Difference Between Bitcoin Fund and Bitcoin ETF (With Table)

“Every informed person needs to know about Bitcoin because it might be one of the world’s most important developments.” This is a quote by the two-time Nobel Peace Prize nominee, Leon Louw. And this perfectly explains how important it has become to get knowledge about Bitcoin and cryptocurrency in general.

Bitcoin is no doubt the largest form of cryptocurrency. It has now become a very popular item to invest in. Many major companies own this cryptocurrency, and some even have started using them to pay the salary of their employees. Bitcoin Funds and Bitcoin ETF are ways for casual people to invest in Bitcoin as a group.

Bitcoin Fund vs Bitcoin ETF

The difference between Bitcoin Fund and Bitcoin ETF is that Bitcoin ETF can only be purchased and sold at the market trading time. In contrast to that, Bitcoin Fund has a longer period of time where they can be traded. Also, Bitcoin Fund has been in the market for a longer period of time than Bitcoin ETF.

Bitcoin Fund is a pool of resources by a number of investors who invest in Bitcoin for the result of profit in the future. There are many companies now that one can invest in to take a part of the Bitcoin Fund. Different companies have different charges that they require to do all the hassle work for the person, like storing and providing security.

Bitcoin ETF is short for Bitcoin exchange-traded funds. They allow the public to more easily buy and sell, all over trade this particular cryptocurrency easier and at a lower price. Not only it, but Bitcoin ETF’s are said to be more secure and provides help in the problem of storage.

Comparison Table Between Bitcoin Fund and Bitcoin ETF

Parameters of ComparisonBitcoin FundBitcoin ETF
Another nameBTC fundBitcoin Exchange-Trade Fund
Tax implicationsBitcoin Fund lacks in tax implications if to be compared with ETFs.They have clearer tax implications.
Founder CompanyGrayscale Bitcoin Trust (GBTC).The Purpose Bitcoin ETF (BTCC) and the Evolve Bitcoin ETF (EBIT)
Year of launch20132021
 LiquidityFunds take more time to liquidate.Bitcoin ETF’s are a little easier to liquidate in comparison to Funds.

What is Bitcoin Fund?

Bitcoin Fund is a type of fund where a group of people can pool their resources and investments and start to trade, that is, the selling and purchasing of Bitcoins over the internet. These types of funds are invested by accredited investors only. Some popular Bitcoin Funds include the Osprey fund, etc.

The client-facing Bitcoin Fund is a new thing, though not being popular right now but is slowly getting better while it receives reputation as more and more people start to get the value of Bitcoin and what advantages the currency can bring to the people.

These Bitcoin Funds can be used by long-term wealth creators by someone who is just getting into the cryptocurrency, Bitcoin market and wants to learn the basics of things. The largest Bitcoin Fund is the Grayscale Bitcoin Trust, which the also known as GBTC. It is estimated at $37 billion that holds Bitcoins for a long period of time.

What is Bitcoin ETF?

Bitcoin ETF is a bundle of pooled resources by a number of investors. They are used by these investors in order to diversify their portfolio. The first official ETF “COIN” bitcoin ETF was released in 2013, but it was rejected. The Purpose Bitcoin ETF (BTTC) is the first-ever Bitcoin ETF to be created. The company takes a management fee of 1% from the investor.

Bitcoin ETF is particular is an investment that tracks the performance of the purchased item or asset. One does not need to trade in Bitcoins if they buy Bitcoin ETF. This is the biggest reason that people choose to invest in Bitcoin ETF rather than purchasing Bitcoin itself. The Investor does not have to deal with the security procedures, and it provides any storage problem.

Bitcoin ETFs, like Bitcoin Funds, is different from actively managed funds since both of them are used for investment as a long-term wealth creation by the investors. The buyer will buy Bitcoin ETF for his or her client and hold it in cold storage where there is no risk of trading. Instead of trading on a cryptocurrency chart, as a Bitcoin would, A Bitcoin ETF would trade in a type of market exchange.

Main Differences Between Bitcoin Fund and Bitcoin ETF

  1. Bitcoin Funds need to be actively managed by the investors or their managers, but Bitcoin ETFs can be passively managed and used as a long-term investment.
  2. Bitcoin ETFs are considered easier to liquidate in comparison to Bitcoin Funds.
  3. Bitcoin Funds are more in number in the market than in comparison with bitcoin ETFs.
  4. Closed-end Bitcoin Funds can only hold a particular number of shares for people. In comparison, Bitcoin ETFs can create new shares.
  5. Bitcoin Funds are older, the year being 2013 than Bitcoin ETF, where the first Bitcoin ETF launched in 2021.

Conclusion

Now, it has become quite vital to know the latest technology and how these cryptocurrencies work. Why? Because now it is the rule of the earth It is the survival of the fittest and now choosing other investments like gold, house, etc. Have become old ways, and people are moving to these new trends that they see can work as the better investment for the future.

The cryptocurrency, and in that particular, Bitcoin Fund and Bitcoin ETF, provide a lot of advantages over the other ways for investment for the future, especially for people who are new to the cryptocurrency field. A big example would be that these items are not physical, so they can not be destroyed by any irregular activity.

References

  1. https://www.sciencedirect.com/science/article/pii/B9780128021170000278
  2. https://ieeexplore.ieee.org/abstract/document/8740574
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