Monday, November 25, 2013

How to Invest in Bitcoins Without Owning Bitcoins

Unless you never read anything on the Internet, which probably isn't you since you are reading this, you are aware of bitcoins. And you may have heard the news that bitcoins have increased in value from $208 per bitcoin a month ago to $824 today, a 296% increase. Bitcoins have received a lot of bad press over the last few months, with the most visible relating to the Silk Road website. Silk Road was an online marketplace for virtually anything, legal or illegal, until it was shut down by the FBI. However, bitcoins are also accepted by many legitimate businesses.

What is a Bitcoin?

If you have heard of them but not exactly sure of what a bitcoin is, I will try to explain it in simple terms. Bitcoins are a peer-to-peer digital currency without any government backing or control. Fewer bitcoins are being created and there is only a limited number of bitcoins that can ever be created. Bitcoins are stored in electronic repositories called wallets, either online, on computers, tablets, or smartphones. Occasionally, they are stored on paper with the appropriate codes.

 Bitcoin Investment Trust

So let's say that you want to invest (or should I say speculate) in bitcoins. Let's look at a few possible ways. First, there is the Bitcoin Investment Trust, which was founded this year in New York, and promoted by SecondMarket, Inc. and Alternative Currency Asset Management, LLC, according to filings with the SEC. This is a Form D Rule 506(c) filing with sales of pooled investment trust units which began September 25 of this year. Minimum investment was set at $25,000 with total amount sold of $2,542,818. According to the Form D, the total offering amount and total remaining to be sold is indefinite. You should be aware that this offering is only available to accredited investors.

Try Bitcoin, Inc.

Then there is Try Bitcoin, Inc. based in Stanford, California. This is a Form D Rule 506(b) offering. According to the company's website, "TryBTC is a tutorial website crafted to show the world how to use Bitcoin in under 5 minutes." The company was formed as a Delaware corporation in January 29, 2013 and the initial offering was September 19. It is interesting to note that the filing shows that the minimum investment was zero, and the total amount offered and sold was only $25,000. Since the total amount remaining to be sold is zero, then there appears to be no opportunity for investors. By the way, the Winklevoss twins are listed as donors.

Winklevoss Bitcoin Trust

In case you don't remember the Winklevoss twins, Cameron and Tyler Winklevoss were the ones that claimed rights to Facebook (FB). They have filed a Form S-1 with the SEC for an IPO called the Winklevoss Bitcoin Trust.

According to the SEC filing:
"The Winklevoss Bitcoin Trust (Trust) will issue Winklevoss Bitcoin Shares (Shares) which represent units of fractional undivided beneficial interest in and ownership of the Trust. Math-Based Asset Services LLC is the sponsor of the Trust (Sponsor) and [TRUSTEE] is the trustee and custodian of the Trust (Trustee) using proprietary and patent-pending technology to administer the Trust. The Trust intends to issue additional Shares on a continuous basis. The Shares may be purchased from the Trust only in one or more blocks of [50,000] Shares (a block of [50,000] Shares is called a Basket). The Trust will issue Shares in Baskets to certain authorized participants (Authorized Participants) on an ongoing basis as described in “Plan of Distribution.” Baskets will be offered continuously at the net asset value (NAV) for [50,000] Shares on the day that an order to create a Basket is accepted by the Trustee. The Trust will not issue fractions of a Basket."
Now if you are looking for regular publicly traded companies involved in bitcoins, there are a couple you might want to look at that accept bitcoins for their business. However, at least for now, the fact that they accept bitcoins in addition to regular currency would affect only a small portion of their revenues. According to Forbes both Baidu (BIDU) and IAC/InterActiveCorp's (IACI) OkCupid accept bitcoins.


Baidu is the large Chinese languarge Internet search engine that trades at 33 times trailing earnings and four times future earnings. The company recently reported a 1.3% increase in quarterly earnings year over year on a 42.3% rise in revenues.


IAC, in addition to owning the OkCupid dating site, also owns,,,,,,, and CitiGrid. The stock trades at 20 times earnings and 13 times forward earnings. The earnings spiked an incredible 138.1%, on a 5.9% boost in revenues. The company even pays a 1.7% dividend yield.

If you want a free list of stocks that have some connection to bitcoins, go to, which includes information on when the company was founded, the PE ratio, the forward PE ratio, and other data. Because of the increasing popularity of bitcoins and the extensive press that bitcoins are receiving, there are sure to be additional bitcoin investment offerings in the future. By the way, if you like this article, please share.

Disclosure: Author didn't own any of the above at the time the article was written.


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