Summary

Darin Feinstein, founder of Core Scientific and Blockcap, argues that spot Bitcoin ETFs offer superior transparency and security compared to gold ETFs due to the immutable nature of the Bitcoin blockchain.

Abstract

The introduction of spot Bitcoin exchange-traded funds (ETFs) has provided U.S. traders with a novel investment tool that possesses unique features not found in other commodity-based ETFs, such as gold ETFs. According to Darin Feinstein, the founder of several blockchain companies, spot Bitcoin ETFs are superior because they verifiably hold Bitcoin, which is backed by an immutable ledger—the Bitcoin network. This network allows for real-time verification of holdings, a feature not available with gold ETFs, where the actual holding and authentication of gold are less transparent. Feinstein emphasizes that the Bitcoin network's transparency and the self-auditing nature of Bitcoin ETFs set them apart from traditional investments, providing a level of trust and security previously unattainable.

Opinions

Darin Feinstein believes that spot Bitcoin ETFs are a safer investment than gold ETFs due to the Bitcoin network's ability to prove holdings in real-time.
He points out that the Bitcoin network's immutable ledger is the best accounting system ever available, which enhances the reliability of spot Bitcoin ETFs.
Feinstein criticizes the lack of transparency in gold ETFs, stating that there is no reliable method to verify the storage, verification, auditing, and authentication processes for all existing physical gold.
He highlights that the Bitcoin network offers unprecedented transparency regarding the total amount of Bitcoin in circulation and the remaining amount to be mined, unlike gold whose total supply is less certain.
Feinstein praises the self-auditing nature of Bitcoin investments, noting that they are publicly viewable 24/7, which is a historic first in investment tools.
Despite some concerns about the potential for spot Bitcoin ETFs to create "millions of unbacked Bitcoin," Feinstein and others, like Bloomberg ETF analyst Eric Balchunas, maintain that holding actual Bitcoin is in the best interest of spot ETF issuers, drawing a parallel to physically backed gold ETFs.

Spot Bitcoin ETF ‘superior’ to gold ETF — Core Scientific founder

With the arrival of spot Bitcoin exchange-traded funds (ETF), traditional traders in the United States has obtained a unique investment tool with features that have never been seen before, according to one industry observer.

Spot, or physically-backed, Bitcoin ETFs are superior to other commodities-based ETFs like gold ETFs because a spot Bitcoin

BTC

$45,440

ETF verifiably holds BTC, according to Darin Feinstein, founder of multiple blockchain firms, such as Core Scientific and Blockcap.

Unlike any other ETF, a spot Bitcoin ETF is running on an immutable ledger, which is the “best accounting system that’s ever been available to humanity,” Feinstein said in an interview with Cointelegraph.

“A Bitcoin ETF proves via the Bitcoin network that it holds the Bitcoin – that’s a much safer investment, in my opinion, than investing in any other ETF, such as 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 stated.

The Bitcoin advocate referred to spot Bitcoin ETF providers like Bitwise, which publicly released the address holding the underlying BTC for its Bitwise Bitcoin ETF a few days after it launched.

The Bitcoin network also enables the tracking of all transactions and addresses in real time, which allowed the blockchain intelligence platform Arkham to independently locate the addresses of spot ETFs like the Grayscale Bitcoin Trust ETF, BlackRock’s iShares Bitcoin Trust and others.

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Unlike any other commodity, the Bitcoin network offers transparency regarding the total amount of Bitcoin in circulation and the remaining amount yet to be mined, with its total supply capped at 21 million coins. This distinguishing feature is absent in commodities such as gold.

According to Feinstein, there is no reliable method to verify the storage, verification, auditing and authentication processes for all existing physical gold, including details on its location and management control.

“It is said that there is $11 trillion in physical gold on Earth,” the Bitcoin advocate said, arguing that all the federal gold hasn’t been publicly audited for as much as 70 years.

“Investments that self-audit, self-authenticate, prove reserves and are publicly viewable 24 hours a day have never existed until the Bitcoin ETF,” Feinstein stated, adding:

“All ledgers have been corrupted by the humans that keep the records, either on purpose through fraud or by accident, through error. And so, for the first time in human history, Bitcoin purported to have this immutable ledger, which I thought was impossible until I studied Bitcoin. Bitcoin’s ledger is unalterable.”

Despite the Bitcoin network offering a high level of transparency, some industry observers previously expressed concerns that spot Bitcoin ETFs could potentially create “millions of unbacked Bitcoin.” On the other hand, Bloomberg ETF analyst Eric Balchunas expressed confidence that holding Bitcoin is in the “best interest” of spot ETF issuers, stating that spot Bitcoin ETFs are essentially the “same thing” as physically backed gold ETFs.