Gate.io Blog What Is The Difference Between Bitcoin And Bitcoin ETF?

What Is The Difference Between Bitcoin And Bitcoin ETF?

18 August 10:21

The blockchain and cryptocurrency revolution created an entirely different paradigm for financial institutions, beginning with Bitcoin in 2009. It was the first-ever cryptocurrency or digital asset used as a digital currency to pay for products or services.
Though Bitcoin and the crypto world, in general, have come a long way, there are still significant challenges, such as government regulations that prevent the mass adoption of Bitcoin and other cryptocurrency services.

One way to solve this challenge is an ETF or Exchange-Trade Fund. Services such as Bitcoin ETFs bridge the gap between traditional and new-age financial institutions.

Whether you’re a crypto enthusiast or someone just beginning to understand Bitcoin and other cryptocurrencies, you’ll now get to choose between investing in Bitcoin or Bitcoin ETFs.

While reading about this to understand the pros and cons of Bitcoin and Bitcoin ETF, I also found a few key differences between the two.

Here’s the list of differences between Bitcoin and Bitcoin ETF:

1. We can buy Bitcoin directly and own the digital asset. However, when we invest in a Bitcoin ETF, we do not own the digital asset but merely invest in a vehicle/tracker that tracks the asset’s value.

2. Bitcoin can be bought on cryptocurrency exchanges, whereas you can invest in a Bitcoin ETF only through an ETF provider. You don’t have to go to a crypto exchange for this.

3. You can buy/sell/trade it anytime you want based on the price surge or dip when you own Bitcoin. However, with Bitcoin ETF, you cannot perform any of these operations since you don’t own the assets.

4. Furthermore, when you buy Bitcoin on exchanges, you can use it to pay for products and services instead of using fiat currency. With Bitcoin ETFs, that isn’t possible.

5. If you want to transfer Bitcoin to another party for them to spend, it’s possible only if you buy Bitcoin directly. This is because of the earlier mentioned reason that you do not own Bitcoin.

6. When you purchase Bitcoins, you’ll have to ensure the security of your funds by researching which platforms are authentic and have proper security measures in place. On the other hand, with Bitcoin ETFs, none of that would be your concern since it’s the ETF provider who will be directly owning the digital asset.
7. Bitcoin values are highly volatile, and when you buy it directly, there is a greater chance of your profits being affected. However, since Bitcoin ETFs come under government regulations, the price will be relatively more stable.

8. Finally, buying and trading Bitcoin are for tech-savvy investors who understand and know the world of crypto. Thus, they know best how to make maximum profits and hence can choose this option. On the other hand, Bitcoin ETFs are for more hands-off investors, who do not want to decide how and when to actively invest in the asset but still want to reap the benefits and let the experts do the job.

To Conclude

Overall, if you’re new to the world of crypto, Bitcoin ETFs can give you a tiny glimpse of how the market performance can be like. However, if you’re a seasoned crypto trader, buying Bitcoin directly will be much more profitable for you since you’ll understand the ins and outs of the market.
Author: Gate.io Observer: Zander

*This article only represents the views of observers and does not constitute any investment advice.

*The content of this article is original and the copyright belongs to Gate.io. If you need to reprint, please indicate the author and source, otherwise legal responsibility will be pursued.

Unbox Your Luck and Get a $6666 Prize

What Is The Difference Between Bitcoin And Bitcoin ETF?

To Conclude

Select language and region

Fiat Currencies