Bitcoin ETF’s: Why this could be THE Game Changer for Cryptocurrency Adoption!!

Around two and a half years ago, I began my journey into cryptocurrency. Bitcoin caught my imagination after the price hit an all time high around $1000 a coin, whilst being <$1 just 2 years earlier. I decided to do a little research to consider whether Bitcoin (and Cryptocurrency at large) was the future of money.

Source: http://www.blueshiftgfx.com

Around this time (and a little before), the global monetary system (£ $ €) made no sense to me. Having left university just 5 years earlier with a degree in Economics, I had John Maynard Keynes fresh on my mind. It seemed to me that, 2007 onwards proved this form of Economics to be bogus, and Governments around the world needed to change in order to avoid falling into these pitfall’s once more.

What actually happened, was a global, coordinated, doubling down on this form of economic. Now, it might feel like I’m going a little bit off topic here, but THIS is the MAIN reason I am a Bitcoin/Cryptocurrency believer, and it will tie in nicely with some further thoughts to come.

Bitcoins rules are immutable and decentralised, and no regime change or crazy new economic theory will change that. This fact is top of a very large pile that triggered me to purchase Bitcoins, and I have been a buyer ever since.

Problems Potential Bitcoin Investors Encounter

Bitcoins have never been easier to purchase with fiat currency. I personally think app’s like Circle have now made Bitcoins accessible to everyone. Everyone except institutional money.

Safe Storage..
Regulation..
Reputaional Risk..
Fear..

The biggest problem for institutional money wanting to invest in Bitcoin is Safe Storage, and coming up with a Regulatory framework which protect’s their investors from Fraud in it’s various forms. I have made mistakes over the years which have resulted in losing money. I even most recently sent some Steem to the @steemit account by accident. Luckily @ned was kind enough to send it back to me.

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I can make mistakes with my own ‘money’, but I wouldn’t dare make those same mistakes with someone else’s money.

I would have invested far more in to Cryptocurrency over the years, if I wasn’t petrified that I would somehow lose private keys or get hacked (and this is coming from someone who has everything backup in multiple locations (on paper and online), and holds nothing at exchanges).

Simon Dixon - CEO of BNK to the Future

I happen to have a small equity investment in bnktothefuture.com, and I received an email from them the other day stating;

Our CEO Simon Dixon, had one to one meetings with over 50 of the largest fund managers in New York, Hong Kong, Boston, London, San Francisco, Singapore & Tokyo about Blockchain...

…Take a guess as to what the number 1 question was asked by these fund managers?..."How can I store Bitcoin securely without counterparty risk?"

The best solution for institutional money wanting to invest in Bitcoin is the creation and subsequent investment in a Bitcoin EFT

What is an ETF?

An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bond, or a basket of assets like an index fund. Unlike mutual fund, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors.
Source: Investopedia

How will a Bitcoin ETF Work?

The ETF operator will Buy Bitcoin, Store them and Insure them for their investors. The price of a share in the ETF will track the price of Bitcoins. Investor will purchase shares in the ETF in the same way they purchase Shares, Funds and ETF’s. They will pay a small fee to the ETF provider for there services. This fee is often around 0.25% per annum.

What Impact will this have?

• Large Buy Side Volume: The creation of a Bitcoin ETF will open up a new investor base. This investor base far exceed the current number of Bitcoin owners, and I believe demand will be high. Bitcoin for me, represents the ultimate hedge against real world economic problems, problems which exist and are not going away anytime soon. A bitcoin ETF breaks down barriers to this investor base.
• Liquidity: More volume will increase liquidity, which is essential to the long term success of Bitcoin, and Cryptocurrency at large.
• Legitimacy: Having Bitcoin listed at a bonafide Financial Exchange will help Bitcoin move away from the sketchy image it currently possesses (in many people’s eyes). This kind of legitimacy will be enough to convince many new investors to engage.
• Stability: More User, More Volume, More Circulation and More Liquidity will all contribute to Stability. This is one key element standing in the way of Bitcoin mainstream adoption.
• Adoption: All of the above elements will move us towards further adoption. This is one area that Bitcoin has done well, however under delivered the last few years. Increasing the accessibility on Bitcoin can only help us move towards a legitimate currency status.

Why Bitcoins are still valuable, sat in an non-transferable vault?

I’m sure there will be many Cryptocurrency purest who hate the idea of the establishment locking Bitcoins up in a vault, and trading them on a financial exchange. I however believe that in the long term, this activity could be the making of Bitcoin.

Bitcoin ETF’s take the fear factor out of holding Bitcoins. This is an area which has really been holding back Bitcoin Adoption in recent year. Every mainstream headline seems to be a new hacking scandal, further muddying the Cryptocurrency waters.

I currently see Bitcoin as a commodity with currency like features. I believe Bitcoin has transcended Blockchain technology, transferability and anonymity and this is why I believe it has value in it's own right (of coarse this is subjective, however perceived value is just that..). In order to get to a point in the future where Bitcoin is seen as a legitimate currency, I believe we need to take a small step back, to allow it to be a boring safe commodity.

This is a walk before we can run moment

Bitcoin has been trying to run for sometime, with limited mainstream success..

Overtime, ownership of Bitcoin through alternative vehicles should result in confidence ballooning. Once confidence begins to increase, Bitcoin’s currency features can begin to come to the forefront of adoption…

Summary

Bitcoin is still, and will continue to be the Cryptocurrency Gateway. If the Gateway become legitimate and confidence is high, the likes of Ethereum, Steem and many other projects stand to gain a lot. Bitcoin ETF’s are the first step to opening up a new type of (globally adopted) asset class.

One step on a long road toward ridding states around the world of Economic control

Keep your eye out for Gemini Trust Company (Winklevoss Twins) and SolidX Bitcoin Trust over the next months who are both vying for SEC approval. This could happen in the next few months, or may take sometime much longer. I am confident that, one day this will happen, and when it does, it will change the cryptocurrency landscape forever...