And most of those who had scoffed at the idea it would ever become more than a novelty, used only by nerds and libertarians. There’s only a small constituency of individuals that even understand what bitcoin is, let alone how to trade it and transact it.
Bitcoin rallied more than 30% from February 9 to March 3 as traders speculated the SEC will approve at least one of the three proposed bitcoin-focused exchange-traded funds by a March 11 deadline.
Now the ways of buying and investing in bitcoin are fairly limited: on online exchanges or through a trust that charges premium prices.
By now, the earliest investors have enjoyed astronomical gains. Soon after my first article was published, I bought a high-end graphics card to “mine” Bitcoin on my home computer. Now it’s nearly three times that value. It’s designed for secure financial transactions that require no central authority – no banks, no government regulators.
However, given the motivation to reject the Winklevoss’ ETF, Bogart considers it unlikely these two will have more luck with the SEC.
Today such small-time Bitcoin mining is impractical to the point of being impossible.
However, doors for supporters of digital currency are not completely closed as the SEC maintained that it could consider the proposal (for an ETF) if regulated markets are developed.
Major exchanges have suspended bitcoin withdrawals, ostensibly to put in place tighter anti-money laundering measures. This means that anyone who trades on the NYSE will be able to invest in Bitcoin (including large institutional investors). This influx of new investors would then drive the price of bitcoin up. As long as the fundamentals of the currency are not altered, meaning that no more than the initial ~21 million bitcoin can be issued, we believe that the price has nowhere to go but up from here.
The Winklevoss’ company is not the only planned bitcoin ETF, however.
Now you’ve got your first bitcoin, where can you spend it? The “Winklevoss Bitcoin Trust” was created essentially to provide exposure for commodity buyers to bitcoin, operating like an investment fund that can be traded like stocks.
The decision was an disappointing resolution to the Winklevoss twins’ almost four-year-long journey to be the first creators of an exchange-traded fund (ETF) out of bitcoin, the cryptocurrency launched by a mysterious creator and once known for fueling online drug marketplaces. For conventional investors, bitcoin remains the source of instability and risk. But thanks to the active community, effects were negligible, which has, in turn, increased the credibility of Bitcoin. But the Winklevoss twins are hopeful that the commission will come around to working with them on bringing an EFT to market.