What is bitcoin?
Bitcoin is a virtual currency. In comparison with traditional currencies, bitcoin is not controlled by any central authority (e.g., a central bank). New bitcoins are generated by a decentralized process called mining. It involves the processing of bitcoin transactions by using specialized hardware.People who would like to start generating bitcoin have to use powerful computers and special software.
Since its invention in 2008, bitcoin has become a widespread means to pay for goods and services. At present, about 200.000 daily transactions are concluded online using bitcoin.
Due to its entirely digital origin, high value (at present, 1 Bitcoin is equal to about EUR 535).
Trading with bitcoin on the Gibraltar Stock Exchange
On 25th of July 2016, Gibraltar Stock Exchange announced welcoming bitcoin as an asset-backed Exchange Traded Instrument (ETI).In order to launch the innovative bitcoin ETI model, Gibraltar Stock Exchange collaborated with a number of financial and technological partners. At present, the minimum order size for bitcoin ETI is EUR 100.000. The trade transactions can be carried throughout 31 countries of the European Economic Area (EEA) as well as Switzerland.
The introduction of bitcoin ETI is a part of Gibraltar’s strategy to become world’s leading virtual currency hub. bitcoin ETI is believed to bring a high-level of transparency and liquidity to investors and boost the number of brokerage operations in the domain of virtual currencies.
Albert Isola, Gibraltar’s Minister for Financial Services and Gaming, stated that the launch of bitcoin ETI demonstrates Gibraltar’s ability to be innovative and deliver speed to market.
What is Exchange Traded Instrument (ETI)?
In simple words, ETI is a type of exchange-traded security that is priced on the basis of the value that is derived from other types of investment instruments (e.g., commodities, currencies, and interest rates). ETI pegged to bitcoins may allow sophisticated investors (i.e., asset managers, private bankers, and pension funds) to bet on bitcoin without the complexities of trading bitcoin itself on specialized bitcoin exchanges.
Bitcoin as an investment opportunity
Bitcoin became an object of interest among global venture capital firms and other institutional investors due to its continuously growing price. China is regarded as a major center of bitcoin investment. This is because Chinese investors choose to convert yuan to bitcoin in order to protect their assets. At present, two Chinese stock exchanges, Huobi and OKCoin, manage about 92% of all global trading in bitcoin.
According to investment specialists, bitcoin portfolios can be used in different forms, such as (1) speculative portfolios, (2) hedge funds, and (3) insurance policies.