Bitcoin is probably the currently most exciting development with an appeal that cuts across a wide variety of industries. Bitcoin a digital currency; hence, it has applications in the finance industry, e-commerce, technology, global economy and trade, and it could even upend geopolitical paradigms.
Al Gore, 45th Vice President of the United States says “ I think the fact that within the bitcoin universe an algorithm replaces the functions of [the government] … is actually pretty cool. I am a big fan of Bitcoin” More so, Ben Bernanke, former Chairman of the Federal Reserve says “[Virtual Currencies] may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.”
The fact that Bitcoin holds such a widespread appeal and the fact that it has the potential to rewrite the history of the world has brought it into limelight in the investment community. Now, investors are looking for ways to invest in Bitcoin in order to get a first-mover advantage. This article provides insight into two of the major opportunities for investing in Bitcoin.
Meet Bitcoin IRA
Bitcoin IRA is the smartest way to invest in Bitcoin especially for smart folks who understand that the government is not likely to keep its end of the bargain if social security fails during their retirement. A BitcoinIRA package provides you with a great opportunity to invest exclusively in Bitcoin for retirement instead of dividing your retirement portfolio between bonds, stocks and other IRA-eligible assets.
With BitcoinIRA, you’ll buy Bitcoin directly from exchanges and keep them in your digital wallet in secured vaults. After buying the Bitcoin, you’ll sit back and watch your investment grow as the adoption of Bitcoin continues to accelerate.
Meet GBTC (Bitcoin Investment Trust)
GBTC (Bitcoin Investment Trust) provides investors with an opportunity to invest in Bitcoin through the familiar vehicle of a publicly traded security. Bitcoin Investment Trust was established in 2013 with the symbol “GBTC”. It has about $102.77M in assets, shares outstanding of 1.86M, and each share of GBTC will buy you about 0.09414055 BTC.
The main selling point of GBTC is that it allows you to invest in Bitcoin without worrying about buying, storing, or selling your Bitcoin. More so, you can easily buy or sell GBTC shares during a trading session at USD prices without having to do complex calculations on how much your Bitcoin is worth per time.
Bitcoin IRA VS GBTC
The first difference between BitcoinIRA and GBTC is that BitcoinIRA gives you direct exposure to Bitcoin while GBTC gives you an indirect exposure to the digital currency. In essence, the value of your Bitcoin IRA portfolio is influenced by the fundamental forces of demand on and supply on Bitcoin.
Conversely, the value of your GBTC holdings will be influenced by fundamental factors, technical analysis, speculation, spread, volatility index, momentum, and volume price actions among other things. Hence, many things could potentially go wrong with an indirect investment in Bitcoin using GBTC than through a direct investment with BitcoinIRA.
Secondly a direct investment in Bitcoin through Bitcoin IRA could be potentially more rewarding than an indirect investment through GBTC. A unit of Bitcoin currently trades around $612 while a share of GBTC trades for about $87. Interestingly, Bitcoin has a market value of $9.733B with total Bitcoin mined at 15,914,350. In contrast, GBTC has about $102.77M in assets, shares outstanding of 1.86M.
In the last one year, Bitcoin has gained 151.57% from October 7, 2015 to October 6, 2016. Bitcoin started at $243.27 one year ago, it made a one-year high of $768 in June, and it currently trades around $612. In the same period, specifically from January 25, 2016 to October 6, 2016, GBTC has gained 81.03%.
Thirdly, BitcoinIRA offers you much more freedom than a GBTC portfolio. Once you have set up a self-directed IRA, you can buy and invest in Bitcoin for retirement by setting up a contribution schedule. More so, you can easily rollover your 401k or rollover your IRA into a Bitcoin IRA for bigger returns. In contrast, GBTC is subject to many constraints such as being a pre-approved investor. More so, GBTC subjects investors to a 2% annual fee on their portfolio.
There are advantages to direct Bitcoin investments through BitcoinIRA and indirect Bitcoin investments though GBTC. However, the individual investor will be better served opting for a direct Bitcoin investment through BitcoinIRA because it gives you greater control over your portfolio.