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Hypothetically, the Winklevoss ETF is approved tomorrow, 3/10/17. The ETF price, which starts at $100/share, will correlate directly with the price of Bitcoin, I assume. What would be some pros/cons of investing in the ETF instead of buying bitcoins myself and storing them in my own wallet? The ETF would be easier to buy/sell than using an exchange plus I wouldn't have to worry about the security of my coins.

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When you say "I won't have to worry about the security of my coins"... I think you've got this backward.

There's nothing more secure than a paper wallet that has been generated offline. Bitcoin was created as a way to avoid the need to trust a third party. If you don't believe that's necessary, then you're just trading it hoping to make USDs, not because you believe in it's intrinsic value.

in other words,

Are you speculating on the price, short term, hoping to make USD?

Get the ETF.

Are you skeptical of the global financial system, and want to hold money outside the reach of any government?

Hold bitcoin.

  • I am skeptical of the global financial system but short term, I am speculating the price. When I say I don't have to worry about the security of my coins I am referring to my personal management of the coins. I do not have to worry about managing them myself although entrusting third-parties is contradictory to the motive of decentralized currency. Basically, you're saying is I am just speculating short term price I should buy into the ETF (assuming it's approved) instead of bitcoins ? – Dr.Von Mar 10 '17 at 15:28
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    the etf won't immediately start trading if it's approved. The effect of the approval on bitcoin's price will have already played out. – hedgedandlevered Mar 10 '17 at 15:53
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           ETF                                     BTC
Fees       expense ratio, trading, and commission  transaction fee
Taxes      IRA/401K protection                     post-tax, and capital gains?
Liquidity  broker hours                            seller/buyer demand
Minimums   one share                               one satoshi + tx fee

Another way I would compare the two is by thinking of BTC as buying a house, and ETF as being a member of a condominium. With your home, you control ownership. For a condo you don't get ownership of the real land. In each case, the trade-offs can be related to its level of risk.

Owning a home is direct personal cost. You bear the burden, repairs, acts of nature, are your responsibility. Also, you are making slower, single purchases. With this responsibility, you get control.

In contrast with condos, there are multiple interests. Part of the attraction is freedom from upkeep, and there is a sense of security from other partners, shared risk. I know of members that have multiple properties. It's this shared exposure that makes it so you can hold more quantity. At the same time, there are plenty of challenges with decision by committee, and HOA dues.

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