The iShares Bitcoin Trust ETF is not an investment company registered under the Investment Company Act of 1940, and therefore is not subject to the same regulatory requirements as mutual funds or ETFs registered under the Investment Company Act of 1940.
INVESTING IN BITCOIN WITH iSHARES
Aug 07, 2024 Commodity
Learn more about investing in Bitcoin and the benefits of using an exchange-traded product like IBIT.
Video 03:13
WHAT IS BITCOIN?
Bitcoin is the world’s most recognized and widely adopted cryptocurrency1, and many investors want to learn more. Watch to learn the basics of Bitcoin, how it works and understand it's significance in our world today.
03:00
We've all heard about Bitcoin. But what exactly is Bitcoin? Let's start at the beginning. Around 100,000 years ago.
09:21
Throughout history, we've used all kinds of objects to help make transactions and store value, from seashells to shiny metals to paper notes. That's because the value isn't just in the object itself, it's in how much we agree the object represents. So, the object can be many things, even, as it turns out, a string of digital code.
42:06
The internet changed everything. It connected the world, changing how we communicate, work, shop and manage finances. It also opened the door to a new kind of currency and asset. Enter Bitcoin, a digital currency not governed by banks or governments, but by its global community of users. And that provided new potential benefits.
01:08:18
Bitcoin exchanges happen person-to-person, anywhere in the world, in near real time and for near zero transaction costs. Saving money, time and opening financial opportunity to those without access to a banking system.
01:27:10
Bitcoin has a fixed supply of 21 million bitcoins. This hard coded rule controls supply, purchasing power and helps avoid the potential misuse of printing more and more currency, which can contribute towards inflation.
01:44:19
All transactions take place on a digital ledger called the blockchain. It's a digital platform to move value, where everyone can see every transaction.
01:57:05
Bitcoin is no longer seen as the radical idea it was 15 years ago. Over 500 million people around the world now use cryptocurrency, with over 50% holding or investing in Bitcoin, making it the most popular cryptocurrency by far. Some use Bitcoin to transfer value across borders and for purchases. Some see Bitcoin as an investment given its limited supply and uniqueness relative to other financial assets. And for those in certain countries, its value goes far deeper, potentially offering greater financial autonomy by serving as an alternative to local currencies.
02:37:11
Bitcoin is an emerging global monetary alternative. Time will tell how far adoption will go, but next time you see a seashell or shiny metal, think about how humans’ idea of “money” has evolved throughout history.
02:56:00
To learn more about bitcoin as part of a portfolio visit: iShares.com/bitcoin
DISCLOSURES:
The iShares Bitcoin Trust ETF (the “Trust”) has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus and other documents the Trust has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting www.iShares.com or EDGAR on the SEC website at www.sec.gov. Alternatively, the Trust will arrange to send you the prospectus if you request it by calling toll-free 1-800-474-2737.
The iShares Bitcoin Trust ETF is not an investment company registered under the Investment Company Act of 1940, and therefore is not subject to the same regulatory requirements as mutual funds or ETFs registered under the Investment Company Act of 1940. The Trust is not a commodity pool for purposes of the Commodity Exchange Act. Before making an investment decision, you should carefully consider the risk factors and other information included in the prospectus.
Investing involves a high degree of risk, including possible loss of principal. An investment in the Trust is not suitable for all investors, may be deemed speculative and is not intended as a complete investment program. An investment in Shares should be considered only by persons who can bear the risk of total loss associated with an investment in the Trust.
This material is provided for educational purposes only and is not intended to constitute investment advice or an investment recommendation within the meaning of federal, state or local law. You are solely responsible for evaluating and acting upon the education and information contained in this material. BlackRock will not be liable for direct or incidental loss resulting from applying any of the information obtained from these materials or from any other source mentioned. BlackRock does not render any legal, tax or accounting advice and the education and information contained in this material should not be construed as such. Please consult with a qualified professional for these types of advice.
Investing in digital assets involves significant risks due to their extreme price volatility and the potential for loss, theft, or compromise of private keys. The value of the shares is closely tied to acceptance, industry developments, and governance changes, making them susceptible to market sentiment. Digital assets represent a new and rapidly evolving industry, and the value of the Shares depends on their acceptance. Changes in the governance of a digital asset network may not receive sufficient support from users and miners, which may negatively affect that digital asset network’s ability to grow and respond to challenges Investing in the Trust comes with risks that could impact the Trust's share value, including large-scale sales by major investors, security threats like breaches and hacking, negative sentiment among speculators, and competition from central bank digital currencies and financial initiatives using blockchain technology. A disruption of the internet or a digital asset network would affect the ability to transfer digital assets and, consequently, would impact their value. There can be no assurance that security procedures designed to protect the Trust’s assets will actually work as designed or prove to be successful in safeguarding the Trust’s assets against all possible sources of theft, loss or damage.
The Trust may incur certain extraordinary, non-recurring expenses that are not assumed by the Sponsor.
Shares of the Trust are not deposits or other obligations of or guaranteed by BlackRock, Inc., and its affiliates, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. The sponsor of the trust is iShares Delaware Trust Sponsor LLC (the “Sponsor”). BlackRock Investments, LLC ("BRIL"), assists in the promotion of the Trust. The Sponsor and BRIL are affiliates of
BlackRock, Inc. The Sponsor is not responsible for losses incurred due to loss, theft, destruction, or compromise of the trust's bitcoin.
Transactions in shares of ETPs may result in brokerage commissions and will generate tax consequences.
©2024 BlackRock, Inc. or its affiliates. All rights reserved. iSHARES and BLACKROCK are trademarks of BlackRock, Inc., or its affiliates. All other trademarks are the property of their respective owners.
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UNDERSTANDING BITCOIN
Bitcoin is the world’s most recognized and widely adopted cryptocurrency1 — and the first form of internet-native money to gain widespread global adoption. Bitcoin allows for peer-to-peer transactions outside of central intermediaries like banks.
There is no physical form of bitcoin; it is solely a digital currency. Additionally, some people see it as a global monetary alternative.
Bitcoin is a decentralized digital asset and one of the foremost applications of blockchain technology. The blockchain is a public, digital database of transactions maintained by a distributed network without a centralized authority. Leveraging the blockchain, bitcoin enables peer-to-peer transactions and ensures the fidelity and security of each transaction without the need of central intermediaries, like banks or clearinghouses.
Bitcoin transactions are validated and new bitcoins are created through a process known as “mining,” during which computers or “miners” race to solve complex mathematical computations. The winning miner updates the blockchain with the latest verified transactions and earns a predetermined amount of new bitcoin generated by the network.
The bitcoins are then held or traded based on supply and demand, which determine the value or dollar price of bitcoin similar to other commodities or assets. Bitcoins are stored in crypto wallets, which are also used to send and receive bitcoin. Each wallet contains a private key that allows you to send bitcoin to complete a transaction, and a public key that allows you to receive bitcoin.
According to bitcoin code, there is a maximum supply of 21 million coins and no new bitcoins will be released after that limit is reached.2 As of January 2024, there are around 19.6 million bitcoins in circulation, and 1.4 million left to be rewarded. This limited supply is one of bitcoin’s key characteristics, which was designed to increase scarcity — and therefore demand — over time.
Cryptocurrencies like bitcoin have enabled a way for secure transactions to be conducted directly between two parties without the need for an intermediary (e.g., a bank) anywhere in the world. It addresses three centuries-old problems that money and payment systems have faced:
- Transacting across borders: bitcoin and its blockchain-based framework enabled a global “internet of value,” where assets can be moved quickly and seamlessly at low cost.
- Open access financial system: bitcoin is available to anyone with a mobile phone and an internet connection. Its open access nature means that bitcoin can help enable more people to participate in the global financial system who may not have full access to traditional banking networks, or who are limited by their own country-specific infrastructure.
- Fixed supply not subject to inflation: bitcoin is a scarce asset, with a supply fixed at 21 million units. Supply of traditional government-issued currencies can be arbitrarily increased, leading to inflation. Bitcoin’s supply grows at a predictable rate, and because of its decentralized nature, its supply is near impossible to alter.
Driving the demand for a bitcoin ETP is the fact that many investors view bitcoin as more than just a form of digital payment.
There are certain trends accelerating bitcoin’s adoption as well:
- Global monetary alternative: A scarce, decentralized, global monetary alternative that may benefit from increasing global disorder, and declining trust in institutions and government-issued fiat currencies.
- Geopolitical and monetary hedge: An expression on increasing global disorder and declining trust in governments, banks, and fiat currencies.
- Blockchain adoption: As the leading cyptoasset1, bitcoin’s performance is seen by many as a key indicator of overall blockchain adoption.
INVESTING IN BITCOIN ETPs
A bitcoin exchange-traded product (ETP) is an investment vehicle that provides exposure by investing directly in bitcoin. Bitcoin ETPs offer the ease of stock trading, low costs, tax efficiency, and convenience.
As bitcoin has grown in popularity, so have the investment options. One of the ways investors can invest directly in bitcoin is through iShares Bitcoin Trust ETF (IBIT). But for investors who prefer the convenience of exchange-traded products, the iShares Bitcoin Trust ETF (IBIT) provides exposure through traditional brokerage platforms — the same place you purchase stocks, bonds, and other ETFs.
We recommend you consult with a financial professional to determine if an investment in bitcoin aligns with your personal investment goals. There are several factors to consider. Bitcoin has had periods of significant outperformance relative to major asset classes since its inception, but it has come with significant volatility.3
Investors with a higher risk tolerance may be inclined to allocate more of their portfolio to bitcoin. Every investor’s situation and goals are unique.
Bitcoin is subject to the same tax laws as property. The IRS requires reporting of each bitcoin transaction, which is subject to capital gains tax.4 Investors should consult a tax or financial professional for more information on how they may be impacted by bitcoin tax laws.
IBIT is fully invested in bitcoin outside of a minimal cash allocation. While market forces can cause modest deviations between IBIT’s share price and its net asset value (NAV), its structure is designed to help minimize these differences.5
Bitcoin is a highly volatile asset exhibiting significant price swings in both directions since its inception in 2009 and may not be suitable for certain investors. Like any investment, there are inherent risks involved with investing in a spot bitcoin exchange-traded product and at large concentrations, bitcoin’s volatility can have a large impact on overall portfolio risk.
Bitcoin exchange-traded products (ETPs) help alleviate some of the challenges of investing directly in bitcoin, such as storage. Traditional forms of investing directly in bitcoin require deciding where to store the purchased bitcoin, which can be in a crypto wallet or on a crypto exchange. This approach gives the investor certain direct responsibilities in preventing security risks such as theft or loss of private keys, which are essentially passcodes to a crypto wallet. With a bitcoin ETP, investors own shares of the ETP, removing the need to determine where to store their bitcoin, as this is handled by the ETP's custodian. It is important to note, however, that investing in a bitcoin ETP still involves risk, including possible loss to principal.
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