No Bitcoin ETFs at Vanguard (2024)

Original Article ↗ Hacker News Discussion ↗

Vanguard’s decision not to offer Bitcoin or crypto ETFs, despite strong customer interest, prompts a broader debate over whether cryptocurrencies are investments or pure speculation. Many commenters echo Vanguard’s view that Bitcoin and most crypto lack inherent economic value, function as zero‑sum gambling instruments, and are tightly linked to scams, money laundering, and extreme volatility, while others argue they have legitimate uses as censorship‑resistant money, especially in unstable economies, or as “digital gold.” The thread also revisits long‑running disputes over whether blockchain technology has valuable applications beyond crypto, and whether assets like gold, stocks, and fiat currency are fundamentally different from cryptocurrencies as stores of value.

Vanguard’s No‑Bitcoin Stance & Investing Philosophy

  • Many commenters praise Vanguard for prioritizing long‑term, fundamentals‑based investing and refusing to offer Bitcoin ETFs, even at the cost of losing customers to more “accommodating” brokers.
  • Others dislike the “paternalistic” restriction and say a broker should be a neutral tool that lets them implement their own theses, including crypto.
  • Several note Vanguard also avoids pure gold and many commodity ETFs, so excluding Bitcoin is consistent with their brand, though gold is somewhat “grandfathered in.”

Is Crypto an Investment or Pure Speculation?

  • Strong view: Bitcoin and most crypto have no inherent economic value, produce no cash flow, and function as zero‑sum or negative‑sum games reliant on a “greater fool.”
  • Counterpoint: So do fiat currencies; value is ultimately social consensus. Bitcoin can be a store of value and cross‑border medium of exchange with unique censorship‑resistant properties.
  • Some argue small allocations (1–5%) can improve risk/return or serve as “insurance” against fiat debasement or systemic shocks; others say volatility and lack of fundamentals make that unjustified.

Comparisons: Stocks, Bonds, Gold, Cash

  • Several argue stocks and bonds are fundamentally different: they are claims on productive assets and future cash flows; long‑term expected return is positive, not zero‑sum.
  • Gold is seen as mostly speculative but with non‑zero industrial and aesthetic demand plus millennia of “Lindy” as a store of value; Bitcoin lacks this history and intrinsic use.
  • Fiat cash is acknowledged as faith‑based and inflationary, but backed by state power and tax obligations, and useful as a short‑term store of value and unit of account.

Blockchain, Smart Contracts & Non‑Crypto Uses

  • One camp: “Blockchain without crypto” is mostly a solution looking for a problem; traditional databases, legal contracts, and regulated intermediaries already work well.
  • Other camp: Smart contracts (e.g., DeFi protocols, ENS) and censorship‑resistant ledgers have real though niche utility, especially for low‑trust, low‑value, or cross‑border interactions.
  • Skeptics note that most visible blockchain activity is still speculation, scams, and money laundering; proponents reply that tooling and scalability are early, and legitimate uses are slowly growing.

Use Cases, Externalities & Ethics

  • Claimed positive use cases: remittances, capital flight from failing currencies, censorship‑resistant payments, and asset access in unstable or authoritarian countries.
  • Negative externalities raised: facilitation of ransomware, sanctions evasion, human trafficking, tax evasion, and enormous energy use (for proof‑of‑work chains).
  • Some see crypto as an economic sink that burns real resources to manufacture speculative assets; others see it as a necessary tool for financial freedom in a world of increasing state and corporate control.