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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.

They have parlayed that fortune into Winklevoss Capital. Their first two investments were in Hukkster, a start-up shopping Web site and SumZero, an online community for professional money managers.

‘GROWING PAINS’

The brothers began dabbling in bitcoin last summer when the dollar value of a single coin was still in the single digits. In addition to the purchase of bitcoins, they also say they have invested in a bitcoin-related company, but declined to disclose which one. The currency itself exists as a string of letters and numbers. In order to keep their holdings secure from hackers, they have taken those codes off networked computers and saved them on small flash drives. They said they have put the drives in safe deposit boxes at banks in three different cities.

It’s hard to verify how the Winklevoss holdings compare with other bitcoin players given the anonymity of accounts, and the twins believe that some early users of the system probably have holdings that are at least as large.

A Maltese company, Exante, started a hedge fund that the company says has bought up about 82,000 bitcoins — or about $US10 million as of Thursday — with money from wealthy investors. A founder of the fund, Anatoli Knyazev, said his main concern is hackers and government regulators, who have so far mostly left the currency alone.

These investments were all in an uncertain state on Thursday after the big price swings and the shutdown of trading on Mt. Gox, a Japan-based company that claims to handle 80 per cent of all bitcoin trades. Mt. Gox said in a statement that the problems were a result of the currency’s popularity, making it impossible to process all the incoming orders. It added that it was not the victim of hackers but “instead victim of our own success!”

The Winklevoss brothers said that this week’s chaotic trading are only “growing pains” like those seen by other young technologies, and not enough to scare them away.

“It has been four years and it has yet to be discredited as a viable alternative to fiat currency,” said Tyler Winklevoss. “We could be totally wrong, but we are curious to see this play out a lot more.”

 

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