What is a Bitcoin ETP explained

A Bitcoin ETP (Exchange-Traded Product) is a financial instrument (a type of security) that tracks the price of Bitcoin and can be traded on traditional stock exchanges, similar to how stocks are bought and sold. For a layman, think of it as a way to invest in Bitcoin without having to buy the actual digital currency and deal with the complexities of cryptocurrency wallets and exchanges. 

With a Bitcoin ETP you invest in a product that represents Bitcoin’s value. This is appealing because it simplifies investing in Bitcoin by avoiding some of the technical challenges, like managing digital wallets and understanding blockchain technology. Instead, you buy shares of the ETP, and these shares reflect Bitcoin’s market price movements.

Bitcoin ETPs can come in various forms, such as:

  • ETFs (Exchange-Traded Funds): These funds directly invest in Bitcoin and the investors hold shares in a fund.
  • ETNs (Exchange-Traded Notes): These are unsecured debt securities, issued by a financial institution. Rather than investing directly in Bitcoin, ETNs are backed by the issuer’s promise to pay a return based on Bitcoin’s price performance.
  • ETCs (Exchange-Traded Commodities): These might directly invest in Bitcoin or in contracts that derive their value from Bitcoin’s price.

The key benefit of Bitcoin ETPs is that they make investing in Bitcoin more accessible and familiar to ordinary investors, providing a bridge between the traditional financial world and the evolving world of cryptocurrencies.