Cryptocurrency, notably Bitcoin and Ethereum, could be entering the mainstream financial markets, according to Crypto Blog. BlackRock, a major investment firm managing billions of dollars in equity, is set to launch an Exchange Traded Fund that could render bitcoin returns more accessible to consumers.
Cryptocurrency is a digital form of currency which uses various digital ledgers to keep track of it. Bitcoin, the leading cryptocurrency in the world, has been in circulation since 2009 and has varied tremendously in value since then. To purchase cryptocurrency, consumers have to access an exchange where they can purchase these assets with US dollars. If they truly want to “own” their assets, users must then transfer this currency to various “wallets.”
This process can be rather involved for many investors, who might simply want to enjoy the returns of the currency without having to understand all the underlying technology. This is where companies like BlackRock can now come in. Leveraging huge buying power, BlackRock intends for one of its funds to buy cryptocurrency. In turn, the fund would issue stock to general investors, who could benefit from the value of cryptocurrency without having to manage their own. In some ways, this mimics gold funds on the stock market, where investors can bet on its growing value without having to purchase and secure the gold directly.
While this move could boost the value of cryptocurrency, it is by no means a guarantee.
Notably not everyone is sold on BlackRock’s proposed spot Bitcoin ETF. Simon Peters, a market analyst at eToro, offered a note of caution saying that the potential for the product to “move the market is not hugely clear and reliant on demand.”
Cryptocurrency is a notoriously speculative and volatile sector, with many investors being wiped out when smaller blockchains folded. The Federal Government itself is looking to indict several major cryptocurrency exchanges, who allegedly engaged in market manipulation. BlackRock itself has mentioned that it will be partnering with Coinbase to house its assets. It will be closely tracking market manipulation, which has privacy hawks calling this a perversion of cryptocurrency’s privacy ethos.
In addition to manipulations, cryptocurrency is a frequent target of cybercrime. North Korea has been financing many of its illegal activities through the theft of and ransoms paid in crypto.
