Arthur Hayes: Wall Street entry would be a disaster for Bitcoin

Source: Blockworks

**Compilation: **Azuma,Odaily Planet Daily

Editor's brief: The anticipation of the approval of a spot bitcoin ETF has ignited sentiment across the crypto industry, but in the view of Arthur Hayes, co-founder and former CEO of BitMEX, it may not be a good thing for Bitcoin itself and its users.

As a super OG in the crypto industry, Arthur believes that the growth of institutional interest in Bitcoin could lead to "something that we won't like" happening.

Recently, Arthur was a guest on the On the Margin podcast and was interviewed by Blockworks, an overseas crypto media outlet.

In the interview, Arthur posed a hypothesis: what would have happened if Larry Fink (founder and CEO of BlackRock) had come in with a bunch of traditional finance people and had absorbed a lot of Bitcoin that could have been freely circulated?

Arthur predicts that spot bitcoin ETFs may be followed by "bitcoin mining" ETFs, as BlackRock is already the largest shareholder of some of the leading miners.

Odaily Note: Arthur means that in the future, institutions will not only control a considerable part of the circulating supply of Bitcoin, but also control the computing power of the entire Bitcoin network (consensus basis) to a large extent.

Arthur warns that mega-asset managers like BlackRock are essentially agents of the will of the state, and they will do what the will of the state dictates.

"If the will of the state wants its citizens to remain in the fiat system so that they can be taxed through inflation and then used to pay off their growing debts, then it makes sense that mega-financial institutions (which essentially follow the will of the state) would get involved in Bitcoin ETFs."

"Because with such a system, you can't actually use Bitcoin normally. With ETFs, you're getting a derivative financial asset, not the real Bitcoin itself."

"You need fiat money to buy this derivative asset... Behind that, institutions will buy real bitcoin and then find a custodian to keep the real bitcoin there."

"If an ETF like BlackRock is too large, it could actually kill bitcoin because the real bitcoin isn't in the hands of users, they just sit there quietly, and users get just a derivative asset tied to the price."

In addition to this, Arthur further warned that a single entity's holding of a large share of computing power will also strengthen its control over the network's consensus.

In order for Bitcoin to remain a "rock-solid crypto asset", the network may need to undergo a series of upgrades in the future (especially crypto and privacy-related features), but traditional financial institutions may not share these ideas, and what if they oppose them?

"Will they support these upgrades? It's a question, and I don't know the answer, but obviously there will be more unknowns when there are passive holders in the ecosystem who hold a large share."

Arthur emphasized that from the very beginning, Bitcoin has been a very different currency from fiat currencies. Bitcoin was created to enable financial inclusion, with the vision of enabling everyone in the world to securely transfer and transact anytime, anywhere.

But what happens if the majority of bitcoin is controlled by one or a few institutions?

Of course, Bitcoin's wider acceptance will undoubtedly make it much more expensive, but is this really good for Bitcoin's actual utility?

"Are we indulging in short-term excitement and ignoring the great catastrophe ahead? I don't know the answer."

Arthur concludes by saying that people need to think longer about these issues. ETFs are really coming, and the price of bitcoin will obviously rise, but what will be the final outcome of this story?