Topic: Winklevoss Twins File to Launch Bitcoin Exchange-Traded Product - page 4. (Read 8428 times)

What i fear is that they will play around bitcoin & blockchain limitations and do whatever they want like they have always done. Just bribe a few and your underlying is not there anymore. Suscribe an etf of an etf of an etf and sell the bitcoin a hundred times. That might hurt those that HOLD a real bitcoin.

http://www.zerohedge.com/article/has-ishares-gold-etf-iau-been-covertly-depleted-90-its-physical-holdings-banks-jpm-and-goldm


What happens if they say in the contract that they only "need" to have a 10% of the underlying at a specific time? hint ! hint !

Good bye to Bitcoin scarcity

What i fear is that they will play around bitcoin & blockchain limitations and do whatever they want like they have always done. Just bribe a few and your underlying is not there anymore. Suscribe an etf of an etf of an etf and sell the bitcoin a hundred times. That might hurt those that HOLD a real bitcoin.

http://www.zerohedge.com/article/has-ishares-gold-etf-iau-been-covertly-depleted-90-its-physical-holdings-banks-jpm-and-goldm

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.

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?

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.

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?

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.

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.

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?

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.

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 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.

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 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.