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[Jozzaboy]

How do you know that they are not issuing more shares than Bitcoin they hold?

its an etf for goodness sake, they are legally obligated to obtain the bitcoins for the shares they issue else they can't issue the shares.

Its not a weird derivative, its an ETF. ETFs are normal and perfectly OK, otherwise you wouldn't even be able to trade things like volatility and futures (which actually ARE weird derivatives) like a stock.

I don't understand why people get so mad about an ETF. When you (or at least, most people) buy a computer, they don't individually pick out each component they need then build the computer. They buy the computer which comes with all the components in a easy bundle. An ETF is the exact same thing - a bundle that allows the seller to make a bit more money due to the convenience factor - except for securities not physical objects. How is that a scam?

Gee, people here are always going on about the free market except when an even mildly exotic financial instrument gets thrown into the situation they completely freak. The funny part is everybody's perfectly OK with CFDs, which actually are 'fake' or 'paper' bitcoins, but a ETF? FREAK OUT TIME.

+1

I like this guy. No bullshit approach to breaking apart FUD.

[Melbustus]

And how do you get bitcoins once you have your ETF shares?

You don't. This is a product for people who want exposure to something that serves a gold-like (Gold 2.0, IMO) store of value purpose. Yes, it's only "exposure" because people owning these ETF shares will not actually possess the underlying bitcoins. So they'll get the price-action, but be subject to the same counter-party risk that nearly everything in the fiat economy is exposed to.

And that's fine. This product puts further options on the table for people. They can get the hard-asset exposure without having to deal with what many consider "sketchy" small operators (bitcoin exchanges), and they can get in and out of the position as easily as buying/selling a stock, which they're already very familiar with.

Personally, I'll just hold my own bitcoin and trade it directly (if I ever decide to sell any), but I see this ETF product as a way to increase bitcoin awareness and exposure. If it also increases market-cap, that's a big net benefit too; not just to the net-worth of people holding bitcoin, but to bitcoin's utility as a currency too.

Bootstrapping the world's first global electronic currency takes many steps, of which these sorts of "bridge" products are one.

[byronbb]

When the underlying asset can be manipulated it's going to be difficult for SEC to approve this.

[David Rabahy]

I truly fail to see why this is absolutely anything but good news.  I'm been trying myself to locate a custodian to facilitate bringing retirement funds into Bitcoin.  This is it; finally.  My only complaint is I didn't get it done first.

Bridging the old pre-Bitcoin world into the age of Bitcoin will take many such arrangements.  Eventually these bridges will look dumb but they are a must for now.

[Frozenlock]

And how do you get bitcoins once you have your ETF shares?

You don't. This is a product for people who want exposure to something that serves a gold-like (Gold 2.0, IMO) store of value purpose. Yes, it's only "exposure" because people owning these ETF shares will not actually possess the underlying bitcoins. So they'll get the price-action, but be subject to the same counter-party risk that nearly everything in the fiat economy is exposed to.

Ok, that's what I thought.

I was confused by those saying "but it's difficult to get BTCs, with this, it will be easy!"

[byronbb]

The moderately competent will always just buy their own coins. Unlike gold, bitcoin incurs no premium charge nor cost of storage or delivery so unless you are a knuckle dragger the only function this etf might serve would be to go short.

[Swapster]

I for one think this is a move forward for Bitcoin. There will be more interest in Bitcoin from larger players, which means more investment in Bitcoin. As well, it will be good to have an agreed upon price of Bitcoin such that MtGox is not the only determining exchange.

[Swapster]

The moderately competent will always just buy their own coins. Unlike gold, bitcoin incurs no premium charge nor cost of storage or delivery so unless you are a knuckle dragger the only function this etf might serve would be to go short.

Indeed, you may want to continue buying your coins as you always have, but you can't disregard the advantage of being able to invest in Bitcoin as well as ANY security on just about any exchange in the world. This move pushes Bitcoin into a mainstream buying audience.

[DeathAndTaxes]

And how do you get bitcoins once you have your ETF shares?

You don't. This is a product for people who want exposure to something that serves a gold-like (Gold 2.0, IMO) store of value purpose. Yes, it's only "exposure" because people owning these ETF shares will not actually possess the underlying bitcoins. So they'll get the price-action, but be subject to the same counter-party risk that nearly everything in the fiat economy is exposed to.

And that's fine. This product puts further options on the table for people. They can get the hard-asset exposure without having to deal with what many consider "sketchy" small operators (bitcoin exchanges), and they can get in and out of the position as easily as buying/selling a stock, which they're already very familiar with.

Personally, I'll just hold my own bitcoin and trade it directly (if I ever decide to sell any), but I see this ETF product as a way to increase bitcoin awareness and exposure. If it also increases market-cap, that's a big net benefit too; not just to the net-worth of people holding bitcoin, but to bitcoin's utility as a currency too.

Bootstrapping the world's first global electronic currency takes many steps, of which these sorts of "bridge" products are one.

Well technically redemption is possible but only in baskets of 50,000 shares (10,000 BTC).  It is in the  S-1 under the section creation and redemption of shares.

[Kazu]

The moderately competent will always just buy their own coins. Unlike gold, bitcoin incurs no premium charge nor cost of storage or delivery so unless you are a knuckle dragger the only function this etf might serve would be to go short.

You have no idea how many people don't fit into our definition of 'moderately competent' when it comes to buying bitcoins. ALL the CNBC people etc, will all be using the ETF as their ticker symbol when they report on the price of Bitcoin. Most will see that and use that just like any other ETF. Do you realize how many people buy things like the TLH when you could easily outperform it with a bit of work?

[bitfair]

And how do you get bitcoins once you have your ETF shares?

You don't. This is a product for people who want exposure to something that serves a gold-like (Gold 2.0, IMO) store of value purpose. Yes, it's only "exposure" because people owning these ETF shares will not actually possess the underlying bitcoins. So they'll get the price-action, but be subject to the same counter-party risk that nearly everything in the fiat economy is exposed to.

And that's fine. This product puts further options on the table for people. They can get the hard-asset exposure without having to deal with what many consider "sketchy" small operators (bitcoin exchanges), and they can get in and out of the position as easily as buying/selling a stock, which they're already very familiar with.

Personally, I'll just hold my own bitcoin and trade it directly (if I ever decide to sell any), but I see this ETF product as a way to increase bitcoin awareness and exposure. If it also increases market-cap, that's a big net benefit too; not just to the net-worth of people holding bitcoin, but to bitcoin's utility as a currency too.

Bootstrapping the world's first global electronic currency takes many steps, of which these sorts of "bridge" products are one.

Well technically redemption is possible but only in baskets of 50,000 shares (10,000 BTC).  It is in the  S-1 under the section creation and redemption of shares.

To use terminology that seems to have stuck in Bitcoinia: it's a Bitcoin pass-thru for selling on legacy stock/commodities exchanges!

[Coinseeker]

Seems like little more than a clever way for them to dump their massive holdings.  The question I'd be asking is, why are they exiting Bitcoin?  Maybe they see the writing on the wall?

[Miz4r]

Seems like little more than a clever way for them to dump their massive holdings.  The question I'd be asking is, why are they exiting Bitcoin?  Maybe they see the writing on the wall?

They're not exiting Bitcoin. Most likely they will be buying back their bitcoins on MtGox at a profit as long as the price stays below $100. It's a clever way of keeping the price from dropping further and protecting their investment.

[Quantum_Negatum]

Seems like little more than a clever way for them to dump their massive holdings.  The question I'd be asking is, why are they exiting Bitcoin?  Maybe they see the writing on the wall?

They're not exiting Bitcoin. Most likely they will be buying back their bitcoins on MtGox at a profit as long as the price stays below $100. It's a clever way of keeping the price from dropping further and protecting their investment.

How long can they sustain that?

[btceic]

Seems like little more than a clever way for them to dump their massive holdings.  The question I'd be asking is, why are they exiting Bitcoin?  Maybe they see the writing on the wall?

Your thinking very short term here, the people that get involved with things like this (i.e. the winkelvii) aren't looking to exit a possible 100 billion or trillion usd venture for a mere 1000% ROI.

bitcoin is the first p2p digital currency (that I know of) that has gained this much traction and attention capable of possibly disrupting the worlds financial industry and breaking the monopoly of the fed and other world banks.

People like the winklevii don't lose, even when they lose they win, i.e. the facebook lawsuit.

[telemaco]

I'm interested to see how they will handle expansion if institutional money moves in and buys out all $20 mill straight away. What is their profit model from all of this?

If the demand drives the price higher than the NAV then the sponsor will deposit an additional basket of 10,000 BTC with the trustee and trustee will issue 50,000 new shares.   The trust has now grown by 10,000 BTC and has 50,000 more shares outstanding so each share still represents 0.2 BTC.

Before:
200,000 BTC in trust
1,000,000 shares outstanding
NAV per share 0.2 BTC (200,000 BTC / 1,00,000 shares)

After
200,000 BTC in trust + 10,000 BTC deposited = 210,000 BTC in trust
1,000,000 shares outstanding + 50,000 newly issued shares = 1,050,000 shares outstanding
NAV per share 0.2 BTC (210,000 shares / 1,050,000 shares)


Those shares can then be sold on the market at the current price (higher than NAV) increasing supply, lowering excess demand and moving the price towards the NAV.Note there is an economic incentive here as the newly issued shares only cost 0.2 BTC each but can be sold for more than 0.2 BTC how much more depends on how much of a demand premium is being offered by buyers.

Of course institutional investors can do the same thing so if the sponsor doesn't act then someone else will and scoop up that risk free arbitrage. The process can also be completed by selling 50,000 shares short (sold at price > NAV), deliver the underlying asset to the trustee, collect 50,000 newly issued shares and cover the short with newly issued shares (buy @ NAV).  The institutional investors picks up the difference as profit.

Strange question coming. I don't know too much about ETFs but at least for Gold and silver there has been some manipulation. Can they do the same with BTC, and thanks to this instrument have JPMorgan short to hell all the Bitcoin economy?

If i get 20000 BTC on shares from this ETF. Can I use that as deposit for my own ETF? I mean, can one ETF be based on the underlying of another ETF, making in that way a BTC to exist two times (in paper) but reflect that on the market?

[btceic]

Strange question coming. I don't know too much about ETFs but at least for Gold and silver there has been some manipulation. Can they do the same with BTC, and thanks to this instrument have JPMorgan short to hell all the Bitcoin economy?

If i get 20000 BTC on shares from this ETF. Can I use that as deposit for my own ETF? I mean, can one ETF be based on the underlying of another ETF, making in that way a BTC to exist two times (in paper) but reflect that on the market?

There exists funds of funds, that is funds that their underlying assets are funds instead of single stocks or gold or silver etc.

But lets not get ahead of ourselves here, lets get this first one approved, listed, ipo'ed and trading before we start talking about funds of funds based on btc.

[telemaco]

Strange question coming. I don't know too much about ETFs but at least for Gold and silver there has been some manipulation. Can they do the same with BTC, and thanks to this instrument have JPMorgan short to hell all the Bitcoin economy?

If i get 20000 BTC on shares from this ETF. Can I use that as deposit for my own ETF? I mean, can one ETF be based on the underlying of another ETF, making in that way a BTC to exist two times (in paper) but reflect that on the market?

There exists funds of funds, that is funds that their underlying assets are funds instead of single stocks or gold or silver etc.

But lets not get ahead of ourselves here, lets get this first one approved, listed, ipo'ed and trading before we start talking about funds of funds based on btc.

I don't have any intention on creating an etf of an etf. I was asking if this will be a way to remove the 21 million BTC limit effectively.

There are some problems with ETFs at least with gold with some Gold chambers (underlying for ETFs) are half empty and should be full. Inventories of gold not being done for decades and even countries that don't believe other countries storing their underlying. Heck even Texas does not have any confidence on the Federal Reserve and has requested their gold back.
There are also two - three times accountancy for ETFs/ETNs where the same physical gold is sold several and several times.

Is this the end of the 21 million BTC?

Who will guarantee that the private keys or the underlying is still there?

[btceic]

Strange question coming. I don't know too much about ETFs but at least for Gold and silver there has been some manipulation. Can they do the same with BTC, and thanks to this instrument have JPMorgan short to hell all the Bitcoin economy?

If i get 20000 BTC on shares from this ETF. Can I use that as deposit for my own ETF? I mean, can one ETF be based on the underlying of another ETF, making in that way a BTC to exist two times (in paper) but reflect that on the market?

There exists funds of funds, that is funds that their underlying assets are funds instead of single stocks or gold or silver etc.

But lets not get ahead of ourselves here, lets get this first one approved, listed, ipo'ed and trading before we start talking about funds of funds based on btc.

I don't have any intention on creating an etf of an etf. I was asking if this will be away to remove the 21 million BTC limit effectively.

There are some problems with ETFs at least with gold with some Gold chambers half empty that should be full. And two - three times accountancy where the same physical gold is sold several and several times.

Is this the end of the 21 million BTC?

I misunderstood your question then, regarding the end of 21 million btc, keep in mind tgat btc has 8 decimal places, we have more than enough btc for far far into the future.

[Frozenlock]

I think telemaco is asking if the ETF could artificially inflate the apparent number of bitcoins.