[Binance Technology Long Investment Book] For the encryption industry to be popularized on a large scale, it is far from enough to rely solely on "Bitcoin Spot ETF"

Binance Chief Technology Officer: If we want to popularize the crypto industry on a large scale, we need more than just ETFs

Binance Chief Technology Officer Rohit Wad said that the success of the “Digital Gold” ETF reminds us to continue to improve the accessibility of Bitcoin and Web3 and lower the barriers to entry.

The recent approval of a Bitcoin spot ETF in the United States is undoubtedly a significant development for Bitcoin and cryptocurrencies, especially at the regulatory and institutional levels. From a technology perspective, the aggressive adoption of ETFs also serves as a reminder that the crypto industry must continue to reduce friction in the user experience if we want to see mass adoption.

About two months after the U.S. Securities and Exchange Commission (SEC) approved the listing of a Bitcoin spot ETF, Bitcoin has hit a record high and regained a market value of trillions of dollars. An early forecast report estimated the funds would have $72 billion in assets under management within five years, and more than $9 billion has flowed into the ETFs since trading began.

Although the market seems to be riding the ETF craze towards a bull market cycle, native cryptocurrency and Web3 companies must not rest on their laurels and should continue to lower the barriers to technology entry.

This is because many institutional and retail investors turn to ETFs precisely because of the friction of user experience.

The friction here refers to the numerous steps users must take to use a wallet or exchange, the amount of time they must spend accepting and learning best practices, such as how to protect their passwords and devices, and the number of steps they must take to protect themselves from scammers and hackers. attack. All of the above problems can be solved through product design.

This is because many institutional and retail investors turn to ETFs precisely because of the friction of user experience.

Let’s compare between Bitcoin and gold and understand why both commodities are suitable for the ETF market. The average investor doesn't want to actually hold gold bullion as a store of value because they don't know where and how to store it safely and conveniently. Gold ETFs exist for this purpose.

Why do you need a Bitcoin spot ETF?

On the other hand, Bitcoin has long been known as "digital gold", which has the scarcity of commodities but does not have the transportation and storage costs of traditional items.

So why do we need to bother buying ETFs (ETFs are actually a package) instead of owning your own digital gold in your own digital wallet? The reason is that cryptocurrencies are still in their early stages of development, and products such as wallets and exchanges are still too complex and intimidating for the vast majority of people.

Bitcoin ETFshelp ease the barrier to entry by managing complex problems that most people don’t want to solve, such as securing mnemonic phrases. In return, investors are willing to bear ETF fees and have their assets held by the ETF.

Cryptocurrency is still in its early stages of development, and products such as wallets and exchanges are still too complex and intimidating for the vast majority of people.

If we take into account the fees paid to ETF issuers as well as foreign exchange, premiums and other costs, ETFs are generally more expensive than buying Bitcoin directly from exchanges, but there is still clear demand for ETFs. Traditional financial service providers are legitimizing cryptocurrencies in financial markets by issuing extremely easy-to-understand ETFs.

The launch of spot Bitcoin ETF is a huge positive development for the industry because it will bring new users and capital to the industry. Traditional asset managers now have a benchmark against which to measure performance, which is a very promising step towards expanding infrastructure development to support more traditional finance participation.

If we can remove the friction for users to engage with cryptocurrencies, we will definitely increase adoption and enable more people to participate. Our collective long-term goal should be to make cryptocurrencies more widely accessible by equipping users with the expertise and tools to directly participate in and manage their own cryptocurrencies. We must build products that are user-friendly, secure, and intuitive to make cryptocurrencies more accessible to everyone.