Title: Expanding Accessibility: Beyond ETFs for Mass Adoption of the Crypto Industry
Cryptocurrency exchange Binance’s Chief Technical Officer, Rohit Wad, believes that the success of the “digital gold” ETF serves as a reminder for the continuous improvement of accessibility and reduction of barriers to entry for Bitcoin and Web3.
The recent approval of a Bitcoin spot ETF in the United States is undoubtedly a significant development for Bitcoin and cryptocurrencies, particularly in terms of regulation and institutional involvement. From a technical perspective, the positive adoption of ETFs also serves as a reminder that if we want to see widespread adoption, the crypto industry must continue to reduce friction in user experience.
It has been approximately two months since the US Securities and Exchange Commission (SEC) approved the listing of a Bitcoin spot ETF. During this time, Bitcoin has reached new all-time highs and regained a market value of over a trillion dollars. An early forecast report estimates that these funds will manage $72 billion in assets within five years, with over $9 billion already flowing into ETFs since their introduction.
While the market seems to be entering a bull cycle driven by the ETF frenzy, native cryptocurrencies and Web3 companies must not remain complacent, but instead continue to lower the technological barriers to entry.
This is because many institutions and retail investors have turned to ETFs due to the friction in user experience. This friction refers to the numerous steps users have to take to use a wallet or exchange, requiring them to invest a significant amount of time in learning best practices such as safeguarding their passwords and devices, as well as preventing fraud and hacker attacks. All of these issues can be addressed through product design.
Let’s compare Bitcoin and gold and understand why both commodities are suitable for the ETF market. Ordinary investors do not want to physically hold gold bars as a means of storing value because they often lack knowledge about where and how to safely and conveniently store it. Gold ETFs exist for this purpose.
On the other hand, Bitcoin has long been referred to as “digital gold” due to its scarcity as a commodity, but without the transportation and storage costs associated with traditional physical items. So, why go through the trouble of purchasing an ETF (which is essentially a package) instead of owning your own digital gold in your digital wallet?
The reason is that the cryptocurrency industry is still in its early stages, and products such as wallets and exchanges are still too complex and daunting for the majority of people. Bitcoin ETFs help reduce entry barriers for most people by managing complex issues they don’t want to deal with, such as ensuring the security of mnemonic phrases. In return, investors are willing to bear the costs of ETFs and allow them to manage their assets.
Considering the fees paid to ETF issuers and other costs such as foreign exchange and premiums, ETFs are usually more expensive than buying Bitcoin directly from an exchange. However, there is still a significant demand for ETFs in the market. Traditional financial service providers are legalizing cryptocurrencies in the financial market by issuing easily understandable ETFs.
The launch of a Bitcoin spot ETF is a tremendous positive development for the industry as it brings new users and capital. Traditional asset management companies now have a benchmark for performance, which is a hopeful step towards expanding infrastructure development to support greater participation from traditional finance.
If we can eliminate the friction users face when interacting with cryptocurrencies, we will undoubtedly increase adoption and enable more people to participate. Our shared long-term goal should be to make cryptocurrencies more widely accessible by empowering users with the knowledge and tools to directly participate in and manage their digital assets. We must create user-friendly, secure, and intuitive products that make cryptocurrencies easier for everyone to use.
Opinion articles present diverse perspectives and do not represent the stance of “WEB3+”.