This article translated what I wrote in japanese into English. Please note that there may be some parts that are difficult to understand.
neokichi
This time, I will explain about cryptocurrency and Bitcoin ETF.
myako
Thank you
neokichi
The first cryptocurrency ETF is not a bitcoin but a possibility of becoming a cryptocurrency called ADK (Aidos kuneen). I will introduce the world’s first ETF at the end.
Contents
What is an ETF?
neokichi
ETF stands for Exchange Traded Fund, which is a listed investment trust.
myako
I don’t know what you’re saying
neokichi
It means an investment trust that can be traded on the stock exchange!
myako
What is an investment trust?
neokichi
OK! Let’s clear one by one! First, I will explain from the investment trust in the following items.
What is an investment trust?
neokichi
An investment trust means to “invest” money, “believe” professionals and “trust” operations. It can be made with a small amount of money, and it is popular among investment beginners because it can be left to the specialists / professionals of investment managers to decide which stocks and securities to invest in.
myako
If a professional operates on my behalf, it will make a profit♪
neokichi
Well, even if professional, the fighting opponents are also professionals, so profits do not always come out, and there are also losses. However, investment trust have the advantage that diversified investments can be made with a small amount
myako
Diversified investment! I’ve heard that then. That means investing in multiple stocks.
neokichi
Correct answer! For example, if you concentrate on one stock and invest it, if that stock falls, it will be a considerable loss. However, if there are multiple investments with diversification, even if one declines, if you can make profits with other stocks, you will lose less. In other words, it ’s a risk hedge.
myako
That means diversifying investment to minimize risk. It seems to be easy for beginners to start because the risk is reduced.
neokichi
Yeah. There is an egg example as a common example. If you put all the eggs in one basket, they will all break when dropped. . However, it is possible to reduce the risk by dividing the basket into eggs and putting eggs.
myako
The example of an egg is easy to understand ♪ Certainly, even if one basket is broken, it is still safe because it remains!
neokichi
That’s right. However, this diversified investment has less risk, but the diversification may reduce profits! Please keep that in mind.
Investment trusts can be entrusted to asset management companies, so you can easily invest without knowing about the stock name.
Professional investors are investing after looking at the financial statements of the stock name themselves and investigating the future business development, future prospects, personality and thinking of the founder.
In other words, professional investors are seriously investing only in stock names that they thought will grow. Investment trusts are easy because they can be entrusted to asset management companies, but there is also the aspect of making it difficult to make significant profits.
myako
Investment trusts are suitable for beginners because they are started with a small amount and are low in risk, but it may be difficult to make a large profit. If I want to make a big profit, I think it’s better to focus on the stock name that I thought was this.
neokichi
However, investing in one or two stock names may fail. If you want to manage it stably, we recommend investment trusts!
myako
That’s right. Beginners should start with diversified investment trusts.
neokichi
Another characteristic of investment trusts is that they can invest in things that are difficult to invest in, such as “crude oil” and “gold”. For example, in the case of gold, you can easily invest in a small amount without buying a “gold bar” at a high price ♪
myako
Especially in the case of crude oil, it is impossible to have the actual thing.
neokichi
hehehe … It’s pretty hard to have crude oil itself.
The point is whether cryptocurrency will be listed in the ETF stock name in the future
The point is whether cryptocurrency will be listed in the ETF stock name in the future
myako
Oh, crypto currency! I forgot! Indeed, like gold and crude oil, cryptocurrencies may be able to be invested through mutual funds.
neokichi
Now that you understand investment trusts, let’s look at the differences between ETF and investment trusts!
Difference between ETF and Investment trust
neokichi
ETF are a type of Investment trust that I explained in the previous section.
myako
What is the difference between an ETF and an investment trust?
neokichi
The big difference is whether you are listed on the stock exchange or not. ETF are listed on stock exchanges just like stocks, but Investment trust is not listed.
myako
What does it mean to be listed on the stock exchange?
neokichi
It means “I started handling on the stock exchange”. In contrast, Investment Trust is sold only by financial institutions such as specific securities companies and banks.
myako
I got it
neokichi
ETF can be purchased at securities companies nationwide by listing on the stock exchange. And there are differences in trading between ETF and Investment trusts.
In the case of ETF, it is possible to buy and sell in real time on stock exchanges, just like cryptocurrency exchanges. In comparison, Investment trust can only trade once a day.
For example, when news comes out, ETF can be bought and sold in real time, so you can buy and sell immediately, but with Investment trust you can trade only once a day.
myako
I got it! ETF like stocks and cryptocurrencies can always be traded in real time ♪
neokichi
Another advantage of ETF over investment trust is that trust fees are low.
In the case of investment trust, you have to pay to securities companies and banks, but in the case of ETF, if you pay only to the management company, ETF has the merit that the fee is cheaper ♪
In the case of investment trust, you have to pay to securities companies and banks, but in the case of ETF, if you pay only to the management company, ETF has the merit that the fee is cheaper ♪
myako
ETF have more advantages than investment trusts♪
About Bitcoin ETF
neokichi
The world market for ETF is said to be around 4.9 trilion dollars. If a Bitcoin ETF is realized, it will be handled in the securities market as a financial product, so institutional investors are expected to enter!
myako
Who is an institutional investor?
neokichi
Institutional investors are large investors who invest in stocks and bonds using large amounts of funds, such as insurance companies, banks, and financial institutions.
myako
Wow! It means that such a large investor may come into cryptocurrency!
neokichi
Institutional investors are expected to enter the market once the ETF is realized. In addition, there is a possibility that people who have not invested in cryptocurrency until now will join.
myako
I don’t think people who have never bought cryptocurrencies will buy them even if they are listed as ETF
neokichi
I’ll explain that point. If you make an account at a cryptocurrency exchange, buy bit coins, store them in a wallet, and so on, it’s difficult to buy if you don’t know PC or the Internet. Besides, there are various risks such as lost cryptocurrency due to address mistake at the time of remittance or loss of secret key, or hacking of the exchange.
myako
Yup. There are a lot of things you have to be careful about. I also struggled to buy cryptocurrency first.
neokichi
You need a lot of knowledge to buy cryptocurrencies. But with ETF, you can easily invest in Bitcoin by applying to a securities company. In other words, you can easily invest without owning bitcoin and managing your wallet.
myako
Ah! surely! Even if you don’t have bitcoin, ETF are the same as investing in bitcoin! In other words, you can invest in ETF even if you don’t have the actual thing like “gold” or “crude oil”!
neokichi
That’s right! The barriers to entry are lower because you can easily invest without managing it yourself.
myako
When will the Bitcoin ETF start?
neokichi
Umm. The Bitcoin ETF has not been realized yet. . The movement to make Bitcoin an ETF has actually started in 2013.
myako
There was a movement to list the Bitcoin ETF for quite some time! ? But it hasn’t been realized yet. . .
neokichi
Yeah. Several have applied for Bitcoin ETF, but all have been rejected or under review.
myako
Why isn’t the Bitcoin ETF so approved?
neokichi
A response from the US Securities and Exchange Commission (SEC) applying for a Bitcoin ETF appears to say that the exchange does not meet the standards required by the SEC to prevent fraud and price manipulation.
There are many cryptocurrency exchanges around the world, but they are not monitored by the country or any public authorities. In other words, there is a fact that price manipulation and fraud are rampant.
myako
There are quite a few scams in cryptocurrency. . It’s hard to be recognized as an ETF if you don’t get it right.
ADK becomes first cryptocurrency ETF!
neokichi
There is a dark currency that seems to be able to realize ETF faster than Bitcoin ETF ♪
myako
Is there such a cryptocurrency when ETF is difficult even with Bitcoin?
neokichi
Yeah, there is! It is a cryptocurrency called ADK (Aidos kuneen). There is a possibility of listing as an ETF on the NSE (Nairobi Stock Exchange) in Kenya.
myako
That ’s amazing! If that happens, is ADK the first cryptocurrency ETF?
neokichi
That ’s right! If that happens, it’s likely to get noticed and spread at a stretch.
myako
But is there a possibility that ADK will be approved even though it is an ETF of such a difficult cryptocurrency?
neokichi
Yeah ♪ ADK is very likely to be listed as an ETF. I’ll write my thoughts in the article below, so please check it out!
ADK becomes the first crypto currency ETF! ?ADK(Aidos kuneen) is scheduled to be listed on three African stock exchanges, including Kenya’s NSE (Nairobi Stock Exchange).Will ADK become the world’s first ETF among cryptocurrencies....
Summary
Cryptocurrency has considerable hurdles to be approved as an ETF for financial products.
However, ADK may be the first to be approved beyond this hurdle before Bitcoin.
I would like to focus on future Bitcoin / ADK ETF trends.
neokichi
If you would like to know more about ADK, Come and Join us on Telegram!
