(duplicate) What is Grayscale Bitcoin Trust (GBTC)?

Grayscale Bitcoin Trust (GBTC) background

The Grayscale Bitcoin Trust was first established in 2013 by Barry Silbert, who also is the Founder and CEO of Digital Currency Group (DCG), a bitcoin and blockchain investment company that has invested lots of popular company like Ripple, Coinbase, Coindesk, Circle, Kraken, and Chainalysis. Grayscale Bitcoin Trust is sponsored by Grayscale Investments, LLC (“Grayscale”), which claims to be the largest digital currency asset manager. GBTC is a bitcoin investment trust exclusively investing in Bitcoin. Through GBTC, you can buy, hold, and sell bitcoin as you do with stocks without worrying about the complex operation around bitcoin.

Why GBTC

There are a few important differences between GBTC and bitcoin, below are a few features that mark the advantages of GBTC.

Simplifying buying and holding bitcoin with guaranteed safety. To own a bitcoin, you need to know where to buy and sell bitcoin. To store bitcoin safely, you need to manage crypto wallets, crypto account, and private key. You will lose the bitcoin if you forget the private and the private is disclosed to others or is hacked. With GBTC, you don't need to worry about the problems in buying, storing, and safekeeping BTC on your own. You can gain exposure to BTC in the form of security similar to buying a stock.

Regulation. GBTC is the first publicly-quoted bitcoin investment tool on OTCQX (OTCQX: GBTC). GBTC and GETH became SEC reporting companies on January 21, 2020 and on October 5, 2020 respectively.

Tax Convenience. GTBC share is like stock and bond which is friendly for tax paying. So you don't need to worry about how to fill the tax return when you hold bitcoin directly.

Tax advantage. GBTC is eligible to be held in certain IRA, 401ks, Roth IRA, and other brokerage and investor accounts.

GBTC stock, fee and returns

As of October 30, 2020, Grayscale has assets under management of $$6.4 billion and has 502,488,200 shares with one GBTC representing 0.00095336 bitcoin. The price per share is roughly approximate the value of the bitcoin represented in the share, but those two can be substantially different. As of October 30, 2020, GBTC has around 479,052 bitcoins.

GBTC's annual management fee is 2%. At close as of 10/30/2020, the GBTC share has a return of 9,021.43% since its inception on Sept 25, 2013.

There are two ways to buy GBTC shares. You can purchase GBTC shares directly if you are an accredited investor and the minimum investment requirement is $50,000. But this way of buying is restricted and subject to significant limitations on resale and transferability. For General Investors, with no requirement to be an eligible investor, you can buy GBTC stock through OTC Markets like the OTCQX. The GBTC stock price fluctuates like a stock, you can visit price indexes like Yahoo , OTCMarkets and TradeBlock.

Grayscale crypto trust diversity

To take advantage of crypto trust, Grayscale has extended to other major cryptos besides bitcoin. It now provides crypto trusts including Grayscale Bitcoin Cash Trust (BCH), Grayscale Ethereum Trust (ETH), Grayscale Ethereum Classic Trust (ETC), Grayscale Litecoin Trust (LTC), Zcash Trust (ZEC) and more.

More bitcoin derivatives and more institutional investors

We have been seeing more investment derivatives and more direct institutional investors, which could make bitcoin and crypto a more mature market.

Bitcoin and crypto funds. 3iQ, founded in 2013, was the first Canadian regulated investment fund manager to manage a public bitcoin investment fund (TSX:QBTC.U) and multi-crypto asset fund. Arrano Capital, the blockchain arm of Venture Smart Asia, was the first crypto fund approved by Hong Kong's Securities and Futures Commission (SFC).

Bitcoin Futures. Bakkt, owned by Intercontinental Exchange, the owner of the New York Stock Exchange, is the most famous in providing bitcoin futures provides. 

Bitcoin ETF. There are no regulated ETF products yet in major countries.

Institutional bitcoin investors. MicroStrategy currently holds a total of 38,250 Bitcoins with an aggregate purchase price of $425 million and an average price of $11.11k. Square now holds 4,709 bitcoins with a purchase price of $50 million.