TL; DR
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There are a handful of options 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 would let us and our friends play in their pool. One of our friends, Devin, would never just jump into the pool.
He walked to the side, dipped his toes in and carefully considered whether to take the plunge or not.
Well, Devin hasn’t changed much. We all bought Bitcoin a while ago, but he’s still on the sidelines contemplating whether to “take the plunge into BTC.”
This is what he’s missing:
He doesn’t have to take the leap. At least not immediately…
There are a handful of options in the traditional finance space where you can buy Bitcoin, indirectly.
We wrote Devin an overview of his options and thought we’d share it (just in case you have a Devin in your life who needs convincing).
Bitcoin ETFs
This allows investors to purchase Bitcoin through the stock market.
You buy a share of the ETF → the people who manage the fund use your money to buy BTC.
What’s cool: You can get exposure to the price of Bitcoin as it moves.
What’s not so cool: ETFs incur fees (anywhere between 0.09% and 0.6%) and most ETFs are only tradable during ‘banking hours’…
Bitcoin prices don’t sleep, so holders could miss out on short-term plays.
Bitcoin Trusts
These are very similar to ETFs, but are less liquid (i.e. they have fewer buyers and sellers, so it can be difficult to sell them quickly and in large quantities).
What’s cool: Trusts need to be more transparent about how much they hold so that you get periodic disclosure of their assets.
What’s not so cool: Because trusts are less liquid, they are harder to sell on the secondary market and have more of a fixed price, so you can ultimately sell/buy at a premium or discount.
Bitcoin Proxies
In short, you invest in companies that work with Bitcoin or own Bitcoin.
In the US, the most common proxy investment would be with publicly traded bitcoin mining companies, aka MicroStrategy.
What’s cool: Powers of attorney function exactly like traditional corporations, because that’s what they are. They have balance sheets, turnover and profit (hopefully).
What’s not so cool: Since this is traditional financing, you open yourself up to all the common problems that public companies face (scandals, mismanagement, lawsuits, etc.)
We don’t have the right answer to which option is best, but we’re certainly glad they exist!