

BIT Poised to Become Publicly Traded Bitcoin Fund - softdev12
http://www.wsj.com/articles/bitcoin-investment-trust-gets-finras-ok-to-become-public-bitcoin-fund-1425242094

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softdev12
Summary of this article:

1) Barry Silbert's BIT has beat the Winklevoss' (or Winklevii) bitcoin fund to
market by using a backdoor listing technique.

2) Finra granted its request for a permanent ticker symbol, GBTC, and that “is
expected to be effective shortly.”

3) Each share of BIT is worth approximately one-tenth of a bitcoin. As of
Friday, the trust’s net asset value stood at $24.43 per share.

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narrator
Oh goody, I can short bitcoin now.

~~~
kryptiskt
As a bonus you get the considerable chance that they will lose all their
bitcoins in a hack/fraud for free.

Hmmm... going long bitcoin and shorting this may be the trade to do.

~~~
MichaelApproved
Before thinking this is a free trade, consider that it costs money to short a
stock. In order to short the stock, you need to first borrow it from someone
so that you could sell it to someone else. When borrowing a stock, you have to
pay an interest rate for the shares which were loaned to you.

Some stocks are cheap to short while others could have high double digit
interest rates. The rate depends on the willingness of people to lend and
volatility.

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habosa
Additional Note: Barry Silbert is the founder of SecondMarket.

Not sure what they're doing now (website is confusing) but when I interned
there in 2012 they were a marketplace for all sorts alternative assets. They
became somewhat well known when they made a deal with Facebook to be the
exclusive pre-IPO market for Facebook equity. They made a business of helping
private companies organize buying/selling of their shares. They branched out
into all sorts of things including a gold fund, etc. So this seems like a
natural move for Barry.

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TomGullen
Is this an ETF? If so, what happens to the ETF if the underlying asset is
lost/stolen?

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bbanyc
The ETF files for bankruptcy and the creditors and shareholders divvy up the
remaining assets (which will be practically nothing).

~~~
MattCamHam
Especially nothing for shareholders, since creditors get paid first.

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noipv4
Why did they choose OTC? Usually the shady penny-stocks or the Qs are traded
OTC.

~~~
nandemo
It's in the article. Lower regulatory hurdles compared to launching a proper
exchange-traded fund.

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tuna-piano
I wonder if market dynamics will force an artificial increase in the value of
bitcoin. If the bitcoin market is operating properly, a bitcoin ETF existing
should not increase the price of bitcoins. If it does, can we assume bitcoins
are overvalued?

In the housing boom people built houses and sold mortgages because they were a
good investment, not because people actually needed the houses. If the bitcoin
ETFs make speculative buying of bitcoins so easy for the average joe, we could
see a huge bitcoin price increase, followed by a crash a while later.

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toolz
Can anyone explain to me what the purpose of owning bitcoin stock is as
opposed to just owning bitcoin?

~~~
breadtk
It's the same reason why you don't buy and own steel, but rather you buy stock
in a mining conglomerate or a refinery. Owning a piece of a business in the
long-run may be more less volatile than the commodity itself. Though the two
can't necessarily be separated in terms of future outlook.

~~~
IkmoIkmo
As the fund tracks the price of bitcoin, this isn't a reason that applies in
this case. It's not a fund that tracks the value of Coinbase and Bitpay etc,
there are barely any public bitcoin companies anyway (maybe 1 or 2 as far as I
know, and they're not big players either.)

It's interesting because it interfaces with existing investment
infrastructure, culture, protocols etc. Trying to buy, store securely and
apply proper accounting rules to a not fully defined (by law) digital currency
concept, is not something investment firms want to bother with unless they
specialize in bitcoin. (like SecondMarket).

Instead, they'd just want to pull up a vetted fund on an exchange they're
familiar with, on their bloomberg terminal they're familiar with, purchase a
financial product whose structure they're familiar with, and apply the same
accounting standards as they would normally, and deal with the normal legal
ramifications of shares of ETFs.

This essentially means anyone can now get exposure to the price of bitcoin
without any extra understanding or investment necessary on the technical bits
of storage, accounting etc.

And that could be very interesting. Bitcoin makes for a great opportunity. It
can go to 0, or it can do 100x or even 500x value growth in the next 20 years.
And I'd say the odds of the latter are greater than 10%. That's why it's not
such a crazy idea for billion dollar funds to put $10m into bitcoin, as they'd
have a chance of making billions at the cost of losing millions. I wouldn't be
surprised if, now that it's easy for any pension fund, hedge fund, family fund
or university endowment fund to buy in, that we'll see quite a few of them do.

At least, that's always been the story. "If pension funds dedicated only 0.1%
to bitcoin, the price would go up one or two orders of magnitude this decade"
or something to that effect.

We'll see how this one plays out.

~~~
nandemo
Your comment is very informative but I don't think most of the above applies
to this BIT fund, since it's just an over-the-counter listing. It does apply
to the upcoming Winklevoss fund, which will be an ETF.

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readme
Will be traded on OTC markets? I believe OTC is where most penny stocks are
bought and sold, right?

So this should be a pretty good gambling opportunity. Wish I knew the exact
date this thing launches.

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artursapek
Big news. Sent the price for a big jolt!
[https://cryptowat.ch/bitfinex/btcusd/30min](https://cryptowat.ch/bitfinex/btcusd/30min)

~~~
bdcravens
It jumped up about $15, the same as it jumped when Coinbase exchange rumors
came out, and well short of the PayPal partnership announcement. (about $50)
In both of those cases, the price retreated to previous levels within a day.

~~~
artursapek
That's why trading Bitcoin is fun

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em70
Hello, index arbitrage!

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placeybordeaux
Well this is not good for price stability, has to happen though.

~~~
tdaltonc
Why not? More volume = more stable.

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kolev
Thanks for these temporary bumps so that I can finally sell my overpriced
bitcoins left at a minimal loss, close this page, and move forward to some
more meaningful investment strategies.

~~~
kolev
Why downvote? I represent a big share of the holders who didn't capitulate
yet.

