[dropcap size=small]T[/dropcap]yler and Cameron Winklevoss were holidaying on Ibiza when a friend first told them about Bitcoin. The twins had just won a $65 Million settlement from Facebook, having claimed that Mark Zuckerberg had stolen their idea for a Harvard based social network. The twins are recognized not only as astute, forward-looking, investors but high achieving athletes that have rowed in the 2008 Olympics. Tyler Winklevoss states, about the day that, they believe, changed everything for them: “We were on vacation and happened to bump into a guy who is mutual friend and he started to tell us about bitcoin,” He went on to say: “We were fascinated from day one.”
The meeting with their Bitcoin savvy friend took place at an opportune moment. Having just finished a long legal battle with Mark Zuckerberg, they were ready to move onto the next big thing. Tyler says: “At the time we were just re-immersing ourselves inside the tech world, getting into the trenches again.”
The increasing value of Facebook has served the canny twins well and the investment business they own. They go on to insist that Bitcoin has the potential to be even bigger than Facebook, that currently has a market value of $151 bn. “Bitcoin potentially could be more impactful because being able to donate 50 cents to someone across the world has more impact than potentially sharing a picture,” he explains. “But they’re very different. Facebook is like the internet – a large company and an application.”
Winklevoss explained how: “Bitcoin is a protocol for decentralisation, so you could build a decentralised company on top of it, a stock market. It’s an internet of ownership, so it’s not quite a direct comparison.”
Many of the top people in Silicon Valley are not as positive on Bitcoin as the Winklevoss twins and Goldman-Sachs recently warned potential investors about Bitcoin’s inherent volatility.
“Calling Bitcoin volatile – it’s a non-statement. Unregulated assets with unclear regulatory landscapes are always going to be volatile. That’s what unregulated assets do,” said Winklevoss. “I can make the same argument about the internet in the early days. But sure enough, technologists came and worked hard at the problem, and it’s getting better.”
He went on to categorise Bitcoin critics into two distinct groups, (1) Teenagers that have neither knowledge or experience of the growing pains of the internet and the early technological problems that had to be addressed, and (2) Luddites that have neither knowledge or interest of financial developments or technological developments.
Tyler is currently touring the world and preaching the gospel of bitcoins. He believes that the Internet is being held back by a reliance on the old technology of Mastercard, Visa and American Express.
Winklevoss describes the losses at Mt Gox as “painful”, yet says ultimately the untimely death of Gox had been good for Bitcoin. “Gox was a pattern of poor operations, poor customer service, poor PR. You can’t just take Bitcoin and hide.”
The twins are promoting a new venture – the Bitcoin exchange Winxdex. “Right now Bitcoin is priced differently depending on where you look, depending on what exchange, depending on who’s trading, he says. “We essentially came up with a method which we think is the most accurate way to price Bitcoin at that moment in time, and we’ll use that price to help create price discovery and stability in the Bitcoin ecosystem.”
This year, the Winklevoss twins predict, will be the year that Wall Street will get involved. “If a new technology comes out and the incumbent doesn’t evolve, then they generally lose,” he says, comparing bitcoin with the internet in 1994. He thinks he knows how this will end. “When it gets to tipping point it’s usually not a long fight. It’s a category killer.”