What Is Bitcoin Grayscale Trust?

In terms of purchasing Bitcoin (CRYPTO: BTC), there are very few indirect ways to own it, such as mutual funds or ETFs. However, there is an investment vehicle called Grayscale Bitcoin Trust (OTC: GBTC) that allows investors to gain exposure to Bitcoin through the stock market. In this Fool is Alive video clip, recorded on March 18, senior analyst John Rotonti and chief analyst at Motley Fool Deutschland, Bernd Schmid, discuss how the Grayscale Bitcoin Trust works.

John Rotonti: What is Grayscale Bitcoin Trust, and how is that different from buying the real Bitcoin through Coinbase or another exchange?

Bernd Schmid: Grayscale is essentially a trust or is a fund that buys Bitcoin, and the shares of this fund are traded in the stock exchange. I think it’s the New York Stock Exchange. You can go to your broker and buy stocks in this trust, basically shares in this trust. Through this, you become exposed to Bitcoin because you know that this trust is supported by Bitcoin. What’s different is that you only trade the shares of this trust, and the shares may trade above the value of the Bitcoin that this trust actually owns, and I n believe right now, they are even trading below value. It is called net asset value. You actually get a pretty good exposure to the Bitcoin price movement for it. Not exactly, but if you just want to get exposure to Bitcoin, see how it feels, the price swings you experience, you can do it, but you’re not the Bitcoin yourself. You can’t call Grayscale and say, “Can you send me my Bitcoin?” If you want to use the Bitcoin, you can’t do it. Basically, you would have to sell the shares in this trust, get your money back, and then use your money for whichever you want. That’s the main difference. If you have the Bitcoin in your wallet, you can do something with the Bitcoin.

Rotonti: Fantastic. If I bought shares in Bitcoin Trust today and in 10 years, Bitcoin was much, much, much higher, if that were the case, I would benefit from that, from owning the shares in Bitcoin Trust?

Schmid: Yes. Exactly.

Rotonti: If I hold the shares throughout that time and Bitcoin is much higher in the future, then I get good exposure.

Schmid: Yes.

Rotonti: OK.

Schmid: That’s okay.

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