The issuance of Bitcoin IOUs by entities like Coinbase for BlackRock raises concerns about off-chain price manipulation and how traditional financial mechanisms could impact Bitcoin's value.
Critics, including Tyler Durden, emphasize that if large players borrow more Bitcoin than they actually possess, it undermines the concept of a 1:1 custody ratio and puts the ecosystem at risk.
The practice of issuing synthetic Bitcoin through fractional reserves has historical roots, reflecting how major institutions might be inflating perceived supply and distorting market dynamics.
As the debate around Bitcoin ETFs and their management deepens, the practices of significant players like BlackRock could fundamentally alter perceptions and realities of Bitcoin value.
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