Invest in bitcoin via certificates


Investing in bitcoin, via certificates with Avanza or Nordnet, should be the easiest way to expose your capital to the world's largest cryptocurrency. The certificates have several advantages – but also certain risks.

How certificates work

Certificates are securities issued by an issuer, for example a bank. The security symbolizes a certain product that the bank has invested in. It could be oil, gold, bitcoin or corn, for example. Very simply explained, certificates are thus a “receipt” that you own part of the asset that the bank has invested in.

For example, the bank could buy in 1 bitcoin and then issue certificates corresponding to 1/20 bitcoin. There will thus be 20 certificates, each of which has a value of 1/20 bitcoin. Similarly, investing in 100 barrels of oil can create 10,000 certificates equivalent to 0.01 barrels each. In this way, a simpler securities trade is created instead of the physical oil, or digital bitcoin, having to change hands.

Buy certificates in bitcoin – in two steps

The range of certificates against cryptocurrencies has gradually increased. In 2017, there were only certificates for bitcoin and ether, while at the beginning of 2023 it was possible to buy certificates for over 10 different cryptocurrencies, crypto indices, etc. How to invest in bitcoin via Avanza:

  1. Select certificate

Log in to Avanza – Go to the menu and select Save and InvestExchange-traded productsCertificate list. Then select asset class Alternative investments. Now all crypto certificates will be presented.

Use the search field and type Bitcoin if only these certificates are desired to be displayed. The range of these is relatively large, which is shown in the picture below.

(Bitcoin certificate on Avanza in May 2023)

  1. Place order

Click on the certificate you wish to buy. As shown in the table above, there are basically two certificates that all trading takes place in, i.e. Bitcoin XBT and Valor Bitcoin Zero SEK. Both of these are traded in SEK and have been on the Swedish market for several years.

Choosing certificates with a large turnover is an advantage as it becomes easier to get through both buy and sell orders at the desired level.

Then choose how many you wish to buy, in the example below 100 are bought for every 30, 41 kroner. How much of a whole bitcoin the certificate represents can be read about in its information sheet.

Two benefits of certificates

  • ISK or capital insurance

The main advantage of investing in bitcoin, via certificates, is that these securities can be held within an ISK or capital insurance. In this way, the trade does not have to be declared and no capital gains tax is paid. However, a smaller standard tax is paid each year.

  • No knowledge required

Bitcoin is a cryptocurrency managed on a blockchain of the same name. To manage the cryptocurrency, a crypto wallet and knowledge of how transactions can be carried out are required. For example, it is possible to buy bitcoin via a Swedish crypto exchange and send them to your own crypto wallet.

Investing in certificates does not require any technical knowledge. It is as easy as buying a share or placing an order on a mutual fund.

Two disadvantages of certificates

  • The risk

As explained early in the article, certificates are securities that reflect an asset that the issuer is expected to have invested in. Of course, there are several security features that control this but in theory an issuer could issue securities without owning the underlying asset. If it were to be discovered, these are of course completely worthless.

The same applies if the issuer goes bankrupt and has not clearly separated its own and the customers' assets. This risk is usually called issuer risk and occurs for all securities where the issuer holds the underlying asset.

  • Cryptocurrency – but without function

Bitcoin was created to be used as a means of payment on a blockchain. Since then, there have been updates to the blockchain that facilitate the handling of bitcoin and the ease of use of using it as a means of payment.

However, a certificate cannot be sent to anyone else, traced via a blockchain, or otherwise used for its original purpose. purpose.

If only investment is desired in the value development in bitcoin, then certificates are a very good alternative.
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