The growth of Bitcoin has been nothing short of phenomenal. With a market capitalization a little shy of 100 billion dollars, Bitcoin is, by far, the undisputed king of the cryptocurrency economy.
Since its inception, Bitcoin has become the gold standard for other cryptocurrencies. The steady growth in usage and value Bitcoin enjoys saw its exchange value balloon to 20,000 dollars in late 2017.
While those heady days are long behind us and the bubble finally calm; nevertheless, Bitcoin is still the cryptocurrency of choice for most investors and buyers. It is not hard to see why: Bitcoin is the safest cryptocurrency to invest in.
With that established, how do you, then, invest in Bitcoin? Rather, should you invest in Bitcoin directly or buy Bitcoin stock? This post will teach you how.
Top reasons people avoid buying Bitcoin directly
With the vaunted safety and security of Bitcoin, many are still not convinced about investing directly in Bitcoin. Their reason is quite obvious: the cryptocurrency market is constantly in a state of flux, and the uncertainty surrounding regulation and prices of coins make organizations and individuals to be extra cautious about investing directly in Bitcoin.
Of worthy consideration also is the issue of security. Cryptocurrencies are notoriously vulnerable to hacks and scams. In 2018 alone, 1.7 billion dollars were lost to hackers. With this in mind, potential investors are wary of putting their hard earn money on the line.
These reasons, among others, are major deterrence to the wide acceptance of and investment in Bitcoin and other alternative coins.
Bitcoin Funds: what you need to know
Although there is a present fear about the safety and security of Bitcoin, people are coming up with creative ways to guarantee the safety of their investments: Bitcoin Investment Trust is one of them.
Bitcoin Investment Trust (NASDAQOTHC: GBTC) is an alternative and indirect way of investing in Bitcoin. Bitcoin Investment Trust allows investors to buy Bitcoin without direct exposure to the market. In other words, Bitcoin Investment Trust holds a certain amount of Bitcoin (about 200,000 Bitcoin), and individuals and institutions can buy shares in the trust, which give them indirect ownership of coins equivalent to the amount of their share.
Grayscale Investment Trust sponsors Bitcoin Investment Trust, and each shares of the trust is worth about 0.001 Bitcoin. Through Bitcoin Investment Trust, individuals find it easy to buy stock in Bitcoin and also get exposure to Bitcoin without directly buying it.
Issues with Bitcoin Stock
No doubt, buying shares in Bitcoin Investment Trust is beneficial for casual investors. It is easy and helps you maintain only one account. It is easier to trade with Bitcoin Investment Trust, too.
However, there are recurring issues with buying stock or shares in BIT. One of them is charges. Grayscale Investment Trust charges shareholders 2 percent of their total asset to manage the fund. This has become problematic as shareholders complain that the charges eat into the asset of the trust because Bitcoin does not generate regular income for GBTC shareholders.
Also, there are talks of high fees for prices of Bitcoin. GBTC typically sells Bitcoin way above the general market price as seen in their September 2017 trading of Bitcoin. The reason is due, in part, to the high demand of Bitcoin against its short supply.
More so, Bitcoin Investment Trust does not guarantee everyday trading as it opens only on working days, leaving out weekends. Shareholders, therefore, are not able to trade all the time with GBTC.
There is nothing like buying your Bitcoin directly from exchange platforms. It might be complicated at first, but in the long run, it will be worth it.
Bitcoin fund is more expensive to buy and manage. Direct buying and trading of Bitcoin will save you extra cost and likely gain you more profit.