Buy bitcoins on Nasdaq

[WaverleyStreet]

...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.

I agree. Once BTC gets more mainstream to these big money investors.. $260 will seem like 'back in the days when it was only $260'

$2600 is more like what we will see once the institutional investors get in.

No! That's not how we do it. $260,000 per coin!

ya man ~ this $ 250,000 [MAX KEYSER SOZA] figure keeps some folks clicking on BTC faucets!!LOLl;)


>>EASY $$$!!!

[bigdude]

regardless of who is doing this ... the point is someone IS.

any news is good news for BTC

[Rampion]

does anyone know how long it will take the SEC to approve this and have them traded publicly? Is this done fast or does it take weeks/months?

weeks/month would be "fast".

[semaforo]

     If the etf makes any money others will quickly follow suit leading to a ridiculous rally.

[btceic]

This story is spreading, now on bloomberg tv headlines.

[broken_pixel]

Easy on that screenshot buddy! Can you maybe make it a bit larger? Its hard to see.

[btceic]

Easy on that screenshot buddy! Can you maybe make it a bit larger? Its hard to see.

no choice, uploaded from my iphone

[Foxpup]

     If the etf makes any money others will quickly follow suit leading to a ridiculous rally.

I'm not sure you understand how a trust works. The trust doesn't own bitcoins, it merely holds them. The shareholders own the bitcoins, even though they never actually hold them. All shares are fully backed by actual bitcoins held by the trust, and the trust can't issue shares if it doesn't have the bitcoins to back them. This whole thing is merely a way for the trust to "sell" its massive collection of bitcoins without any bitcoins actually trading hands, thereby avoiding a massive price crash (at least, that's the theory). Aside from the lack of a price crash, the trust doesn't make any money that it wouldn't make by simply selling its bitcoins the conventional way (and anyone looking to sell less than 10 million dollars or so worth of bitcoins should do it the conventional way, rather than going to the ridiculous trouble of creating another ETF).

[DrGregMulhauser]

...This whole thing is merely a way for the trust to "sell" its massive collection of bitcoins without any bitcoins actually trading hands...the trust doesn't make any money that it wouldn't make by simply selling its bitcoins the conventional way...

Funds of this type are designed to generate revenue via management fees. The sponsor's fees and trust expenses are covered by the Bitcoins held in the trust itself. Thus the gradually decreasing net asset value (understood in BTC per share) cited in the filing, pp. 40-41; the same gradual process of NAV erosion also occurs in other commodity ETFs such as precious metal funds, etc.

[QuestionAuthority]

...This whole thing is merely a way for the trust to "sell" its massive collection of bitcoins without any bitcoins actually trading hands...the trust doesn't make any money that it wouldn't make by simply selling its bitcoins the conventional way...

Funds of this type are designed to generate revenue via management fees. The sponsor's fees and trust expenses are covered by the Bitcoins held in the trust itself. Thus the gradually decreasing net asset value (understood in BTC per share) cited in the filing, pp. 40-41; the same gradual process of NAV erosion also occurs in other commodity ETFs such as precious metal funds, etc.

So do you feel this is just a way for them to recover their money in a highly illiquid market? They could never sell enough Bitcoins to recover their investment so they create a fund?

[chufchuf]

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.

where does it say that they have to keep buying BTC in the open market?

[DeathAndTaxes]

...This whole thing is merely a way for the trust to "sell" its massive collection of bitcoins without any bitcoins actually trading hands...the trust doesn't make any money that it wouldn't make by simply selling its bitcoins the conventional way...

Funds of this type are designed to generate revenue via management fees. The sponsor's fees and trust expenses are covered by the Bitcoins held in the trust itself. Thus the gradually decreasing net asset value (understood in BTC per share) cited in the filing, pp. 40-41; the same gradual process of NAV erosion also occurs in other commodity ETFs such as precious metal funds, etc.

So do you feel this is just a way for them to recover their money in a highly illiquid market? They could never sell enough Bitcoins to recover their investment so they create a fund?

What are you talking about? ETFs make money from management fees.  All ETFs make money from management fees.  It is the entire profit motive for running an ETF.  GLD for example has $38 billion and collects 0.4% in fees on that annually.  $38B * 0.4% = $150M annually.  Obviously this ETF is smaller but all ETF start small and has the potential to be much larger. 

[DeathAndTaxes]

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.

where does it say that they have to keep buying BTC in the open market?

They don't have to but institutional investors will exploit it for arbitrage.  Say demand exceeds supply and while 1 share = 0.2 BTC the price rises above NAV and is trading at say 0.22 BTC per share (in USD equivelent).  An institutional investor would short 50,000 shares and deliver 10,000 BTC to the trustee.  The trustee would then add the 10,000 BTC to the trust, issue 50,000 new shares.  The investor then uses the new shares to cover the short and pockets 0.02 BTC per share * 50,000 = 100 BTC in a 0 risk arbitrage.

IT doesn't matter who buys the underlying asset, someone will if demand for the ETF shares exceeds supply.  This isn't a new concept.  For example physical bullion trusts have existed for over a decade.  The best known one is GLD.  The trust proposed by the  W twins is functionally identical to GLD except the underlying asset is Bitcoins not Gold Bullion.

[QuestionAuthority]

...This whole thing is merely a way for the trust to "sell" its massive collection of bitcoins without any bitcoins actually trading hands...the trust doesn't make any money that it wouldn't make by simply selling its bitcoins the conventional way...

Funds of this type are designed to generate revenue via management fees. The sponsor's fees and trust expenses are covered by the Bitcoins held in the trust itself. Thus the gradually decreasing net asset value (understood in BTC per share) cited in the filing, pp. 40-41; the same gradual process of NAV erosion also occurs in other commodity ETFs such as precious metal funds, etc.

So do you feel this is just a way for them to recover their money in a highly illiquid market? They could never sell enough Bitcoins to recover their investment so they create a fund?

What are you talking about? ETFs make money from management fees.  All ETFs make money from management fees.  It is the entire profit motive for running an ETF.  GLD for example has $38 billion and collects 0.4% in fees on that annually.  $38B * 0.4% = $150M annually.  Obviously this ETF is smaller but all ETF start small and has the potential to be much larger.  

That's what I'm asking DnT. First, let's pretend that not everyone that shows up at this forum is a Wall Street investor. Second, let's pretend that occasionally people ask questions here not because their trolling but to gain knowledge from people that can explain what's going on.

Now, let' s start again and I will try to be more accurate in the asking. Are the Winklevoss twins attempting to recover their money from creating a fund because if they sell a bunch of Bitcoins at a time they will crash the price or are they doing this because they really love Bitcoin and ultimately want it to succeed? Is this like a hedge against their investment?

[Damnsammit]

From numbers, they actually own 200,000 bitcoins, seems that all their coins went into this IPO

This article posted today, said that their initial investment was $11M but it is worth around "Oops, that’s about $8-million now." today.

So, at $8,000,000 by today's price (~$86 at time of article) we are looking at under 100,000 BTC.

Still a buttload of coins!

Edit:  http://www.theglobeandmail.com/report-on-business/top-business-stories/introducing-winklevoss-bitcoin-shares-if-you-cant-have-facebook/article12915664/

(Article I referenced)

[DeathAndTaxes]

Now, let' s start again and I will try to be more accurate in the asking. Are the Winklevoss twins attempting to recover their money from creating a fund because if they sell a bunch of Bitcoins at a time they will crash the price or are they doing this because they really love Bitcoin and ultimately want it to succeed? Is this like a hedge against their investment?

No offense intended I honestly didn't know what you were asking but it is a good question and one other people have asked in a variety of ways.

My guess (and this is just my guess) they are doing this to profit both directly from the fees generated by the ETF and indirectly by the benefit to Bitcoin in general.  If they simply wanted to unload 100K BTC they could do so much easier, cheaper, and quicker then then the huge regulatory expense of starting an ETF.  

The first reason is that regulators may simply not approve this ETF or they may require lots of back and forth and modification of the proposed financial insturment.   Second is that even once approved they need to find an exchange to list it and it is possible no exchange will or their first choice will decline (after some wasted months of underwritting) and they need to shop it to a second or third or fourth exchange.

Lastly 100K BTC is really not that much.  This is a very slow process.  Remember we are moving at the speed of government mixed with risk averse accountants with the added bonus of lawyers dealing with something totally new (and thus hard to provide firm legal guidance).  Honestly I would say 3-4 months is naively optimistic.  There is a real possibility it will take much longer given the novel first of its kind nature however lets say it takes them four months though.  That is 120 days.  If they wanted to unload that on MtGox that would only require selling 833 BTC a day for the next four months.

Once again simply my opinion but I see the motivation for the ETF as:
a) if Bitcoin becomes very big someday and the ETF is popular they will have first mover status.  They will be the GLD of Bitcoins and that is a license to print money.  Hell I will use it and I own physical Bitcoins.  Why?  Because I can use tax exempt money in my IRA or 401K to buy Bitcoins without taking a penalty to withdraw it from the IRA/401K.

b) it provides liquidity/access on a scale that MtGox simply can't handle.  A VC fund would be far more comfortable dealing in "paper Bitcoins" on the NASDAQ then wiring $10M to the Magic The Gathering Online exchange in Japan.

c) it is potentially bullish for Bitcoin in general and Bitcoin related enterprises.  The whole a rising tide lifts all ships.  They can profit indirectly in addition to the direct profits.

d) for better or worse their names are now tied to Bitcoin.  Don't underestimate egos.  If this thing hits big people on Wallstreet will remember who launched it, who bought coins when most people hadn't heard of Bitcoin, who "got it right" and laughed all the way to the wallet.dat.  If Bitcoin has a great year in 2014 (or 2015, or 2029) say up 500% the fund would post gains up 500%.  Imagine the news story and inverview on CNBC about the guys who brought you the best performing ETF on a year to date and 5 year basis.

Once again I caution this is just my opinion but it seems illogical they would go through all this simply to unload some coins. 

[Damnsammit]

d) for better or worse their names are now tied to Bitcoin.  Don't underestimate egos.  If this thing hits big people on Wallstreet will remember who launched it, who bought coins when most people hadn't heard of Bitcoin, who "got it right" and laughed all the way to the wallet.dat.

Once again I caution this is just my speculation but it seems illogical they would go through all this simply to unload some coins.

That's an interesting side of it I never thought of... what a great way for them to be seen as the "guys who mainstreamed Bitcoin" and not "the crybabies who sued Facebook"

[DeathAndTaxes]

d) for better or worse their names are now tied to Bitcoin.  Don't underestimate egos.  If this thing hits big people on Wallstreet will remember who launched it, who bought coins when most people hadn't heard of Bitcoin, who "got it right" and laughed all the way to the wallet.dat.

Once again I caution this is just my speculation but it seems illogical they would go through all this simply to unload some coins.

That's an interesting side of it I never thought of... what a great way for them to be seen as the "guys who mainstreamed Bitcoin" and not "the crybabies who sued Facebook"

Yeah I think it is a lesser consideration but it is important to remember people are people not wealth accumulating robots.  Motivations often have a very human element to it.

[Damnsammit]

d) for better or worse their names are now tied to Bitcoin.  Don't underestimate egos.  If this thing hits big people on Wallstreet will remember who launched it, who bought coins when most people hadn't heard of Bitcoin, who "got it right" and laughed all the way to the wallet.dat.

Once again I caution this is just my speculation but it seems illogical they would go through all this simply to unload some coins.

That's an interesting side of it I never thought of... what a great way for them to be seen as the "guys who mainstreamed Bitcoin" and not "the crybabies who sued Facebook"

Yeah I think it is a lesser consideration but it is important to remember people are people not wealth accumulating robots.  Motivations often have a very human element to it.

As an NYSE trader, I would definitely be buying some shares of the ETF.  For some reason I just don't think it will get approved.

Hopefully I am wrong!

[QuestionAuthority]

Now, let' s start again and I will try to be more accurate in the asking. Are the Winklevoss twins attempting to recover their money from creating a fund because if they sell a bunch of Bitcoins at a time they will crash the price or are they doing this because they really love Bitcoin and ultimately want it to succeed? Is this like a hedge against their investment?

No offense intended I honestly didn't know what you were asking but it is a good question and one other people have asked in a variety of ways.

My guess (and this is just my guess) they are doing this to profit.  If they simply wanted to unload 100K BTC they could do so much easier, cheaper, and quicker then then the huge regulatory expense of starting an ETF.   First is that regulators may simply not approve this ETF or they may require lots of back and forth and modification of the proposed financial insturment.   Second they need to find an exchange to list it and it is possible no exchange will or their first choice will decline (after some months of underwritting) and they need to shop it to a second or third or fourth exchange.

Lastly 100K BTC is really not that much.  This is a very slow process.  We are talking 3-4 months at least and possibly much longer given the novel first of its kind nature.  Lets say it takes them four months though.  That is 120 days.  If they wanted to unload that on MtGox that would only require selling 833 BTC a day for the next four months.

Once again simply my opinion but I see the motivation as:
a) if Bitcoin becomes very big someday and the ETF is popular they will have first mover status.  They will be the GLD of Bitcoins and that is a license to print money.

b) it provides liquidity on a scale that MtGox simply can't handle.  A VC fund would be far more comfortable dealing in "paper Bitcoins" on the NASDAQ then wiring $10M to the Magic The Gathering Online exchange in Japan.

c) it is potentially bullish for Bitcoin in general and Bitcoin related enterprises.  The whole a rising tide lifts all ships.  They can profit indirectly in addition to the direct profits.

d) for better or worse their names are now tied to Bitcoin.  Don't underestimate egos.  If this thing hits big people on Wallstreet will remember who launched it, who bought coins when most people hadn't heard of Bitcoin, who "got it right" and laughed all the way to the wallet.dat.

Once again I caution this is just my speculation but it seems illogical they would go through all this simply to unload some coins.

Thank you that's a great explanation and I can now see that they are gambling their fate and rep on Bitcoin but if it pays off it pays off big. I never thought of it that way.

No offense taken. I trade Bitcoins at MtGox and BTCe and have made some money doing it but have no problem admitting that I'm a two year old Bitcoin noob and I've been very lucky so far. But I'm learning!

Can you answer my question from earlier in this thread. You probably missed it. Thanks.