What is Bitcoin?
Summary
Bitcoin is an open network for holding and sending BTC without a company keeping the ledger. Its rules limit supply to 21 million BTC. Direct holders can transfer BTC; an ETP investor owns a security linked to its price.
- Bitcoin records BTC transfers on a shared ledger rather than one company’s books.
- The 21 million BTC supply limit is defined by the rules, but it does not determine market value.
- Virtune Bitcoin Prime ETP is physically backed by Bitcoin held as collateral.
Holding and sending BTC
Bitcoin lets two people transfer BTC without a company maintaining their shared account book. The sender authorises a transfer with a private key; participants in the network check and record it on a public ledger1. The recipient can then hold or send the BTC onward.
That open ledger and a maximum supply of 21 million BTC2 distinguish Bitcoin from a company-issued balance. No single issuer can create more BTC at will. The supply limit is one reason people compare Bitcoin with digital gold: both have a scarcity story. The comparison does not establish a stable price or future value.
How does a transfer become part of the ledger?
A wallet sends a signed transaction rather than moving a file from one device to another. Miners group valid transactions into blocks, and each later block makes an earlier entry harder to change1. The network's rules determine new BTC issued to miners, with the reward declining over time toward the supply limit.
The private key is what lets a holder authorise a transfer. Losing access to it can mean losing access to BTC; someone who obtains it may be able to move the asset. A wallet backup can help restore access3 after a device failure. Direct ownership and security ownership come with different custody responsibilities.
Bitcoin chiefly records BTC ownership and transfers. Other networks can also run apps with different purposes. The introduction to cryptocurrency covers that broader history and variety.
BTC or a Bitcoin ETP
A direct BTC holder can send BTC at any time the network is available. Virtune Bitcoin Prime ETP instead provides Bitcoin price exposure through an exchange-traded security, without the investor managing private keys. It is physically backed with Bitcoin held as collateral4. The investor owns the ETP, not BTC in a personal wallet.
The product is listed on Nasdaq Stockholm, Xetra and the Warsaw Stock Exchange.
Costs when buying Virtune Bitcoin Prime ETP
| Cost | Charged by | When |
|---|---|---|
| Brokerage commission | Broker | On every purchase and sale |
| Difference between bid and ask price | Market | On every trade |
| Management fee, 0.25% per year | Issuer | Ongoing, from the product's value |
| Currency conversion | Broker, if applicable | If the product trades in another currency |
Risks to understand
Bitcoin's price can move sharply even with a defined supply limit. Direct ownership requires a wallet or custodian; the ETP adds issuer, custody and exchange-trading risks. It trades during exchange hours while Bitcoin moves around the clock. Physical backing does not protect against price falls. Crypto-assets can lose substantial value5.
Related product
Sources
- Bitcoin.org: How does Bitcoin work?
- Bitcoin.org: Frequently Asked Questions
- Bitcoin.org: Securing your wallet
- Virtune: Bitcoin Prime ETP: physical backing and synthetic exposure
- EBA, EIOPA and ESMA (the European Supervisory Authorities): EU financial regulators warn consumers on the risks of crypto-assets
