not represent real value will collapse as confidence in it erodes.
A valid currency would be one that has a non-negotiable value based on provision of food and shelter, these being things essential to human welfare that can not be changed into data or made from data.
All other currencies are fictional things. That people have faith in them today does not mean they will tomorrow.
Bruce Perens.
Having the another country printing is own fiat currency does not really affect the price of the USD. There is 873 ish alt-coin (https://coinmarketcap.com/currencies/views/filter-non-mineable-and-premined/). Most of them are extremely illiquid thus do not have that real price. If I sell/buy for $5000 of the bottom half of those alt-coins you will see a huge price change. Each of them competes against them with different ideas and strategy. Most will fail, some may discover a better solution. The fact another currency can be created has nothing to do with the limit. There will never be more than 21 million Bitcoin. This is a fact and that will never change. In your original comment, you said a good currency would have redeemable value, that's good in practice but impossible in reality. The good (no matter what it is (food, water, gold) do not have the same price everyone on earth and WHO will be in charge to do the redeem? There would be massive fraud. I prefer to stick with the law of math that can't be cheated.
An ETF is an Exchange Traded Fund. It is a financial instrument that is traded on a traditional stock market but holds a set of assets that are not traded on a stock market. The purpose is to bridge the gap between the two markets and allow more investment opportunities.
In this case, a BitCoin futures contracts are used as the underlying instrument. Futures contracts are yet another financial instrument that are traded in their own market (the futures market!) along with oil, corn, coffee, orange juice, and my favorite: pork bellies. Futures contracts generally use large contracts and require a lot of capital to trade so having an ETF composed of them allows smaller investors the ability to trade futures at a distance.
Ultimately the way this will all work is this: BitCoin moves on the market day-to-day. The BitCoin futures market will move in response to this, but it will also move in response to people's future expectations of the price in BitCoin (hence the term 'futures'). The ETF will hold a certain number of futures contracts which will be divided into shares which will then be traded on the NYSE or NASDAQ. The price of these shares will reflect the prices of BitCoin, the BitCoin futures contracts, and the management overhead of the ETF. The contracts are all dated and the ETF will have a set trading scheduling for rotating contracts as they expire.
Of course there is a lot of minutiae to consider but this is gist. ETFs are very standard and have been traded for a long time. I'm more surprised there's a BitCoin futures market. Futures markets for onions are verboten!
The currency of choice for anarchists and Ferengi weapons traders.
But at least Fiat money is attached to a government or governing body and hence an economy.
When you look at historical societies that have traded using different forms of non-fiat currencies it's hard to argue that you need a central enforcement body. All that is needed for currency trade is the trust that whatever tokens are exchanged can later be exchanged for other goods. Nation states ensure this with military but trading peoples have relied on other methods for at least 10,000 years.
When you consider that it's all fake, you can bundle anything up like this.
What happens if the ETF is hacked? (and it will be!)
When has the NYSE been hacked?
Who says they haven't?
But anyhow...you're confusing hacking the *exchange* with hacking their wallet holding millions, or potentially billions in bitcoin or other cryptocurrency. Two very different things there.
Plus, if you hacked the exchange they just void your errant transactions (bad transactions are thrown out fairly often as a normal matter of business) while if you got the private key for the wallet and transferred out coins you'd either have to fork the blockchain or allow the loss. There's no method to rescind individual transactions.
You can get rich if you own a politician, but you have to be rich to buy one in the first place.