The Dilemma: Owning Bitcoin vs. Investing in Bitcoin ETFs | BitcoinChaser

Choosing between owning Bitcoin (BTC) directly or investing in a Bitcoin ETF is a truly challenging decision. As someone who has invested in BTC myself—stored securely in a self-custody wallet—I often worry about the various and sudden ways I could lose my cryptocurrency.

You read about it all the time in the news.

While it doesn’t keep me up at night, the possibility of losing my modest BTC holding does give me some pause.

Would it not be safer to move that investment into a Bitcoin ETF?

With a Bitcoin ETF (exchange-traded fund), you can effectively gain Bitcoin exposure without actually holding the coin yourself.

So why would anyone go through the trouble of owning actual Bitcoin?

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What is a Bitcoin ETF?

An ETF (exchange-traded fund) is an investment fund traded on stock exchanges, much like stocks.

A Bitcoin ETF lets you buy shares that track the price of Bitcoin and are traded on regulated stock markets. This means you gain exposure to Bitcoin’s price movements without needing to handle cryptocurrency directly.

Why Invest in a Bitcoin ETF?

By investing in a Bitcoin ETF you are investing in shares of the ETF, which represent an interest in the Bitcoin assets or Bitcoin-related derivatives held by the fund. You are not owning Bitcoin personally or managing private keys.

This means it is accessible for beginners: Buying ETFs or stocks is simpler than opening a wallet, buying crypto, and storing private keys. You can start investing on some platforms for $1, meaning there is a lower barrier to entry.

Owning Bitcoin ETFs allows for easier diversification via other ETFs. Brokerage platforms allow you to invest in 1000s of stocks, assets, cryptocurrencies, bonds, and ETFs all from one platform. You will be exposed to all these other financial investment opportunities. 

ETFs are also highly regulated, meaning greater options in the event of fraud, bankruptcy, or mishandling of funds. This is not to say there is none around crypto, but you are undoubtedly safer with the protection of an ETF. 

On top of these points, there are other long term things we could include like tax report efficiency, and long term security of funds. 

Overall, investing in a Bitcoin ETF is an accessible, low-barrier, and safe way of investing indirectly into Bitcoin. If Bitcoin goes up, you will still get the benefits, just without so many risks and headaches. 

Why Own BTC Yourself?

There is still a very good reason to buy Bitcoin: You own it. 

You own a piece of the actual blockchain – a slice of the original cryptocurrency pie. And if you are into cryptocurrency at all, and I think you are if you are reading this, I can imagine that means a lot. 

And owning cryptocurrency naturally leads to learning more about it. The benefit of people buying cryptocurrency and holding it in wallets is that they learn as they go. 

Learning means making some mistakes along the way, of course, but becoming more connected to the cryptocurrency world, opening doors to decentralized finance (DeFi), staking, and yield farming. 

And then you can look to reinvest the Bitcoin you own and earn passive income and a whole new world has opened up.

So for me this is a good enough reason to own Bitcoin and be involved in the cryptocurrency world.

BTC vs. Bitcoin ETF: How Will I Manage My Bitcoin Going Forward?

I am still not sure how I feel about Bitcoin ETFs, but I am sure Bitcoin will be around in the next 30 years. 

It is important to me that I own some Bitcoin and I am actively part of the cryptocurrency world rather than just investing into it from the sidelines. 

But (and this is a big but), I don’t trust myself enough to be able to manage my cryptocurrency for the next 20-30 years and not make a mistake: expose my wallet somehow or lose the crypto. 

So I will be looking into Bitcoin ETFs more. 

Two of the biggest in the world I will be looking into first include ARK 21Shares Bitcoin ETF and iShares Bitcoin Trust ETF.

I plan to hold investments in Bitcoin ETFs but also invest into Bitcoin and cryptocurrency in general.