 Hey guys, it's MJ the student's actuary and in this video, I'm going to explain the Bitcoin ETF But before we do that, let's quickly look at what is a Bitcoin and what is an ETF? After that, I'm going to give the reasons for combining the two and why the idea got rejected So when it comes to Bitcoin, it's a bit of a mystery We know that it's decentralized and it's on some sort of blockchain But what actually is it? Last year I made a video saying is Bitcoin a commodity or a currency? Commodity are meaning should we be comparing Bitcoin to something like gold and silver? Or should we be comparing Bitcoin to US dollars and the sterling pound? Or is Bitcoin something different? Is it some sort of payment mechanism in which case we should compare it to PayPal and Visa and American Express? Now the reason why Bitcoin has become so popular is because in the past well with other assets Governments can freeze your assets if you do something wrong But when it comes to Bitcoin, they have no control over it Also governments have these things called capital controls Whereas if you have Bitcoin, you can easily move your capital outside of a country in what's known as capital flight You can also use Bitcoin to dodge the taxman as you can hide a lot of income earned But the problem with Bitcoin is that people don't really know how much it's worth and there's a lot of volatility The price is going up and the price is going down Also, there are some fundamental flaws in the Bitcoin technology It's getting very slow. It's gone over capacity Which is making it very expensive and there's rumors of a Bitcoin split We might have Bitcoin classic and something else called Bitcoin unlimited, but that's beyond this video Now I want to talk about ETFs and these things are growing very quickly and becoming very popular So what I want to do is just to help us understand an ETF. I want to ask these eight questions So what is it? It's an investment vehicle And it's something that is listed on the stock exchange and it's associated with passive investing diversification liquidity And essentially what you're doing is instead of buying a whole bunch of random securities You're you're putting them all into a basket and you're just buying one Yes, there's a little bit of documentations and some few more parties involved But essentially what you can do with this now is you can buy like an equity index You can buy a whole basket of bonds or even do like a style like value or growth investing All within one security and the security can be listed traded. They can be created. They can be redeemed and they're also regulated And the most important parameters around exchange trader funds is the net asset value The fees and the number of shares if you divide the net asset value by number of shares You can get the price and ETFs there can replicate indexes and they can comply with various investment mandates So why do we want a bitcoin ETF? Well, essentially what it's going to do it's going to be allowing bitcoins to be traded on the stock market and That's actually pretty cool Now the reasons for doing this is going to make it very easy to buy bitcoin It's going to reduce the hacking risk It's going to reduce the complexity. Remember if you want to get bitcoins now You have to open a wallet and do all these weird things also you have to go through those exchanges And they're actually quite expensive. So we're going to be reducing costs There's going to be a lot more market makers, which means we're going to see an increase in liquidity Also being on the stock market It's going to increase the brand awareness of bitcoin even more And this is going to increase demand specifically if institutional investors now getting get involved with it Which is going to drastically increase the price It's also going to allow for short selling, you know, some derivatives can be created around it And one of the articles I read it said that it will allow for fractional ownership And while this is true with ETFs with other securities That's not the case with bitcoin because a bitcoin can be split into something known as satoshis Which is like one millionth of a bitcoin. So Personally wrote that article didn't know bitcoin too much, but we'll let that one slide What I want to talk about now is why bitcoin got rejected by the securities exchange commission And the main reason we're saying that bitcoin is not diversified and remember That's the whole idea of an exchange traded fund is that instead of buying every single share on the stock exchange You're buying one security, which is a basket of all of them And so what they say is that when it comes to an ETF The maximum you can hold of any one security is 10 percent of your total portfolio But with this exchange traded fund it would be a hundred percent in bitcoin Now the last three reasons I thought were quite funny because they said bitcoin is unregulated Well dirt they try to get it regulated now And you're saying that we can't regulate it because it's unregulated. It's a little bit silly This one was also quite entertaining. They said surveillance and enforcement is difficult And that's one of the big drivers or why people want to use bitcoin is because of this very reason Also because of the idea that there's no central depository that controls it Although this does does have the disadvantage that if your bitcoins are stolen Shade because the trades are irrevocable Now another thing why I think that the the ETF got rejected is because if you look at who the ETF manager For this one was going to be it was these guys called the vinkelvosser twins Remember they're the guys who are like we created facebook and they sued mark zuckerberg Now if you look at who the ETF sponsor is going to be Again, it's the vinkelvosser twins Who's going to be the provider of the reference price? It's going to be the vinkelvosser twins Who's going to be the custodians and actually hold all these bitcoins? You guessed it the vinkelvosser twins Now the security exchange commission says that there might be a conflict of interest So I just feel so bad for these guys everything they try and do whether it's social media or ETFs It just seems to fail for them Although in my personal opinion, I do feel as if bitcoin is in a bit of a bubble and that is you know overpriced Although I've been saying that when bitcoin was around 750 dollars. I think it's now 1200 and The price is always changing every minute. So I can't pinpoint it exactly But look, I mean, I really love cryptocurrencies I've invested quite a bit in litecoin and you'll know from my channel that I like to have a lot of fun with the dodgecoin And I mean, I've even gone and raised a little bit of funding to create my own coin Although we all these other coins have got a very much a capitalist mentality Mine's going to have a little bit of a socialist mentality But if you want to hear more about that, I'll be releasing videos in the future So please make sure that you do subscribe to my channel and hit that like button if you enjoy this video And let me know your thoughts in the comment section below Do you think bitcoin's overpriced? Do you think it should be on an exchange rate of fund? Let me know and we'll can check down there. Thanks guys