5 Minute Bitcoin
- This an article series devoted to explaining one Bitcoin topic in 5 minutes.
Bitcoin ETF
Introduction
What is a Bitcoin ETF?
What is an ETF ?
- An ETF is fund, which normally is comprised of a basket of 100 or more stocks.
- When you buy shares of the fund, these shares represent a share of ownership of the whole basket of stocks.
Single Asset ETF
- An ETF fund can be a basket of a single asset.
- The single asset or commodity is actually purchase by the fund or pool.
- In this instance buying a share of the fund gives you a percentage of ownership of the single asset or commodity.
Why do we need ETFs?
- ETF's serve two main functions, as I understand them.
- First, ETFs allow us to get a more diversified portfolio then we otherwise wold be able to have, this reduces our risk of loss and increases our chance of profit. For example, investing in the ETF SP500 allows you to invest in a fund owning the top 500 stocks in the New York Stock Exchange in terms of performance the year before. The fund owns 500 different companies, a level of diversification and risk reduction almost impossible for a small investor. This also increases chance of picking profitable companies much more likely.
- The second reason ETFs exist is to provide investors a way to invest in a asset or commodity not listed on the New Yoork Stock Exchange. The Fund manager buys this asset or commodity and owns it in the fund, and tjhen you can buy shares of the fund, so you own a share of the monetary value of the asset or commodity. Share price usually tracks the dollar value of the fund asset, so this is a good way to profit off the appreciation of the asset or commodity.
What is Bitcoin ETF
- A Bitcoin ETF, is a single asset investment pool, and the only asset it contains Bitcoin.
- A Bitcoin ETF allows you to buy a share of a fund which owns Bitcoin.
- If you buy shares of a Bitcoin ETF, you own shares of a fund, which owns Bitcoin.
- So while you can’t buy Bitcoin for your retirement account, you can buy ownership shares of a fund which owns Bitcoin, called a Bitcoin ETF.
Indirect investment versus Direct Investment
- This investment is called an indirect investment.
- A direct investment would mean buying bitcoin.
- An indirect investment means you own ownership shares of a pool or fund which owns bitcoin.
- Now you know what a Bitcoin ETF is, and why it is necessary.
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I like this idea, 5 minute Bitcoin.
This is a decent 5 Minute Bitcoin article, but I think it can be made clearer.
I read your Bitcoin Futures ETF articleand it is clearer.
I guess your getting better as you go along, and there is nothing wrong with that
I am glad you enjoyed the article. I will review it to see if it clarity can be improved.
I Upvoted and reblogged.
Thank you
your welcome
I wasn't aware of the series before now. I think this one is helpful.
I am glad you found it helpful
Upvote and Reblog
Thanks
Nice explanation. Although we now have an actual Bitcoin ETF in addition to the Bitcoin Futures ETF, we still cannot buy Bitcoin, only a share of the ETF which owns Bitcoin. It's important that we understand these things, and your 5 Minute Format makes this easy.
Thanks, that understanding is the goal
5 Minute Bitcoin
Check out these short articles on Hive COmmunity Bitcoin for beginners
Nice graphic
5 Minute Bitcoin
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Thank you
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