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What Is Grayscale Bitcoin Trust and How It Works

Are you looking for a Bitcoin fractional investment and keeping an eye on the market of Bitcoin without directly purchasing it? If so, the Grayscale Bitcoin Trust (GBTC) is a platform that is totally developed for you. It helps you by providing fractional investment plans and you can explore the overall market of Bitcoin by just purchasing a share of Bitcoins. To know more about (GBTC) go through this article and break more interesting facts about this exciting platform. So, let’s get started!

The Grayscale Bitcoin Trust: What It Is  

The Grayscale Bitcoin Trust (GBTC) is a trust that holds Bitcoin (BTC), and the investors can perform a fractional investment in Bitcoin (BTC) that is held by the trust. Fractional investment is a kind of investment where the investors buy shares of the Bitcoin (BTC) instead of purchasing the whole (BTC). Additionally, (GBTC) is a financial product, where investors can explore the price movements of (BTC) without purchasing and storing it. The investors that use (GBTC) charge a 2% yearly fee from the total amount of assets. 

The (GBTC) is managed by Grayscale Investment, which is the investment agency that manages the various cryptocurrencies (Bitcoin (BTC), Ethereum (ETH), and others)  investment products such as trust and funds. It is traded publicly on the OTC market and investors can trade it through their brokerage accounts. 

OTCQX is a stock market and here you can sell and buy those products directly from companies that are not listed on the major exchanges and you cannot buy them from here. OTCQX is backend operated by the OTC markets Groups. 

Grayscale Bitcoin Trust: How It Works

Here, we will discuss the working of (GBTC) in a few steps and further describe each step:

  • Purchase Bitcoin: Investors join (GBTC) and deposit funds to the trust and the trust utilize those funds later in the purchasing of (BTC). 
  • Creation of Share: After the successful purchasing of (BTC), the trust will create shares through which the investors can perform fractional investments. For instance,  100 BTC are held by the trust, and you want to buy a share of 100 BTC that is 10 BTC. This means you perform a fractional investment and instead of buying the whole BTC you just buy a share of BTC. On this chunk of investment, you can further perform exposure on the price movements of BTC.
  • Trading of Shares: After the successful creation of shares, they can be traded on various reputable exchanges.
  • Buying and Selling of Shares: Investors can buy and sell shares of bitcoins to gain the exposure to the bitcoin prices without directly purchasing it.

Final Words

Overall, Grayscale Bitcoin Trust (GBTC) collects funds from the users and then utilizes these funds in the purchasing of Bitcoins. It provides the factional investment plan to the investors for their ease of use. By utilizing fractional investment plans, investors just need to invest in a share of Bitcoin. And later on, they can use it for further exposure to the market cap of Bitcoin.

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