Bitcoin ETF: A 10-Year Struggle for Legitimacy

The cryptocurrency revolution finally reached new heights in January 2024, when the SEC approved 11 Bitcoin spot ETFs. A never-before-seen influx of global investors brought in nearly $5 billion on the first day of trading. As a result, the intersection between traditional finance and digital assets is now firmly established, and as the market continues to mature, it will open the door to new opportunities for cryptocurrencies. This marks the end of a decade-long struggle for legitimacy and demonstrates the success of progress not only in blockchain technology itself, but also in the public perception of money. Cryptocurrency is here to stay.

In the early days of Bitcoin, many cryptocurrency investors believed that Wall Street needed Bitcoin, but the opposite was not true. This one-sided love has been true for some time, but it’s mostly due to a lack of regulatory clarity around the world.

The transition from traditional finance to cryptocurrencies has always been limited and cautious, as whenever there was a market correction, pundits on Wall Street were eager to declare “Bitcoin is dead” or “the bubble has finally burst.” In fact, a study on Binance found that Bitcoin’s demise has occurred nearly 400 times, but all the resurgences and bull runs have not caused skepticism about this emerging technology. Traditional finance seems to have finally woken up and accepted that the world has changed since the last global financial crisis and is ready for cryptocurrencies.

But now, following the emergence of the Bitcoin ETF, the cryptocurrency industry is celebrating the milestone with mixed emotions. Actually, it was quite a journey to get there. ETF acceptance began in 2013 with the launch of the Grayscale Bitcoin Trust. Gemini’s spot application that same year was ultimately rejected in 2017. Then, in 2021, the first futures ETFs were launched, paving the way for final spot approval this month.

After the first approval, many early cryptocurrency investors opposed spot ETFs. They continue to adhere to the ‘No keys, no coins’ belief. Ultimately, their concern is that the mainstream institutionalization that these ETFs represent will challenge the notion of decentralization cherished by many in the cryptocurrency community.

Bitcoin investors are right to be wary of centralization, and we are actually moving in a new direction by embracing traditional finance. Rather than clinging to outdated beliefs, it is time for the Bitcoin industry to focus on transforming its existing outdated infrastructure and enabling more people to enjoy the benefits of digital assets.

We must not forget that one of the fundamental purposes of Bitcoin is financial inclusion and helping the underbanked. But now, with the Bitcoin network’s high transaction fees and an increasingly monopolized mining industry, the playing field has tilted in favor of those with the most resources and scale of operations.

That said, Bitcoin has transformed into a more powerful store of value that is attracting both cryptocurrency and traditional finance, and institutional investors are rushing to accumulate as much of the cryptocurrency as quickly as possible. All of this is good for the industry to grow and mature, but the people the technology was designed to help in the first place remain more or less the same.

Bitcoin also faces technical challenges, including the threat of numerous forks, debates over increasing block sizes, and bans imposed by several countries. The approval of spot ETFs has shifted the global regulatory environment, making it now much more open to Bitcoin investors.

The growing mainstream adoption of Bitcoin in the form of a variety of financial products presents a rare opportunity to directly help those in need. From payments companies to green energy transitions, Bitcoin can help struggling economies by backing foreign exchange reserves and providing new investment opportunities through security token offerings and real asset products. Other innovations could include issuing tokens pegged to Bitcoin or stablecoins for use in financial applications. The list goes on where Bitcoin can impact people’s daily lives by including them in a globally connected digital economy facilitated by blockchain technology.

Looking ahead to the next decade, the revolution in improving lives around the world through cryptocurrency will continue. With Bitcoin at its center, this industry will continue to reshape our understanding of the changing macroeconomic environment, geopolitical risks, and most importantly, difficult money concepts. The industry has experienced incredible growth and is already impacting the way we interact in society. Changing the world sometimes feels like a movie where you don’t know how it ends, but it’s every little step you take that makes you feel hopeful.

This is a guest post by Yiwei Wang.With help from Nick Ruck, COO of ContentFi Labs. The opinions expressed are solely personal and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.