Bitcoin ETF is “better” than gold ETF, according to Core Scientific founder

Written by Rock Buivy

Post Date: 14 Feb, 24

Darin Feinstein, the creator of Core Scientific, feels that physically backed Bitcoin ETFs, such as the Bitwise Bitcoin ETF, are safer than any other ETFs because of their special accounting structure.

According to Darin Feinstein, the founder of several blockchain companies, including Core Scientific and Blockcap, spot, or physically-backed, Bitcoin exchange-traded funds (ETFs) are preferable to other commodities-based ETFs, such as gold ETFs, because a spot Bitcoin ETF verifies that it possesses Bitcoin.

A spot Bitcoin ETF operates on an immutable ledger, the “best accounting system that’s ever been available to humanity,” according to Feinstein, who described it in an interview. This sets it apart from all previous ETFs.

It’s a much safer investment, in my opinion, than investing in any other ETF, like a gold ETF, where you have no way to know on a real-time basis if its really holding the gold or if it’s been authenticated, Feinstein said. A Bitcoin ETF proves via the Bitcoin network that it holds the Bitcoin.

The proponent of Bitcoin made reference to spot Bitcoin ETF providers such as Bitwise, which a few days after its inception made public the address containing the underlying Bitcoin.

The blockchain intelligence platform Arkham was able to independently find the addresses of spot ETFs such as the Grayscale Bitcoin Trust ETF, BlackRock’s iShares Bitcoin Trust, and others since the Bitcoin network makes it possible to trace all transactions and addresses in real time.

With a maximum supply of 21 million coins, the Bitcoin network provides transparency unlike any other commodity on the total number of Bitcoin in circulation and the amount that is still to be mined. This unique quality is missing from commodities like gold.

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Feinstein claims that there is no trustworthy way to confirm the procedures for the storage, verification, auditing, and authentication of all physical gold that is now in existence, including information on its location and management control.

The proponent of Bitcoin asserted, “There is reportedly $11 trillion in physical gold on Earth,” and claimed that no public audit of any federal gold has been conducted in up to 70 years.

Every ledger has been tainted by the people who maintain the records, either intentionally through deception or accidentally through mistakes. Therefore, Bitcoin claimed to have this immutable ledger for the first time in human history, which, up until I investigated Bitcoin, I thought was impossible. The Bitcoin ledger cannot be changed.

Spot Bitcoin ETF Concerns: Balancing Transparency and Interest

Spot Bitcoin ETFs have raised concerns that they may produce “millions of unbacked Bitcoin,” even though the Bitcoin network offers a great degree of transparency.

However, storing Bitcoin is undoubtedly in the "best interest" of spot ETF issuers, according to Bloomberg ETF analyst Eric Balchunas, who also asserts that spot Bitcoin ETFs are almost the "same thing" as physically backed gold ETFs.

The emergence of spot Bitcoin exchange-traded funds (ETFs) has sparked a debate within the cryptocurrency community, with concerns being raised about the potential for these ETFs to generate “millions of unbacked Bitcoin.”

Despite these apprehensions, proponents argue that the Bitcoin network offers a high degree of transparency, which could mitigate such risks.

Spot Bitcoin ETFs represent a significant development in the cryptocurrency space, as they provide investors with a convenient way to gain exposure to Bitcoin without directly owning the digital asset.

Instead, these ETFs hold Bitcoin on behalf of investors, allowing them to trade shares representing ownership of the underlying asset.

However, some critics worry that spot Bitcoin ETFs may not always hold sufficient reserves of Bitcoin to back the shares they issue.

This concern stems from the fact that unlike physically backed gold ETFs, which hold gold in secure vaults, Bitcoin is a digital asset stored in online wallets.

This lack of physical backing has led to fears that spot Bitcoin ETFs could engage in fractional reserve practices, issuing more shares than the Bitcoin they actually hold.

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