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Facebook twins amass a Bitcoin fortune

via NYT/ AFR | April 15, 2013
Cameron and Tyler Winklevoss, the identical twins who tussled with Mark Zuckerberg over Facebook, have built one of the world’s biggest single portfolios of the volatile online currency known as Bitcoin.

Facebook twins amass a Bitcoin fortune

The Winkelvoss twins, Cameron (left) and Tyler (right) have amassed one of the world’s largest single fortunes in the Bitcoin virtual currency, whose value has gyrated wildly in recent days. Photo: Fairfax

Cameron and Tyler Winklevoss have been many things in a short time: Olympic rowers. Nemeses of Mark Zuckerberg. Characters on The Simpsons. Now they can add a new label: bitcoin moguls.

The 31-year-old identical twins have amassed since last summer what appears to be one of the single largest portfolios of the online currency that has caused such a stir in financial and technology circles.

An array of speculators have now bid up the price of the bitcoin to the point where the outstanding supply of the digital money was worth $US1.3 billion at last count. The Winklevii — as they are popularly known — say they own nearly 1 per cent of that, or some $US11 million.

The decision by the brothers to go public with their position signals a new stage for what has been an experimental alternative to national currencies. Created in 2009 by a programmer or programmers known only by a pseudonym, the bitcoin world has been dominated by anonymous programmers and traders.

Now mainstream investments in the digital money are starting to emerge. On Thursday, a group of venture capitalists, including Andreessen Horowitz, announced that they were funding a bitcoin-related company, OpenCoin.

DUTCH TULIPS FUTURE?

Other Silicon Valley venture firms, while not holding bitcoins, are starting to show interest in the technology. Tim Draper of the firm Draper Fisher Jurvetson put money into CoinLab, which is doing bitcoin-related projects. Tribeca Venture Partners announced this week that it was putting money into Coinsetter, a start-up trading platform for the currency.

Bitcoin is the new new thing but the question is whether it will end up in the same dustbin as Dutch tulips and Pets.com, or, as its backers believe, turn into a disruptive technology with the potential to revolutionize the global payments system.

The perils have been obvious over the last two days, as bitcoin has gone through its most volatile stretch ever, sinking from a high of $US260 a bitcoin to a low of $US105, before ending Wednesday around $US175. On Thursday it was down again to $US120 when one of the major online exchanges called a 12-hour halt on trading. The volatility has raised questions about whether bitcoin can even be called a currency.

“It’s not something I’d want to be involved in or have any investors’ money involved with,” said Steve Hanke, a professor specializing in alternative currencies at Johns Hopkins University. “To say highly speculative would be the understatement of the century.”

 

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