Beginners Guide

A Detailed Guide on ETF- Exchange Traded Fund

Written by: Nidhi Kolhapur

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Nidhi Kolhapur

Nidhi is a Certified Digital Marketing Executive and Passionate crypto Journalist covering the world of alternative currencies. She shares the latest and trending news on Cryptocurrency and Blockchain.

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Jun 27, 2019

While Bitcoin Futures contracts already exist, what is an Exchange Traded Fund (ETF)? Here, we explore what a Bitcoin ETF is, and unpack its difference from a ‘blockchain ETF’.

So let’s start :

What is a Bitcoin ETF and How it works?

ETF is commonly known as an ‘exchange-traded fund’. It is a type of investment fund that tracks the performance of a particular asset, such as gold, oil, an index or stocks. 

One important thing about ETF is investors can trade holdings in an ETF to other market members over the stock exchange. 

A Bitcoin ETF will have the digital currency bitcoin as an asset or which tracks the performance of Bitcoin. It means the investor holding a bitcoin ETF is like indirectly purchasing Bitcoin but not the actual Bitcoin itself. This helps the investor to be free from the process of complex storage and security procedures. 

Moreover, the ETF will be closely following the price of bitcoin, as for the investor it should make little difference whether they are holding a bitcoin ETF or the actual digital currency.

The difference of buying a Bitcoin ETF v/s Bitcoin would be like investors purchasing a regulated investment channel that they can buy and sell on exchanges, instead of having to buy and securely store the actual bitcoin.

Why to Invest in a Bitcoin ETF

Ok, you will be wondering now, bitcoin ETF follows and reflects the price of the actual cryptocurrency itself, then why to have an intermediate?  we can invest directly in bitcoin and trade. 

Let me explain to you, there are many reasons why you should use Bitcoin ETF. One of the main reason is already mentioned above, where investors don't have to think about ...

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