Bitcoin Forum

Here’s one of the more interesting S-1 filings of the year.

In a filing with the SEC 5304.OK +1.25%, the Winklevoss Bitcoin Trust, headed by Cameron and Tyler Winklevoss, said it will sell around $20 million worth of shares, which will each represent a fraction of a single bitcoin, the digital currency the twins have invested in.

Bitcoin has become the best known virtual currencies since its release in 2009. The currency was created by a person or group known as Satoshi Nakamoto (whose true identity is unknown) and is primarily used by online merchants, though some mostly smaller brick-and-mortar retailers have recently begun to accept bitcoins for payment. People can “mine” bitcoins using complex algorithms that require intensive computing power, though they can also buy the currency on exchanges and through services like BitInstant and Coinbase. The total number of bitcoins that can be created is capped at 21 million, and currently more than 11 million have been mined, according to various websites. Bitcoin has attracted attention from companies like Western Union, MoneyGram and eBay’s Paypal, which have said they are evaluating whether it makes sense to allow their customers to use the currency on their platforms.

And by the way, creating these paper markets is how they control the price of alternative commodity currencies like gold. Nobody bothers actually buying or selling the actual metal when they can just go to the paper market... which puts the paper market in control of the underlying commodity! And it's not like it's difficult to naked short a paper market to drive prices anywhere you want.

If I'm reading the filing correctly, this is essentially an ETF with BTC as a base asset. So, if this gets approved and listed, everyone will be able to buy bitcoins in any amount through their favorite broker. Institutional investors into BTC, anyone?

Trust investors will be also able to convert this instrument into underlying BTC in 10K increments. Again, this gives a clean and easy access to BTC for institutional investors.

And for every additional 50K units the trust issues, it has to buy 10K BTC on the open market. Once this works, resulting demand for BTC will be absolutely unimaginable for anyone involved in BTC trading right now. 260 usd/btc bubble top? We haven't seen nothing yet, mark my words.

what a pipedream

What exactly? It may be challenging to get the filing approved, but far from impossible. Once it is exchange-traded, this instrument will effectively become a primary market for BTC due to superior liquidity and current "BTC exchanges" will just take its price and follow it.

Doesn't this open up all of the existing trading tools and options without any new software or websites to trade on to every single trader out there?

If this is approved, anyone cares to predict when all this will come to market?

They'll want to as fast as they can without compromising their investment

It needs to be approved by regulators and then accepted by exchange underwriters.  The process moves at the speed of government with a healthy dose of beucracy and side order of legal teams.  We are talking a timeframe in months if not the better part of a year.  There isn't much they can do to make it go faster. 

And after all that people will not be buying an actual bitcoin (or possessing private keys) just a promise from Winklevi that they hold bitcoin in equal amounts somewhere to back their deposits ... what are the rules on taking delivery of btc? They probably couldn't do that without becoming a "money transmitter"

Watching this. Looks interesting.

Smoothie, wanna start a Litecoin ETP now?  ;D

The interesting thing is the filing keeps referring to their holdings as "math-based assets."  I'm wondering if this leaves room for alt currencies.

Actually, the filing never refers to their holdings as just "math-based assets", it specifically refers to their holdings as "Bitcoins", defined as "a type of a Digital Math-Based Asset". The filing does refer to altcoins as examples of alternative Digital Math-Based Assets and Bitcoin's competion, though the Trust does not deal in anything other than bitcoins specifically.

I'd like to know their model for trading the underlying asset. Where will the balance be held and who by? The Winkelvii?

I hope they do it right. The last thing we need is a crash caused by a bucket shop operation.

Exactly.  Even if there was demand for a ETF for an alternative CC it wouldn't make sense for a single ETF and single trust to handle both.  I mean there are Physical Gold ETFs and Physical Silver ETFs but you don't see mixed Silver & Gold ETFs.  Ticker symbols are cheap and there are thousands of ETFs.  If the first one gets approved and there is demand no reason you couldn't have a whole family of CC based ETFs.

the winkelvii aren't trading bitcoin here, they are just offering shares in their company that holds bitcoin.

If they have 1% of all bitcoins, that's 100,000 BTC which is approximately 100M USD - so this is the valuation of their 'company'.  They are offering stock in approximately 20M USD and so you will own part of the company whose valuation will float on the price of bitcoin.  They will keep 80% of the company and sell stock up to 20%.

There is nothing new in what they are doing here - just offering stock in a company.  All the winkelvii are doing is spreading their risk - they aren't selling bitcoins or trading bitcoins from fiat.  This doesn't seem that much of a big deal to me other than the media attention this will garner.

Will

Favorite snarky tweets in my feed...

"Bitcoin ETF" is an anagram of "Fiction Bet" which seems pretty apt.. https://twitter.com/LorcanRK/status/351840221773578241
Bitcoin ETF ticker ideas: $DCHE $LOSS $ZERO $SCAM (via @jamesvonsimson - his idea: $SCKR) https://twitter.com/finansakrobat/status/351837836724551682
Well, at least the Winkelvii Bitcoin trust is consistent with their practice of being parasitic on new innovation… https://twitter.com/EpicureanDeal/status/351834917593817088
The Winkelvoss Bitcoin ETF is the first of many wonderful deals brought to you by the JOBS Act (Just Open Bucket Shops). https://twitter.com/ReformedBroker/status/351830441646489601
Imagine the call "if you got burned on the Facebook IPO, why don't you take the Winklevoss Bitcoin Trust for a spin?" https://twitter.com/BarbarianCap/status/351825104147189760

I never understood what's the advantage of buying shares in a trust over buying the underlying commodity itself.

Well i'm just a private individual not a VC though.

I'm also just a private individual. That's why I don't have a massive, impenetrable vault in my basement for storing my gold, instead I just buy gold ETFs. Similarly, although I have the technical experience to safely store my bitcoins, most people do not. These people will certainly not buy actual bitcoins, but they may be willing to invest in a bitcoin ETF where they don't have to worry about that. That's the advantage.

This story is spreading, now on bloomberg tv headlines.


https://i.imgur.com/77AK9ts.jpg

No, that's not what they're doing at all. It is not a company and in no way resembles a company. It is a trust that holds bitcoins and issues shares that represent a claim of ownership on those bitcoins and can be redeemed for those bitcoins by any trustor at any time

There is a poll today on yahoo finance about this most of the choices as well as the votes are negative tho.  >:(

link? found it

link?

"Beware of Bitcoin ETF" they say in that subtle way they have.

http://finance.yahoo.com/blogs/breakout/winklevosses-trying-bring-bitcoin-mainstream-investors-171834667.html

+100,000BTC !
That is the best point in the protection of BTC from some of stupid government decisions which I have ever heard!

Exactly.  Even if there was demand for a ETF for an alternative CC it wouldn't make sense for a single ETF and single trust to handle both.  I mean there are Physical Gold ETFs and Physical Silver ETFs but you don't see mixed Silver & Gold ETFs.  Ticker symbols are cheap and there are thousands of ETFs.  If the first one gets approved and there is demand no reason you couldn't have a whole family of CC based ETFs.

What will be the smallest number of shares one can buy?

1? Or 100?  More?

I never understood what's the advantage of buying shares in a trust over buying the underlying commodity itself.

Well i'm just a private individual not a VC though.