TL;DR
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There are a handful of avenues in the traditional finance space where you can buy Bitcoin, indirectly.
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Below, we cover: BTC ETFs, BTC Trusts, and BTC Proxies.
Full Story
Growing up we had a neighbor who let us and our friends play in their swimming pool. One of our friends, Devin, would never just jump in the pool.
He’d walk over to the side, dip his toes in, and carefully consider whether he wanted to take the plunge or not.
Well, Devin hasn’t changed much. We all bought into Bitcoin a while back, but he’s still on the sidelines, considering whether to ‘take the plunge’ into BTC.
Here’s what he’s missing:
He doesn’t have to take the plunge. Not directly at least…
There are a handful of avenues in the traditional finance space where you can buy Bitcoin, indirectly.
We wrote Devin a breakdown of his options and thought we should share (just in case you have a Devin in your life that needs convincing).
Bitcoin ETFs
These allow investors to purchase Bitcoin, via the stock market.
You buy a share in the ETF → the folks managing the fund use your money to buy BTC.
What’s cool: You can get exposure to Bitcoin’s price as it moves.
What’s not so cool: ETFs have fees (anywhere from 0.09%-0.6%) and most ETFs are only tradable during ‘banking hours’…
Bitcoin prices don’t sleep, so holders may miss out on short term plays.
Bitcoin Trusts
These are very similar to ETFs, but they are less liquid (i.e. have fewer buyers and sellers, so can be hard to sell out of quickly, in large amounts).
What’s cool: Trusts have to be more transparent on how much they are holding, so you’d get periodic disclosures of their assets.
What’s not so cool: Because trusts are less liquid, they’re more difficult to sell on the secondary market and they have more of a set price, so you may end up selling/buying at a premium or a discount.
Bitcoin Proxies
Basically, you invest in companies that work with Bitcoin or own Bitcoin.
In the US the most common Proxy investment would be with public traded bitcoin mining companies, or MicroStrategy.
What’s cool: Proxies function exactly like traditional companies, because they are. They have Balance sheets, revenue and profit (hopefully).
What’s not so cool: Because this is traditional finance, you’re opening yourself up to all the general problems public companies face (scandals, mismanagement, lawsuits, etc.)
We don’t have the right answer on which option is best, but we sure are glad they exist!
