A Famous Author’s Big Warning: Is Your Bitcoin Just a “Paper Promise”?
Hey everyone, John here! Welcome back to the blog where we make the sometimes-confusing world of crypto and blockchain simple. Today, we’re going to talk about a warning shot fired by a very well-known investor and author. You might have heard of him – Robert Kiyosaki, the man behind the mega-bestselling book, “Rich Dad Poor Dad.”
He has some strong feelings about a popular way people are investing in not just Bitcoin, but also in traditional assets like gold and silver. He’s essentially asking a tough question: Do you own the real thing, or just a piece of paper that says you do? Let’s break it down together.
First, What’s an ETF? It Sounds Complicated!
Before we dive into what Mr. Kiyosaki said, we need to understand the thing he’s talking about: the ETF. This is one of those terms you hear all the time in the investment world, and it can sound a bit intimidating.
Lila: “Okay John, I have to jump in here! I’ve definitely heard that acronym, ETF, but I always just nod along. What on earth is it, really?”
That’s a perfect question, Lila! Let’s clear it up. Think of an ETF (which stands for Exchange-Traded Fund) like a shopping basket.
Imagine you want to invest in technology, but you don’t want to pick just one company. Instead, you can buy a “tech basket” ETF. This basket might hold tiny pieces of stock from Apple, Google, Microsoft, and many others. You buy one share of this “basket” on the stock market, and just like that, you’re invested in all those companies at once.
It’s the same idea for Bitcoin, gold, or silver. A Bitcoin ETF is a company that buys a whole lot of real Bitcoin and then sells shares of their “basket” on the stock market. So when you buy a share of a Bitcoin ETF, you’re not buying Bitcoin directly. You’re buying a share in a fund that owns Bitcoin. It’s a way to get exposure to Bitcoin’s price without having to deal with setting up a crypto wallet and managing it yourself.
Kiyosaki’s Warning: “Paper” vs. “The Real Thing”
Now that we know what an ETF is, let’s get back to Robert Kiyosaki. He is not a fan of using these ETFs to own assets like Bitcoin, gold, or silver. He calls them “paper versions” or “paper-based instruments.”
What does he mean by “paper”? He means you don’t actually hold the asset yourself. You hold a certificate, a digital entry in a brokerage account—essentially, a promise from a company that they are holding the asset on your behalf.
Think about it this way:
- Owning the “Real Thing”: This is like having a gold coin in a safe in your house. You can see it, touch it, and do whatever you want with it because it’s in your possession.
- Owning the “Paper Version” (an ETF): This is like having a certificate from a storage company that says, “We are holding one gold coin for you in our vault.” You trust that the coin is there and that the company will give it to you if you ask. But you don’t have it in your hand.
Kiyosaki believes that this “paper version” is not a true substitute for owning the real asset, and he uses a powerful analogy to explain why.
The “Picture of a Gun” Analogy
To make his point crystal clear, Kiyosaki compared owning an ETF to having a “picture of a gun” for self-defense.
It’s a stark comparison, but it gets the message across. He says that in good times, when everything is calm and the financial markets are running smoothly, having that “picture” (the ETF) might feel just fine. It looks like the real thing, and its value goes up and down with the real thing.
However, he warns that in a real crisis—a major market crash, a company going bankrupt, or a situation where you need immediate access to your assets—that “picture” becomes useless. A picture of a gun can’t protect you in an emergency. In the same way, he argues, an ETF might fail you in a severe financial crisis because you are depending on a third party (the ETF company) to keep its promise. You don’t have ultimate control.
So, What Does “Owning the Real Thing” Mean for Bitcoin?
It’s easy to understand owning real gold—you can literally hold it. But what about Bitcoin? It’s digital, so how can you “hold” it?
Lila: “Right, that’s what I was wondering! You can’t put a Bitcoin in your pocket. So how do you ‘own the real thing’ if it’s just code on the internet?”
Excellent point, Lila. This is where we get to the very heart of what makes Bitcoin special. “Holding the real thing” in the crypto world means having self-custody.
Self-custody means you—and only you—control the “private keys” to your Bitcoin. Think of a private key as the master password to your own personal digital vault. It’s a long, secret string of characters. If you have the keys, you have the Bitcoin. No one can move it, spend it, or take it from you without them.
You can achieve this by using:
- A software wallet on your computer or phone.
- A hardware wallet, which is a small physical device (like a USB stick) that keeps your keys completely offline and is considered extremely secure.
When you own Bitcoin this way, you are your own bank. You don’t need to trust anyone. When you own a Bitcoin ETF, the ETF company holds the private keys. You are trusting them to keep the Bitcoin safe and honor your share’s value. Kiyosaki’s argument is that this trust is a weakness, especially in uncertain times.
Our Final Thoughts
John’s Take: Robert Kiyosaki is definitely taking a purist’s stance here. His view taps into the original philosophy of Bitcoin, which was created to be a system that doesn’t rely on trust in banks or financial institutions. He’s reminding everyone that while ETFs offer convenience and make it easy for beginners to get started, that convenience comes at the cost of control. It’s a classic trade-off: ease of use versus direct ownership. His warning is a powerful reminder to understand exactly what you are buying.
Lila’s Take: As someone still learning, this makes so much sense. The idea of managing my own private keys sounds a little intimidating, and I can see why an ETF would be appealing because it feels simpler, like buying a normal stock. But Kiyosaki’s analogy of the “picture of a gun” really sticks with me. It clarifies that there’s a huge difference between having a claim on something and actually holding it in your own hands (or, in Bitcoin’s case, in your own digital vault!). It’s something I’ll definitely think about as I learn more.
This article is based on the following original source, summarized from the author’s perspective:
Robert Kiyosaki slams ETFs for being ‘paper versions’ of
Bitcoin, gold and silver