What if twins' coins were hacked?
The prospectus says that they will be kept in cold storage (printed wallets stored in vaults).
aha ...
... so, in real world, you can exchange ETF gold bond for physical gold ?
At the same price ... ?
(trap)You, personally, almost certainly cannot, but it is possible, yes. In fact, I know of at least one case when it was done.
It will be the same with this ETF. It would be possible to exchange ETF shares for bitcoins, but most people won't be able to afford it, because it will be doable only in multiples of 50.000 shares.
Read the prospectus.
Anyone that considers investing in their ETF certainly should verify whether or not they are insured against such theft when determining their risk exposure.
This is not very clear from the prospectus. On the one hand, there is explicit language that there will be no insurance of the bitcoins. But maybe the meaning is that the bitcoins are not insured the way deposits are insured by the FDIC. On the other hand, there is language that the custodian would take whatever insurance means he deems appropriate and the terms may change.
The fact that GLD tracks gold doesn't prove it has any gold. It only proves the manipulators are paying attention and staying active.
This statement suggests that you have no clue how GLD tracks the price of gold.
If GLD can sell off the physical gold, as many believe they've done
and they are wrong.
what would keep COIN from secretly selling off some bitcoin from the fund?
The same thing. With time, the ability of COIN to track the bitcoin price will deteriorate significantly. The problem is that this will become obvious only significant time after the bitcoins are gone.
However, they can show transparency by publishing the public keys of their wallets - so that anyone can check that they indeed still own the bitcoins. Unfortunately, it is not clear to me from the prospectus whether they would do that. In fact, there is some language that says that both the private and the public keys will be kept confidential.
Liquidity? Interesting. The FED's wrongful manipulation by "injecting liquidity" by printing up fresh dollars is one of the problems bitcoin might partially solve. It seems almost dirty to talk about injecting liquidity in bitcoin.
I don't think that you understand what this word means. It is not "injecting liquidity in bitcoin" as in "printing more bitcoins". It is "injecting liquidity in the bitcoin markets", as in "bringing more buyers and sellers".
Suppose that you own 1 BTC and desperately need US dollars to pay your rent, so you want to sell it. But, because there are few buyers on the market (the market is illiquid), you can find only one buyer who is willing to pay you no more than $250, despite the fact that the last transaction completed at $300. Since you are forced to sell (you need USD), you take the transaction and the price collapses to $250. Next come someone who really wants to own 1 BTC - but there is only one seller and he demands $350 for it. Since there is no other choice, the buyer agrees. Bang, the BTC price goes from $250 to $350. Huge volatility, because the market is illiquid (relatively few market participants).
Basically this means they are offering shares to other investors. In other words, BTC are exchanged for fiat indirectly, when investors buy these shares.
Not really. It just means that it transfers ownership of the bitcoins owned by the twins to current holders of US dollars - once. You can turn the argument on its head and say that it is "bad" because it is equivalent to the twins selling their bitcoins. But it would be just as incorrect.
You must always keep in mind how a tracking ETF works. If the demand for shares is larger than the demand for bitcoins, the ETF custodian creates ETF shares out of nothing and sells them to the public. Then he uses the money from the sale to buy bitcoins. This drops the price of the shares (increased supply) and ups the demand for bitcoins (increased demand), bringing the two in equilibrium again.
The same procedure works in the other direction. If people start buying bitcoins faster than the ETF shares, the custodian sells some bitcoins and uses the money to buy back ETF shares and to destroy them. This increases the supply of bitcoins (putting a downward pressure on their price) and increases the demand for the ETF shares (putting an upward pressure on their price), bringing the two in equilibrium.
Note that it doesn't matter whether the price of bitcoins is going up, down or sideways. All that matters is the difference in demand between bitcoins and ETF shares. By creating and destroying shares and buying and selling bitcoins, the ETF custodian makes sure that the prices of the two are in sync - i.e., the ETF is doing its job of tracking the bitcoin price.
Of course, this mechanism will break down if the custodian has no bitcoins. Exactly the same logic applies to the gold tracking ETF.
If a 'whale' was to buy 300,000 btc = 30 blocks and put this into the winklevoss EFT,
Who would then hold the majority vote in company matters?
An ETF is not a stock. Owning shares of it does not let you vote on how it is run.
