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Comment by ur-whale | Hacker News Reader

While I agree with the sentiment, please remember that actually buying BTC directly and doing self-custody is still an option.

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But then I have to pay taxes on it.

Time to full send my retirement accounts into these ETFs so I can retire early. /s

Actually though I might consider allocating a tiny percentage (1-3%) to these. Seems like fairly low risk with enough upside, but who knows.

These are cash creates not in kind creates. So there is no escaping taxes. You will be paying capital gains just by holding spot Bitcoin ETFs

Edit: after further research it appears that the cash create mechanism doesn't cause a tax event for shareholders as it does with mutual funds. See https://www.grayscale.com/blog/legal-topics/addressing-poten...

We will have to see how every Bitcoin ETF is structured. YMMV depending on this structure and how you get taxed.

I think the parent is talking about buying the ETF inside a tax sheltered account.

Indeed I was, thanks for clarifying.

Ok. Not a terrible idea to be in high growth/high return assets in qualified accounts.

What do you mean? self-custodying BTC is still unrealized gains until you sell, so no tax either.

BTC ETF in in a 401K/IRA can be contributed, grow, or possibly be withdrawn tax-free depending on how you set it up. Coinbase reports your gains and you owe taxes on them. (Don't think Coinbase has an IRA/401K option for custody. Yet.)

I was referring to the capital gains tax you pay for selling BTC on an exchange. I was thinking specifically about Roth IRAs, where any gains are tax free, but a 401k or similar would work too.

So much more hassle though. Nobody's going to bother with that now - what's the point?

UX with hardware wallets (which you can get for like $60) is pretty decent these days and it eliminates a lot of stress in the workflows you typically use. There's still a huge room for improvement with seedphrase backup and "social recovery", but it's easier now than it's been in the past.

How does the average person back these up in a secure, yet durable way that lasts decades and can easily be discovered by (and only by) their ultimate heirs?

I think everyone will have different behavior sec for their funds, with the options now ranging from simply committing a 12 or 24 word seed phrase to memory and buying ETF shares.

There is shamir secret splitting, multisig, MPC, secure enclaves with biometerics, etc...

There will be apps like Fuse wallet: https://www.fusewallet.com/

There will be phones like Saga: https://solanamobile.com/hardware

I think how one handles their wallets will be much like how people make their espressos. Some will just stick k-cup in a machine and hit a button, others will become full-blown coffee enthusiasts that carefully measure their beans, de-static their grinds, and extract for the exact right amount of time.

> simply committing a 12 or 24 word seed phrase to memory

That's absolutely out of the question for almost any human being, especially given the timeframes involved.

> There will be phones like Saga [...] There will be apps like Fuse wallet: [...]

Again, we're talking about a timeframe of decades. How many of these will even still boot up after that amount of time? None of these seem safe to just throw in a bank safe deposit box.

> make their espressos. Some will just stick k-cup in a machine and hit a button

I'm really not a coffee connoisseur by any meaning of the word, but even I know that what comes out of a k-cup machine is brewed coffee, not espresso.

My point is there are thousands of ways to handle your wallets, I don't think there will be one average way.

The ETF is probably the equivalent of this "espresso style" k-cup https://www.keurig.com/Beverages/Dark-Roast/Espresso-Style-C...

> I'm really not a coffee connoisseur by any meaning of the word, but even I know that what comes out of a k-cup machine is brewed coffee, not espresso.

No, that's his passphrase

Same as anything else really: A sheet of paper and a safety deposit box.

You die, your heir or executor takes the appropriate paperwork to the bank, and then they get the contents of the box.

How many people even have a safety deposit box?

Many banks don't offer them anymore, and in some countries they have a disturbing tendency of getting robbed, with absolutely no recourse for the depositors (since contents are usually unverified and uninsured).

Then buy a large fire safe, bolt it to your floor inside a closet, and fill it with 10 lb barbell plates until it requires a forklift to move.

If your threat model includes someone inside your home with power tools and you can’t trust a bank… you might want to consider moving.

Given that people probably don't arrange their life around the ability to safeguard physical assets, I think you've just given several good arguments against self-custody:

Many people don't own a home. Not all of those that do want to expose themselves to the liability of storing valuables there. The safety situation between homes even within the US varies greatly, and even more so internationally. Banks with safety deposit boxes aren't ubiquitous.

If it works for you, great! I'm just saying that you might be in the minority here.

That's cool. What do I do when I move every few years because I'm a renter and can't afford to own a home in this economy?

You tell me.

That's what the "social recovery" ideas are for. It's a framework for doing key management across multiple trusted parties under controlled conditions in the hypothetical case your primary keys are inaccessible. You could have your executor hold a key, for example.

Passphrase in a bank safe deposit box.

I love this scenario.

"Why is Bitcoin a great asset?"

"Because its the future of currency! Its great and everyone will use it!"

"Then why don't you just get it directly?"

"Uh, its too much of a hassle. For me. A professional finance worker."

It's not really that hard, and the tools are continually evolving to be more user friendly (e.g. Last year Trezor added hardware support to simplify Shamir backup).

Of course the ability to hit "buy now" in the same marketplace you manage all your other investments is pretty low friction and I'm sure this decision will bring fresh investment out of the woodwork.

But what’s the point of Bitcoin then? They might as well put anything in these ETFs and it’d be the same thing then: the flat rocks in my garden are limited in number and very scarce, wanna put some in an etf?

Maybe, but my rocks are better, faster, and more scalable!

Frankly we could probably get our rock ETF's approved more quickly. Regardless of how you feel about Bitcoin, it's not (or shouldn't be) the SEC's place to play nanny and dictate the particular assets/commodities/etc. in which you're allowed to invest your money. Incidentally even one of SEC commissioners agrees https://www.sec.gov/news/statement/peirce-statement-spot-bit...

Well as a matter of fact btc is none of these things compared to any other crypto, which are themselves not particularly any of these things.

But I agree with the fact it’s not the SEC’s role to tell us the merit of btc. I do have some worries on the Tether scam still going on for example though, which has been manipulating BTC for years.

No matter if it is a scam or not, at the end it worked. Similar to banks which don't have enough capital.

Now Tether owns tons of money, and can buy treasuries that bring few % of interests, and these interests are not paid back to USDT holders.

As a result, overtime, they'll be able to fill-in any potential gaps or money accidentally lost.

Impressive, isn’t it? They bootstrapped a stablecoin!

Edit: spelling

Bitcoin's value lies in its potential as a secure means of payment for microtransactions and its integration with advanced technologies like the Lightning Network. Its worth is tied to its perceived future utility in various domains, particularly in facilitating transactions over APIs. The recent ETF news contributes to its liquidity and stability, essential for its role in digital transactions. As the technology and applications around Bitcoin continue to evolve, its true value might become more apparent, potentially transforming the landscape of digital commerce and AI interactions.

I don’t think you quite understand. One ounce of gold or one bitcoin is indistinguishable from any other, i.e. fungible.

Also, limited in number and scarcity only partly define value. In addition to these properties, other people must agree with you.

If your flat rocks are scarce and people want to invest in them, by all means…

One bitcoin is very much distinguishable from another bitcoin as they can be traced through transactions and wallets, with the outcome that some bitcoins might be rejected by recipients that are uncomfortable with certain source wallets or mixers.

There's no way for a wallet to block incoming transfers. If someone sends Bitcoin to an address, the transfer will be processed by the network.

Yes but you could refuse to deliver whatever the sender is paying for. I mean you need to wait for 6 confirmations or whatever anyway before "approving" the payment transaction.

Everyone who does not have access to the US financial system will keep doing it. Which is 7/8B people on this planet.

Are you missing some other somewhat relevant financial systems here by any chance?

The EU (higher population than the US) has had Bitcoin ETFs for a while now.

> Nobody's going to bother with that now - what's the point?

This is actually a great comment that I think applies well to the crypto world as a whole, even if that wasn't your original intent.

I will own up to trolling slightly to draw attention to the fact that exhanging bitcoin as a digital currency is not something which would occur to most people who own it. The only thing most people will do with their bitcoin is exchange it for fiat.

That and hodl it, hoping it'll someday be worth more.

Save approx. 1% on fees annually is the point.

Your question is equivalent to asking the point of bitcoin (avoid centralization).

The mob always wins in the end, but I never understood why many on HN have been so cynical about Bitcoin. At least Satoshi tried, whoever they were. They gave a gift to the world, but it sadly got co-opted and taken over first by small-time grifters and now by the big boys at Wall Street. In hindsight it was probably bound to happen, because money buys influence and a casual decentralized group of coders can never win against banks and governments.

Anyway, digital gold is still better than nothing. It's still an innovation as a store of value, even if the payments idea is basically history (some Bitcoin maxis just don't understand that yet). Also Bitcoin has inspired a whole ecosystem of other blockchains. If you want the original concept of a peer-to-peer electronic cash system, Monero is probably one of the best to check out currently. Governments are btw currently going after Monero, because unlike the common myth about Bitcoin, it actually enables anonymous payments - just like cash. And so of course we can't have that. Multiple exchanges already announced they were forced to delist XMR.

> I never understood why many on HN have been so cynical [...]

You ask the question and then proceed to answer it.

> Satoshi [...] gave a gift to the world, but it sadly got co-opted [...] In hindsight it was probably bound to happen, because money buys influence

Because anything of value and fungible will invite exploitation by monied interests.

> and taken over first by small-time grifters and now by the big boys at Wall Street.

There is ample evidence to indicate that the predominant grifters are not small-time operators.

It's only worth something if someone else values it vs. physical gold.

Gold's value is mostly disconnected from it's utility. We've just decided it's valuable for a longer period of time so less people question it.

The time period is part of it, but I think the physicality matters too. You can debate gold's inherent value as you can with bitcoin, but you can't argue that it's not even a thing that exists. You also can't create more of it - which some would argue you can't with bitcoin either, but all it would take is consensus. Plus one could argue that other coins are equivalent goods.

Of course, this is also true of physical gold though. If all non-industrial use of gold were to end the price would collapse

That's a tautology....

The aesthetic and industrial applications of gold are what makes it intrinsically valuable - that being the key distinction, and distinct from Bitcoin. If you ignore the useful aspects, of course it's no different from any useless thing.

>... but I never understood what many on HN have been so cynical about Bitcoin.

Eh, I think you actually might! Hell, you said it yourself - the mob always wins in the end. It doesn't matter what Satoshi made, the mob took it and made it into something else. It's what Bitcoin turned into that HN is collectively cynical about.

What Bitcoin has been turned into is still revolutionary, but not in the way it was supposedly intended. The original intention as per Satoshi's whitepaper and posts was to empower people and give them an alternative to banks. It was supposed to be a cash system run by the people for the people. The democratization of money.

Ignoring that this idea was mocked by many from the start for reasons we can only speculate about, it seems there's a lot of confusion about what Bitcoin currently is as well. Mocking the idea that poor people in Congo will be saved by Bitcoin - sure. Making fun of laser-eyed Bitcoin maxis telling you we'll all totally use Bitcoin for payments (have you heard of the Lightening Network bruh?) - of course, I joke about them too.

But what you have is the first time in the history of the planet that there is a public ledger that can be used by anyone, transparently and permissionlessly, to store and transfer value. It's not in the hand of any bank or government. Nobody can freeze your account because you're fully in control. You can run your own node to push transactions if you wish to. It can absolutely not be falsified, unlike cash or book money. This is still extremely valuable. Especially when you add programmability, which Bitcoin only has in a rudimentary form, but other "smart contract" platforms already do much better. Because now you can automate transactions and those transactions don't necessarily have to be about money.

Satoshi might not even be real.

It might be funded by intel agencies for all we know.

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