By Nick Spanos, Founder of the Bitcoin Center (2013)
In 2013, I attempted to rent a booth at the New York Stock Exchange to buy and sell Bitcoin. The chairman and others laughed me out of the building. A year later, I founded the Bitcoin Center in 2013, right next to the NYSE, to wake up Wall Street to Bitcoin’s potential. But now, over a decade later, I ask myself: Did I make a mistake? Have we invited the very forces that Bitcoin was designed to resist into our ecosystem? The recent approval of Bitcoin ETFs, particularly BlackRock’s involvement, signals a dangerous shift in Bitcoin’s trajectory—one that mirrors Ethereum’s loss of decentralization and control to traditional finance.
The Ethereum Precedent: A Warning for Bitcoin
In 2016, Ethereum faced an existential crisis when a major hack led to a controversial hard fork, splitting the network into Ethereum (ETH) and Ethereum Classic (ETC). The fork was more than a technical fix—it was a shift in Ethereum’s ideological foundation. The “code is law” principle was abandoned in favor of centralized intervention. Traditional financial institutions, including Wall Street-aligned investors, threw their weight behind the new Ethereum chain, ensuring its dominance over Ethereum Classic. Today, Ethereum Classic, which stayed true to the original decentralized ethos, lags far behind in price and adoption.
The lesson? When institutional money enters a decentralized system, it dictates which version of the network prevails. It rewards those who comply with its interests and sidelines those who resist. With BlackRock and other financial behemoths now entering Bitcoin through ETFs, we face the same existential threat.
How BlackRock and Bitcoin ETFs Undermine Bitcoin’s Original Vision
Bitcoin was created as a decentralized, peer-to-peer alternative to fiat currencies and the centralized banking system. It was a hedge against institutional control, censorship, and government overreach. But Bitcoin ETFs, particularly those controlled by entities like BlackRock, pose several serious risks:
1. Custodial Control Over Bitcoin
Bitcoin ETFs don’t grant investors actual ownership of Bitcoin. Instead, institutions like BlackRock hold the private keys. This creates a dangerous centralization of Bitcoin’s supply, contradicting the fundamental principle of self-sovereign money. If enough Bitcoin is controlled by institutions, they will influence its governance, making it easier to manipulate or censor transactions.
2. Wall Street’s Leverage Over Bitcoin’s Future
When Wall Street controls vast amounts of Bitcoin through ETFs, it gains the power to influence forks, upgrades, and governance. The Ethereum precedent shows how traditional finance can determine which version of a cryptocurrency flourishes. If BlackRock and similar entities decide that Bitcoin should integrate with central bank digital currencies (CBDCs) or comply with government regulations, they will have the leverage to push those changes forward.
3. The Threat of Paper Bitcoin
ETFs introduce “paper Bitcoin,” similar to how gold ETFs introduced “paper gold.” This means that more Bitcoin claims exist than actual Bitcoin, leading to price manipulation. BlackRock and its peers can artificially suppress Bitcoin’s price or pump it at their discretion, creating volatility that benefits institutional traders at the expense of retail investors.
4. Regulatory Capture and Censorship Risks
By bringing Bitcoin into the traditional financial system, ETFs expose it to increased regulatory control. Governments can impose restrictions on ETFs, such as requiring KYC (Know Your Customer) compliance or blacklisting addresses. If enough Bitcoin is concentrated within ETFs, regulators could effectively censor transactions without altering Bitcoin’s code.
5. The Inevitable Centralization of Bitcoin Holdings
Institutions like BlackRock exist to consolidate wealth and power. If they control Bitcoin’s supply through ETFs, they gain an outsized influence over Bitcoin’s narrative, its integrations, and ultimately, its function as a decentralized currency. Bitcoin was designed to be a tool of financial freedom, but ETFs risk turning it into just another Wall Street asset.
Proof of Work: The Foundation of Bitcoin’s Value
Satoshi Nakamoto understood that for Bitcoin to function as the best form of money, it needed a decentralized and immutable ledger. Proof of Work (PoW) is the mechanism that allows Bitcoin to create its own time, ensuring a sequential and secure order of transactions without relying on a trusted third party. PoW is what gives Bitcoin its arrow of time—each block is a timestamp proving computational effort was expended, and this energy expenditure makes Bitcoin unforgeable.
Proof of Work connects Bitcoin to the physical world. Unlike fiat currencies or Proof of Stake (PoS) systems, which rely on social consensus, PoW requires miners to expend real-world energy to secure the network. This ensures that no entity can manipulate the ledger without investing an enormous amount of energy—making Bitcoin the most trustless and secure digital asset ever created.
How BlackRock Could Push for Proof of Stake and Increase Bitcoin’s Supply
The risk we now face is that BlackRock and other institutional players could use their massive influence to push Bitcoin toward a Proof of Stake system under the guise of addressing environmental concerns or mitigating threats from quantum computing. The establishment could claim that quantum computers may one day break PoW encryption and use this as a pretext to push for a Bitcoin fork that transitions to PoS.
Why would BlackRock want PoS? Because Proof of Stake centralizes control. Instead of requiring energy expenditure, PoS systems allow those with the most coins to dictate network consensus. This is a system that traditional finance and government elites would prefer because it mimics the existing power structures of fiat currency—those who hold the most assets control the system. BlackRock and its allies could use their ETF holdings to vote in favor of this transition, sell off PoW-based Bitcoin, and reinvest into the new PoS version that they control.
Additionally, BlackRock has already suggested that Bitcoin’s 21 million supply cap should be increased. If such an idea gains traction, it would undermine Bitcoin’s core principle of scarcity—the very property that makes it a superior form of money. By increasing Bitcoin’s supply, BlackRock and other institutional players could dilute its value, much like central banks do with fiat currencies. The combination of a supply increase and a transition to Proof of Stake would make Bitcoin indistinguishable from traditional financial assets, stripping it of its decentralized, censorship-resistant qualities.
The Curious Case of Hamdan Azhar and BlackRock’s Bitcoin Working Group
Hamdan Azhar, a co-founder of the Bitcoin Center in 2013 and my former hire as Ron Paul’s Chief Data Scientist during his 2011 presidential run, later joined BlackRock. Within a month of being let go from Blackrock the Chief Operating Officer of Blackrock publicly hailed Azhar as an “up-and-coming rock star” in front of 30,000 employees during a company-wide meeting.
Yet, just two days before the official formation of BlackRock’s Bitcoin Working Group—a group he was poised to lead—Azhar was curiously and abruptly fired. This raises serious questions: Was his departure a calculated move to replace a true Bitcoiner with someone more aligned with BlackRock’s long-term institutional strategy? Was he removed because he would resist efforts to reshape Bitcoin in a way that benefits Wall Street instead of preserving its decentralization? These are questions the Bitcoin community must consider as BlackRock’s involvement deepens.
Conclusion: Bitcoin’s Future is in Our Hands
BlackRock’s entry into Bitcoin, when viewed alongside the historical Ethereum split, raises significant concerns about the potential for traditional financial interests to dictate the evolution of decentralized networks. The Ethereum precedent shows that when the establishment intervenes, even the most fundamental crypto principles—like the immutability of code—can be sidelined. For Bitcoin to remain true to its revolutionary promise, investors and the broader community must remain vigilant, educate themselves, and guard against the prying hands of traditional finance that could undermine its decentralized ethos.