As a digital currency, bitcoin has been praised for its
ability to circumvent traditional transaction networks and
function as an independent peer-to-peer payment
While that may sound like a revolutionary concept, detractors
have pointed out that the lack of regulation leads to volatile
price swings and uncertain security measures.
This uncertainty has so far prevented bitcoin from becoming a
mainstream investment class for all but the most speculative
To break down those barriers, the Winklevoss twins (of
Facebook fame) have filed SEC documents to register the first
bitcoin related ETF called the Winklevoss Bitcoin
While the SEC has
recently made cautious statements
about the use of bitcoin and other digital currencies, they
appear to be allowing the regulatory process for the bitcoin ETF
An ETF To Play On Strong Auto Sales Data
Last month, the Winklevoss Bitcoin Trust filed its
that stated the ETF would trade on the NASDAQ exchange with a
ticker symbol that has yet to be determined.
In theory, a bitcoin ETF would allow investors the opportunity
to participate in the daily price movement of an index the twins
created called the Winkdex.
According to the SEC filing, the ETF is "designed for
investors seeking a cost-effective and convenient means to gain
exposure to bitcoins with minimal credit risk."
The Winklevoss Bitcoin Trust is designed to hold bitcoins and
issue baskets of shares in exchange for deposits.
Conversely it will distribute bitcoins in connection with
The bitcoins held by the trust will be stored in a digital
wallet format and the custodian will be responsible for the
safekeeping of these assets.
Bitcoins are currently used in tens of thousands of
transactions per day and recent quotes put the value of a single
unit near $650.
In the fourth quarter of 2013, the price of bitcoin
skyrocketed to over $1,000.00 per unit which attracted a great
deal of attention from currency and investment experts.
While many experts are skeptical about the liquidity and
transactional aspects of a bitcoin ETF, a successful roll-out of
this concept may ultimately provide another level of confidence
for investors that are drawn to this theme.
It may also pave the way for new digital currencies to be
accepted into the mainstream.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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