The tortoise or the hare. The timeless Aesop fable has been applied to many situations, over and above the abilities of the animal kingdom. And it certainly can be applied to the quest in the United States to create a domestic Bitcoin exchange for the 2nd largest Bitcoin market in the world. 2014 saw many great additions to the Bitcoin ecosystem, but maybe the most important are afoot as we speak.
Coinbase made news just a couple of weeks ago in launching the first U.S.-based regulated Bitcoin exchange from their San Francisco headquarters. They said they could do Bitcoin business in 24 states, including California and New York, two of the largest Bitcoin markets in the union. Problem is neither state has regulated any Bitcoin exchange; Coinbase included, to this point. This is the point of view from the State of California:
“Numerous press accounts about Coinbase’s January 26 launch of Coinbase Exchange erroneously reported the exchange has received regulatory approval from the state of California,” DBO Commissioner Jan Lynn Owen said in the statement. “The California Department of Business Oversight has not decided whether to regulate virtual currency transactions or the businesses that arrange such transactions, under the state’s Money Transmission Act. California consumers should be aware Coinbase Exchange is not regulated or licensed by the state.”
According to Coinbase, they will do business in the 24 states “which represent where Coinbase is either licensed to engage in money transmission, where it has determined that no such license is currently required or where licenses are not yet being issued with respect to Coinbase’s business.” These happen to include California and New York, according to Coinbase. So it seems to be first to market was of the utmost importance to Coinbase, and the details of regulations and licensing will not stop this leap forward, at least initially.Top speed is their game.
Cameron and Tyler Winklevoss have a different view on the Bitcoin exchange market. They are working night and day on their “Gemini” exchange, and look to have it fully operational within Q1 2015. The main delay is in fact getting licensed within New York and confirming their compliance with any upcoming state regulations for any monetary exchange or digital currency business within New York State. They are choosing to await full regulatory compliance rather than forge ahead, regardless. They recently spoke to Vice Magazine about their approach versus that of Coinbase.
“We just don’t feel comfortable launching and don’t feel it’s right to our customer base without meeting whatever bar is set by regulators,” says Cameron Winklevoss. “We just don’t think it’s fair to bring people onto a platform before we’ve gone through that process. I think that process exists for a reason, to protect consumers and our future customers, and make sure best practice and policies are involved. So that’s our philosophy. That’s sort of what we’re doing, and that doesn’t change based on other people’s actions or behaviors. That’s been our plan and mission.”
Cameron and Tyler Winklevoss are the two Harvard grads who helped start Facebook, somewhat indirectly, with Mark Zuckerberg, sued him in 2004, and received $65 Million in a settlement in 2008. Ever since they have become somewhat obsessed with Bitcoin as the next stage in global finance and have been major investors and advocates of the technology.
“I think we loved the elegance of it, the simplicity of it, said Tyler Winklevoss told Vice. “It’s obviously a complex idea, and it’s hard to wrap your head around it, but this idea that you can send a (monetary) value like you send an email seemed right. It seemed like something that should have existed a long time ago, and it hadn’t until this point. So obviously you first hear about something, and you should be a little skeptical and you start digging in and you realize this is phenomenal, I can send some value anywhere in the world right now at any time and it would get to them fairly instantly and for free. And if I tried to send them money, it would be a horrendous experience.
It wasn’t immediately day one our whole lives revolved around Bitcoin, but today, the most important things in our lives right now are Bitcoin related — it’s Gemini and COIN. So it crept up on us pretty quickly, and now it consumes us.”
So the Winklevoss twins have chosen a path for Gemini and their vision of what a Bitcoin exchange should be. Coinbase may have a laid-back West Coast approach to the finer details and paperwork of building an exchange. New York-based Gemini seems to be more in line with a more detail-oriented East-coast approach to business. I think it is admirable that they look before they leap into an exchange, and make sure all of the i’s are dotted and t’s are crossed. To each his own.
This rivalry may not turn out to Aesop’s fable. They may both win in the end. You know what they say. There’s more than one way to skin a cat. And, at this point, there seems to be more than one way to open a Bitcoin exchange. Competition is a good thing, so here’s to the tortoise and the hare. You’re both winners in my book.
Images provided by Wikimedia and Shutterstock.