Do We Even Need Bitcoin ETFs

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

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

While this could result in an influx of billions of dollars into the market, it is important to step back and consider the ramifications of traditional financial institutions getting involved in this sector.

BlackRock, the world’s largest asset manager, is among them which launched a Bitcoin ETF. This, coupled with the centralization of current ETF systems, should ring alarm bells.

There should be a more decentralized approach – and the reason it’s not happening yet is simple: Web3 was built with cumbersome infrastructure that newcomers find difficult to build on.

If Web 3.0 had championed usability from the start and been as easy to use as traditional financial applications, we wouldn’t need ETFs in the first place.

Challenges hindering mainstream adoption

Cryptocurrencies are growing in popularity, there is no doubt about it. Bitcoin jumped by 150% in 2023, and with the halving looming, 2024 looks just as bullish.

Despite this, widespread adoption of Web 3.0 technology is progressing at a slow pace – especially when compared to established payment methods such as PayPal and Zelle.

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

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

Right now, crypto users primarily use Web 3.0 through their wallets – but when it comes to usability, fintech platforms focused on fiat currency have a head start.

Changes in user experience

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

Features like “send to name” eliminate the need to understand long and intimidating cryptographic addresses. Instead, funds can be transferred to human-readable contacts with just a few clicks.

Importantly, it eliminates the need for centralized databases.

On platforms like Unstoppable Domains, users must set up a separate Web 3.0 wallet and then paste addresses into it, making it difficult to know whether a party involved in a transaction is credible and verified.

It also increases the risk of phishing attacks, where wallets can be emptied in a devastating exploit.

Payment solutions of the future will be more than just a plug-in for Web 3.0: they will be a versatile choice for both users and B2B wallet developers.

Features, including staking, should be readily available within a wallet, eliminating extra, tedious steps that create friction.

Additionally, addresses that users transact with must be verified through cryptographic proof of identity, adding an additional layer of protection.

Such guarantees help make any phishing attempt virtually impossible.

The path to mass adoption of Web 3.0

Next-generation Web 3.0 wallets must champion accessibility and become more accessible to users who are already familiar with fintech.

By ensuring security, faster transfers and secure custody – spanning on-chain and DeFi transactions – Web 3.0 wallets that do things right have the potential to become crypto’s answer to PayPal.

Simplifying the user experience and ensuring the complexities of Web 3.0 are hidden behind the scenes is the way forward – meaning everyone can get the most out of this technology without having to understand how it works.

By creating a secure and user-friendly application, ETFs will no longer be necessary to participate in cryptocurrency trading. Instead, investing can become as simple as moving funds from point A to point B.

Now that Bitcoin ETFs have been approved, attention must turn to how to decentralize them.

The answer is to ensure that consumers can easily and intuitively expose themselves to crypto – without requiring exhaustive training on the process.

By addressing the challenges of today’s adoption of Web 3.0, we can pave the way for a future where cryptocurrency transactions are as simple and secure as traditional financial transactions.

Michal “Mehow” Pospieszalski is a seasoned technology leader with a track record of pioneering innovative solutions in the crypto world. As co-founder of Fortress Switzerland and co-founder/co-inventor of MatterFi, Michal merges visionary strategy with practical technology know-how, propelling both companies toward defining the future of digital asset management.

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Disclaimer: Opinions expressed on The Daily Hodl do not constitute investment advice. Investors should conduct due diligence before making high-risk investments in Bitcoin, cryptocurrency or digital assets. Please note that your transfers and transactions are at your own risk and any losses you may incur are your responsibility. The Daily Hodl does not recommend the purchase or sale of cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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