Cryptocurrency

What’s the Difference: Bitcoin stocks vs Bitcoin

April 25, 2019

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What’s the Difference: Bitcoin stocks vs Bitcoin

Bitcoin stocks vs Bitcoin - CoinCola

Over the past decade, Bitcoin has done exceedingly well as an asset. Even some of its less successful years – 2015 (+37%) and 2014 (+13%) – still turned in impressive performances in terms of value gained.

More exciting, of course, are Bitcoin’s good years. The cryptocurrency gained 1500% in 2011, 5400% in 2013, and 2,222% in 2017. These are outstanding results for any asset. When delivered by a single cryptocurrency, they’re truly incredible.

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This, in a nutshell, is why so many people want to invest in Bitcoin. It’s already performed incredibly well time and again, and the technology is still in its early stages of mass adoption. The sky appears to be the proverbial limit.

Why don’t people just invest in Bitcoin directly?

A few things stop some investors from buying Bitcoin and other cryptocurrencies directly. For starters, the process of creating a wallet, securing it, going through KYC checks, and buying Bitcoin is relatively complicated – especially for people who aren’t crypto natives.

Another factor is that Bitcoin is unregulated. This is a concern for institutional investors, people looking to add a new asset to their pension plan, and many other investor classes (including banks).

Last but not least, many organizations and individuals are simply reluctant to try new things. Given that their money is at stake, it’s hard to blame them; especially when it’s possible to invest in Bitcoin via funds and stocks.

How Bitcoin funds work

Bitcoin stocks vs Bitcoin - CoinCola

Not all investors want to buy Bitcoin directly. Fortunately, there are over-the-counter funds and stocks that make it possible to invest in Bitcoin indirectly. Here’s how that works.

Let’s say a Swiss Fund or a US company buys a certain number of Bitcoin tokens. The organization then stores these using cold wallets tucked away in remote vaults. Afterward, it issues shares and sells them publically.

The result is a stock or fund share whose price is directly linked to that of a Bitcoin. This way, a crypto asset becomes security that can, for example, be sold in OTC stock marketplaces.

This convenient workaround lets investors who wouldn’t usually work with Bitcoin do so anyway. Some of the funds and companies in question do exceedingly well. For example, investors gave the Grayscale Bitcoin Trust 2 million USD each week through Q4 2018: an impressive number by any measure.

The problem with Bitcoin funds and stocks

Bitcoin Investment - CoinCola

Although funds have a number of advantages, they also have one important disadvantage. They come with a price premium that can vary from 10% to over 100% depending on market sentiment, news, the country, etc.

In addition to the premium, many companies issuing Bitcoin securities charge fees. For example, Grayscale Bitcoin Trust has an annual fee that works out to about 2% of a Bitcoin’s price each year.

That may not be a big number – but if you want to make a long-term investment, fees and costs like these really add up over time. In that sense, it might be worth figuring out how to invest in Bitcoin directly unless you plan to sell quickly.

Where can you buy Bitcoin easily and safely?

If you’re serious about investing in crypto, it’s worth getting your own wallet and buying Bitcoin directly.

If that sounds like something you want to do, you may be interested in our offer. Our business – CoinCola.com – is a hybrid Crypto Exchange and OTC Marketplace where users can buy Bitcoin and major altcoins like Ethereum quickly and easily.

The fact that we currently process over 100,000 transactions per month speaks to the trust our users have in us. If you’d like to learn more about how we work and what we do, or start buying Bitcoin today, go to coincola.com to learn more.

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About CoinCola

Founded in 2016, CoinCola is a Hong Kong based company offering both over-the-counter cryptocurrency trading and crypto-to-crypto pair trading exchange. CoinCola now serves millions of users from over 150 countries with our fast, secure, and reliable trading services. We support BTC, ETH, BCH, LTC, USDT, DASH, and XRP. Visit www.coincola.com to invest in digital assets.

Disclaimer: Trading and investing in cryptocurrencies, also called digital currencies, crypto assets, and so on) involves substantial risk of loss. All informations are used at your own risk, and any content on this site should not be relied upon as advice or construed as providing recommendation of any kind.