The Many Sides of Bitcoin: A Currency, Payment System & Investment Vehicle in One
Many have wondered over the last couple years if Bitcoin was a fad that would eventually crash and burn or the future of money as we know it. The online payment system has experienced huge jumps and dips in market capitalization since it launched in 2009 and is currently hovering a bit above $3 billion. Until now, "investing" in it meant owning the digital currency outright, mining it or putting money into technical instruments or apps that support it.
But Bitcoin just got a lot more accessible. On May 18, 2015 a Swedish mining company called KnCMiner, through its affiliated entity XBT Provider listed Bitcoin Tracker ONE (Ticker: BITCOIN XBT), the first Bitcoin-based security on a regulated exchange. This new exchange-traded note (ETN) was listed on Nasdaq Stockholm and provides investors with convenient access to returns of the underlying reference price of Bitcoin.
Bitcoin’s main functionality is that of a peer-to-peer, decentralized online "currency" that relies on a computationally intensive decryption process called mining, and a public ledger of all transactions of Bitcoin between "wallet" holders called the Blockchain that eliminates the need for an intermediary or central bank. It also serves as a payment system, and hundreds of thousands of online retail businesses have started accepting Bitcoin for payment, along with standard credit cards. Investors who have been hesitant to purchase Bitcoin but are still curious about the craze it’s created could find Bitcoin-based trading vehicles to be comfortable middle ground.
Several other Bitcoin-based products are also slated to be introduced this year, including the highly anticipated U.S. exchange-traded fund (ETF) from the WinkleVoss twins. Whether Bitcoin is on its way to competing with Gold for market cap or the U.S. Dollar as a universal means of payment is yet to be determined, but one thing that is clear: awareness and products associated with it are growing by the truckload.
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Oliver Albers, VP Global Information Services, Nasdaq