Bitcoin in the financial markets: what you need to know

Orozco explained that in the wake of the 2008 crisis, the financial system developed credibility problems, which triggered the rise of Bitcoin.

“Out there, someone or something called Satoshi Nakamoto, because it’s not yet known if it’s a person or a community, produced Blockchain, the data chain this cryptocurrency is based on.”

A cryptocurrency is a digital currency that is not reliant on any government or central bank.

It is based on Blockchain technology, which is a decentralized record-keeping system that uses cryptography to secure transactions.

“This data has decentralized validation, which generated the currency that evolved as a means of payment,” he said.

Orozco pointed out that it is not the only cryptocurrency, as there are others, such as Ethereum.

Orozco said that as time went by, the vision of Bitcoin being used as a means of payment was lost to being used as a means of speculation.

“The price of bitcoin was set based on supply and demand, unlike a stock, which is based on future flow generation, sales analysis, expectations, and more.

“(Bitcoin) is totally speculative. No matter how many models are created to project or forecast Bitcoin values, it’s impossible. In the end, it’s very unpredictable, there’s a lot of uncertainty and it’s very volatile.”

In 2017, it was worth 400,000 pesos. 2 years later, it reached 1 million pesos, then the value dropped to 300,000 pesos, he said.

“This approval is significant, as it offers investors a more regulated and accessible way to gain exposure to Bitcoin.”

Orozco described an ETF, or Exchange Traded Fund as if it were a basket of fruit for didactic purposes.

“Imagine that the basket represents the ETF and each type of fruit inside the basket is a different investment, such as company stocks, bonds or commodities.”

He added that just as a fruit basket offers a variety of pears, apples, grapes, and more, an ETF contains a variety of financial assets.

“For example, let’s say you have a fruit basket (ETF) that specializes in red fruits. This basket will include red apples, strawberries, cherries, and more.

“In the same way, a technology ETF would include shares of several technology companies such as Apple, Microsoft, and Google.”

Orozco said that by buying a portion of the ETF you are buying a small portion of all the fruit (shares) within the basket, which allows you to diversify your investments and reduce risk.

“In the same way you can buy and sell fruit in a market, you can buy and sell ETF shares in the stock market,” he said.

Orozco said that as of now, ETFs containing Bitcoin have been created on the U.S. stock exchange.

According to Orozco, this news is a way to regulate Bitcoin so that more people will adopt it.

“This approval is significant, as it offers investors a more regulated and accessible way to gain exposure for Bitcoin, which could lead to increased adoption and greater stability in the cryptocurrency market.”

He said that previously, Wallets were used to purchase a Bitcoin, whether centralized or decentralized, as well as authorized or unauthorized.