- BlackRock’s embrace of Bitcoin through its Bitcoin ETF is a way for the company to adapt to and survive crypto’s continuous adoption.
- Traditional finance firms like BlackRock, banks, and payment providers are rapidly adopting crypto-technology and blockchain to remain relevant and efficient.
- Bitcoin provides an invaluable service of being a decentralized digital asset outside the control of any country, which traditional banking cannot replicate.
BlackRock’s recent embrace of Bitcoin represents crypto’s integration into mainstream finance, rather than a loss of Bitcoin’s decentralized ethos.
The Rise of Bitcoin ETFs
The launch of US Bitcoin exchange-traded funds (ETFs) was crypto’s most celebrated event in 2024. But to some, the term “Bitcoin ETF” is an oxymoron. SEC Chairman Gary Gensler argued in January that “Satoshi Nakamoto said this was gonna be a decentralized system, but now you can buy it through this thing called an exchange-traded product as well, which is centralized.”
He has a point. Over 1,000,000 BTC and counting are now controlled by Bitcoin ETF providers across the world, including giants of traditional finance like BlackRock and Fidelity – exactly the sort of centralized firms that crypto aims to disintermediate.
Adaptation, Not Capitulation
However, BlackRock’s embrace of Bitcoin represents an adaptation to crypto’s march toward mainstream adoption, not a loss of Bitcoin’s decentralized ethos. As BlackRock CEO Larry Fink said, Bitcoin provides an invaluable service as “digital gold” that traditional banking cannot replicate.
The Bitcoin ETFs fill a niche for investors seeking Bitcoin exposure who face hurdles acquiring actual Bitcoin. Yet the hurdles to self-custody are falling. The user experience is improving, and regulation is becoming more crypto-friendly. Soon, blockchain-based finance will be more efficient and useful than traditional banking.
Traditional Finance Plays Catch-Up
In preparation, all of traditional finance is experimenting with crypto-technology. BlackRock launched an Ethereum-based tokenized fund. Franklin Templeton expanded a blockchain money market fund. PayPal launched a stablecoin, Mastercard is piloting tokenized asset settlement, and central banks are developing CBDCs.
Between central banks and private sector adoption, TradFi’s embrace of crypto-tech represents an effort to adapt to Bitcoin’s rising tide, not control it. To survive, they must work with Bitcoin, not against it.
Conclusion
Rather than compromising Bitcoin’s decentralization, BlackRock’s Bitcoin ETF represents traditional finance’s adaptation to crypto’s inevitable mainstream adoption. The barriers to self-custody are falling as blockchain-based finance becomes more useful than traditional banking. To stay relevant, traditional institutions like BlackRock must embrace Bitcoin. Their survival depends on working with, not against, crypto.
