Company Name: Bitwise Asset Management
Founders: Hong Kim and Hunter Horsley
Date of establishment: December 2016
Headquarter Location: San Francisco, California and New York, New York
Amount of Bitcoin in the vault: Undeclared
Number of employees: 65
Website: https://bitwiseinvestments.com/
Public or private? private
In 2016, Hong Kim and his co-founder founded Bitwise Asset Management (Bitwise)Hunter Horsley was living the startup life – working out of his living room in San Francisco and looking for a project he could grow into a business.
While they were experimenting with different ideas, none of which gained much traction, their friends couldn’t stop talking about Bitcoin. Moreover, by early 2016, every venture capital firm in Silicon Valley was focusing on Bitcoin as well.
“We wanted to avoid it for a long time because it was overhyped,” Kim told Bitcoin Magazine. “But then, through osmosis, we spent more time thinking about it.”
By the end of the year, after doing their homework on Bitcoin, Kim and Horsely had founded Bitwise, a crypto asset management company focused primarily on Bitcoin, which would provide Bitcoin wrappers so that customers could buy those assets through traditional brokerage firms.
Eight years later, Bitwise became one of 11 US companies to launch a spot Bitcoin ETF; it is currently 5th Largest Bitcoin ETF in the US by Assets Under Management (AUM)This is partly due to Bitcoin enthusiasts who bought into it because of the way Bitwise has kept the spirit of Bitcoin alive while interacting with Wall Street.
Bitwise vs. All Other Bitcoin ETF Issuers
There are a number of factors that set the Bitwise Bitcoin ETF (BITB) apart from its competitors.
On the other hand, Bitwise is the only Bitcoin ETF in the US that publishes the addresses of its Bitcoin holdings, embracing the idea of transparency, a fundamental principle of Bitcoin.
“So far, it’s been several months and we’re still the only ETF that discloses its holding addresses,” Kim said. “You can go to the Bitcoin block explorer and check our holdings on-chain.”
Kim also noted that Bitwise is the only Bitcoin ETF issuer that proactively communicates with its customers via social media.
“We’re on Twitter talking about product and answering questions,” Kim explained.
“I will explain anything and communicate with the community. If there is anything that bothers them (about) the products, they can yell at us and we will respond to them and take them seriously,” he added.
Furthermore, Kim noted that Bitcoin remains Bitwise’s primary focus, which makes the company very different from other ETF companies like BlackRock or Invesco that manage a wide range of other asset types.
“We’ve been here for seven years or so and this is the only thing we talk about,” Kim said.
“When prices go down when there’s a bear market, we don’t go into emerging markets or fixed income or anything else,” he added.
“There may not be a big difference between BlackRock and Investo or BlackRock and Franklin Templeton, but there is a big difference between BlackRock and Bitwise.”
Finally, Bitwise has pledged to donate 10% of its ETF fee profits to three non-profits that support Bitcoin Core developers — open satellites, edge And the Human Rights Foundation – For 10 years.
Donate to open source software developers
While many in the Bitcoin community have praised Bitwise for its donation to Bitcoin Core developers, Kim sees the contribution as more of a commitment than a sacrifice.
“As a Bitcoin user, I feel like it’s not a real donation,” Kim said.
“American taxpayers don’t think they’re contributing to the military budget,” he added.
“This is not a donation, it’s your security budget.”
Kim went on to explain that while Bitwise manages some other crypto assets, two-thirds of the company’s holdings are Bitcoin, which is why he sees supporting Bitcoin Core developers as contributing to the technology that powers his livelihood.
“If you’re like BlackRock, where you have all sorts of other assets and bitcoin is just one of them, you probably don’t feel that way,” Kim said, referring to why a company like Bitwise is more interested in bitcoin than some of the larger traditional financial institutions that have issued spot bitcoin ETFs.
“If you’re like me or in a similar economic situation and care enough about Bitcoin, it’s not optional for the Bitcoin network to be as secure as possible,” he added.
Kim, Bitwise’s CTO and cybersecurity expert, explained why open source developers are so important to Bitcoin, noting that many people who don’t understand how open source technology works misunderstand what Bitcoin developers do. He claimed that the majority of Bitcoin developers aren’t there to make radical changes to Bitcoin, but rather to keep it functional as it interacts with other software.
“You can have an opinion about the latest controversial soft fork proposal or whatever, but 95% of the developers we’re talking about aren’t working on it,” Kim explained.
“The 50 or so core developers who do this every day, they’re not the ones who spend their time on it. Every time a new version of Linux or Mac or Windows comes out, what happens? We need to make sure Bitcoin Core compiles on that version,” he continued.
“Someone has to make sure that the software we rely on remains compatible, well documented, and operable.”
On a mission
While Bitwise does a lot to differentiate itself from its competitors, Kim wants Bitwise to do something more profound than just being one of the top issuers of bitcoin ETFs in the United States.
“There are ways to think about a business as the product (it offers) or how it’s different from its competitors, but I think there’s another way to look at the company as like, ‘What did you come here to do?’” Kim explained.
He shares that he and Horsley hadn’t started asking themselves this question, but now it seems to be at the forefront of his mind.
“I want Bitwise to be the company that helps accelerate and guide this movement, because it is very important for the world to have public money that is accessible to everyone and that no one can control,” Kim said.
After sharing this, Kim acknowledged what he felt many people might be thinking as they read this: You are offering exposure to the price of Bitcoin within the walled garden of traditional finance.
“Traditional finance culture and Bitcoin are inevitably at odds, and people have their concerns and disagreements about that,” Kim said. “That was really at the forefront of my mind.”
Kim emphasized that this is why Bitwise chose to donate to open-source Bitcoin developers, make their Bitcoin addresses public, and engage with the Bitcoin community. He also shared some information about what Bitwise is working on next: recoverable Bitcoin.
Bitcoin is redeemable
Bitwise is currently talking to policymakers in Washington, D.C., in an effort to facilitate Bitwise’s in-kind redemption of bitcoin from the Bitwise ETF. In simple terms, Kim wants Bitwise customers to be able to withdraw the bitcoin they invested in via the Bitwise ETF if they want to, whereas currently, customers cannot withdraw the cash value of bitcoin they invested in via the Bitwise ETF.
“There are gold ETFs that you can redeem, even as an individual investor, and have gold coins and bars delivered to your door,” Kim explained.
“You can redeem the in-kind without incurring any taxable event. There is no reason why a Bitcoin ETF cannot do that,” he added.
“This will be a product I will be proud of.”
Kim believes that if Bitwise can make redeemable bitcoin a reality for investors, bitcoin ETFs like BITB have the potential to become one of the biggest ways to access bitcoin.
“Bitcoin ETFs are a huge improvement (over listing bitcoin) since most people have brokerage accounts,” said Kim, who added that it’s much easier to convince family and friends to invest in bitcoin when they don’t have to go through the hassle of setting up an account with a bitcoin or cryptocurrency exchange.
“If your uncle at the Thanksgiving table is convinced and wants to invest $100 in bitcoin, you no longer have to say, ‘Wait a minute. Buy a $40 notebook first.’ …[Now, it takes]just two clicks and you get $100 of exposure to bitcoin,” he added.
“But then, at any point in their journey, if they’re so inclined, they can opt out of that. In that sense, it can become a really clean, simple path.”
While Kim acknowledged that many are skeptical that this will ever happen — speculating that Wall Street wants as much bitcoin as possible inside its walled gardens — he also noted that many feel the same way about the launch of spot bitcoin ETFs. He asked for patience as Bitwise continues its efforts to tear down the wall between bitcoin and traditional finance.
“There is a way to look at bitcoin ETFs as a clean, easy way to get in and out and less friction for the average person,” Kim said.
“That would be the ideal world for me, and it’s the world that Bitwise is currently working on,” he added.
“In this world, ETFs and the blockchain world are not separate, but can have a close relationship.”