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Winklevoss Bitcoin Trust

155 points by markmassie 12y ago

dnautics 12y ago
By being in the general markets, bitcoin will finally have mass access to leveraged trading. The result will be that bitcoin will finally see a 'true bubble'. While the bitcoin price has been decreasing, it's not really been a bubble as the popping of a bubble is usually twice as fast as its inflation, the opposite of which is true in the current bitcoin decrease. A good resource on the connection between leverage and financial bubbles is Kindleberger's "Manias, Panics, and Crashes"
- jim_greco 12y ago
  You really can't lever up equities all that much. Mom & pop can margin up to 50%. Even professional investors are quite constrained in how much leverage they can apply for outright bets.
  - encoderer 12y ago
    Once there is sufficient liquidity you will see options market makers as you do with other ETFs. Additionally, margin is only strictly constrained under reg-t for accounts under $100k or so. Above that level you can request portfolio margin.
  - dnautics 12y ago
    Nonetheless I think the culture of bitcoin as it is currently is more leverage averse than normal which is why the decline this year has not been a precipitous one. My point being that the up and down dynamic of bitcoin will start to change.
  - cylinder 12y ago
    Which is ridiculous, because an S&P500 index fund is a much less risky asset over 30 years than a 4-bdrm house on Maple St in Anywhere, Michigan, yet 20:1 leverage is available for the latter. Unfortunately the government favors homes as an asset class and has distorted the market with policy. I'd much rather put $50,000 down on something like a 30-yr mortgage for $250,000 in a diversified index fund than do the same in a house. But alas this isn't an available product.
    - refurb 12y ago
      I'd much rather put $50,000 down on something like a 30-yr mortgage for $250,000 in a diversified index fund than do the same in a house. But alas this isn't an available product. I agree with your point, but at the same time I'm not sure I'd want the irrational exuberance that we saw (and will see again) in the real estate market to start happening to equities!
califield 12y ago
They're going to trade Bitcoin under the NASDAQ symbol COIN. I love it!
- fennecfoxen 12y ago
  I prefer the bit about how the "Delaware Trust Company, a Delaware trust company, acts as the trustee of the Trust". nice name there DTC.
7Figures2Commas 12y ago
The Risk Factors section could be tightened up. "Bitcoin lost over half its value in 2014"[1] would probably suffice. [1] http://www.bloombergview.com/articles/2014-12-23/and-2014s-worst-currency-wasbitcoin http://www.bloombergview.com/articles/2014-12-23/and-2014s-w...
- EStudley 12y ago
  The price of Bitcoin in early 2014 was based on popularity and hype. I really think that the normalization of a price for Bitcoin is good for the currency, and that's what I've seen happening.
  - batbomb 12y ago
    it's still a market and the price could still be mostly hype and the "normalization" is only relative to a previous peak.
  - mrgordon 12y ago
    Not to be argumentative, but I see very little indication that any "normalization" is happening in Bitcoin prices unless you simply mean that it is trending downwards more steadily over time. Jan 1, 2014: $770.44 April 1, 2014: $478.72 July 1, 2014: $635.59 October 1, 2014: $381.33 December 31, 2014: $315.33 The numbers above indicate massive volatility. At first glance, it doesn't look as bad from October 1 to December 31, but if you look at the chart then you'll see it went up to $427.24 on November 12 before losing an average of $2.28 per day for a month and a half to get where it is today... I do agree that the earlier prices were simply based on hype though. Typical buy high and sell low behavior.
    - gwern 12y ago
      > The numbers above indicate massive volatility. You could look at an actual calculation of volatility instead of eyeballing some random prices: https://btcvol.info/ https://btcvol.info/ Right now we're in a pretty quiet period after the bubble in Jan 2014.
pnathan 12y ago
Interesting. If accepted, I am tempted to buy a few shares and see what falls out over time.
- deleted 12y ago
  [deleted]
- primitivesuave 12y ago
  According to the filing, you would have to buy them in sets of 50,000.
  - minimax 12y ago
    That is only for "Authorized Participants" converting between bitcoin and shares in the ETF. It's the so called "creation and redemption" process and virtually all ETFs use a similar scheme. If the shares trade publicly you will be able to buy them one at a time if you want.
- nostromo 12y ago
  Why not buy bitcoin directly? I get gold trusts, like GLD -- transporting and storing and selling gold is a pain. But it's easy to buy and store Bitcoin using a service like CoinBase. Not to mention the fact that you'll be paying management fees. I suppose if you wanted to put bitcoin in your IRA this would be helpful.
  - ssharp 12y ago
    I trust my money in E*Trade, Fidelity, etc. far more than I trust it in any BitCoin wallet service.
    - nostromo 12y ago
      Your broker will not protect you from buying a bad asset. The real question is if you trust the trust and its management. In other words: do you trust the Winklevosses?
minimax 12y ago
This is just a new version of the S-1. The SEC still hasn't approved the ETF for sale.
ssharp 12y ago
Is this the only way to cash out a large amount of BitCoins?
- ssharp 12y ago
  I see the down votes but I'm genuinely curious. I'm assuming the Winklevi stand to profit from this and hold a large number of BitCoins that would probably be hard to get liquidity from.
  - HockeyPlayer 12y ago
    From looking at market volumes, I think a skilled group using trading software could probably sell a few million USD worth of bitcoin per week without giving up a huge edge. But I agree that this is one of the few ways to get liquidity on a huge position.
- pc86 12y ago
  That's not at all what this is.
- tpeng 12y ago
  The creation/redemption process is intended for market makers known as Authorized Participants (APs) to arbitrage differences in the ETF price and the underlying price. While, yes, you can sell bitcoins to the trust in exchange for shares of the ETF, you would then need to sell those ETF shares in the market. So in other words, you would only have liquidity if there were demand for the ETF. It's possible that there will be more demand for the ETF than for bitcoins simply because ETFs are more accessible.
- wmf 12y ago
  No, there are several reputable brokers like SecondMarket and Coinsetter that can do that.
  - gaadd33 12y ago
    Could those cash out holdings in the ballpark of the Winklevoss twins? Another comment put their holdings at about 100K BTC. I didn't think there were any exchanges that had near that sort of volume.
benguild 12y ago
I still think it's funny that these guys clearly just went on HN and read about Bitcoin and randomly invested. Good for them though.
- giarc 12y ago
  I'm sure they did a little more than that.
- kavrick 12y ago
  Total coincidence that the acronym for the trust's sponsor is MBA's LLC (Math-Based Asset Services, LLC)! :)
- rsacco 12y ago
  http://explainbitcoinlikeimfive.com http://explainbitcoinlikeimfive.com please don't remain ignorant.
  - juliangregorian 12y ago
    Thanks for linking the most condescending site ever. Please also tell me how vaccines don't actually cause autism.
- maaku 12y ago
  The Winklevoss twins have been active in the bitcoin space since the early days. Mostly as passive investors lending their fame to the asset, admittedly, but they do at least know the technology and the space.
jekrb 12y ago
If you have access to the dev console I highly recommend setting the max-width of the body to 40em. The text spans all the way across the screen by default.
- yafujifide 12y ago
  I was able to set the width of the body using this command: document.querySelector('body').style['width'] = '40em'; However, setting the max-width did not work: document.querySelector('body').style['max-width'] = '40em'; Any idea why?
  - sadgit 12y ago
    Is it not style.maxWidth in that context?
  - elmin 12y ago
    CSS attributes become camelCased on the style object. document.body.style.maxWidth = '40em'( Will work.
    - yafujifide 12y ago
      That's it! Thanks.
apaprocki 12y ago
One thing sticks out as a red flag to me: they invented their own spot index (the Winkdex(R)) to price their NAV and that index includes BTC-e. BTC-e is a widely used site in the Bitcoin world, but no one knows who operates it or exactly where they are located (Bulgaria? Russia?). You would seriously base a large component of your index pricing an SEC regulated instrument on a number coming from unknown individuals who can not sign a contract or accept any liability? When people in the Bitcoin world always wonder "Why did X not include BTC-e?? How incompetent!" they never stop to think that there is no one on the other side that can pick up the pen.
- minimax 12y ago
  This could be one of the reasons the SEC hasn't approved the ETF for sale to the public. The first S-1 for this ETF is dated 2013-07-01, so it's not like the SEC hasn't had time to look at it. That said, there is a whole universe of bizarro exchange traded products in the US equity market so who really knows. I don't think the feedback from the SEC to the Winklevoss brothers has been made public.
- rockyleal 12y ago
  That's just being consistent with the reality of the Bitcoin market. BTC-e, whatever its structure, is one of the main Bitcoin exchanges, and as such it is necessary that it is represented in the index, else the index would present a distorted picture of the real market.
- sheetjs 12y ago
  > that index includes BTC-e Not necessarily. All they say is: > The Index Provider’s Winkdex formula provides a volume-weighted, exponential moving average market price by blending trading data from the three largest Bitcoin Exchanges by volume on a list of Index Provider-approved Bitcoin Exchanges. > As of December 26, 2014, the eligible Bitcoin Exchanges include Bitfinex, BitStamp, BTC-e, CampBX and LocalBitcoins. Needless to say, if BTC-e is not one of the three largest BTC exchanges, then it won't be included. Assuming there's a way to verify every trade reported by BTC-e on the blockchain, shouldn't irregularities show up relatively quickly? More importantly, it seems that they do recognize that possibility: "Even in the absence of large trading fees and fiat currency deposit/withdrawal policies, price differentials across Bitcoin Exchanges remain; for example, bitcoins on BTC-e traded at a discount of approximately 0.9 percent relative to the average daily weighted price for bitcoins on BitStamp and Bitfinex during the week ended December 26, 2014. During the prior month, prices on BTC-e typically traded at a discount of between zero and five percent."
ucha 12y ago
If the SEC approves it, this would be great news for bitcoin. Assuming the ETF is sufficiently liquid, it would allow: - easy shorting of bitcoins which facilitate price discovery - lower transaction costs. The cheapest and most liquid exchanges still charge .2% per transaction + spread. Most (all?) of them charge you for getting cash in our out of their platform. Buying shares of an ETF would cost just spread + transaction cost charged by your broker which should be much lower (.0035 per share on Interactive Brokers for example) - easy hedging of a real bitcoin position. Let's say you hold a large fluctuating position in bitcoin that would like to hedge in USD. You could continuously convert all your BTC to USD or go long/short the ETF which is much cheaper.
- 7Figures2Commas 12y ago
  > lower transaction costs. The cheapest and most liquid exchanges still charge .2% per transaction + spread. Most (all?) of them charge you for getting cash in our out of their platform. Buying shares of an ETF would cost just spread + transaction cost charged by your broker which should be much lower (.0035 per share on Interactive Brokers for example) The ETF has an associated Sponsor's Fee, to be paid in Bitcoin, that is not yet known. Also, a few relevant sections from the prospectus: > Extraordinary expenses resulting from unanticipated events may become payable by the Trust, adversely affecting an investment in the Shares. > In consideration for the Sponsor’s Fee, the Sponsor has contractually assumed certain operational and periodic expenses of the Trust. See “Business of the Trust—Trust Expenses.” Extraordinary expenses of the Trust (e.g., expenses relating to litigation) and any other expenses that are not assumed by the Sponsor under the terms of the Trust Agreement are borne by the Trust and paid through the sale of the Trust’s bitcoins. Any incurring of extraordinary expenses by the Trust could adversely affect an investment in the Shares. And: > The Trust’s transfer or sale of bitcoins to pay expenses or other operations of the Trust could result in Shareholders incurring tax liability without an associated distribution from the Trust. > Each delivery or transfer of bitcoins by the Trust to pay the Sponsor’s Fee or other expenses will be a taxable event to Shareholders. This or other operations of the Trust could result in Shareholders incurring tax liability without an associated distribution or dividend payment from the Trust. Any tax liability could adversely impact an investment in the Shares and may cause Shareholders to prepare and file additional tax documents. See “United States Federal Income Tax Consequences—Taxation of US Shareholders.” I don't see how anybody actually taking the time to read the prospectus could come to the conclusion that this ETF will provide a lower cost vehicle for investing in Bitcoin.
kumarski 12y ago
I wish the SEC website was properly responsive.
elwell 12y ago
> as measured by the Winklevoss IndexSM (“Winkdex®”)
bobcostas55 12y ago
I think it's really sad that Bitcoin trading ended up being so ridiculously expensive to trade that an ETF listed on traditional markets will drop the costs by an order of magnitude.
Animats 12y ago
This is not a way to "grow Bitcoin". It's a way for a big holder to dump a lot of Bitcoins without, they hope, crashing the market. The terms are awful: "The Shareholders’ limited rights of legal recourse against the Trust, Trustee, Sponsor, Administrator, Trust Agency Service Provider and Custodian and the Trust’s lack of insurance protection expose the Trust and its Shareholders to the risk of loss of the Trust’s bitcoins for which no person is liable." "The Trust will not insure its bitcoins. The Custodian will maintain insurance with regard to its custodial business on such terms and conditions as it considers appropriate in connection with its custodial obligations and will be responsible for all costs, fees and expenses arising from the insurance policy or policies. The Trust will not be a beneficiary of any such insurance and does not have the ability to dictate the existence, nature or amount of coverage. Therefore, Shareholders cannot be assured that the Custodian will maintain adequate insurance or any insurance with respect to the bitcoins held by the Custodian on behalf of the Trust. Further, Shareholders’ recourse against the Trust, Custodian and Sponsor under [New York] law governing their custody operations is limited. Similarly, the Shareholders’ recourse against the Administrator and Trust Agency Service Provider for the services they provide to the Trust, including those relating to the provision of instructions relating to the movement of bitcoins, is limited. Consequently, a loss may be suffered with respect to the Trust’s bitcoins which is not covered by insurance and for which no person is liable in damages." I've never seen terms this unfavorable to shareholders in a prospectus before. They're taking on less liability than Mt. Gox took on. If the Bitcoins mysteriously disappear, no one is liable.
- ucha 12y ago
  You must be right when you say that big players will be able to sell a lot of bitcoins with a measured market impact. That's closely related to an improved liquidity on the markets which will help grow Bitcoin. Otherwise, no large exchange insures bitcoins stored in their cold wallets - which will be the case here. The risks are not well understood/priced yet... http://www.coindesk.com/coinbase-names-aon-bitcoin-insurance-broker/ http://www.coindesk.com/coinbase-names-aon-bitcoin-insurance...
- juliangregorian 12y ago
  Should come as no surprise then that the "Winklevi" have been accused of pump-and-dumping bitcoin before.
foobarqux 12y ago
The real problem with the ETF is that the index used for pricing is not independent.
- patio11 12y ago
  This is mostly irrelevant. The index used for pricing could be a weighted average of Thomas' and my karma, but if the trust was still backed by ~0.2 BTC per share and had working redemption mechanics, one would expect shares to trade around where rational market participants thought 20% of a Bitcoin was worth.
  - deleted 12y ago
    [deleted]
Kiro 12y ago
> In March 2014, it was announced that the twins had purchased seats on Richard Branson's Virgin Galactic shuttle using the profits they had made from Bitcoin. [1] I wonder how much bitcoins they own. [1] http://en.wikipedia.org/wiki/Winklevoss_twins#Bitcoin http://en.wikipedia.org/wiki/Winklevoss_twins#Bitcoin EDIT: From the top of the article: "In April 2013, the brothers claimed they owned nearly 1% of all Bitcoin in existence at the time."
- firloop 12y ago
  On April 3rd, 2013, there were 10,988,125 bitcoins in circulation[1]. 10,988,125 * .01 = about 109,881 BTC. 109,881 * $320 (current market value of bitcoin) = $35,161,920.. not bad. The price of bitcoin in April 2013 was about $138[2]... so if they bought all of them then (I think they got into bitcoin earlier than that so this is unlikely) they would have paid around $15,163,578 for them, so a return of approximately $19,998,342 (131%) from April 2013 to now. [1]: https://blockchain.info/charts/total-bitcoins?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= https://blockchain.info/charts/total-bitcoins?timespan=2year... [2]: https://blockchain.info/charts/market-price?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= https://blockchain.info/charts/market-price?timespan=2year&s...
  - iopq 12y ago
    I heard of them getting into bitcoin when it was still around the $10 mark, they could have even bought in earlier.
murbard2 12y ago
It's not about the liquidity. It's not about shorting. It's not about leveraging. It's a little bit about ease of investing. It's a lot about the fact that once this is available, hordes of brokers can make commissions by recommending their clients buy into this ETF.
anigbrowl 12y ago
I don't think it matters. Per blockchain.info, the volume of Bitcoin transactions is in gradual decline over the last year and seems stuck at about $50m USD/day, despite many more merchants offering to accept payment. Market cap is fairly steep decline and hash rate has been leveling off. https://blockchain.info/charts/estimated-transaction-volume-usd https://blockchain.info/charts/estimated-transaction-volume-... https://blockchain.info/charts/market-cap https://blockchain.info/charts/market-cap https://blockchain.info/charts/hash-rate https://blockchain.info/charts/hash-rate It just struck me that the market cap trend seems to have gone down in very similar fashion tot he price of oil over the last 6 months. If enough people who bought bitcoin did so primarily as a hedge, then you'd expect it to loosely track a basket of popular commodities like oil and gold (the price of which looks quite similar to Bitcoin's market cap over the last year IMHO - http://goldprice.org/ http://goldprice.org/). Can't wait for Google to get their automatic statistician tool online - I don't like statistics well enough to want to use R regularly but I would love a tool that I can use to quickly measure the coupling between different datasets.
- Adlai 12y ago
  The amount of bitcoins being spent is a function primarily of the amount of bitcoins earmarked for spending by the userbase, rather than the number of deals closed by a payment processor's sales team.
justinireland 12y ago
Doesnt the ETF also open the door to institutional funds that are normally restricted to specific assets? Seems to me that is the biggest advantage of a bitcoin ETF as it will open the gates to more capital for bitcoin investments.
- jcliff 12y ago
  This is exactly my thought as well. Not just for institutional money either. This makes it dramatically easier and simpler for retail investors (in both taxable and tax advantaged accounts) to get some exposure to BTC.
gojomo 12y ago
The Winklevosses are most famous for claiming their 'tech guy' ran off with their billion-dollar secrets. Have they become better at managing secrets and 'tech guys'? Because that's what's necessary to safely hold a lot of Bitcoin.
- refulgentis 12y ago
  An amusing oversimplification, but an oversimplification nonetheless. They didn't view it as a "billon-dollar secret", but there's clearly something morally deficient about being contracted to work on something and then moving on with a clone of that something.

155 points by markmassie 12y ago

By being in the general markets, bitcoin will finally have mass access to leveraged trading. The result will be that bitcoin will finally see a 'true bubble'. While the bitcoin price has been decreasing, it's not really been a bubble as the popping of a bubble is usually twice as fast as its inflation, the opposite of which is true in the current bitcoin decrease. A good resource on the connection between leverage and financial bubbles is Kindleberger's "Manias, Panics, and Crashes"

jim_greco 12y ago
You really can't lever up equities all that much. Mom & pop can margin up to 50%. Even professional investors are quite constrained in how much leverage they can apply for outright bets.
- encoderer 12y ago
  Once there is sufficient liquidity you will see options market makers as you do with other ETFs. Additionally, margin is only strictly constrained under reg-t for accounts under $100k or so. Above that level you can request portfolio margin.
- dnautics 12y ago
  Nonetheless I think the culture of bitcoin as it is currently is more leverage averse than normal which is why the decline this year has not been a precipitous one. My point being that the up and down dynamic of bitcoin will start to change.
- cylinder 12y ago
  Which is ridiculous, because an S&P500 index fund is a much less risky asset over 30 years than a 4-bdrm house on Maple St in Anywhere, Michigan, yet 20:1 leverage is available for the latter. Unfortunately the government favors homes as an asset class and has distorted the market with policy. I'd much rather put $50,000 down on something like a 30-yr mortgage for $250,000 in a diversified index fund than do the same in a house. But alas this isn't an available product.
  - refurb 12y ago
    I'd much rather put $50,000 down on something like a 30-yr mortgage for $250,000 in a diversified index fund than do the same in a house. But alas this isn't an available product. I agree with your point, but at the same time I'm not sure I'd want the irrational exuberance that we saw (and will see again) in the real estate market to start happening to equities!

califield 12y ago

They're going to trade Bitcoin under the NASDAQ symbol COIN. I love it!

fennecfoxen 12y ago
I prefer the bit about how the "Delaware Trust Company, a Delaware trust company, acts as the trustee of the Trust". nice name there DTC.

7Figures2Commas 12y ago

The Risk Factors section could be tightened up. "Bitcoin lost over half its value in 2014"[1] would probably suffice. [1] http://www.bloombergview.com/articles/2014-12-23/and-2014s-worst-currency-wasbitcoin http://www.bloombergview.com/articles/2014-12-23/and-2014s-w...

EStudley 12y ago
The price of Bitcoin in early 2014 was based on popularity and hype. I really think that the normalization of a price for Bitcoin is good for the currency, and that's what I've seen happening.
- batbomb 12y ago
  it's still a market and the price could still be mostly hype and the "normalization" is only relative to a previous peak.
- mrgordon 12y ago
  Not to be argumentative, but I see very little indication that any "normalization" is happening in Bitcoin prices unless you simply mean that it is trending downwards more steadily over time. Jan 1, 2014: $770.44 April 1, 2014: $478.72 July 1, 2014: $635.59 October 1, 2014: $381.33 December 31, 2014: $315.33 The numbers above indicate massive volatility. At first glance, it doesn't look as bad from October 1 to December 31, but if you look at the chart then you'll see it went up to $427.24 on November 12 before losing an average of $2.28 per day for a month and a half to get where it is today... I do agree that the earlier prices were simply based on hype though. Typical buy high and sell low behavior.
  - gwern 12y ago
    > The numbers above indicate massive volatility. You could look at an actual calculation of volatility instead of eyeballing some random prices: https://btcvol.info/ https://btcvol.info/ Right now we're in a pretty quiet period after the bubble in Jan 2014.

pnathan 12y ago

Interesting. If accepted, I am tempted to buy a few shares and see what falls out over time.

deleted 12y ago
[deleted]
primitivesuave 12y ago
According to the filing, you would have to buy them in sets of 50,000.
- minimax 12y ago
  That is only for "Authorized Participants" converting between bitcoin and shares in the ETF. It's the so called "creation and redemption" process and virtually all ETFs use a similar scheme. If the shares trade publicly you will be able to buy them one at a time if you want.
nostromo 12y ago
Why not buy bitcoin directly? I get gold trusts, like GLD -- transporting and storing and selling gold is a pain. But it's easy to buy and store Bitcoin using a service like CoinBase. Not to mention the fact that you'll be paying management fees. I suppose if you wanted to put bitcoin in your IRA this would be helpful.
- ssharp 12y ago
  I trust my money in E*Trade, Fidelity, etc. far more than I trust it in any BitCoin wallet service.
  - nostromo 12y ago
    Your broker will not protect you from buying a bad asset. The real question is if you trust the trust and its management. In other words: do you trust the Winklevosses?

minimax 12y ago

This is just a new version of the S-1. The SEC still hasn't approved the ETF for sale.

ssharp 12y ago

Is this the only way to cash out a large amount of BitCoins?

ssharp 12y ago
I see the down votes but I'm genuinely curious. I'm assuming the Winklevi stand to profit from this and hold a large number of BitCoins that would probably be hard to get liquidity from.
- HockeyPlayer 12y ago
  From looking at market volumes, I think a skilled group using trading software could probably sell a few million USD worth of bitcoin per week without giving up a huge edge. But I agree that this is one of the few ways to get liquidity on a huge position.
pc86 12y ago
That's not at all what this is.
tpeng 12y ago
The creation/redemption process is intended for market makers known as Authorized Participants (APs) to arbitrage differences in the ETF price and the underlying price. While, yes, you can sell bitcoins to the trust in exchange for shares of the ETF, you would then need to sell those ETF shares in the market. So in other words, you would only have liquidity if there were demand for the ETF. It's possible that there will be more demand for the ETF than for bitcoins simply because ETFs are more accessible.
wmf 12y ago
No, there are several reputable brokers like SecondMarket and Coinsetter that can do that.
- gaadd33 12y ago
  Could those cash out holdings in the ballpark of the Winklevoss twins? Another comment put their holdings at about 100K BTC. I didn't think there were any exchanges that had near that sort of volume.

benguild 12y ago

I still think it's funny that these guys clearly just went on HN and read about Bitcoin and randomly invested. Good for them though.

giarc 12y ago
I'm sure they did a little more than that.
kavrick 12y ago
Total coincidence that the acronym for the trust's sponsor is MBA's LLC (Math-Based Asset Services, LLC)! :)
rsacco 12y ago
http://explainbitcoinlikeimfive.com http://explainbitcoinlikeimfive.com please don't remain ignorant.
- juliangregorian 12y ago
  Thanks for linking the most condescending site ever. Please also tell me how vaccines don't actually cause autism.
maaku 12y ago
The Winklevoss twins have been active in the bitcoin space since the early days. Mostly as passive investors lending their fame to the asset, admittedly, but they do at least know the technology and the space.

jekrb 12y ago

If you have access to the dev console I highly recommend setting the max-width of the body to 40em. The text spans all the way across the screen by default.

yafujifide 12y ago
I was able to set the width of the body using this command: document.querySelector('body').style['width'] = '40em'; However, setting the max-width did not work: document.querySelector('body').style['max-width'] = '40em'; Any idea why?
- sadgit 12y ago
  Is it not style.maxWidth in that context?
- elmin 12y ago
  CSS attributes become camelCased on the style object. document.body.style.maxWidth = '40em'( Will work.
  - yafujifide 12y ago
    That's it! Thanks.

apaprocki 12y ago

One thing sticks out as a red flag to me: they invented their own spot index (the Winkdex(R)) to price their NAV and that index includes BTC-e. BTC-e is a widely used site in the Bitcoin world, but no one knows who operates it or exactly where they are located (Bulgaria? Russia?). You would seriously base a large component of your index pricing an SEC regulated instrument on a number coming from unknown individuals who can not sign a contract or accept any liability? When people in the Bitcoin world always wonder "Why did X not include BTC-e?? How incompetent!" they never stop to think that there is no one on the other side that can pick up the pen.

minimax 12y ago
This could be one of the reasons the SEC hasn't approved the ETF for sale to the public. The first S-1 for this ETF is dated 2013-07-01, so it's not like the SEC hasn't had time to look at it. That said, there is a whole universe of bizarro exchange traded products in the US equity market so who really knows. I don't think the feedback from the SEC to the Winklevoss brothers has been made public.
rockyleal 12y ago
That's just being consistent with the reality of the Bitcoin market. BTC-e, whatever its structure, is one of the main Bitcoin exchanges, and as such it is necessary that it is represented in the index, else the index would present a distorted picture of the real market.
sheetjs 12y ago
> that index includes BTC-e Not necessarily. All they say is: > The Index Provider’s Winkdex formula provides a volume-weighted, exponential moving average market price by blending trading data from the three largest Bitcoin Exchanges by volume on a list of Index Provider-approved Bitcoin Exchanges. > As of December 26, 2014, the eligible Bitcoin Exchanges include Bitfinex, BitStamp, BTC-e, CampBX and LocalBitcoins. Needless to say, if BTC-e is not one of the three largest BTC exchanges, then it won't be included. Assuming there's a way to verify every trade reported by BTC-e on the blockchain, shouldn't irregularities show up relatively quickly? More importantly, it seems that they do recognize that possibility: "Even in the absence of large trading fees and fiat currency deposit/withdrawal policies, price differentials across Bitcoin Exchanges remain; for example, bitcoins on BTC-e traded at a discount of approximately 0.9 percent relative to the average daily weighted price for bitcoins on BitStamp and Bitfinex during the week ended December 26, 2014. During the prior month, prices on BTC-e typically traded at a discount of between zero and five percent."

ucha 12y ago

If the SEC approves it, this would be great news for bitcoin. Assuming the ETF is sufficiently liquid, it would allow: - easy shorting of bitcoins which facilitate price discovery - lower transaction costs. The cheapest and most liquid exchanges still charge .2% per transaction + spread. Most (all?) of them charge you for getting cash in our out of their platform. Buying shares of an ETF would cost just spread + transaction cost charged by your broker which should be much lower (.0035 per share on Interactive Brokers for example) - easy hedging of a real bitcoin position. Let's say you hold a large fluctuating position in bitcoin that would like to hedge in USD. You could continuously convert all your BTC to USD or go long/short the ETF which is much cheaper.

7Figures2Commas 12y ago
> lower transaction costs. The cheapest and most liquid exchanges still charge .2% per transaction + spread. Most (all?) of them charge you for getting cash in our out of their platform. Buying shares of an ETF would cost just spread + transaction cost charged by your broker which should be much lower (.0035 per share on Interactive Brokers for example) The ETF has an associated Sponsor's Fee, to be paid in Bitcoin, that is not yet known. Also, a few relevant sections from the prospectus: > Extraordinary expenses resulting from unanticipated events may become payable by the Trust, adversely affecting an investment in the Shares. > In consideration for the Sponsor’s Fee, the Sponsor has contractually assumed certain operational and periodic expenses of the Trust. See “Business of the Trust—Trust Expenses.” Extraordinary expenses of the Trust (e.g., expenses relating to litigation) and any other expenses that are not assumed by the Sponsor under the terms of the Trust Agreement are borne by the Trust and paid through the sale of the Trust’s bitcoins. Any incurring of extraordinary expenses by the Trust could adversely affect an investment in the Shares. And: > The Trust’s transfer or sale of bitcoins to pay expenses or other operations of the Trust could result in Shareholders incurring tax liability without an associated distribution from the Trust. > Each delivery or transfer of bitcoins by the Trust to pay the Sponsor’s Fee or other expenses will be a taxable event to Shareholders. This or other operations of the Trust could result in Shareholders incurring tax liability without an associated distribution or dividend payment from the Trust. Any tax liability could adversely impact an investment in the Shares and may cause Shareholders to prepare and file additional tax documents. See “United States Federal Income Tax Consequences—Taxation of US Shareholders.” I don't see how anybody actually taking the time to read the prospectus could come to the conclusion that this ETF will provide a lower cost vehicle for investing in Bitcoin.

kumarski 12y ago

I wish the SEC website was properly responsive.

elwell 12y ago

> as measured by the Winklevoss IndexSM (“Winkdex®”)

bobcostas55 12y ago

I think it's really sad that Bitcoin trading ended up being so ridiculously expensive to trade that an ETF listed on traditional markets will drop the costs by an order of magnitude.

Animats 12y ago

This is not a way to "grow Bitcoin". It's a way for a big holder to dump a lot of Bitcoins without, they hope, crashing the market. The terms are awful: "The Shareholders’ limited rights of legal recourse against the Trust, Trustee, Sponsor, Administrator, Trust Agency Service Provider and Custodian and the Trust’s lack of insurance protection expose the Trust and its Shareholders to the risk of loss of the Trust’s bitcoins for which no person is liable." "The Trust will not insure its bitcoins. The Custodian will maintain insurance with regard to its custodial business on such terms and conditions as it considers appropriate in connection with its custodial obligations and will be responsible for all costs, fees and expenses arising from the insurance policy or policies. The Trust will not be a beneficiary of any such insurance and does not have the ability to dictate the existence, nature or amount of coverage. Therefore, Shareholders cannot be assured that the Custodian will maintain adequate insurance or any insurance with respect to the bitcoins held by the Custodian on behalf of the Trust. Further, Shareholders’ recourse against the Trust, Custodian and Sponsor under [New York] law governing their custody operations is limited. Similarly, the Shareholders’ recourse against the Administrator and Trust Agency Service Provider for the services they provide to the Trust, including those relating to the provision of instructions relating to the movement of bitcoins, is limited. Consequently, a loss may be suffered with respect to the Trust’s bitcoins which is not covered by insurance and for which no person is liable in damages." I've never seen terms this unfavorable to shareholders in a prospectus before. They're taking on less liability than Mt. Gox took on. If the Bitcoins mysteriously disappear, no one is liable.

ucha 12y ago
You must be right when you say that big players will be able to sell a lot of bitcoins with a measured market impact. That's closely related to an improved liquidity on the markets which will help grow Bitcoin. Otherwise, no large exchange insures bitcoins stored in their cold wallets - which will be the case here. The risks are not well understood/priced yet... http://www.coindesk.com/coinbase-names-aon-bitcoin-insurance-broker/ http://www.coindesk.com/coinbase-names-aon-bitcoin-insurance...
juliangregorian 12y ago
Should come as no surprise then that the "Winklevi" have been accused of pump-and-dumping bitcoin before.

foobarqux 12y ago

The real problem with the ETF is that the index used for pricing is not independent.

patio11 12y ago
This is mostly irrelevant. The index used for pricing could be a weighted average of Thomas' and my karma, but if the trust was still backed by ~0.2 BTC per share and had working redemption mechanics, one would expect shares to trade around where rational market participants thought 20% of a Bitcoin was worth.
- deleted 12y ago
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Kiro 12y ago

> In March 2014, it was announced that the twins had purchased seats on Richard Branson's Virgin Galactic shuttle using the profits they had made from Bitcoin. [1] I wonder how much bitcoins they own. [1] http://en.wikipedia.org/wiki/Winklevoss_twins#Bitcoin http://en.wikipedia.org/wiki/Winklevoss_twins#Bitcoin EDIT: From the top of the article: "In April 2013, the brothers claimed they owned nearly 1% of all Bitcoin in existence at the time."

firloop 12y ago
On April 3rd, 2013, there were 10,988,125 bitcoins in circulation[1]. 10,988,125 * .01 = about 109,881 BTC. 109,881 * $320 (current market value of bitcoin) = $35,161,920.. not bad. The price of bitcoin in April 2013 was about $138[2]... so if they bought all of them then (I think they got into bitcoin earlier than that so this is unlikely) they would have paid around $15,163,578 for them, so a return of approximately $19,998,342 (131%) from April 2013 to now. [1]: https://blockchain.info/charts/total-bitcoins?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= https://blockchain.info/charts/total-bitcoins?timespan=2year... [2]: https://blockchain.info/charts/market-price?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= https://blockchain.info/charts/market-price?timespan=2year&s...
- iopq 12y ago
  I heard of them getting into bitcoin when it was still around the $10 mark, they could have even bought in earlier.

murbard2 12y ago

It's not about the liquidity. It's not about shorting. It's not about leveraging. It's a little bit about ease of investing. It's a lot about the fact that once this is available, hordes of brokers can make commissions by recommending their clients buy into this ETF.

anigbrowl 12y ago

I don't think it matters. Per blockchain.info, the volume of Bitcoin transactions is in gradual decline over the last year and seems stuck at about $50m USD/day, despite many more merchants offering to accept payment. Market cap is fairly steep decline and hash rate has been leveling off. https://blockchain.info/charts/estimated-transaction-volume-usd https://blockchain.info/charts/estimated-transaction-volume-... https://blockchain.info/charts/market-cap https://blockchain.info/charts/market-cap https://blockchain.info/charts/hash-rate https://blockchain.info/charts/hash-rate It just struck me that the market cap trend seems to have gone down in very similar fashion tot he price of oil over the last 6 months. If enough people who bought bitcoin did so primarily as a hedge, then you'd expect it to loosely track a basket of popular commodities like oil and gold (the price of which looks quite similar to Bitcoin's market cap over the last year IMHO - http://goldprice.org/ http://goldprice.org/). Can't wait for Google to get their automatic statistician tool online - I don't like statistics well enough to want to use R regularly but I would love a tool that I can use to quickly measure the coupling between different datasets.

Adlai 12y ago
The amount of bitcoins being spent is a function primarily of the amount of bitcoins earmarked for spending by the userbase, rather than the number of deals closed by a payment processor's sales team.

justinireland 12y ago

Doesnt the ETF also open the door to institutional funds that are normally restricted to specific assets? Seems to me that is the biggest advantage of a bitcoin ETF as it will open the gates to more capital for bitcoin investments.

jcliff 12y ago
This is exactly my thought as well. Not just for institutional money either. This makes it dramatically easier and simpler for retail investors (in both taxable and tax advantaged accounts) to get some exposure to BTC.

gojomo 12y ago

The Winklevosses are most famous for claiming their 'tech guy' ran off with their billion-dollar secrets. Have they become better at managing secrets and 'tech guys'? Because that's what's necessary to safely hold a lot of Bitcoin.

refulgentis 12y ago
An amusing oversimplification, but an oversimplification nonetheless. They didn't view it as a "billon-dollar secret", but there's clearly something morally deficient about being contracted to work on something and then moving on with a clone of that something.