Getting back to the article, this is best seen as a variant of 'Banking 1.0'. Remember how in the old days banks would have gold that your paper money could be converted into?
Well, with these new investments you can buy into the Bitcoin goodness much like how our forefathers could have their wealth backed by gold.
With a bank backed by gold the actual gold does not leave the vault very often. It was theoretical that you could go to the bank and get your paper notes changed for actual gold.
In this brave new world of Bitcoin backed investments your transactions to and from the fund do not involve anything being added or removed from the blockchain. There is just a wallet there, in the bank cold storage with however many bitcoins on it. The bank does not have one wallet for its bitcoins it has thousands of the things, so the account is sharded this way.
The difference is that rather than gold being the real backing it is a Bitcoin wallet. If you get out of the fund then the bank won't be selling the contents of that wallet on Coinbase, it will just sit there in the fund ready for the next punter to buy into.
An investment fund that has gold as the backing store of wealth is able to track the value of the gold, same with Bitcoin. If Bitcoin goes up then your investment is worth more, the fund takes its percentage and it all works fine.
This is what Bitcoin has come to, if you strip away all the 'fintech' mumbo-jumbo buzzword legalese this is all it is, a variant on 'Banking 1.0'.
Well, with these new investments you can buy into the Bitcoin goodness much like how our forefathers could have their wealth backed by gold.
With a bank backed by gold the actual gold does not leave the vault very often. It was theoretical that you could go to the bank and get your paper notes changed for actual gold.
In this brave new world of Bitcoin backed investments your transactions to and from the fund do not involve anything being added or removed from the blockchain. There is just a wallet there, in the bank cold storage with however many bitcoins on it. The bank does not have one wallet for its bitcoins it has thousands of the things, so the account is sharded this way.
The difference is that rather than gold being the real backing it is a Bitcoin wallet. If you get out of the fund then the bank won't be selling the contents of that wallet on Coinbase, it will just sit there in the fund ready for the next punter to buy into.
An investment fund that has gold as the backing store of wealth is able to track the value of the gold, same with Bitcoin. If Bitcoin goes up then your investment is worth more, the fund takes its percentage and it all works fine.
This is what Bitcoin has come to, if you strip away all the 'fintech' mumbo-jumbo buzzword legalese this is all it is, a variant on 'Banking 1.0'.