5 Ways to Play Bitcoin on the Public Markets

As the bitcoin economy expands, so do the number of ways to gain exposure to the all-conquering cryptocurrency.

Public equity markets are still a popular and convenient way for many retail investors to park their cash.

Here’s a list of five (OK – four and a quarter, accounting for the Bitcoin Investment Trust and Zynga) stocks that you can buy to gain exposure to bitcoin without actually having to hold the cryptocurrency yourself.

1. BTX Trader

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WPCS International (NASDAQ) announced the release of its bitcoin trading application BTX Trader on 26th December.

The company’s stock price jumped from $1.51 before the announcement to $2.53 the following day, hitting a high of $2.75 on 2nd January. It is now trading at $2.05.

BTX Trader is touted as the first trading platform to allow users to execute orders on five of the most popular bitcoin exchanges. The exchanges include Mt. Gox,BTC China and BitStamp. The software also lets users place stop-loss orders on trades, monitor real-time price feeds and use various charting tools.

WPCS International said in a filing to the exchange on 26th December that it had recently acquired BTX Trader LLC. The acquired firm is now a wholly-owned subsidiary of WPCS International. BTX Trader appears to have made its public debut in a post on Bitcoin Talk in May, when the developers announced it was open for a free private beta.

WCPS International works on engineering projects in wireless communication, specialty construction and electrical power, working on things like installing and managing infrastructure like power cables, according to its website.

As other media outlets have noted, little has been written about WPCS International since it was floated in 2003. Its shares have not performed well since then; it was offered at $140 and trades at about $2 today.

2. SmartTrans (ASX)

btcminer

This mineral exploration company listed on the main board of Australia’s stock exchange is trading in its diamond drills for super-fast computers, as it revamps itself into a software services company with a subsidiary focused on bitcoin mining.

The firm bought a $500,000 “bitcoin mining contract” on 30th November through a joint venture it owns with Zhenya Tsvetnenko.

According to SmartTrans, the contract had already generated about $150,000 of gross revenue in its first seven days. The contract is to run for 12 months in total. SmartTrans has a 50% stake in the joint venture with Tsvetnenko, which is a Hong Kong-incorporated firm called Digi8. SmartTrans stock has traded at about AUD0.025 since the announcement.

SmartTrans has interests in mines in Australia ranging from zinc to gold and copper. However, the firm is dramatically repositioning itself into a China-focused tech company.

The latest SmartTrans annual report, for 2013, said the firm will focus its future activities on its mobile phone and Internet operations in China and that it would seek to rationalise its mineral exploration projects through joint ventures or sales.

SmartTrans is engaged in developing online and mobile billing systems in China. One of its clients is a firm that is building the “Angry Birds Playground Curriculum and Learning Space” in the Middle Kingdom, according to its third-quarter reportfrom 2013. SmartTrans reported a loss of about $1.9mn for 2013 on the back of about $2.45mn in revenues.

3. Overstock (NASDAQ)

shopping key

The online retailer can’t stay out of the headlines as it announced both its decision to start accepting bitcoin payments and thestellar results from that move. It made $130,000 in sales from Bitcoin within 24 hours of accepting the cryptocurrency.

Overstock.com’s share price has been trending down since it announced it would take bitcoin on 9th January. The stock opened on that day at $29.79 and is trading at $28.43 at the time of this writing.

Overstock’s chief executive and chairman, Patrick Byrne, is famously bullish on bitcoin. He said in the retailer’s press release announcing the move to take bitcoins:

“Digital currency will be an important part of the future and Overstock is excited to be the first major online shopping retailer to accept it.”

Given Byrne’s rosy pronouncements on the future of bitcoins, it’s fair to expect Overstock to continue supporting its adoption. Traders who think bitcoin will be embraced by the high street shoppers of the future might want to take a look at this stock.

4. Bitcoin Investment Trust

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SecondMarket’s Bitcoin Investment Trustisn’t a publicly listed security, but sophisticated investors, which is its target market, can still buy units in it relatively easily.

The trust is open to accredited investors as defined by the US Securities and Exchange Commission, which includes individuals with a net worth above $1m or an income exceeding $200,000 annually, among other conditions. Investors can sign up online but must submit identification documents.

The Bitcoin Investment Trust has proved to be popular, raising $61.1m from investors within three months of its launch. This amount has greatly exceeded the fund’s initial goal, which was $10m by the end of 2013.

The Bitcoin Investment Trust is designed to make buying and storing bitcoinssafer and more convenient for investors who are willing to pay the hefty fees, which amount to about 5% in total. The minimum investment is $25,000.

Investors can redeem their units in BIT through SecondMarket auctions, which are slated to start this year. Several individual retirement account platforms, including Pensco and Entrust, can be used to invest in the BIT, including, briefly,Fidelity.

If the idea of trading bitcoins yourself through exchanges or other means aren’t your thing — or if wallet security is keeping you up at night — then this SecondMarket product might be worth considering.

5. Zynga (NASDAQ)

Farmville 2, by Zynga.
Farmville 2, by Zynga.

When the social gaming giant Zynga announced it would start testing bitcoin payments on 4th January, the news added 10 percentage points to its stock price to a high of $4.059 in intra-day trading.

The price has trended upwards to a $4.23 on 8th January before tapering slightly to about $4.10 at the time of writing.

The games company hasn’t announced the outcome of its bitcoin trial yet. It is working with payment processor BitPay to accept bitcoins for in-game purchases. The firm reported annual revenues of $1.28bn in 2012 but a net loss of $209m.

Its stock has languished at around $4 for much of the last 18 months. It’s a far cry from its exuberant opening-day price of $10, which then steadily climbed to an all-time high of $15 in March 2012, before falling into a steady decline.

It’s unclear at this point whether Zynga will continue to support bitcoin adoption within its portfolio of games. But with $1bn in sales, the company could be a natural ally to bitcoin bulls if the results of its current trial prove positive.

 

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