Winklevoss Bitcoin Trust {COIN} on Nasdaq OMX [Video]

[odolvlobo]

In concept, great.  In practice, a disaster.  What happens when someone hacks the Winklevoss and steals all the BTC?  Are they going to guarantee the principal?

2) the baskets are 100% cold stored. hackers wont get any coins. privkeys are locked in secured and insured storage boxes physically away from the internet. only public keys will be shown on the internet.

Eventually people will want to move in and out of the ETF via exchanging bitcoin for shares which will eventually force the ETF to maintain somewhat of a hot wallet.

That is not how it works. Only "Authorized Participants" can redeem their shares for the bitcoins, and then it has to be done in basket-size amounts. People that want to move in and ouf the ETF simply buy and sell shares on the exchange.

[InwardContour]

In concept, great.  In practice, a disaster.  What happens when someone hacks the Winklevoss and steals all the BTC?  Are they going to guarantee the principal?

2) the baskets are 100% cold stored. hackers wont get any coins. privkeys are locked in secured and insured storage boxes physically away from the internet. only public keys will be shown on the internet.

Eventually people will want to move in and out of the ETF via exchanging bitcoin for shares which will eventually force the ETF to maintain somewhat of a hot wallet.

That is not how it works. Only "Authorized Participants" can redeem their shares for the bitcoins, and then it has to be done in basket-size amounts. People that want to move in and ouf the ETF simply buy and sell shares on the exhange.

The basket size is only implemented to keep costs down. If a large enough of a holder of either bitcoin or "COIN" wanted to trade one for the other and had a "basket size" holding then they could either work is an authorized participant or work to become one.

[mkc]

Will this to trade soon, will this trust forced to buy more bitcoin if there are great interest?

[Este Nuno]

Will this to trade soon, will this trust forced to buy more bitcoin if there are great interest?

Hopefully yeah. I hope it's so popular that they are rushing out to purchase more.

[LiteCoinGuy]

Will this to trade soon, will this trust forced to buy more bitcoin if there are great interest?

Hopefully yeah. I hope it's so popular that they are rushing out to purchase more.

i guess their "little" bitcoin stack will be enough for the first 4-6 months but they have to get more  

[franky1]

Will this to trade soon, will this trust forced to buy more bitcoin if there are great interest?

Hopefully yeah. I hope it's so popular that they are rushing out to purchase more.

i guess their "little" bitcoin stack will be enough for the first 4-6 months but they have to get more  

4-6 months??

even if shares start at $130 a piece (equivlent to $650 bitcoin value)... its only $130mill cap... did you see how fast the caps of other IPO's reached over $130m..

i can see them shares being bought up in days. especially if offered cheaper than 20% of bitcoin true value

[blatchcorn]

Will this to trade soon, will this trust forced to buy more bitcoin if there are great interest?

Hopefully yeah. I hope it's so popular that they are rushing out to purchase more.

i guess their "little" bitcoin stack will be enough for the first 4-6 months but they have to get more  

4-6 months??

even if shares start at $130 a piece (equivlent to $650 bitcoin value)... its only $130mill cap... did you see how fast the caps of other IPO's reached over $130m..

i can see them shares being bought up in days. especially if offered cheaper than 20% of bitcoin true value

Yup I would not be surprised if they are already pre-sold.  This has been coming for over a year now

[Este Nuno]

Will this to trade soon, will this trust forced to buy more bitcoin if there are great interest?

Hopefully yeah. I hope it's so popular that they are rushing out to purchase more.

i guess their "little" bitcoin stack will be enough for the first 4-6 months but they have to get more 

4-6 months??

even if shares start at $130 a piece (equivlent to $650 bitcoin value)... its only $130mill cap... did you see how fast the caps of other IPO's reached over $130m..

i can see them shares being bought up in days. especially if offered cheaper than 20% of bitcoin true value

Yup I would not be surprised if they are already pre-sold.  This has been coming for over a year now

What would happen if they sold out or something quicker than expected? Would they have to freeze the ticker symbol on the market until they went out and acquired more bitcoin? I wonder if they have a plan for this(would be a good problem to have I guess )

[franky1]

Will this to trade soon, will this trust forced to buy more bitcoin if there are great interest?

Hopefully yeah. I hope it's so popular that they are rushing out to purchase more.

i guess their "little" bitcoin stack will be enough for the first 4-6 months but they have to get more  

4-6 months??

even if shares start at $130 a piece (equivlent to $650 bitcoin value)... its only $130mill cap... did you see how fast the caps of other IPO's reached over $130m..

i can see them shares being bought up in days. especially if offered cheaper than 20% of bitcoin true value

Yup I would not be surprised if they are already pre-sold.  This has been coming for over a year now

What would happen if they sold out or something quicker than expected? Would they have to freeze the ticker symbol on the market until they went out and acquired more bitcoin? I wonder if they have a plan for this(would be a good problem to have I guess )

imagine it this way, winklevoss sell 1million shares for.. $130 each. to group A.. once those share are gone group A (early adoptors) decide to sell for profit as there is still demand.

its just like bitcoin exchanges or any other exchange if you buy a share/coin/fiat, and someone else demands it, you can sell it on and because of the demand, charge a higher price. shares wil be flying back and forth btween many peoples hands if demand is high enough, causing a winkledex price to rise..

but if the "authorised parties" add a basket to the trust, this will add fresh shares, meaning more supply and would slow down the demand.

there would never be a situation where they would freeze the ticker.. those holding the shares would just have sell prices higher and let buys if demanding enough get the shares. its how exchanges function.. check any bitcoin exchange and swap the word bitcoin for winkleshare, and you will see how it works

thats why you see a list of sell order and buy orders on exchanges. after being sold. they dont just disappear, they are always changing hands

[InwardContour]

Will this to trade soon, will this trust forced to buy more bitcoin if there are great interest?

Hopefully yeah. I hope it's so popular that they are rushing out to purchase more.

i guess their "little" bitcoin stack will be enough for the first 4-6 months but they have to get more 

4-6 months??

even if shares start at $130 a piece (equivlent to $650 bitcoin value)... its only $130mill cap... did you see how fast the caps of other IPO's reached over $130m..

i can see them shares being bought up in days. especially if offered cheaper than 20% of bitcoin true value

Yup I would not be surprised if they are already pre-sold.  This has been coming for over a year now

What would happen if they sold out or something quicker than expected? Would they have to freeze the ticker symbol on the market until they went out and acquired more bitcoin? I wonder if they have a plan for this(would be a good problem to have I guess )

No the price of the ETF would trade higher then the underlying amount of bitcoin held. As a result the APs would have an incentive to purchase more bitcoin on exchanges, convert the bitcoin to shares of COIN and sell the ETF in the market, causing the spread between BTC and COIN to decrease; this process would be repeated until the spread would not be worth the risk for the AP

[Este Nuno]

But in that case couldn't they lose money if the market adjusts the price upwards before they finish buying all the btc they need? If COIN is trading at 20% above spot you can almost guarantee that Bitstamp et al are sure to follow soon.

[franky1]

No the price of the ETF would trade higher then the underlying amount of bitcoin held. As a result the APs would have an incentive to purchase more bitcoin on exchanges, convert the bitcoin to shares of COIN and sell the ETF in the market, causing the spread between BTC and COIN to decrease; this process would be repeated until the spread would not be worth the risk for the AP

3 scenario's
1) as quote above says selling higher to incentivize fun managers ("authorized participants") to buy more baskets
2) price mirrors bitcoin average price/5 because shares are backed by bitcoin no one would pay alot more
3) prices are below once you take into account fee's

i think that share prices will be close to a 5th of a btc (5shares=btc equivelent remember). and fund managers ("authorised participants") dont care* if bitcoin goes to $5000 or $50. because they are getting a set commission per trade.

much like how btc-e, bitstamp, etc dont care as they are making 0.2% for from the buyer and the seller. so these fund managers controlling their basket of 50,000 shares could make alot of money just buy having a basket that kept swapping between clients hands.. without any hard work at all.

for instance.. take bitcoin exchanges.. if btc-e have a trade volume of 10,000 coins a day they make 0.4% per trade (0.2 buyer 0.2 from seller). just by having the 10,000 fly through different peoples hands btc-e makes 40btc profit per day.

the basket managers if their 50,000 shares were to change hands per day, they are making alot of money doing nothing but sitting there watching the screen fill up with transaction fee's. if the fe was 1%, they can simply buy another basket in 100 days without even lifting a finger.

and if the share price sticks to roughly bitcoin price, then the managers get a known daily income. yes we will se spikes that will incentivize managers to buy more coins to add more baskets, which would raise true bitcoins up to mirror the winkledex again

*well they do care because 1% of $5000 is better then 1% of $50.. but thats another level im not above the point im making

[ShakyhandsBTCer]

No the price of the ETF would trade higher then the underlying amount of bitcoin held. As a result the APs would have an incentive to purchase more bitcoin on exchanges, convert the bitcoin to shares of COIN and sell the ETF in the market, causing the spread between BTC and COIN to decrease; this process would be repeated until the spread would not be worth the risk for the AP

3 scenario's
1) as quote above says selling higher to incentivize fun managers ("authorized participants") to buy more baskets
2) price mirrors bitcoin average price/5 because shares are backed by bitcoin no one would pay alot more
3) prices are below once you take into account fee's

i think that share prices will be close to a 5th of a btc (5shares=btc equivelent remember). and fund managers ("authorised participants") dont care* if bitcoin goes to $5000 or $50. because they are getting a set commission per trade.

much like how btc-e, bitstamp, etc dont care as they are making 0.2% for from the buyer and the seller. so these fund managers controlling their basket of 50,000 shares could make alot of money just buy having a basket that kept swapping between clients hands.. without any hard work at all.

for instance.. take bitcoin exchanges.. if btc-e have a trade volume of 10,000 coins a day they make 0.4% per trade (0.2 buyer 0.2 from seller). just by having the 10,000 fly through different peoples hands btc-e makes 40btc profit per day.

the basket managers if their 50,000 shares were to change hands per day, they are making alot of money doing nothing but sitting there watching the screen fill up with transaction fee's. if the fe was 1%, they can simply buy another basket in 100 days without even lifting a finger.

and if the share price sticks to roughly bitcoin price, then the managers get a known daily income. yes we will se spikes that will incentivize managers to buy more coins to add more baskets, which would raise true bitcoins up to mirror the winkledex again

*well they do care because 1% of $5000 is better then 1% of $50.. but thats another level im not above the point im making

Over the long run the price of COIN will mirror the price of BTC/5, if it deviates too much then the APs will step in and perform an arbitrage trade. If it deviates a little bit then traders on exchanges will see the difference, anticipate trades from APs and buy/sell on the exchange in order to close the gap.

Over the loan run an ETF should improve liquidity in the bitcoin market.

[ThePanCakeKid95]

yea that's the goal

[InwardContour]

But in that case couldn't they lose money if the market adjusts the price upwards before they finish buying all the btc they need? If COIN is trading at 20% above spot you can almost guarantee that Bitstamp et al are sure to follow soon.

This would be very likely indeed. But the APs would not need to purchase all of the BTC that they will give to the trustees below the selling price, they only need their average price to be below the price of COIN.

I have read that the basket size is 50,000 (I am not sure if this is shares or BTC, but I think BTC) so an AP will need to buy 50k BTC to give to the trusee so they can sell 250k shares on the market.

[Ron~Popeil]

Wow with at least a couple of these ETF's being planned this could really drive demand. Definitely time to buy and "hodl."

[ThePanCakeKid95]

not just drive demand, but allow things like hedge funds, which at the current moment can't invest in bitcoin, with this it will open up bitcoin trading to big time traders who wish not to understand bitcoin and wish only to invest

[franky1]

But in that case couldn't they lose money if the market adjusts the price upwards before they finish buying all the btc they need? If COIN is trading at 20% above spot you can almost guarantee that Bitstamp et al are sure to follow soon.

bitstamp doesnt move the bitcoin price.. buys and sellers (users of bitstamp) move it...
what you will see those is the authorised participants being the bitstamp users and buying bitcoins as fast as they can. so yes bitcoin price on bitstamp will rise due to AP's buying the coin.. not bitstamp tweaking order values behind the scenes to mirror other exchange values, as that's illegal.

This would be very likely indeed. But the APs would not need to purchase all of the BTC that they will give to the trustees below the selling price, they only need their average price to be below the price of COIN.

I have read that the basket size is 50,000 (I am not sure if this is shares or BTC, but I think BTC) so an AP will need to buy 50k BTC to give to the trusee so they can sell 250k shares on the market.

its 10k coins = 50k shares per basket

i think on day 1 of launch it would be AP's buying the winkles 20 baskets. and the winkles use that money to buy more bitcoins on bitstamp etc.. to add more baskets and then slowly over a few days if AP's see demand is high still, the AP's would also buy bitcoins and form their own 10k btc baskets in the trust, to add to the ones that were pre-made by the winkles... but thats just me speculating

i do se though that buying 10k coins in one lump will make the bitcoin price of an exchange rise, if you look at the market volume of sell orders and see what price it lands on once you take 10k coins off the sell order wall.

[odolvlobo]

not just drive demand, but allow things like hedge funds, which at the current moment can't invest in bitcoin, with this it will open up bitcoin trading to big time traders who wish not to understand bitcoin and wish only to invest

There is nothing that prevents hedge funds from investing in bitcoins. Google "bitcoin hedge funds".

i think on day 1 of launch it would be AP's buying the winkles 20 baskets. and the winkles use that money to buy more bitcoins on bitstamp etc.. to add more baskets and then slowly over a few days if AP's see demand is high still, the AP's would also buy bitcoins and form their own 10k btc baskets in the trust, to add to the ones that were pre-made by the winkles... but thats just me speculating

It could also be the other way around. APs that bought thousands of bitcoins last year exchange them for shares and then dump the shares, driving the price down.

[Jubettarr]

Get a lapel mic