ETFs and Bitcoins

Winklevoss-TwinsThe Winklevoss Twins have recently announced that they are to release an exchange-traded fund (ETF) to track the movements of Bitcoins, worth a whopping $20m (source).

What is an ETF?
It is a financial instrument, which tracks the movement of an asset (or basket of assets) in an index. In this case the ETF will track the movement of Bitcoins, therefore allowing you to speculate on whether a Bitcoin will gain or lose value, without the risk of actually purchasing any.

The advantage of this is that the ETF will cost a very small margin of the price of an actual Bitcoin, but you still benefit from any gains the Bitcoin market makes.

What is a Bitcoin?
My previous blog post explains what a Bitcoin is and what the risks involved are.

The ETF offering is likely to make the Winklevoss twins a tidy sum of money, and it will also provide the ‘individual’ investor an opportunity to have a gamble on the Bitcoin market.

What are your views? Will you be more likely to speculate of Bitcoins now an ETF is available? Tweet me on @Breadeconomics

-Ed

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