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Is a New Bitcoin Trust from SecondMarket for You?

Jon C. Ogg

You have certainly heard of the craze and hype behind Bitcoin by now. Perhaps you have even heard of the efforts to "game" Bitcoin and to further push the adoption of Bitcoin. The Winklevoss twins want a Bitcoin ETF. Regulators (and likely central bankers) are taking a slow and measured look at how to regulate or police Bitcoin. Now there is a new fund for Bitcoin being promoted by SecondMarket.

The Bitcoin Investment Trust is being launched as a private and open-ended trust which is invested exclusively in Bitcoins and derives its value solely from the price of Bitcoin. Barry Silbert, CEO of SecondMarket, offers excitement behind Bitcoin. He also warns that Bitcoin "faces regulatory hurdles and widespread adoption concerns that make investing in Bitcoin a very risky proposition."

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To take matters of risk even further, Mr. Silbert said, "There is a real possibility that the price of Bitcoin drops to zero. It is challenging to buy, store and secure Bitcoin, and many investors simply don’t want to deal with the hassle of it."

The new Bitcoin Investment Trust is targeted at only accredited investors who are looking for Bitcoin exposure through an investment vehicle as opposed to a direct investment.

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24/7 Wall St. has always had some serious concern with Bitcoin despite wanting to have a virtual currency of sorts that finally survives and thrives in an age where currency transactions of all forms are closely monitored and regulated by international agencies. Unfortunately, Bitcoin does still come with major risks and caveats that many traditional owners might simply not understand or be comfortable with.

SecondMarket's pitch sheet is here. As with all new investment vehicles and new investor trends, particularly a virtual currency that acts to mimic real currency, caveat emptor.

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