Buying actual bitcoins vs derivative paper products?

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I bought some bitcoins on Localbitcoins and Coinbase a few months ago, as a purely speculative "investment".

Now I noticed that there is a Bitcoin certificate with 1:1 leverage available at the online bank I have used to trade traditional stocks and stock funds for the past 10 years. The buy and sell fees are 2.5% for the certificate.

Now I'm curious if there is any reason to bother with the risk and hassle of using cryptocurrency exchanges or if I could just as well just buy the certificate if I want to "invest" more in Bitcoin? The online cryptocurrency exchanges have similar fees, and it seems like the risk is higher and the user experience is much worse, especially when selling and withdrawing to fiat currency.

Obviously I'm not interested in using bitcoins for payment, this is for pure speculation purposes.

Magnus W

Posted 2017-12-15T10:13:22.897

Reputation: 107

Question was closed 2017-12-18T10:08:37.883

That has nothing to do with Bitcoin. Who knows what your online banks iou mean or are worth. This is blatantly off topic here. Now that btc futures are traded in chicago a lot off people with no knowledge of btc are asking finance questions here. The only answer remotely related is that in united States the Bitcoin exchanges in most states need to pass regulatory committees.marshal craft 2017-12-15T12:19:42.403

So... I take this as "there is no reason to bother with the hassle and fees of buying and selling real Bitcoin in Bitcoin exchanges if speculating and not intending to use and/or hold on to the Bitcoins long term"?Magnus W 2017-12-15T13:07:48.197

How and who did you interpret that? Bitcoin true value is real. To prove it I say you can't own a Bitcoin unless someone chooses to give it to you. Can you steal one? Now what stops someone from forging paper work, or otherwise refusing to accept your paper work or records. With Bitcoin this can not happen, unless majority of users choose to work very hard.marshal craft 2017-12-15T16:52:35.460

From a financial institutions perspective a Bitcoin is nothing more than a commodity. How that institution deals with that is not really related to Bitcoin as a technology. Can you understand that maybe? Really I'm trying to help you get an answer but I think there are other se sites than this. Like specialising in a field.marshal craft 2017-12-15T16:57:48.277

So if your question is, "is btc secure?" Why not just say that or refer to existing answers to not ask duplicate. A Bitcoin expert wouldn't be an expert in bank leverage or margins or investment securities. Bitcoin while may be used as an investment, like virtually anything; is not about selling for dollars on exchanges. Sadly there are experts in that area in financial exchanges, ecomics se, finance se, and probably at your little bank too. You can split hairs but this isn't about nay saying Bitcoin taking sides. There is proof of work you can read about on crypto se too. Best of luck.marshal craft 2017-12-15T17:05:07.773

@marshalcraft I'll rephrase the question: A lot of people who want to speculate on the current Bitcoin frenzy are asking "Where do I buy Bitcoin?" and "How do I buy Bitcoin?". Why should they buy Bitcoin in the first place? Why not just buy a certificate at your ordinary bank where you usually buy stocks and funds? Seems a heck of a lot easier to me for people who are not interested in using Bitcoin but just want to speculate in it, rather than researching how/where to buy it and then going through the hassle of ID verification, bank transfers and whatnot.Magnus W 2017-12-15T19:09:15.640

Again, I'm not gonna participate in a perpetual flame war with you. Again I do not see how that is in anyway related to bitcoin. You do realize just because you use the word bitcoin doesn't automatically mean the phrase, sentence, paragraph, paper, etc is related. I don't see anyone posting an answer, and the end goal here is to get good answers. So I say try in a se site more related to the question. Sure someone could post an answer that exactly is what you are looking for. Or maybe suddenly useing bitcoin iou's written on paper. But none of that is related to bitcoin at the end of the day.marshal craft 2017-12-15T20:40:05.367

And in helping people in general get good, quality answeres in timely matter. Sticking to related subjects is a vital tool. So go ahead and argue. I've flagged this as off topic and hasn't been resolved yet. So if I'm wrong and somehow this is related then ok. But you and I both know, nothing of real value will have been added. Tell yourself what ever you want.marshal craft 2017-12-15T20:46:17.527

Answers

1

You only own a bitcoin, if you control the private key. What happens when the online bank (a much more lucrative target than regular joe for hackers) gets hacked, and the bitcoins are siphoned away via monero or other methods? What happens when the bank makes a poor gambit and fails?

Compare that to the risk of losing your own private key, getting mugged/robbed, or losing everything due to other reasons (serious brain incident leaving you vegetative). If you manage to keep your coins safe, and you leave clear instructions on how to access the bitcoins when you are absent, why would you not just go to an exchange?

BlackBeltBob

Posted 2017-12-15T10:13:22.897

Reputation: 447

I was expecting this type of answer. As I said, it's for speculation. As far as I'm concerned nothing different from speculating and trading stocks. Just as I wouldn't buy and sell physical gold, oil or wheat if that's what I'm speculating in, I am wondering if there is any benefit to buying and selling real bitcoins as opposed to a certificate. I own physical gold and silver, but I'm not expecting to sell it in a hurry. Isn't the risk of a bitcoin exchange being hacked bigger than a major traditional bank? Transferring to a offline wallet adds more hassle and fees.Magnus W 2017-12-15T11:04:38.577

BadCash then why are you asking here?marshal craft 2017-12-15T12:21:28.633