Bitcoin’s Custody War: ETFs vs. Wallets – Who’s Holding the Keys?

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Behold, the wizards of the Bitcoin guild have gathered ’round the roundtable to argue whether the future lies in magical money trees (ETFs) or keeping one’s gold in a metaphorical sock. The air crackles with the scent of burnt toast and existential dread.

The latest spark? Investor Fred Krueger, who has apparently discovered the concept of “both/and” (a revolutionary idea in a world where people still argue about socks). He endorses Nick Szabo’s dual strategy: “Let’s build bridges! Or at least both banks and castles!” 🏰🏰

“Szabo is right,” Krueger wrote, “the answer is BOTH: welcome adoption by Banks, ETFs, and the greater establishment. And at the same time, encourage and practice self-custody. And defend the right to self-custody.”

His plan: unite the Bitcoin purists (who think self-custody is the only way to avoid becoming a human-shaped piggy bank) and the ETF enthusiasts (who think “trust us, we’re professionals!” is a solid business model). A bridge too far? Possibly. But someone’s gotta try.

The debate dates back to November 30, when Bram Kanstein dropped a historical bombshell: “Gold is so 2000 BCE!” He argued that gold’s popularity led to its own obsolescence-like a rock star who gets replaced by a backup singer with a better LinkedIn profile.

Szabo, ever the historian, noted that gold’s centralization in vaults made it ripe for theft. “Merchants and banks preferred trust-based alternatives,” he wrote. “Because who wants to get robbed by a shiny rock?” 🦕

This centralization eventually gave rise to bills of exchange and telegraphic wire transfers. Szabo then added the punchline: “Bitcoin solves speed and verification, but theft resistance? Still needs work. Like your ex’s cooking.” 🍳

“Bitcoin is, without further work and as most commonly used, still below the best trust-based methods in its theft resistance,” wrote Szabo. “But hey, it’s a start. Or a draft.”

Wall Street, ever the optimist, prefers third-party custody. Because nothing says “trust” like handing over your keys to a stranger in a suit. 🎩

ETFs vs. Self-Custody: A Philosophical Standoff (or a Troll Under a Bridge)

Bloomberg’s Eric Balchunas, the goblin banker of crypto, questioned why “snobby OGs” accept exchanges holding Bitcoin but oppose ETFs. His logic: “It’s the same outsourced custody, just cheaper and safer. Who cares if it’s a bird in a cage or a bird in a spreadsheet?” 🐦🧮

“What I don’t understand is why the snobby OGs were totally fine with crypto exchanges holding your bitcoin and not ETFs? It’s the same outsourced custody concept, except ETFs are waaay cheaper and safer.”
– Eric Balchunas (@EricBalchunas) December 7, 2025

Analyst Sam Wouters, however, retorted with the fire of a thousand suns: “An ETF is a bird in a cage. Self-custody is a bird with a passport.” 🐦✈️

“Snobby OGs love bitcoin as money that creates freedom. An ETF is a bird in a cage,” he wrote. “But hey, at least it can’t fly into a wall of regulatory paperwork.”

Wouters argued that self-custody is the ultimate freedom, even if most people never use it. “It’s like owning a sword. You don’t have to swing it every day, but you’re not gonna let someone else polish it for you.” ⚔️

Meanwhile, Balchunas insisted ETFs are the future: “They spread ownership across millions, reduce volatility, and make Bitcoin ‘mature.’” He also claimed ETF issuers “don’t want power of protocol,” which is like saying goblins don’t want your gold. 🤭

The debate spiraled into a full-blown ideological war, with left-wingers pointing out that many platforms offer free withdrawals, low spreads, and no annual fees. “ETFs charge you just to exist,” one wag muttered. “That’s capitalism’s version of a pyramid scheme.” 🏗️

“All I know is I got a ledger thing, then the app went out to source BTC, and it was 1.4% minimum to convert my $. Some were 2-3%. For an ETF person, that’s really expensive, worse than the 1970s.”
– Anonymous (probably a person who still uses floppy disks)

Still, some grumble that Bitcoin exists because investors cannot trust corporations on their word. Which is fair. Unless you’re a corporation. Then it’s just good marketing. 🎯

As the debate rages on, Bitcoin’s identity crisis deepens: sovereignty vs. scalability, freedom vs. convenience. It’s less a debate and more a storm in a teacup, with everyone shouting over the sound of the kettle. ⚓️🌊

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2025-12-08 01:44