For some reason everyone was convinced that this ETF will be the turning point for bitcoin & bring many more mainstream investors into bitcoin without them having to make a wallet and protect their private keys etc...
HERE IS WHY THE ETF HAS DONE & WILL NEVER DO ANYTHING GOOD FOR BTCITCOIN :- Nobody involved in the ETF knows what they're doing!
That's why they listed Mt.Gox as one of the three exchanges that will be mirrored in the ETF. Who knows if other exchanges can stand the test of time & create profit with no new funds in bitcoin. They state they have no idea wtf they are doing in the form they released to the SEC "... the Sponsor and its management have no history of operating an investment vehicle like the Trust, their experience may be inadequate or unsuitable to manage the Trust.
The Sponsor was formed to be the Sponsor of the Trust and has no history of past performance in managing investment vehicles like the Trust. The past performances of the Sponsor’s management in other positions are no indication of their ability to manage an investment vehicle such as the Trust. If the experience of the Sponsor and its management is inadequate or unsuitable to manage an investment vehicle such as the Trust, the operations of the Trust may be adversely affected."
This goes hand in hand with
"The value of the Shares could decrease if unanticipated operational or trading problems arise. The mechanisms and procedures governing the creation, redemption and offering of the Shares and storage of the Bitcoins have been developed specifically for this product. There may be unanticipated problems or issues with respect to the mechanics of the Trust’s operations and the trading of the Shares that could have an adverse effect on an investment in the Shares. In addition, although the Trust is not actively “managed” by traditional methods, to the extent that unanticipated operational or trading problems or issues arise, the Sponsor’s past experience and qualifications may not be suitable for solving these problems or issues..."
They also acknowledge that they could be hacked or the private key could be compromised or the security system they use could have flaws or bugs & any of that would mean no recovery of any of the bitcoins rendering the shares useless. Bitcoins held by the Trust are not subject to FDIC or SIPC protections and the bitcoins will not be insured in anyway. Also nobody can be held responsible if one day they are all gone.
- The block reward halving in 2016 is also looked at as negative!
"As the number of Bitcoins awarded for solving a block in the Blockchain decreases, the incentive for miners to continue to contribute processing power to the Bitcoin Network will transition from a set reward to transaction fees. The requirement from miners of higher transaction fees in exchange for recording transactions in the Blockchain may decrease demand for Bitcoins and prevent the expansion of the Bitcoin Network to retail merchants and commercial businesses, resulting in a reduction in the Blended Bitcoin Price. If transaction fees paid for the recording of transactions in the Blockchain become too high, the marketplace may be reluctant to accept Bitcoins as a means of payment and existing users may be motivated to switch from Bitcoins to another Digital Math-Based Asset or back to fiat currency. Decreased use and demand for Bitcoins may adversely affect their value and result in a reduction in the Blended Bitcoin Price."
"If the award of Bitcoins for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners, miners may cease expending processing power to solve blocks and confirmations of transactions on the Blockchain could be slowed. A reduction in the processing power expended by miners on the Bitcoin Network could increase the likelihood of a malicious actor or botnet obtaining control in excess of 50 percent of the processing power active on the Bitcoin Network or the Blockchain, permitting such actor or botnet to manipulate the source code of the Bitcoin Network in a manner that adversely affects an investment in the Shares or the ability of the Trust to operate. If transaction fees are not sufficiently high, miners may not have an adequate incentive to continue mining and may cease their mining operations. Miners ceasing operations would reduce the collective processing power on the Bitcoin Network, which would adversely affect the confirmation process for transactions and make the Bitcoin Network more vulnerable to a malicious actor or botnet obtaining control in excess of 50 percent of the processing power on the Bitcoin Network. Any reduction in confidence in the confirmation process or processing power of the Bitcoin Network may adversely impact an investment in the Shares. " They also realize this could cause serious liquidity problems for the shares and they might possibly be locked out of buying or selling reasonably.
- This ETF is for brokerage accounts & small time investors might not be allowed to buy in until it's too late!
Read more on who is even allowed to buy/short this ETF! Since they want to release over 1mil shares right off the bat, Remember many big investors will be the first to have shares of this ETF that they will gladly sell you for over $20/share ESPECIALLY since they can continue to issue shares(read the next 2 bullet points for more info)
"...The Shares may be purchased from the Trust only in one or more blocks of [50,000] Shares (a block of [50,000] Shares is called a Basket). The Trust will issue Shares in Baskets to
certain authorized participants (Authorized Participants) on an ongoing basis as described in “Plan of Distribution.” Baskets will be offered continuously at the net asset value (NAV) for [50,000] Shares on the day that an order to create a Basket is accepted by the Trustee. The Trust will not issue fractions of a Basket."
"... Baskets may be created or redeemed only by Authorized Participants. Each Authorized Participant must (1) be a registered broker-dealer or other securities market participant such as a bank or other financial institution which is not required to register as a broker-dealer to engage in securities transactions, (2) be a direct participant in DTC, (3) have entered into an agreement with the Trustee and the Sponsor (“Authorized Participant Agreement”) and (4) have established a Bitcoin custody account (“Authorized Participant Custody Account”) with the Trustee. The Authorized Participant Agreement provides the procedures for the creation and redemption of Baskets and for the delivery of Bitcoins required for such creations or redemptions."
- Even the "Authorized Paricipants" admit speculators are the only ones using Bitcoin
"Currently, there is relatively small use of Bitcoins in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect an investment in the Shares."
"As relatively new products and technologies, Bitcoins and the Bitcoin Network have not been widely adopted as a means of payment for goods and services by major retail and commercial outlets. Conversely, a significant portion of Bitcoin demand is generated by speculators and investors seeking to profit from the short—or long-term holding of Bitcoins. The relative lack of acceptance of Bitcoins in the retail and commercial marketplace limits the ability of end-users to pay for goods and services with Bitcoins. A lack of expansion by Bitcoins into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in the Blended Bitcoin Price, either of which could adversely impact an investment in the Shares."
- Unlimited ability to issue shares!!! One share doesn't even equal one bitcoin & it never will!
They planned to make a share of this ETF equal to .2
BTC and they will have the ability to issue more shares at any time(in which the "authorized participants" will always get the first offerings for) This means they would have the ability to lower your exposure & your gains by issuing more shares that they have the authority to buy first! Then your share becomes worth .1bitcoin then .05 then who knows! And it's all at their leisure! "... The Trust expects to create and redeem the Shares from time to time, but only in one or more whole Baskets (a Basket equals a block of [50,000] Shares..."
- There are many many events that can happen causing this ETF to terminate.. Here is what they mention from 2013 :
• the Trustee is notified that the Shares are delisted from the [EXCHANGE] and are not approved for listing on another national securities exchange within five business days of their delisting;
• Shareholders acting in respect of at least 75 percent of the outstanding Shares notify the Trustee that they elect to terminate the Trust;
• 60 days have elapsed since the Trustee notified the Sponsor of the Trustee’s election to resign and a successor trustee has not been appointed and accepted its appointment;
• the SEC determines that the Trust is an investment company under the Investment Company Act of 1940 and the Trustee has actual knowledge of that determination;
• the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act of 1936, as amended (“CEA”), and the Trustee receives notice from the Sponsor that, because of that determination, termination of the Trust is advisable;
• the Trust is determined to be a “money transmitter” under the regulations promulgated by FinCEN under the authority of the US Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder, and the Trust receives notice from the Sponsor that, because of that determination, termination of the Trust is advisable;
• the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust for US federal income tax purposes, and the Trustee receives notice from the Sponsor that the Sponsor determines that, because of that tax treatment or change in tax treatment, termination of the Trust is advisable;
• a United States regulator requires the Trust to shut down or forces the Trust to liquidate its Bitcoins;
• the aggregate market capitalization of the Trust, based on the closing price of the Shares, was less than $[ ] million (as adjusted for inflation by reference to the US Consumer Price Index) at any time after the first anniversary of the Trust’s formation and the Trustee receives, within six months after the last trading date on which the aggregate market capitalization of the Trust was less than $[ ] million, notice from the Sponsor of its decision to terminate the Trust;
• 60 days have elapsed since DTC ceases to act as depository with respect to the Shares and the Sponsor has not identified another depository that is willing to act in such capacity; or
• the Trustee elects to terminate the Trust after the Sponsor is conclusively deemed to have resigned effective immediately as a result of the Sponsor being adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property being appointed, or a trustee or liquidator or any public officer taking charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation.
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I think I could go on forever but it is very hard to preach to people who only see things one sided & one way. I am a supporter of bitcoin but even though I have made money in the process I am worried about other people getting sucked in & never being able to cash out or use their currency! I am just noticing that this amazing technology is being stolen from bitcoin & being moved to other practical uses. I am noticing all the money being moved out of bitcoin and only "dumb" money flowing in. As the system gets bigger it looks more and more unsustainable. I mean c'mon we are mining close to $2mil worth of bitcoin per day everyday... In 2013 it was calculated that every 24hrs miners are burning through over $300,000 in just electricity cost! Some miners out there haven't sold yet & their expenses keep rising! Soon they won't be able to take out more loans to cover costs and they will have to join all the other miners who are dumping. WOW! 2016 should be very surprising and interesting indeed!!! If somehow you were a firm believer that this ETF will turn bitcoin completely around somehow... You must consider that the Winklevoss twins will at least do everything in their power & throw all the money they can into
constantly suppressing the price of each bitcoin so they can buy up a lot more for future profit. So why would you be a buyer anywhere near these levels when in the short term you will be able to buy 2,3, maybe even more than 4times as much in bitcoin! IN THE SHORT TERM!!!
This ETF has already taken a year and a half... Watch what happens in price over the next year... Good luck to all.
