Topic: What are your thoughts on the new bitcoin hedge fund that just launched (Read 1378 times)

It depends on what type of fund it is. If it is an ETF where each share is backed by "physical" bitcoin and if you have enough shares, you can exchange them for bitcoin, then I don't see anything wrong with the fund at all. If people decide instead to trade derivatives and options based on the bitcoin price, then not only is not only silly, but there will be a low demand. The main reason derivatives exist is to give companies that need a fixed cost for a commodity the ability to reliably buy it at that price.

What could go wrong?

With the history of corruption related to the "banking" system, this could be bad for BTC. But it could cause the value to rise, we'll see soon enough!

hedge funds and storage of coins reminds me of ...hmmm.hmmmmm Oh yea Barclays bank, JP MOrgan, And a handful of other huge Bullion banks, what a bullion bank is for those who do not know, its the big banks who decide what your rates are and HOLD a certain amount of gold that which they trade thru paper contracts and IOUS to manipulate both the gold market as well as the fiat currency the bak in located in. So I say NO to hedg.

I also think they better set up the exchanges quickly before the banks decide to do what they always do and step in and rule this game.They need to set all exchanges up just like Cryptsy. Where you can not sell off a massive amount of coins all at once forcing the value of the coin to drop, this is how the big banks like to work together and manipulate all the currency markets they are in. The best way to keep the big banks at bay are to institute rules withing the exchange community, you can not sell a bitcoin unless someone is offering to buy it. and the seller determines the prices not the buyer. This allows a way to keep the banks from crashing our world, if they cant sell off millions of dollars in coins in a fraction of a second, they can not control this market.

This strategy puts the power in the hands of the people involved not the people with the most money. And it also makes this whole currency impossible to crash thru normal Barclays techniques because in order for them to sell their must be a buyer to buy, this means you can not move the price because you cant sell unless their is a buy. Banks move markets because they have the ability to sell a currency when there are no buyers forcing the value of that currency down. if there were as many buyers as sellers the value would not move due to purchasing power. The value of bitcoin can and will rise because of its transactions, as more people work hard and promote the coin and others begin using it daily in their business the value will rise, why let the banks undo in a fraction of a second what has taken the bitcoin community years to develop and strengthen.

We buy shares of fund which invest in BTC. Trading shares is indirectly to invest in BTC like trading off-blockchain. The fund will be divided to a large number of shares which will be priced as small amount of fiat or btc affordable to the majority of people. So the price is kept down.

I don't think it is a threat to bitcoin. If the financial market accepts it, BTC will reach all aspects of our live. People will accept and spend it. They realized the benefits BTC will bring to us.At that time no one will be able to destroy it.

The same story has popped up multiple times before, just with different names. Some company with flashy marketing offers to sell you bitcoins or a "bitcoin investment" but they keep the private keys. This is not owning Bitcoin.

Remember Mt. Gox? People thought they had bitcoins but actually only had bitcoin IOUs. When their business collapsed, their bitcoin IOUs became worthless. If people still want to buy bitcoin IOUs instead of actual bitcoins, then that's their choice but they should understand that you don't actually own any bitcoins if you don't possess the private key.

As bitcoin becomes more mainstream, the ecosystem will inevitably expand to include more payment mechanisms, more merchants accepting bitcoin but also more ways to invest in bitcoin-related businesses -- just like there are a gazillion banks, credit card companies etc out there to buy shares in right now. No?

And in what way are 'these funds' trading off-blockchain and how would that "keep prices down"? For the manager of the fund, who probably earns a performance fee, that would kind of defeat the object surely?

I'm not sure I understand your point 2good2betrue. If a fund buys BTC and you own shares in that fund, how is that materially different from, say an investor buying shares in a Gold ETF because it's easier than buying physical gold in a vault for an individual? Or a money-market fund as an alternative to depositing all your cash with one bank?

I don't think wall street guys "invest" in bitcoin are good idea
if it's pure investment, that will be good. but i think it's closer called "speculation" than "investment"
the wolf of wall street can destroy bitcoin if they do pump-dump scheme with big capital

I think, the biggest thread to Bitcoins is, that financial markets are absorbing it, using it like everything else and destroying it when enough money is made.
As other people stated before: That is not how Bitcoins are supposed to work

I've been saying these are a bad thing from the start and I'm worried I'm right. If you don't have the private key, you don't have the bitcoin, period.

They might even be artificially expanding bitcoin liquidity with all their off-blockchain artificial bitcoin and keeping prices down. Whatever they are they are not bitcoin, you buy bitcoin and it's on the blockchain, these things are artificial bitcoin and are not on the blockchain... there's not a 21 million coin programmed limit on these things, it's limited only by what wall street can get away with and they can get away with a lot.

All these "bitcoin" investment funds are just making bitcoin move with the stock market. It correlates bitcoin to all the other wall street toys. Traders panic on some foreign debt problem, like today, and bitcoin goes down with the market when it should be going up with gold.

"a year-old U.K. company that specializes in secure Bitcoin storage"

Great they can store my bitcoin for me!  I'm pretty sure that's what Satoshi had in mind.  This can only end well.   

I like their description of cryptocurrency. Sounds like a good definition for financial people to understand.

Daniel Masters, has just launched a Bitcoin hedge fund from the island of Jersey, a British Crown dependency.

http://libertyblitzkrieg.com/2014/07/11/blythe-masters-ex-husband-launches-bitcoin-hedge-fund-from-the-island-of-jersey/



http://www.reddit.com/r/Bitcoin/comments/2ablk6/jersey_welcomes_global_advisors_bitcoin/

http://www.reddit.com/r/Bitcoin/comments/2a9vgd/worlds_first_fully_regulated_bitcoin_investment/