Quote from: klaus on September 30, 2013, 11:51:27 AM

Ich weiß nicht mehr wo ich es gelesen habe aber der Bitcoin Investment Trust hat bereits bitcoins in 5stelliger Zahl gekauft.

So, ich wollte das nicht so leer stehen lassen:

Es sind bisher 17.800 Bitcoins die der Trust gekauft hat.

Ist wohl aus den Trust-Unterlagen ersichtlich.
Seine bisherige Kapitalisierung (also alle Dollar bisheriger Anleger) mal irgendein Faktor für den er dann immer Bitcoins am Markt kauft.

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Quote from: Kupsi on September 26, 2013, 10:10:24 AM

Quote from: 600watt on September 26, 2013, 09:33:33 AM

do i understand this correctly: the trust already has purchased those coins and now some deep pockets can invest into bitoin? if they sell the shares quick, they might buy more bitcoins ?

Yes, if they sell out they have to buy more bitcoins.

Quote from: 600watt on September 26, 2013, 09:33:33 AM

is it possible that this fund was the whale that drove price up in july/august ?

No, they have only bought 17,800 BTC so far. But people who knew that this was going to happen can have bought large amounts.

17,800 BTC is nothing. They will start to buy more soon Cheesy

Quote from: Herp on September 26, 2013, 05:55:57 PM

Quote from: chodpaba on September 26, 2013, 05:41:27 PM

Quote from: rolling on September 26, 2013, 05:19:00 PM

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Initially, each BIT share will represent 0.1 bitcoins, but the trust will not generate any income and will regularly sell/distribute bitcoins to pay for on-going expenses, so the amount of bitcoin represented by each share will gradually decline over time.

Thank you captain Obvious. The trust has a maintenance fee it has to cover. So what's your point?

The trust will keep buying bitcoin and selling new shares along the way. The 17,800 bitcoins they currently have will sell like hotcakes in no time and they'll have to buy more Bitcoins to meet shareholder demand. Trust uses same model as the famous GLD ETF http://www.spdrgoldshares.com/.

Quote from: BTC4Victory on September 26, 2013, 07:43:16 PM

OK, I may technically be violating the terms of the NDA language I clicked on when I signed up last night as an accredited investor with Second Market, but so be it. While a healthy skepticism is entirely appropriate, and I appreciate chodpaba (and cypherdoc) for playing a skeptical role here, this isn't just some "how many angels can dance on the head of pin" type metaphysical question that we can go around and around on and never come to an agreement upon -- it's a factual question as to how the trust has structured itself, and there's a factual answer.

From pp. 7-8 of the Private Placement Memorandum, under the heading "Creation and Redemption":

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The Trust creates and redeems the Shares on a continuous basis, but only upon the order of Authorized Participants and only in Baskets. A Basket is a block of 100 Shares. Initially, each Share represents 1/10th of a bitcoin.

The creation and redemption of Baskets requires the deliver to the Trust or the distribution by the Trust of the number of bitcoins represented by the Baskets being created or redeemed. The number of bitcoins that will be required ("Basket Bitcoin Amount") for each creation basket ("Creation Basket") or redemption basket ("Redemption Basket") will be determined from time to time by dividing the number of bitcoins owned by the Trust at such time by the number of Shares outstanding at such time (calculated to one one-hundred-millionth of one bitcoin) and multiplying the quotient obtained by 100. the Basket Bitcoin Amount may gradually decrease over time if the Trust's bitcoins are used to pay the Trust's expenses. See "Bitcoin Investment Trust - Trust Expenses." Baskets may be created or redeemed only by Authorized Participants. Authorized Participants may create or redeem Baskets, and may act for their own account or for the account of one or more of their customers in respect of all or part of the Shares comprising a Creation Basket or Redemption Basket.

While this may seem like a convoluted and Rube-Goldberg-esque mechanism to those unfamiliar with the down-in-the-weeds details of how ETFs work, this is exactly the way the SPDR Gold ETF (or, say, the various ETFs which track the Dow 30 or the S&P Index) functions: the amount of bitcoins held by the trust can grow or shrink over time to accomodate demand for the investment vehicle. But -- unlike an ordinary mutual fund, where shareholders can buy new shares directly from the issuer at any time for USD or cash out their existing shares at any time by selling them back to the issuer at the daily-determined net asset value (NAV) -- in the case of an ETF like SPDR GLD (or, like the BIT Trust will operate, as the Prospectus makes clear), for a run-of-the-mill normal investor my only way to get in and out is not through interactions with the issuer but instead simply by buying or selling the ETF shares on the open market (the Nasdaq or NYSE, in the case of publicly-traded ETFs; on Second Market's proprietary market (limited to accredited investors) in the case of the BIT Trust).

BUT, what ensures that the price of the ETF shares closely tracks the value of the underlying assets held by the Trust, is that specialized "Authorized Participants" have the ability to either create new ETF shares at any time by delivering a "basket" of the underlying asset (Gold, in the case of the Gold Trust, or a specified number of shares of every company in the S&P500 Index, in the case of an S&P500-tracking ETF, or bitcoins, in the case of the BIT Trust) to the ETF itself; or, alternatively, at any time the same Authorized Participants have the right to put a "basket" of shares back to the ETF to have them redeemed out in-kind for the set number of bitcoins per share. So, if the price of the BIT Trust gets out of line one way or the other with the underlying price of Bitcoins, it's risk-free money for the Authorized Participants to either buy and contribute more bitcoins to the Trust in exchange for new shares that the AP can then sell at a profit (if the ETF is trading "too high" relative to the underlying price of Bitcoins), or can buy up ETF shares at a discount and immediately cash them in for the Bitcoins which it will sell at a profit (if the ETF is trading "too low" relative to the underlying price of Bitcoins) -- it's this built-in arbitrage opportunity which keeps the price of the ETF closely in line with the price of the underlying.

In other words, the BIT Trust is not limited to holding the 17,800 BTC it holds today -- it will likely end up holding a lot more (assuming sufficient investor interest), although in theory it could end up holding less -- and the total amount of BTC it holds will fluctuate over time, but what will stay constant* is the number of BTC held by the trust per number of shares outstanding. (*Well, constant, except for the slow erosion over time as BTC are sold to pay the rather-steep 2% annual maintenance fee.)