The BIT10

Introducing the world’s first cryptocurrency index for retail investors

As of today, anyone around the world can invest in the new Bitwise 10 Crypto Index Token (BIT10) through the Abra app. The new token tracks the professionally-managed Bitwise 10 Large Cap Crypto Index through a partnership with San Francisco-based Bitwise Asset Management, the leading provider of cryptocurrency indexes.

The BIT10 gives retail investors a simple way to benefit from the diversification and rebalancing of index investing. Now, by holding one asset, Abra users can gain exposure to 80% of the crypto market.

The index will track the price of the 10 largest cryptocurrencies by market cap that also meet several criteria in Bitwise’s rigorous and transparent index methodology. To be included in the BIT10, crypto assets first need to meet liquidity, security, and robustness requirements. Each month, the set of 10 coins is rebalanced by Bitwise, adding, removing, or adjusting weights of coins to adjust to the constantly changing market.

Bitwise Asset Management launched its initial index funds a little over a year ago. Since then, the company’s initial fund has performed better than investing in bitcoin alone.

Now, with BIT10, anyone around the world can invest in a crypto index on the Abra app — with a $5 minimum investment, no restrictions on entry or exit timing, and no fees.

What is the BIT10?

The BIT10 is based on the traditional model of index investing that was first popularized in the 1970s.

In the early days, index funds tracked major portions of the stock market, like the Standard & Poor’s 500, which is based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ, or the Dow Jones Industrial Average, which is composed of the 30 companies that are considered most representative of major pieces of the country’s economy.  

Today, there are index funds tracking just about every sector of the economy and region of the globe. Mainly because of their low cost and diversification, index funds have become thought of as a foundational element to most investment portfolios.

Investors are drawn to index funds because they are convenient and easy to use. Rather than having to decide which asset to buy, investors are able to buy a collection of assets, which spreads risk while enhancing upside potential.

And, based on research, and if given enough time, index funds outperform other types of stock investing options. In 2007, Warren Buffett made a famous bet that an index fund would outperform a traditional, managed mutual fund over a ten year period. Buffet won the bet in 2017 and donated the $2.2 million proceeds to charity.

One of the biggest reasons for creating the BIT10 is that, like the stock market index funds that came before, it widens access to cryptocurrency investing by simplifying the experience of gaining exposure to a large part of the crypto market, and minimizing barriers to entry.

How the BIT10 works?

The price of each BIT10 token is based on a real-time price feed of the Bitwise 10 Large Cap Crypto Index provided by Bitwise. The methodology of the index is publicly available to read and is actively maintained by Bitwise.

The composition of the assets in the index, and subsequently the exposure of the BIT10, is rebalanced on a monthly basis in accordance with the Bitwise Crypto Index Methodology rules which include a variety of requirements related to liquidity, security, and trading volume. The composition of BIT10 will be published on Abra and will reflect the monthly rebalancing update of the index by Bitwise.

Using Abra’s successful stablecoin model on the backend,  BIT10 positions are held in multi-signature smart contracts on the Bitcoin or Litecoin blockchain. Once invested, Abra and the user enter into a smart contract that effectively pegs the asset invested (either fiat currency or cryptocurrency) to the same amount of BIT10 tokens. Abra will get a real-time price feed from Bitwise Asset Management (again according to their published methodology) and the BIT10 investor will see the market moves up or down reflected in the price of their BIT10 tokens.  

This method of using smart contracts to create synthetic currencies which peg asset values to one another is a proven technology that currently powers the backend of the Abra app. Now, instead of trading fiat currency for cryptocurrency or other synthetic currencies, BIT10 investors can use the same technology to easily invest in larger portions of the crypto market, all through one crypto asset.

Another significant advantage to Abra’s technology is that it is all based on a non-custodial wallet, which gives the user more control.

About Bitwise Asset Management

Founded in 2017, Bitwise Asset Management pioneered the first cryptocurrency index fund and is the leading provider of crypto indexes and index funds.

The team is based in San Francisco and combines modern software expertise with decades of asset management experience, coming from firms including Facebook, Wealthfront, BlackRock, JPMorgan, US Commodity Funds, Goldman Sachs, and ETF.com.

Bitwise is backed by leading institutional investors and is a partner to high net worth individuals, financial advisors, family offices, multi-family offices, investment managers and institutions in navigating the crypto asset space. Bitwise develops funds, indexes, models, research, and other services. For more information, visit www.bitwiseinvestments.com

The information contained herein is not intended to be a source of advice or analysis with respect to the financial instrument described above, and the information contained in this post does not constitute investment advice.

Cryptocurrency investing involves substantial risk of loss and is not suitable for every investor. The valuation of the financial instrument described above may fluctuate, and, as a result, customers may lose their original investment.

Abra, and/or its officers or employees may have a financial interest in the financial instrument described.

Bitwise makes no representation or warranty, express or implied, regarding the advisability of investing in Abra Cryptocurrency-based Software Contracts Product(s). Bitwise’s only obligation is the licensing of the Index which is determined, composed and maintained by Bitwise without regard to any product offering. Bitwise disclaims liability to any party for any errors or omissions in the Index, for any inaccuracy in the data on which the Bitwise Products are based, and for any mistakes, errors, or omissions in the calculation and/or dissemination of the Abra Cryptocurrency-based Software Contracts Product(s) nor shall it be under any obligation to advise any person of any error therein. Bitwise and the Bitwise Indexes are the service marks of Bitwise and are being used with the permission of Bitwise.

51 thoughts on “The BIT10

  1. I want to know how an investor can earn by purchasing the token. Will he earn didvidends from the token or gain interest from the price increase of the token?

    1. Emmanuel,

      An investor holds a position in the index, which is represented by a token. If the value of the index goes up, so will the value of the token. On the other hand, if the value of the index goes down, so will the value of the token. An investor realizes the difference between his or her initial investment and the movement up or down when he or she exchanges the token for another asset within the Abra wallet or withdraws via bank wire or transfer or through one of the natively supported cryptocurrencies. I hope that helps.

        1. That’s right. This is not an index fund. It’s a crypto token that tracks the price feed of an index developed by Bitwise Asset Management.

  2. Can you please explain more about the actual liquidity or “ease of sale” of these BIT10 tokens? The upside seems obvious. But suppose the cryptocurrencies comprising the BIT10 index all plummet significantly and the BIT10 index price loses virtually all value. I assume the BIT10 tokens will reflect this identical drop in value due to the way the smart contracts operate. Who would be the actual “buyers” or counterparties in the event of a massive sell off of BIT10 tokens? Is it just fellow users of the Abra wallet? Is there any published data on the number of users of the Abra wallet/exchange participants? Thanks so much for any light you can shed.

    Also, are BIT20 or BIT70 tokens on the roadmap?

    1. Frank,

      Thanks for the questions. I think as a starting point you should check out this post on how Abra’s synthetic currency works https://www.abra.com/blog/abras-synthetic-currency/. I hope it answers your question about counterparty risk (basically the contract exists between individual users and Abra). We haven’t yet published numbers regarding the number of active wallets. And all we can say about the roadmap right now is that we are actively working on lots more features and functionality.

  3. where is the white paper of this? the detailed tokenomics and the supply information? is it a stable coin? or can also pump if large institutions wants to jump in?

  4. I don’t understand where my money would be stored. For example, I have bitcoin on the Abra wallet and buy Bit10, where is my bitcoin transferred? At what point are the index assets bought and where stored?

    1. Oleg,

      This blog post about Abra’s synthetic currency model might help. https://www.abra.com/blog/abras-synthetic-currency/.

      The basic gist is that your bitcoin would still live on the blockchain. If you decide to buy the BIT10, or any of the other synthetic assets on Abra, then a smart contract would peg the value of your bitcoin to the value of the BIT10 (this happens when you tap the exchange button within the app).

  5. I just have a stupid question. If I add bitwise 10 to my wallet will my bitcoin or any of the 10 tokens be automatically transferred to bitwise10 or is it it’s own thing?

    1. Lucy,

      The BIT10 will function like any of the other assets on Abra. So you can add it to your wallet, but unless you use the exchange function (which moves assets around) it will just sit there with a zero balance. Hope that helps,

  6. You’ve spent a lot of words above describing this new offering. But you don’t describe how to buy in? I don’t see any options for BIT10 in your app.

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