Bitcoin ETFs: The Game's Just Got to a Whole New Level

The approval of a Bitcoin ETF marks a significant milestone towards the mainstream adoption of Bitcoin. The ETF is an easy-to-access financial instrument that helps establish the legitimacy of bitcoin and has the marketing power to bring it to a wider population, potentially in the billions - we've already seen a few bitcoin ETF marketing campaigns. Through its reach, the bitcoin ETF will also make it easier for more institutions (and less crypto-native retail customers) to access bitcoin indirectly, and attract more talent to our industry.

As we celebrate this huge industry win, I believe we need to recognize that prevalence of bitcoin ETFs may heighten the risk of over-financialization for bitcoin (i.e. "not your keys, not your coins"). If bitcoin becomes a mere investment asset, and if most bitcoins end up being held through bitcoin ETFs instead of directly held and used by billions of individuals, bitcoin could become a mere decoration in the legacy finance system, and, ultimately, lose its independence as a global decentralized network.

So, like many other aspects of crypto, the bitcoin ETF comes with inherent controversy.

Whether we view the bitcoin ETF as an saving angel or a trojan horse by TradFi, its occurrence was inevitable. However, how we react to its approval and potential prevalence shapes our path forward. Abraham Lincoln once said, "the best way to predict the future is to create it." I believe this is one of the moments when industry participants have to decide how to react and write the future.

What is the future we are working toward? Let's not forget why bitcoin started. About 15 years ago, on January 3, 2009, the first bitcoin was mined. It was created to remove intermediaries, put control back into individuals' hands, and build a permissionless and trustless system for more transparency and freedom globally. If bitcoin's final success is becoming only an investment asset, we'll have failed its original mission of permissionless transparency and freedom.

Despite the fact that the bitcoin network has been in place for 15 years, we can safely say that we are still in the very early stages of developing this global system. On one hand, the total number of bitcoin addresses was about 1.2bn by November 2023, about 15% of total world population. There is clearly a long way to go for bitcoin to reach billions of people, as was intended by its creator. On the other hand, and apart from it being a store of value and a tradable asset, Bitcoin is yet to offer other widely-recognized value as a global network. Some developers and companies are currently working on layer 2 solutions like Lightning to make Bitcoin a global medium of exchange, while others are attempting to explore its programmability through taproot, BRC20 and ordinals. These are all important efforts that will define what the Bitcoin network will be in the future.

OKX has been in the crypto industry for almost a decade. As a platform participant, we celebrate this milestone and with it the reality that Bitcoin can no longer be ignored. The bitcoin ETF approval is a major win for the industry. But we also must be mindful of getting too complacent. If we don't want bitcoin (and crypto in large) to be "colonized" by Wall Street, we need to continue to build and innovate in parallel. At OKX, we're committed to innovation and ecosystem growth. Our plate is quite full, and in the coming years we'll continue to:

  • Build our centralized exchange product with the goal of offering a compliant, safe and localized gateway to more customers globally. We want to be ready to help when customers are ready.

  • Invest in the OKX wallet, MPC and zero knowlege (ZK) technology, and onchain tools and analytics. We believe the future is ultimately decentralized. We want to enable more accessible control for more people through a safe, convenient and powerful self-custody wallet.

  • Support open-source developers through grants. There's still work to be done on the bitcoin network to further enhance its security, privacy and usability. Many developers are also working on other protocols to solve the scaling problem.

  • Work with builders/entrepreneurs/developers to foster innovation in the ecosystem. Technology innovations shape the trends that we live through.

When Satoshi wrote the White Paper, no one knew whether Bitcoin would survive. Now its market cap almost doubles that of VISA, and its fourth halving is around the corner. In a way, the bitcoin ETF is a signal that the game has reached a whole new level. This signal opens the gate for more investors to access bitcoin indirectly. It also reminds builders and innovators that we need to stay focused and keep building so more people will be willing and able to access Bitcoin directly. We're racing against the mighty force of financialization. We can only win if we create something that is viable and 10x better than the existing solution. The clock is ticking.

Hong Fang

OKX President

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