Investing in Bitcoin isn't as easy as investing in stocks - right now.
But the arrival of the Winklevoss Bitcoin ETF - an exchange-traded fund developed by twins Cameron and Tyler Winklevoss - will change that.
The Winklevoss Bitcoin ETF will make investing in Bitcoin as simple and straightforward as buying shares of any other exchange-traded fund.
While there are two other Bitcoin funds - Bitcoin Investment Trust, by SecondMarket, and a hedge fund, Pantera Bitcoin Advisers LLC, by Pantera Capital - both are open to wealthy investors only.
When the Winklevoss twins filed to register their Bitcoin ETF last year, they said the purpose was to make Bitcoin investing available to anyone with a brokerage account.
"The Trust brings Bitcoin to Main Street and mainstream investors to Bitcoin," Tyler Winklevoss told The New York Times. "It eliminates the friction of buying and reduces the risks associated with storing Bitcoin while offering similar investment attributes to direct ownership."
Here's how the Winklevoss Bitcoin Trust would work...
A Winklevoss Bitcoin ETF Makes Sense
The Winklevoss Bitcoin ETF would work in a similar way to commodity-based ETFs like those for gold and silver, with the Trust buying the bitcoins to back the ETF shares. The filing proposed that the Trust would purchase one bitcoin for every five shares of the ETF.
Daily transactions would go through a regulated trading desk. The Winklevoss twins say they have a proprietary method for storing the bitcoins to prevent thieves from hacking into their system and stealing them.
Since being filed last July, the Winklevoss Bitcoin ETF, officially known as the Winklevoss Bitcoin Trust, has been under review by the U.S. Securities and Exchange Commission (SEC).
But it keeps inching closer to approval.
Just this week, the lawyer who drafted the proposal for the Bitcoin ETF, Kathleen H. Moriarty, a partner at Chicago-based law firm Katten Muchin Rosenman LLP, told Bloomberg News that the process is "progressing nicely and [approval] might occur at the end of 2014."
And the approval of the Winklevoss Bitcoin Trust - which appears to be a question of when, not if - should be on the radar of every investor, because of what will happen after it goes live...
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About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.
I'm old and as dumb as a bag of hammers but I don't get this BITCOIN stuff. Who is in control of the machinery that generates BITCOINS; what company or companies prints or creates them; what controls are in place to prevent a 'Congresslike' mess (or a Canadian Senate type mess) from taking control of this phenomena. What's to prevent greed and the need for control infecting this, given the world wide implications of the BITCOIN.
You confusion is understandable. Bitcoin is a new and innovative form of money. In fact, no person or group controls it; Bitcoin is managed wholly by software, using the Internet itself as the backbone. People "mine" Bitcoins using powerful computer hardware. The decentralization of Bitcoin makes it hard for governments to control as they control their own fiat currency, although governments can (and soon will) start regulating it. the combination of practical government regulation and widespread adoption by businesses will help Bitcoin go mainstream over the next year or so.
Hope this helps!
With all these major Crypto currencies out there (worldcoin, litecoin, etc.) what affect will this have one them? They are much lower in value, but returns might be sufficient as well if Bitcoin is going to go up in value.
Bitcoin is a digital daydream backed by a fiat fairy tale.
Sounds a lot like the dollar..
curious to what you think the mad selloff of bitcoin is about. Does this appear to be a healty correction or the beginning of the end. Down about 200 the last couple of days
Hard to say with Bitcoin, but part of it seems to be the Mt. Gox price falling in line with the Bitcoin prices on all the other exchanges (it was more than $100 higher not long ago). It would seem that Bitcoin volatility is far from dead, after all.
UPDATE: Apparently Mt. Gox has temporarily suspended withdrawals, which has triggered a general Bitcoin selloff. Watch Money Morning for a full story.
I think everyone might be missing the point here. If this is allowed, and it will be, then BITCOIN by default has just been controlled by government(s). Does the word "derivative" come to mind? Not only can big money bet on it, but more important, when they feel its time to take it down, they will. This is no different than all the various derivatives against precious metals. I'm sorry but for all the great things that make BITCOIN a fantastic alternative to fiat currencies, this is the ultimate game changer for the banks. I'm not saying this won't cause BITCOIN to gain in value, oh it will. And then once the big player think that it is time to destory it, they will. This is just the start of its downfall.
I think the banks are already very concerned, however they will have to join in this new market with either the implementation of their own crypto coins to try dominating the market or buying up as many Bitcoin exchanges as they can. I do not believe they will ever be able or willing to risk destroying these crypto currencies. For a start how would destruction be possible and why would they cut their own throats because the speed this currency has moved within just a few years indicates the public are in the mood to embrace it. The banks also know we customers understand their record profits in these hard times are made from leaching fees and costs from their customers and have lost the trust they once enjoyed. The ANZ has just lost a court case involving these issues and I bet these costs will be recovered through another charge with no improvement in integrity.
As well as BitCoin, I am investing in Quark. This is because I missed out on the early gains of BitCoin so I looked for a new currency that has great potential. I found there are dozens and dozens of BitCoin alternatives, but 99% of them are just clones of BitCoin with a new logo – they add nothing new, so why would people want them long term?
The ONLY alternative coin I could find that significantly moves the technology from BitCoin is Quark Coins. They are MUCH more secure than BitCoin, and have incredibly fast transaction speeds (it was like moving from dial up to broadband).
So these coins are technically superior to BitCoins but are seriously undervalued because they are in their infancy.
BTC is down but not out, it is at $110 at Gox, the biggest but not only trading platform, it is well over 500 still at the other "players" trading sites. Gox ownership has either been bought off, blackmailed, or threatened and most likely all three, bitcoin can never be destroyed or contained and will keep coming back over and over, this is the end of centralized banking and fiat as we know it. They would have to shut the internet down permanently to stop it. Much of this is my opinion, but if you tell me I can't sell my coin right now for 532 dollars, I'll tell you that you are a fool
This whole theory about decentralization and no one has control reminds me of the days of P2P and BitTorrent, where almost everyone from the 90s generation was downloading music and movies en masse… it was thought that could never be stopped because it was decentralized, too.
Then the industry started sending multi-thousand dollar fines to anyone who was participating, limiting their internet speeds, seizing websites, and all sorts of punishment. That stopped things pretty quick. Even though the decentralized P2P is technically still the same to this day, they've rattled the masses out of it, thereby making it less and less useful until it fades away.
As soon as bitcoin is tied to some sort of undesirable activity, it won't take long to see it targeted by regulators. It is a serious and legitimate concern for them. This isn't the first time in history that a currency challenge has arisen, but the outcome is always the same, and it isn't pretty for those on the fringe. Sure, you'll always be able to participate in bitcoins… but watch as the risk/certainty of punishment increases. And with that, good luck finding others who will participate with you. That's how you kill something which is "decentralized."
But P2P file sharing was clamped down on because people were sharing content illegally. There is nothing illegal about bitcoin itself. It will be targetted by regulators but the bitcoin community expect that. And it will only help to legitimize bitcoin and ultimately succeed.