One Possible Way to Make Cryptocurrency Stable: Bitcoin ETFs
Published on: 19 Sep 08:01
Cryptocurrency is now over a decade old, but the amount of misinformation and lack of understanding of what exactly cryptocurrency is remains ubiquitous. Maybe it’s the name. After all, it has the word “crypt” in it, which to a lot of people evokes the feeling of death and zombies. Most likely, however, it’s that cryptocurrency is not as easy as Facebook to understand. You can’t make “friends” with different cryptocurrencies. You actually have to endeavor to understand them, like friendships used to be before the social media took over.
cDuel is a cryptocurrency trading simulator that is free for anyone to use. It is designed to teach you about how to trade cryptocurrency using real world market prices on current cryptocurrencies in a safe way. cDuel is a trading simulator game meant to be fun and challenging, while learning about trading cryptocurrencies. You compete against others, while trying to maximize your ROI for the match. It’s a fun, learning video game for all.
The main problem people have with cryptocurrency once they understand it is how volatile it is on the market. Many people just can’t afford to invest with that level of risk. Proponents of cryptocurrency are actively trying to figure out ways to mitigate the risk of cryptocurrency trading so more people will trade it. One suggestion has been Bitcoin (and other cryptocurrencies) ETFs. In this blog post, we’ll explore what is a Bitcoin ETF and if implementing one would help. Sign up online today to play our cryptocurrency simulator game for free!
WHAT IS AN ETF?
In order to understand what a Bitcoin ETF is, you need to understand what an ETF is. An ETF stands for Exchange Traded Fund. These are popular investment vehicles that are investment funds traded on the stock market. An ETF is made up of many components, usually of your choosing, such as stocks, commodities, or bonds that are also usually tied to an index of some sort, such as a stock or bond index. cDuel, the creator of the best cryptocurrency trading game, notes that the investor does not buy the investments directly, but only as part of the fund. Anytime you diversity, or spread out your investments into different investment vehicles, you are mitigating risk — something most of us want to do. ETFs are useful because you can mitigate risk and still earn a good rate of return on your investment.
WHAT THEN IS A BITCOIN ETF?
Thus, we can then apply all of the benefits of an ETF to cryptocurrency and Bitcoins. In theory, Bitcoin and other cryptocurrency-based ETFs would be great for investors. It would take away the volatility of the cryptocurrency market that is preventing so many investors from joining in. However, while the concept holds credence, the practicality of bringing a Bitcoin ETF to life is a whole other ballgame.
WHAT WOULD BE THE BENEFITS OF BITCOIN ETFS?
- Built in protection. A Bitcoin-based ETF would be tied to an index, either one based on Bitcoin itself, which is the best cryptocurrency around, or a portfolio of mixed cryptocurrencies. By having more than one currency in the pot, you are adding in an extra layer of diversification.
- No minimum investment required. Most exchanges require a minimum amount of money to cover transaction fees when buying or selling stocks in your ETF. However, you would not need fees for Bitcoin ETFs since there is no asset to own.
- You can earn dividends. ETFs earn dividends now, so your Bitcoin ETF could be set up similarly. Since there are no actual Bitcoins themselves to buy and sell, this whole process would be much more simplified.
- No hefty tax consequences. Dividends fall under “like-kind” tax rules when making money in trades. Hence, there are no capital gains tax consequences like there are when you trade individual cryptocurrencies on the market, including crypto-to-crypto or crypto-to-fiat.
WHY BITCOIN ETFS WOULD BE PERFECT
Many argue that Bitcoin ETFs would be a safer, more stable way for investors to invest in Bitcoin and cryptocurrency in general without having to take the risk of the unregulated market of Bitcoin or other cryptocurrencies themselves. cDuel, the creator of a currency exchange simulator, notes that traditional ETFs are a safe, stable way to invest and earn great returns. ETFs manage risk, are simple to invest in, and are regulated by the U.S government as a security instrument. Hence Bitcoin ETFs just make sense overall. However, it seems hoops must be jumped through to get Bitcoin ETFs off the ground, which will be the subject of our next blog post.
HOW cDUEL CAN HELP WITH BITCOIN ETFS
cDuel’s passion is to help others learn more about cryptocurrency. We believe cryptocurrency is here to stay and will be the wave of the future. Hence, we want to get the word out about cryptocurrency and help you to understand its benefits. By learning more about cryptocurrency, sharing our free online cryptocurrency trading simulator game with them, you’ll get the word out about its advantages. The more people know about cryptocurrency, the more likely implements such as Bitcoin ETFs will come to fruition.
As the best cryptocurrency trading simulator online, cDuel offers a fun, exciting, and safe place to learn about trading cryptocurrency. With real-time market prices on actual cryptocurrencies, such as Bitcoins and Litecoins, you’ll have a real-life trading experience in a fun, competitive way. Sign up online today!