From: Nils Neidhardt
Sent: October 13, 2016
Subject: File Number SR-BatsBZX-2016-30

Dear madam or sir,

I am writing to provide feedback on the question whether or not the Bitcoin ETF should be approved.

My background is that I am a senior software engineer by trade, I have been following the Bitcoin/Cryptocurrency space closely for the last couple of years and I am personally invested in Bitcoin.

Firstly, the security of some Bitcoin exchanges has been a concern in the past, as outlined by Prof. Jorge Stolfi in his letter to the SEC.  Whilst security breaches certainly can’t be ruled out in the future (just as in the fiat banking system), many of the large exchanges such as Coinbase have since reacted and offer multisignature vaults in addition to existing features such as multi factor authentication to users.  A good reference for the security of Bitcoin would be Professor Emin Gün Sirer from Cornell University, who has conducted extensive research on Bitcoin. (

That being said, it is still important to distinguish the security of Bitcoin itself from the security of Bitcoin exchanges. As you are probably aware, the immutability of the Bitcoin ledger is protected by the computing power of a global “mining” network, which processing power significantly exceeds the largest top 500 supercomputers combined ( That circumstance, together with the fact that more than 5000 Bitcoin nodes worldwide verify the work of Bitcoin miners make it practically extremely difficult to e.g. issue more Bitcoins than the universally by the network agreed upon limit of 21 million Bitcoins.

In regards to Bitcoin liquidity, there is a large number of exchanges around the world, with the Gemini exchange just being one of them. For Bitcoin market data such as volatility, velocity and other statistics I can recommend the services from .

In his letter to the SEC, Mr Stolfi compares Bitcoin to a Ponzi scheme. However to put this into perspective, he also views gold as a form of a Ponzi:

Further, Mr Stolfi alleges that Bitcoin provides no benefit to society beyond its existence as a speculative item. My response thereto would be that Bitcoin’s low transaction fees of about 10 cents, combined with settlement times of 10 minutes on average are already leveraged by numerous remittance providers across the globe, such as:

Apart from remittance, there is a large number of use cases being actively developed in the “Blockchain” space , the technology that is underlying Bitcoin:

Consequently, the number of investments in Bitcoin- and Blockchain companies have been quite substantial:

Some of these Blockchain use cases may be implemented via alternative ledgers, but can be it assumed that some of them will end up using Bitcoin since it is has by far the largest ecosystem and is secured by much more computing power than alternative cryptocurrencies .

Because of those significant investments in Bitcoin itself, as well as related Bitcoin companies and the broad number of use cases across different industries and countries the properties of Bitcoin are in my view vastly different from those of a penny stock, as Mr Stolfi alleges.

In addition to the above mentioned use cases for Bitcoin, I believe that Bitcoin’s properties as a new asset class are a valuable use case in itself since it allows portfolio diversification, an investment vehicle for the unbanked population, as well as a means of securing wealth in a global, decentralized and easily transferrable medium.

Lastly, I appreciate that the SEC is valuing the opinion of the general public in this important matter and I’d be happy to answer any further questions you might have.

Best regards,
Nils Neidhardt