What is Bitcoin?
Bitcoin is the origin of blockchain technology and the first cryptocurrency, introduced to the world in 2009 by an anonymous founder, Satoshi Nakamoto. Bitcoin’s White Paper, “Bitcoin: A Peer-to-Peer Electronic Cash System” still serves as inspiration for the crypto community. Fast forward to 2021 and Bitcoin still maintains its #1 crypto market ranking.
Bitcoin isn’t minted by a central bank; instead, its supply is dictated by “miners,” other computers in the network that create bitcoin by getting their computer to solve hard math puzzles. If you’ve got a powerful enough computer, you can “mine” for bitcoin.
Bitcoin is governed by a self-regulated community of developers. After Nakamoto put forward the idea for Bitcoin, a team of (non-anonymous) developers continued work on it and further its development. In 2011, the Bitcoin Foundation was started, headed by Gavin Andresen, Jon Matonis, Patrick Murck, Charlie Schrem, and Peter Vessenes. Many still work on it today and as an open source project, anyone can jump in to work on the Bitcoin protocol.
Bitcoin used be worth almost nothing, but the last few years have seen high spikes and significant price volatility. At the end of June 2021, Bitcoin’s price was hovering around $40,000.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset. First and foremost:
No Canadian securities regulatory authority has expressed an opinion about Bitcoin, including an opinion that BTC is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of BTC prior to making it available on Wealthsimple Crypto and has concluded that BTC is not and is unlikely to be deemed a security or derivative. However, there is a risk that this conclusion could change in the future and the impact of this on an asset’s value is outlined in our Product Disclosure.
We evaluated Bitcoin based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of Bitcoin, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created Bitcoin;
- The supply, demand, maturity, utility and liquidity of Bitcoin;
- Material technical risks associated with Bitcoin, including any code defects, security breaches and other threats concerning the Bitcoin blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them; and
- Legal and regulatory risks associated with Bitcoin, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of BTC.
Like all other crypto assets, there are some general risks to investing in BTC. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Each of these risks are described in more detail in our in-app Product Disclosure. Further, the Bitcoin community is not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of BTC have no recourse to its community or Wealthsimple if BTC declines in value for any reason.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading BTC. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
WDA is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Digital Assets Inc. dated June 18, 2021. Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply to a misrepresentation in this Statement.
Last updated: July 26, 2021