Author: ARNDXT, crypto researcher; Translated by: 0xxz@Golden Finance

Now is the time to have a candid discussion about the potential long-term impact of a Bitcoin ETF and institutional adoption.

While the price action is exciting, I worry that we may be overlooking some serious risks to Bitcoin’s fundamental value proposition.

Pros: Adoption and price increases

Let's start with the positives:

• The Bitcoin ETF was approved about 7 months ago, marking a major milestone for mainstream adoption.

• Since then, these ETFs have acquired approximately 4.3% of the total Bitcoin supply.

• The influx of institutional funds has indeed triggered a new bull run, pushing Bitcoin to a new all-time high.

On the surface, this looked great. Higher adoption, higher prices, more legitimacy in the eyes of traditional finance. But as I dug deeper, I couldn’t shake the feeling that we were trading short-term gain for long-term risk.

Worrying: Centralization is spreading

Here are the things that keep me up at night:

  • The ETF has swallowed up 4.3% of the Bitcoin supply in just 7 months, which is likely an underestimate considering the number of lost Bitcoins.

  • MicroStrategy alone accounts for more than 1% of the supply.

  • The U.S. government also controls about 1%.

  • Other large entities are undoubtedly accumulating as well.

We are seeing Bitcoin rapidly becoming concentrated in the hands of a few powerful players. This trend goes directly against the core spirit of Bitcoin: decentralization.

Dilemma: Adoption vs. Decentralization

This situation presents a classic dilemma:

  • We want Bitcoin to be widely adopted and recognized as a legitimate asset class.

  • But we also need it to remain decentralized in order to fulfill its promise as a censorship-resistant, permissionless monetary system.

These goals are increasingly at odds with each other. The mechanisms that drive adoption (ETFs, institutional investing) are themselves concentrating ownership.

Centralization Risk

Why should we care about this centralization? Here are a few reasons:

  • Market manipulation: Large holders can influence price movements.

  • Regulatory capture: Governments and institutions may push for regulation that favors large holders at the expense of individual users.

  • Network governance: Although the Bitcoin protocol is difficult to change, social consensus is crucial. Large holders can have a huge impact on the debate over upgrades or forks.

  • Liquidity issues: If a large amount of supply is locked up by long-term holders, it could affect Bitcoin’s utility as a medium of exchange.

Lack of centralized blocking mechanism

What’s particularly worrisome is that we have no mechanism to prevent this centralization. Bitcoin’s design prioritizes permissionlessness, which means we can’t stop anyone (whether an individual or an institution) from accumulating as much wealth as they want.

Personal thoughts

I’m glad to see Bitcoin gaining mainstream acceptance. But at what cost? Are we too focused on the growth of numbers and ignoring the revolutionary potential of truly decentralized money?

I don’t pretend to have all the answers, but I believe this topic is critical to the future of Bitcoin and cryptocurrency as a whole.

原文：The Double-Edged Sword of Bitcoin ETFs: Are We Sacrificing Decentralization for Adoption?

#BTC #ETF