3 posts tagged with "Bitcoin"

BlackRock’s iShares Bitcoin Trust, ticker IBIT, has become one of the most popular ways for investors to gain exposure to Bitcoin directly from a standard brokerage account. But what is it, how does it work, and what are the trade-offs?

In short, IBIT is an exchange-traded product (ETP) that holds actual Bitcoin and trades like a stock on the NASDAQ exchange. Investors use it for its convenience, deep liquidity, and access within a regulated market. As of early September 2025, the fund holds approximately $82.6 billion in assets, charges a 0.25% expense ratio, and uses Coinbase Custody Trust as its custodian. This guide breaks down exactly what you need to know.

What You Actually Own with IBIT​

When you buy a share of IBIT, you are buying a share of a commodity trust that holds Bitcoin. This structure is more like a gold trust than a traditional mutual fund or ETF governed by the 1940 Act.

The fund’s value is benchmarked against the CME CF Bitcoin Reference Rate – New York Variant (BRRNY), a once-a-day reference price used to calculate its Net Asset Value (NAV).

The actual Bitcoin is stored with Coinbase Custody Trust Company, LLC, with operational trading handled through Coinbase Prime. The vast majority of the Bitcoin sits in segregated cold storage, referred to as the “Vault Balance.” A smaller portion is kept in a “Trading Balance” to manage the creation and redemption of shares and to pay the fund’s fees.

The Headline Numbers That Matter​

• Expense Ratio: The sponsor fee for IBIT is 0.25%. Any introductory fee waivers have since expired, so this is the current annual cost.
• Size & Liquidity: With net assets of $82.6 billion as of September 2, 2025, IBIT is a giant in the space. It sees tens of millions of shares traded daily, and its 30-day median bid/ask spread is a tight 0.02%, which helps minimize slippage for traders.
• Where It Trades: You can find the fund on the NASDAQ exchange under the ticker symbol IBIT.

How IBIT Keeps Up with Bitcoin’s Price​

The fund’s share price stays close to the value of its underlying Bitcoin through a creation and redemption mechanism involving Authorized Participants (APs), which are large financial institutions.

Unlike many gold ETPs that allow for “in-kind” transfers (where APs can swap a block of shares for actual gold), IBIT was launched with a “cash” creation/redemption model. This means APs deliver cash to the trust, which then buys Bitcoin, or they receive cash after the trust sells Bitcoin.

In practice, this process has been very effective. Thanks to the heavy trading volume and active APs, the premium or discount to the fund’s NAV has generally been minimal. However, these can widen during periods of high volatility or if the creation/redemption process is constrained, so it’s always wise to check the fund’s premium/discount stats before trading.

What IBIT Costs You (Beyond the Headline Fee)​

Beyond the 0.25% expense ratio, there are other costs to consider.

First, the sponsor fee is paid by the trust selling small amounts of its Bitcoin holdings. This means that over time, each share of IBIT will represent a slightly smaller amount of Bitcoin. If Bitcoin’s price rises, this effect can be masked; if not, your share’s value will gradually drift downward compared to holding raw BTC.

Second, you’ll encounter real-world trading costs, including the bid/ask spread, any brokerage commissions, and the potential for trading at a premium or discount to NAV. Using limit orders is a good way to maintain control over your execution price.

Finally, trading shares of IBIT involves securities, not the direct holding of cryptocurrency. This simplifies tax reporting with standard brokerage forms but comes with different tax nuances than holding coins directly. It’s important to read the prospectus and consult a tax professional if needed.

IBIT vs. Holding Bitcoin Yourself​

Choosing between IBIT and self-custody comes down to your goals.

• Convenience & Compliance: IBIT offers easy access through a brokerage account, with no need to manage private keys, sign up for crypto exchanges, or handle unfamiliar wallet software. You get standard tax statements and a familiar trading interface.
• Counterparty Trade-offs: With IBIT, you don't control the coins on-chain. You are relying on the trust and its service providers, including the custodian (Coinbase) and prime broker. It’s crucial to understand these operational and custody risks by reviewing the fund’s filings.
• Utility: If you want to use Bitcoin for on-chain activities like payments, Lightning Network transactions, or multi-signature security setups, self-custody is the only option. If your goal is simply price exposure in a retirement or taxable brokerage account, IBIT is purpose-built for that.

IBIT vs. Bitcoin Futures ETFs​

It’s also important to distinguish spot ETFs from futures-based ones. A futures ETF holds CME futures contracts, not actual Bitcoin. IBIT, as a spot ETF, holds the underlying BTC directly.

This structural difference matters. Futures funds can experience price drift from their underlying asset due to contract roll costs and the futures term structure. Spot funds, on the other hand, tend to track the spot price of Bitcoin more tightly, minus fees. For straightforward Bitcoin exposure in a brokerage account, a spot product like IBIT is generally the simpler instrument.

How to Buy—And What to Check First​

You can buy IBIT in any standard taxable or retirement brokerage account under the ticker IBIT. For best execution, liquidity is typically highest near the U.S. stock market's open and close. Always check the bid/ask spread and use limit orders to control your price.

Given Bitcoin’s volatility, many investors treat it as a satellite position in their portfolio—an allocation small enough that they can tolerate a significant drawdown. Always read the risk section of the prospectus before investing.

Advanced Note: Options Exist​

For more sophisticated investors, listed options on IBIT are available. Trading began on venues like the Nasdaq ISE in late 2024, enabling hedging or income-generating strategies. Check with your broker about eligibility and the associated risks.

Risks Worth Reading Twice​

• Market Risk: Bitcoin’s price is notoriously volatile and can swing sharply in either direction.
• Operational Risk: A security breach, key-management failure, or other problem at the custodian or prime broker could negatively impact the trust. The prospectus details the risks associated with both the "Trading Balance" and the "Vault Balance."
• Premium/Discount Risk: If the arbitrage mechanism becomes impaired for any reason, IBIT shares can deviate significantly from their NAV.
• Regulatory Risk: The rules governing cryptocurrencies and related financial products are still evolving.

A Quick Checklist Before You Click “Buy”​

Before investing, ask yourself these questions:

• Do I understand that the sponsor fee is paid by selling Bitcoin, which slowly reduces the amount of BTC per share?
• Have I checked today’s bid/ask spread, recent trading volumes, and any premium or discount to NAV?
• Is my investment time horizon long enough to withstand crypto’s inherent volatility?
• Have I made a conscious choice between spot exposure via IBIT and self-custody based on my specific goals?
• Have I read the latest fund fact sheet or prospectus? It remains the single best source for how the trust truly operates.

This post is for educational purposes only and is not financial or tax advice. Always read official fund documents and consider professional guidance for your situation.

The gap between the promise of crypto payments and the reality for e-commerce merchants remains surprisingly wide. Here's why—and where the opportunities lie for founders and builders.

Despite cryptocurrency's rise in mainstream awareness, accepting crypto payments on leading e-commerce platforms like Shopify remains far more complicated than it should be. The experience is fragmented for merchants, confusing for customers, and limiting for developers—even as demand for crypto payment options continues to grow.

After speaking with merchants, analyzing user flows, and reviewing the current plugin ecosystem, I've mapped the problem space to identify where entrepreneurial opportunities exist. The punchline? The current solutions leave much to be desired, and the startup that solves these pain points could capture significant value in the emerging crypto-commerce landscape.

The Merchant's Dilemma: Too Many Hoops, Too Little Integration​

For Shopify merchants, accepting crypto presents an immediate set of challenges:

Restrictive Integration Options — Unless you've upgraded to Shopify Plus (starting at $2,000/month), you cannot add custom payment gateways directly. You're limited to the few crypto payment providers Shopify has formally approved, which may not support the currencies or features you want.

The Third-Party "Tax" — Shopify charges an additional 0.5% to 2% fee on transactions processed through external payment gateways—effectively penalizing merchants for accepting crypto. This fee structure actively discourages adoption, especially for small merchants with tight margins.

The Multi-Platform Headache — Setting up crypto payments means juggling multiple accounts. You'll need to create an account with the payment provider, complete their business verification process, configure API keys, and then connect everything to Shopify. Each provider has its own dashboard, reporting, and settlement schedule, creating an administrative maze.

Refund Purgatory — Perhaps the most glaring issue: Shopify does not support automatic refunds for cryptocurrency payments. While credit card refunds can be issued with a click, crypto refunds require merchants to manually arrange payments through the gateway or send crypto back to the customer's wallet. This error-prone process creates friction in a critical part of the customer relationship.

A merchant I spoke with put it bluntly: "I was excited to accept Bitcoin, but after going through the setup and handling my first refund request, I almost turned it off. The only reason I kept it was that a handful of my best customers prefer paying this way."

The Customer Experience Is Still Web1 in a Web3 World​

When customers attempt to pay with crypto on Shopify stores, they encounter a user experience that feels distinctly behind the times:

The Redirect Shuffle — Unlike the seamless in-line credit card forms or one-click wallets like Shop Pay, selecting crypto payment typically redirects customers to an external checkout page. This jarring transition breaks the flow, creates trust issues, and increases abandonment rates.

The Countdown Timer of Doom — After selecting a cryptocurrency, customers are presented with a payment address and a ticking clock (typically 15 minutes) to complete the transaction before the payment window expires. This pressure-inducing timer exists because of price volatility, but it creates anxiety and frustration, especially for crypto newcomers.

The Mobile Maze — Making crypto payments on mobile devices is particularly cumbersome. If a customer needs to scan a QR code displayed on their phone with their wallet app (which is also on their phone), they're stuck in an impossible situation. Some integrations offer workarounds, but they're rarely intuitive.

The "Where's My Order?" Moment — After sending crypto, customers often face an uncertain wait. Unlike credit card transactions that confirm instantly, blockchain confirmations can take minutes (or longer). This leaves customers wondering if their order went through or if they need to try again—a recipe for support tickets and abandoned carts.

The Developer's Straitjacket​

Developers hoping to improve this situation face their own set of constraints:

Shopify's Walled Garden — Unlike open platforms like WooCommerce or Magento where developers can freely create payment plugins, Shopify tightly controls who can integrate with their checkout. This limitation stifles innovation and keeps promising solutions off the platform.

Limited Checkout Customization — On standard Shopify plans, developers cannot modify the checkout UI to make crypto payments more intuitive. There's no way to add explainer text, custom buttons, or Web3 wallet connection interfaces within the checkout flow.

The Compatibility Treadmill — When Shopify updates its checkout or payment APIs, third-party integrations must adapt quickly. In 2022, a platform change forced several crypto payment providers to rebuild their integrations, leaving merchants scrambling when their payment options suddenly stopped working.

A developer I interviewed who built crypto payment solutions for both WooCommerce and Shopify noted: "On WooCommerce, I can build exactly what merchants need. On Shopify, I'm constantly fighting the platform limitations—and that's before we even get to the technical challenges of blockchain integration."

Current Solutions: A Fragmented Landscape​

Shopify currently supports several crypto payment providers, each with their own limitations:

BitPay offers automatic conversion to fiat and supports about 14 cryptocurrencies, but charges a 1% processing fee and has its own KYC requirements for merchants.

Coinbase Commerce allows merchants to accept major cryptocurrencies, but doesn't automatically convert to fiat, leaving merchants to manage volatility. Refunds must be handled manually outside their dashboard.

Crypto.com Pay advertises zero transaction fees and supports 20+ cryptocurrencies, but works best for customers already in the Crypto.com ecosystem.

DePay takes a Web3 approach, allowing customers to pay with any token that has DEX liquidity, but requires customers to use Web3 wallets like MetaMask—a significant barrier for mainstream shoppers.

Other options include specialty providers like OpenNode (Bitcoin and Lightning), Strike (Lightning for US merchants), and Lunu (focused on European luxury retail).

The common thread? No single provider offers a comprehensive solution that delivers the simplicity, flexibility, and user experience that merchants and customers expect in 2025.

Where the Opportunities Lie​

These gaps in the market create several promising opportunities for founders and builders:

1. The Universal Crypto Checkout​

There's room for a "meta-gateway" that aggregates multiple payment providers under a single, cohesive interface. This would give merchants one integration point while offering customers their choice of cryptocurrency, with the system intelligently routing payments through the optimal provider. By abstracting the complexity, such a solution could dramatically simplify the merchant experience while improving conversion rates.

2. The Seamless Wallet Integration​

The current disconnected experience—where customers are redirected to external pages—is ripe for disruption. A solution that enables in-checkout crypto payments via WalletConnect or browser wallet integration could eliminate redirects entirely. Imagine clicking "Pay with Crypto" and having your browser wallet pop up directly, or scanning a QR code that immediately connects to your mobile wallet without leaving the checkout page.

3. The Instant Confirmation Service​

The lag between payment submission and blockchain confirmation is a major friction point. An innovative approach would be a payment guarantee service that fronts the payment to the merchant instantly (allowing immediate order processing) while handling blockchain confirmation in the background. By taking on settlement risk for a small fee, such a service could make crypto payments feel as immediate as credit cards.

4. The Refund Resolver​

The lack of automated refunds is perhaps the most glaring gap in the current ecosystem. A platform that simplifies crypto refunds—perhaps through a combination of smart contracts, escrow systems, and user-friendly interfaces—could remove a major pain point for merchants. Ideally, it would enable one-click refunds that handle all the complexity of sending crypto back to customers.

5. The Crypto Accountant​

Tax and accounting complexity remains a significant barrier for merchants accepting crypto. A specialized solution that integrates with Shopify and crypto wallets to automatically track payment values, calculate gains/losses, and generate tax reports could transform a headache into a selling point. By making compliance simple, such a tool could encourage more merchants to accept crypto.

The Big Picture: Beyond Payments​

Looking ahead, the real opportunity may extend beyond simply fixing the current checkout experience. The most successful solutions will likely leverage crypto's unique properties to offer capabilities that traditional payment methods cannot match:

Borderless Commerce — True global reach without currency exchange complications, enabling merchants to sell to underbanked regions or countries with unstable currencies.

Programmable Loyalty — NFT-based loyalty programs that provide special benefits to repeat customers who pay in crypto, creating stickier customer relationships.

Decentralized Escrow — Smart contracts that hold funds until delivery is confirmed, balancing the interests of both merchants and customers without requiring a trusted third party.

Token-Gated Exclusivity — Special products or early access for customers who hold specific tokens, creating new business models for premium merchants.

The Bottom Line​

The current state of crypto checkout on Shopify reveals a striking gap between the promise of digital currency and its practical implementation in e-commerce. Despite mainstream interest in cryptocurrencies, the experience of using them for everyday purchases remains needlessly complex.

For entrepreneurs, this gap represents a significant opportunity. The startup that can deliver a truly seamless crypto payment experience—one that feels as easy as credit cards for both merchants and customers—stands to capture substantial value as digital currency adoption continues to grow.

The blueprint is clear: abstract away the complexity, eliminate redirects, solve the confirmation lag, simplify refunds, and integrate natively with the platforms merchants already use. Execution remains challenging due to technical complexity and platform limitations, but the prize for getting it right is a central position in the future of digital commerce.

In a world where money is increasingly digital, the checkout experience should reflect that reality. We're not there yet—but we're getting closer.

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What crypto payment experiences have you encountered as a merchant or customer? Have you tried implementing crypto payments on your Shopify store? Share your experiences in the comments below.

In recent times, discussions in the Bitcoin realm have seemingly transitioned towards the Bitcoin network itself, with BRC20 tokens emerging as a hot topic. People are contemplating whether the arrival of Bitcoin's Layer 2 (L2) expansion solutions and the BRC20 standard could introduce enhanced functionality and scalability to Bitcoin. However, it's important to tread carefully, as these discussions currently seem to lean more towards market speculation. Let's delve into Bitcoin's L2 architecture, BRC20, and potential security concerns.

Understanding Bitcoin’s L2 Architecture​

The blockchain ecosystem grapples with a so-called 'impossible triangle'—security, decentralization, and scalability—of which only two can be achieved at the cost of the third. Bitcoin, for example, has prioritized security and decentralization, sacrificing scalability in the process. Bitcoin’s block generation time is approximately 10 minutes, a significant lag compared to other popular blockchains like Ethereum 2.0 or Solana that boast block times on the scale of seconds or even milliseconds. This limitation has spurred demand for Bitcoin scalability solutions, leading to the emergence of Bitcoin's L2 expansion, exemplified by systems such as Stacks.

Stacks is a decentralized application and smart contract network built on top of Bitcoin. This network connects to the Bitcoin blockchain through a cross-chain consensus mechanism, achieving the goal of preserving Bitcoin's security while also offering a rich application scenario for smart contracts. Stacks operates in a layered fashion, where the base settlement layer (Bitcoin) is supplemented by the addition of smart contracts and programmability (Stacks), which further incorporates a scalability and speed layer (Hiro's subnet). This layered approach not only offers functionality akin to blockchains like Ethereum but also avoids many shortcomings of complex public chains.

Explaining BRC20​

To understand BRC20, we first need to familiarize ourselves with Ordinals. Ordinals is a protocol that assigns unique identifiers to Bitcoin's smallest unit, satoshis (sats), essentially transforming each sat into a unique non-fungible token (NFT), akin to Ethereum NFTs. Additionally, Ordinals allow for the inclusion of text, images, audio, and video within sats, further accentuating their uniqueness.

The creator of BRC20, leveraging the Ordinals protocol, introduced the concept of fungible tokens on Bitcoin by assigning a unified "format" and "attributes" to sats. BRC20, through Ordinals, inscribes JSON formatted text data into sats, acting as a ledger for BRC20 tokens and tracking token holdings and transfers.

Risks Associated with BRC20​

Despite the attention BRC20 tokens have garnered, they currently exist as mere JSON files without practical value or business use-case, and their popularity largely hinges on Bitcoin's popularity and traffic. Further, managing BRC20 tokens is not as straightforward as handling Bitcoin and requires a dedicated wallet. Moreover, participation in BRC20 investment requires third-party tools which often carry an entry barrier.

Several risks surround BRC20 tokens. Firstly, market speculation and hype may create a bubble, overvaluing the tokens. Secondly, similar to other blockchain technologies, BRC20 tokens are susceptible to hacking attempts. Lastly, the lack of regulatory oversight in the blockchain and cryptocurrency markets could lead to fraudulent or illegal activities involving BRC20 tokens.

A common misconception among users is that BRC20 tokens, created using Bitcoin's security, are as secure and stable as Bitcoin. However, the two are fundamentally different. Bitcoin's security is underpinned by cryptographic and consensus algorithms, and it has been running relatively stably for a considerable duration. Conversely, BRC20 relies on the Ordinals