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The Price of Progress: The Costs of Bitcoin’s Acceptance

by Karen Shidlo

Bitcoin ETFs
Bitcoin ETFs
Bitcoin ETFs

As Bitcoin undergoes some pretty unexpected, even if welcome, changes in
terms of acceptance and accessibility, it seems inevitable that the price to pay
is a compromise in some of its more appealing aspects.

One of the cornerstones to Bitcoin is its decentralized nature, allowing
individuals to transact peer-to-peer without the need for intermediaries like
banks or governments. Yet, as the OG cryptocurrency continues to gain wider
acceptance among regulators and traditional financial institutions, the
question of whether it will become more centralized in terms of governance
and oversight arises. And if it does, this evolution will certainly erode the trust
in Bitcoin’s decentralized ethos among some of its early adopters.

Regulating Bitcoin
With increased Bitcoin integration into traditional financial systems comes a
mandatory set of regulatory compliance measures, including KYC and AML
as requirements for user identification and transaction monitoring. An industry
standard in the world of banking, these impositions detract from Bitcoin’s
original promise of anonymity and privacy.

But perhaps far more threatening to its core values and original intention as a
tool for “financial freedom,” is the fact that institutional players and large
corporations are increasingly and actively embracing Bitcoin. The advantages
include bringing greater liquidity and stability to the market, but at the cost of
introducing a different set of priorities and dynamics. It is unavoidable that
Institutional investors prioritize factors such as regulatory compliance, risk
management, and profit maximization over the core principles of
decentralization that initially attracted many Bitcoin enthusiasts.

Following 11 applications, including from BlackRock, Ark Investments
21Shares, Fidelity, Invesco, and VanEck, the U.S. securities regulator
approved the first U.S.-listed exchange traded funds (ETFs) to track bitcoin in
early January 2024. These exchange-traded funds have made it easier for
everyday investors to place bets on the cryptocurrency market, like they
would buy and sell stocks on Wall Street, and in the days since federal
regulators finally gave the green light, investors have poured nearly $2 billion
into the new bitcoin funds.

Joel Khalili of Wired says, “It harkens back to the underlying ideology of
bitcoin, that it would be a technology that underpinned a payment network
whereby people would store their own wealth and transact directly with one
another, essentially cutting these large Wall Street intermediaries out of the
picture. And the reality is that the ETFs are just not that, they’re kind of the
opposite. They’re a vehicle exclusively for financial speculation.”

Shifts in the investor base
As more people who previously could not get exposure to Bitcoin gain access
to it, the price volatility may decrease over time. While this may be regarded
as a positive development in terms of creating stability, it also diminishes the
potential for rapid price appreciation that characterized Bitcoin’s early years.
This means that the allure of high-risk, high-reward investments are likely
destined to fade as Bitcoin’s price movements become more subdued,
leading to a shift in the investor base and sentiment surrounding the

“The notorious price volatility of bitcoin, as well as its fluctuating values
against stablecoins and other cryptocurrencies, could expose mainstream
investors to a less familiar spectrum of investment risks,” said Yiannis Giokas,
senior director of Moody’s Analytics.

Despite failing to catch on as a replacement for fiat money, Bitcoin soared
near $68,000 in November of 2021, only to dip below $20,000 a year later,
with investors shunning riskier assets and a series of company blowups and
scandals shaking faith in the crypto industry.

A hack of the SEC’s X account also sent prices soaring and raised questions
about both the ability of scammers to manipulate the market and the SEC’s
ability to stop them.

Diluting the principles
It is a strange moment in Bitcoin history, as we struggle with both the benefits
that mass adoption and the drawbacks that such a shift will bring about.
The changes and adaptations to fit within existing regulatory frameworks and
institutional structures may enhance Bitcoin’s legitimacy and integration into
the global financial system, but they also risk diluting some of the core
principles and features that initially made it appealing to its early adopters


Karen Shidlo went to college in NYC, and has lived in Switzerland for the past 6 years. Currently marketing manager at Fiat24, she is passionate about blockchain technology and the impact that it can have on the world. Fiat24 is a web3 banking concept, built on Ethereum and powered by smart contracts to offer everyone a seamless peer-to-peer, next-generation payment experience.

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