Today we’re going to talk about What is Grayscale Bitcoin Trust and how does it work?
The Grayscale Bitcoin Trust is a digital currency investment product that individual investors can buy and sell in their own brokerage accounts.
Grayscale Bitcoin Trust gathers money, usually U.S. dollars , from institutional investors and uses that to buy BTC directly. These BTC are stored in the Grayscale fund, which essentially makes the Grayscale institution rather than its investors the actual owners of BTC. You can then buy shares of GBTC and indirectly own Bitcoin.
The Grayscale Bitcoin Trust gives the customers the chance to trade bitcoin in return for a premium on the stock market. GBTC is not just about the same as compared to Bitcoin. The GBTC is an investment trust or fund that stores Bitcoin on your behalf and secures it. You buy shares of the trust when you buy GBTC. On the other side, when you purchase Cryptocurrencies, you buy the Bitcoin cryptocurrency directly and do not share in a Bitcoin investment trust.
Let us dig deeper into what the Grayscale Bitcoin Investment Trust is and its overall aspects now,
GBTC is a platform intended which allows conventional investors to be introduced to bitcoin, where BTC can be bought by individuals from their retirement and stock trading accounts. Grayscale Bitcoin Trust is a financial vehicle that allows investors to swap trust securities containing broad Bitcoin poolstional asset, you can only trade it on weekdays, and only selected investors can trade it. The shares in the fund follow Bitcoin’s price. Several other exchange traded assets are also provided by Grayscale, including Ethereum, Bitcoin Cash, and Litecoin, etc.
How does the Grayscale Bitcoin Trust work?
A private pool of wealthy investors is welcomed by Grayscale to contribute cash to the fund, which it uses to acquire large quantities of Bitcoin. The fund is then released by Grayscale on public stock markets to ensure that anyone can sell shares in it. The shares of the fund would trade at the actual Bitcoin price at either a premium or a discount.
Bitcoin Investment Trust partners with Xapo, a wallet service for cryptocurrencies. Xapo stores all the bitcoins of the Grayscale Bitcoin Trust in cold storage safe, disconnected and on an actual physical device, essentially stopping any unauthorized Internet access.
When Grayscale Bitcoin Trust carries on these new obligations, they charge a 2% monthly maintenance fee to their customers, which is very costly relative to most trusts for other cryptocurrencies. Bitcoin still has a fair share of payments, even though the rates paid are a little expensive. The fees paid for bitcoin trading will easily surpass the 2% charged to the trust, depending on the exchange.
Bitcoin Trust , Bitcoin Cash Trust , Ethereum Trust , Ethereum Classic Trust , Horizon Trust , Litecoin Trust , Stellar Lumens Trust , XRP Trust , Zcash Trust , and Grayscale Digital High Cap Fund are the ten cryptocurrency investment items currently provided by Grayscale.
