Do We Even Need Bitcoin ETFs

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After five years of drama and dozens of rejections, ETFs (exchange-traded funds) based on Bitcoin’s spot price have finally been approved.

A total of 11 ETFs are making their market debut, allowing US investors to gain exposure to Bitcoin (BTC) without directly owning the cryptocurrency itself.

While this could see billions of dollars flow into the market, it’s important to take a step back and consider the ramifications of traditional financial institutions getting involved in the space.

BlackRock, the world’s largest asset manager, is among those that has launched a Bitcoin ETF. This, when coupled with the centralization in current ETF systems, should ring alarm bells.

There should be a more decentralized approach — and the reason one is yet to materialize is simple: Web3 has been built with clunky infrastructure that’s difficult for newcomers to rely on.

Had Web 3.0 championed user-friendliness from the start and had been as easy to use as mainstream financial apps, we wouldn’t need ETFs in the first place.

Challenges hindering mainstream adoption

Cryptocurrencies are growing in popularity – there’s no doubt about it. Bitcoin surged by 150% in 2023, and with the halving looming, 2024 is shaping up to be equally bullish.

But despite this, the mainstream adoption of Web 3.0 technology is proceeding at a sluggish pace – especially when compared with established payment methods such as PayPal and Zelle.

New users are put off by the prospect of managing seed phrases and understanding long addresses made up of a random string of letters and numbers.

Hardware wallets are expensive too, meaning affordability is a big concern for consumers in emerging economies.

Right now, crypto users are mainly engaging with Web 3.0 through their wallets – but when it comes to usability, fiat-focused fintech platforms remain lightyears ahead.

Changes in user experience

It doesn’t have to be this way. Infrastructure that amplifies the user experience so that crypto transactions are as intuitive to make as PayPal transfers is the answer.

Features such as ‘send to name’ eliminate the need to understand long and daunting crypto addresses. Instead, funds can be transferred to human-readable contacts in a few taps.

Crucially, this eliminates the need for centralized databases.

On platforms such as Unstoppable Domains, users need to set up a separate Web 3.0 wallet and then paste addresses over – making…