What are the implications of off-chain BTC substitutes?

Guys i’m trying to figure out the implications of this podcast brought up in the daily sub

[https://unconfirmed.libsyn.com/why-the-icebakkt-news-makes-some-crypto-investors-nervous-ep032](https://unconfirmed.libsyn.com/why-the-icebakkt-news-makes-some-crypto-investors-nervous-ep032)

Basically the VanEyck ETF proposal is based on cash-settled futures (as of their July 20 letter to the SEC)

[https://www.sec.gov/divisions/investment/van-eck-associates-innovation-cryptocurrency.pdf](https://www.sec.gov/divisions/investment/van-eck-associates-innovation-cryptocurrency.pdf)

HOWEVER the Bakkt will be physically-settled in BTC

So you could think this is good news,

EXCEPT Wall Street is about to print off-blockchain ‘paper’ BTC in unlimited quantities (exchanged freely between institutions in the spirit of the MBS and synthetic CDOs) that removes the scarcity of the 21 million physical BTC

*” creating* [*~~#~~****BTC***](https://twitter.com/hashtag/BTC?src=hash) *substitutes off-chain that aren’t 100% backed by real on-chain coins suppresses* [*~~#~~****bitcoin***](https://twitter.com/hashtag/bitcoin?src=hash)*’s price “*

**Bottom line the physically-owned BTC will become worthless?**

*” Fractional-reserve* [*~~#~~****bitcoin***](https://twitter.com/hashtag/bitcoin?src=hash) *suppresses* [*~~#~~****BTC***](https://twitter.com/hashtag/BTC?src=hash)*’s price. It offsets BTC’s real-world scarcity by creating unbacked claims to BTC (ie, more paper claims to BTC than there are real BTC), causing BTC’s price to drop, all else equal. We have entered the era of fractional-reserve bitcoin. “*
r/https://twitter.com/CaitlinLong_/status/1026608240015159296

Unless the CFTC places strict position limits on Bakkt (which will be self-regulated by ICE so what are the odds…) by November 2018?

What’s your take?



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2 Comments

  1. mrj62698
    August 11, 2018
  2. Willshw
    August 11, 2018

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