Topic: Winklevoss Twins File to Launch Bitcoin Exchange-Traded Product - page 7. (Read 8509 times)

Well perhaps. But at least they're not dumping them onto Gox.

I don't think they just suddenly decided to turn bear onto BTC. They must have been planning this from the start.

In practical terms it can only push the price up

Or you can see it as a pseudo-sell of 200k coins.

So overall this is an incredibly good thing right?

The buying behaviour of the trust is likely to inflate the price of BTC, without really doing anything that could negatively affect it.

The second statement isnt true. There is no way of doing direct arbitrage but its still possible. You can just take the shares directly to the admin to settle them. There is just risk of extreem decline in value of underlying asset while you're doing so. A true ETF will stay pegged to the underlying within reason assuming nothing weird is going on.

Exactly my thoughts. Serious fun ahead.

https://news.ycombinator.com/item?id=5973971

I find these comments quite interesting:

I can wait till 2014. As long as its before spring next year I'm perfectly OK

Correct they would however that wouldn't happen until after IPO which I think people should realistically expect it to take at best a large number of months.  If the ETP is popular and demand forces issuing additional shares that may be bullish on the "physical BTC" price in ... 2014.

No, I mean, clearly they'd need to issue more shares of the ETP, meaning they'd need more BTC right?

My guess (just a guess) is the reason for acquiring their 200,000 BTC quietly and without a splash last summer was specifically for this or something like it.  There is a lot of regulatory headache to launch an ETF.  If one wanted to simply divest there are easier, quicker, and cheaper ways to do it.   I wouldn't expect them to do any panic buying driving up the price prior to an IPO though.  Since a S-1 is a public document my guess is they made sure to have the necessary BTC before filing the S-1.

Ok great. Now the question becomes (at least in the medium to short term): Do the Winklevoss dudes use this as a way of selling their Bitcoins with flare, or are they actually buying new bitcoins to finance this?

I'm dumbstruck.

It's 3 steps.

1) https://www.bitaddress.org  (60 seconds)
2) Print & Store (60 seconds)
3) Publish Address and get to work. (A life time)

It's not practical or easy to own Bitcoins. Thats why so few own any.

It's an ETF. The shares of the ETF can be converted to bitcoins, or bitcoins converted into shares of the ETF. It would let you buy and sell bitcoins through participating stock brokerages. It would be like Mt.Gox but completely legal and "for real."

Per the S-1 the trust is obligated to hold 0.2 BTC per share outstanding so it would be an ETF.

Probably the same way they bought their first 1+% of the entire Bitcoin market, by hiring a market operator(s) to wring out all the weak hands like all the bears you see here

Initially the trust will need to acquire 200,000 BTC from large investors prior to the IPO.  The W twins reportedly have 210,000 BTC so they "may" use some or all of their BTC holdings to set this up, otherwise the fund would need to buy sufficient BTC on the global market to "back" the shares they will issue.

once trading if demand pushes the price above NAV, the sponsor of the fund or another institutional investor will buy 10,000 BTC, deliver them to the trustee who will issue 50,000 shares (0.2 BTC per share).  The fund now has 50,000 more shares and holds 10,000 more BTC.  The investor can then sell the shares collecting the difference between the NAV and selling price as a risk free arbitrage. In your example, the retirement fund being an institutional investor would never buy overpriced shares (shares trading > NAV) that is for retail schlubs, they would simply deposit with the trustee (wording of S-1 is unclear if one needs to deposit BTC or USD equivelent of BTC and trustee will use that to buy BTC) and receive newly issued shares directly.

All this is routine stuff and has been done for years using physical commodity trust ETFs. Take the GLD fund for example http://www.spdrgoldshares.com/media/GLD/file/SPDRGoldTrustProspectus2012.pdf   Replace "Gold" with "Bitcoin" and everything about it from issuance & redemption, to the creation of a holding trust, to audits & secure storage, etc is very similar to the structure of the S-1 proposed here.

Man this news is breaking hard.. Getting some major coverage now.

I'd say the biggest positive news for bitcoin in months!!!

Some of the biggest news in fact, compared with the nonsense FUD news like California sues bitcoin foundation. Seems like a joke

I reckon we'll be back at 100+ soon.

Quickly can somebody tell me what this is:

Exchange Traded NOTE (i.e, troll derivative but I'll still probably be trading it)

or

Exchange Traded FUND (which means that its actually backed by bitcoins)

thats the thing, with an ETN they essentially just issue you debt not backed by anything but... debt. With an ETF they have to actually back it by bitcoins. Now presumably in the case of ETN they'll hedge by buying bitcoins, but still.

aha, thanks for clarifying.

Perhaps you can explain how the trust will buy new BTC.

Say my retirement fund allocates 1% of it's high risk package to BTC. That would no doubt increase the price of the winkelvii stock above the market price of BTC, how do they compensate for that?