Intense debate is occurring at the heart of Bitcoin thinking as experts vie over the future of custody, sovereignty, and the role of ETFs in making widespread use happen.
The latest point was sparked by investor Fred Krueger, who supports Nick Szabo's call for a two-pronged strategy.
ETFs face increasing debate in Bitcoin regarding self-custody.
Krueger encourages followers to implement institutional rails, such as banks and ETFs, while strongly protecting the right to self-custody.
Szabo is right, Krueger writes. The answer is both: welcome developments from banks, ETFs, and large institutions while promoting and training self-custody and protecting the right to self-custody.
His stance aims to bridge the wider gap between pure Bitcoin advocates, who value personal sovereignty, and ETF proponents who argue that size requires traditional infrastructure.
This conversation began on November 30 after Bram Kanstein argued that gold effectively served as money until it was replaced by fiat currency.
Szabo responds with a historical explanation: the centralization of gold in vaults and the poor resistance to theft made trust-based options more beneficial for merchants and banks.
Centralization ultimately led to gold being partially replaced by paper tickets and telegraphic transfers.
Szabo emphasizes that Bitcoin addresses the main issue of speed and verifiability but still lags behind in one crucial aspect: resistance to theft.
"Bitcoin is, if free from additional work and used the most, still lower than the best trust-based methods in terms of resistance to theft," Szabo writes.
This contributes to Wall Street's favoring of increased third-party control.
ETFs vs. Self-Custody: Philosophies collide.
This context has led to a broader ideological debate. Eric Balchunas from Bloomberg questions why some high-status OGs accept exchanges that hold Bitcoin but oppose ETFs. Balchunas argues that both rely on the management of others and that ETFs are cheaper and safer.
Analyst Sam Wouters responds firmly by pointing out that users can withdraw currency to store it themselves from the exchange market at any time, unlike ETFs.
OGs with high status love Bitcoin as money that creates freedom, while ETFs are like a bird in a cage, he writes.
He argues that the value of self-custody lies in having the option to withdraw, even though many do not exercise that right today. However, with ETFs, he warns that that option will disappear.
However, Balchunas still insists that ETFs accelerate adoption, spreading holdings across millions and helping Bitcoin become a less volatile asset.
Some still argue that OGs do not accept coins controlled by companies simply because they increase in quantity. They argue that ETFs risk allowing institutions to influence the direction of Bitcoin's protocol as understood.
As the points start to expand, Balchunas argues that self-custody is cumbersome and expensive when bought on the exchange market, but the left argues that there are many platforms offering free withdrawals, low spreads, and no annual fees, unlike ETFs.
Balchunas confirms that ETF issuers do not want the power of the protocol, even though the general opinion is that large companies are often under pressure.
The only thing I know is that I have something like a ledger, and then the app goes to find BTC back. It has a minimum of 1.4% to convert my USD. Some have 2-3% for those interested in ETFs; it's really expensive, worse than the 1970s, he said.
Some still believe that Bitcoin exists because investors cannot trust companies that use their own words.
As unique bitcoins are continuously tested between sovereignty and expansion, the debate over ETFs versus self-custody has become more than a conflict. It has become a breaking point that defines what will determine the next chapter of this asset.
