Wondering how to make money with bitcoin? Here Smith explains how cryptocurrencies like bitcoin can be used as collateral to trade stocks and ETFs.
First Global Credit is opening the door to investing with bitcoin. The company allows bitcoin owners to use the cryptocurrency as collateral on the stock market, just as one would a fiat currency.
The Investing News Network spoke to CEO Gavin Smith to learn more about his company and the bitcoin market, and in particular to gain a better understanding of how investors can make money with bitcoin on the stock market. Here’s what he had to say.
Using bitcoin to invest in stocks and ETFs
According to Smith, “there is very little you can do with bitcoin right now to generate a profit except trade in and out of it. But if you trade out of bitcoin, you lose the potential of any big upside move.” So what is the solution for investors who want to make money with bitcoin? Smith believes that the answer is using the digital currency as collateral when investing in the stock market.
He explained, “if you use our services, your bitcoin is being used as collateral to secure your trades. It is not being sold to buy or short that stock you are interested in. So you get the benefit of bitcoin price rises and you get the benefit of being right on your stock selections. Our clients are capturing the profit opportunities in mainstream markets and the potential of their bitcoins at the same time.”
Those interested in using this service first transfer their bitcoins to a segregated wallet on the First Global Credit website. Once signed up for the service, clients receive a list of available equities and ETFs. If the customer has a specific stock in mind, they are also able to suggest additional stocks to trade. The platform works for both long and short positions. When it comes time for a client to close a trade, the profit earned or lost in fiat currency is automatically traded into bitcoin.
In January, First Global Credit expanded the range of available equities to include shares traded on the London Stock Exchange. Smith explained that the decision was a move towards serving its international client base. “We started with US stocks because we knew our customers would be excited about trading all the big names, like Activision (NASDAQ:ATVI), Apple (NASDAQ:APPL) and Google (NASDAQ:GOOGL). But First Global serves a worldwide customer base with clients on every continent except Antarctica,” he said.
Although Smith anticipates adding a dozen more countries over the next 12 months, the UK seemed like a logical first step for the company — “we picked the UK because we have a high concentration of customers there and wanted to give them access to familiar stocks,” he noted. Enthusiastic about this move, Smith reassured potential customers, stating, “we’ve picked a number of well-known companies that have had big price moves — and that means potential profit for my clients!”
The company also has a number of other milestones coming up in this year, including the addition of commodity futures trading to the site in February, a new upgraded trading platform that is MT4 compatible and the aforementioned expansion into new countries. Furthermore, although Smith was mum about the details, First Global Credit is expecting to see a new division that will offer services uniquely tailored to the maturing digital currency market near Q3 2016.
These exciting developments suggest that the market for bitcoin-traded stocks is hot among cryptocurrency enthusiasts. For digital currency investors looking to make money with bitcoin, the options available through First Global Credit may be the way to go.
Long-term outlook on how to make money with bitcoin
For Smith, the decision to invest in bitcoin is an obvious one. He said, “we are just seeing the very first glimmer of the benefits that will come from smart people thinking about money in a new way and inventing new services built on bitcoin and the blockchain. I think its integration into the worldwide economy will take place over a number of years. We cannot begin to fathom all the benefits that will become possible because of digital currency.”
So what could those benefits be? Smith foresees retailers recognizing the value of retaining some of their revenue in digital currency. From there, these companies will start looking for ways to generate returns from that money. That will generate a new industry centered around the creation of a bitcoin capital market that will ultimately work to stabilize and start increasing the bitcoin price. He explained that “volatility is fueled by lack of liquidity, and when people start to hang onto bitcoin instead of involuntarily jumping out of it at every price dip, you will see a positive cycle start to overtake erratic price moves.”
All in all, that bodes well for investors looking to make money with bitcoin. As Smith suggested, “what will be really interesting is to see how this paradigm-shifting technology will become integrated into the culture, changing so much that is fundamental about how the world’s finances work.” Investors who start thinking now about bitcoin as a fiat currency that can be used as collateral on the stock market may have a leg up on this new technological and financial frontier.
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.