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Winklevoss Twins Revealed As Owning 1% Of All BitCoins

Tyler Durden's picture




 

Think the 75% plunge in BitCoin values in two days has crushed all former supporters of the virtual currency (which truth be told is only back to levels from a month ago)? Wrong. As the NYT reports, a very unexpected supporting genepool (split into two identical halves) has emerged in the shape of two names previously linked to yet another pre-bubble frenzy name, FaceBook: Cameron and Tyler Winklevoss (collectively, the "Winklevii"). Following stints as Olympic rowers, Simpsons characters, and antagonistic Facebook litigants, the two 31 year-old identical twins are now indirect investors in the latest "currency" craze, whose heyday may well have come and gone, courtesy of owning a whopping 1% stake in all of the entire outstanding supply of BitCoin which at last count was worth $1.3 billion (if maybe a little less now).

From the NYT:

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 $1.3 billion at last count. The Winklevii — as they are popularly known — say they own nearly 1 percent of that, or some $11 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.

 

...

 

The 6-foot-5 Winklevii were unfazed by the latest tumult. Indeed, the brothers said they used the low prices to buy more. They argue that bitcoin will have much further to soar once a broader audience sees its virtues: a unit of exchange that can be moved around the world at the click of a button without requiring any payments to Western Union or American Express.

 

“People say it’s a Ponzi scheme, it’s a bubble,” said Cameron Winklevoss. “People really don’t want to take it seriously. At some point that narrative will shift to ‘virtual currencies are here to stay.’ We’re in the early days.”

 

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.

Nothing like having a string of letters and numbers in safes in flash drives in three cities as a store of value...

To some more cynically inclined observers, for the two brothers who lately have been desperate to get back into the public arena, this latest "investment" is nothing but a rather expensive PR campaign, and one which depending on their cost basis, may have already proven to be a huge loss. However, that will not step them. Or many others desperate to ride on the coattails of the next parabolic bubble:

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.

Sadly, a somewhat notable problem with BitCoin, the currency and not the bubblicious asset, is that one can't really use it for much other than to buy more bitcoin, or convert it into fiat currencies: the same fiat currencies that BitCoin is trying to replace:

So far, few real companies accept bitcoins as payment, and the primary place they can be used is an online bazaar, known as Silk Road, where narcotics are the main wares for sale. But the currency’s believers see a future in which Starbucks and Amazon take bitcoins. For their part, the Winklevoss twins have used some of their bitcoin to pay for the services of a Ukrainian computer programmer who has worked on the site of their venture capital firm.

But the drop dead punchline:

“We have elected to put our money and faith in a mathematical framework that is free of politics and human error,” Tyler Winklevoss said.

That's funny - it is more or less what the heads of the Federal Reserve and all other central banks have said for the past 100 years.

As for the future of BitCoin? Well, if its credibility can survive a collapse like this...

... maybe it just does have staying power. Unless, of course, the other sizable "investors" are none other than the central banks the currency hopes to supplant, just biding their time until they launch the next avalanche selloff...

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Thu, 04/11/2013 - 17:37 | 3438287 AllThatGlitters
AllThatGlitters's picture

They don't just own 1%.  They invented it! Watch out Bitcoiners.  The Winlevii are planning to sue to get your bitcoins, which are rightfully theirs!

Thu, 04/11/2013 - 17:39 | 3438326 notbot
notbot's picture

I thought for sure this headline was a joke.

 

I'm sorry Winkelvii, you are still at the mercy of the Bernanke and Congress. Would that it were otherwise, but if BTC becomes a real threat a some future date, all they have to do is shutter the exchanges and make it illegal for legit merchants to accept.

 

If it were that easy, Zuckerberg would have already beat you too it.

Thu, 04/11/2013 - 17:41 | 3438341 riphowardkatz
riphowardkatz's picture

like they did with drugs and illegal guns.

Thu, 04/11/2013 - 17:46 | 3438363 James_Cole
James_Cole's picture

People really don’t want to take it seriously. At some point that narrative will shift to ‘virtual currencies are here to stay.’ We’re in the early days.”

Do people really disagree with this statement? A borderless virtual currency seems both inevitable & for the best. 

Thu, 04/11/2013 - 17:49 | 3438383 fonzannoon
fonzannoon's picture

I disagree. Maybe the top .000005% can engage in virtual currencies so they can move their capital from the Hamptons to the south of France. It's dark ages for the rest of us. Cash and PM's.

Thu, 04/11/2013 - 17:54 | 3438396 The Abstraction...
The Abstraction of Justice's picture

Given that most currency is held electronic, without even paper backing, we should assume 99% engage in virtual currencies.

What will your cash be worth when the government declares the notes null and void, as it has done with the €500 note.

Thu, 04/11/2013 - 17:58 | 3438425 James_Cole
James_Cole's picture

On a site like this I'd of thought there'd be far more support for such a currency because of the obvious advantages from a libertarian point of view. 

Thu, 04/11/2013 - 18:13 | 3438475 toys for tits
toys for tits's picture

The BTC principal is good, the reality isn't.  The Winklevii are going to be Zuckerburged by the TPTB.

The government doesn't have to outlaw it, there are other options to make BTC irrelevant. Many of these options have been posted by numerous ZHers before.  

(1) They can co-opt BTC as electronic currency.

(2) They can have users self-report, which will make it as useless to the law-abider as an offshore account.

(3) They can track it since the same technology that allows for verification also removes anonymity.

(4) They can manipulate the shit out of it causing wide price fluctuations.

 

Thu, 04/11/2013 - 18:12 | 3438498 The Abstraction...
The Abstraction of Justice's picture

Have you tried tracking firesharers that pretty much use the same network technology?

Thu, 04/11/2013 - 18:21 | 3438539 McMolotov
McMolotov's picture

Have you tried buying a computer from Amazon with an ounce of cocaine? If that doesn't work, why? Is it because Amazon doesn't accept cocaine as payment, or because the government outlaws cocaine?

Does it even matter? Again, governments have very simple methods for making sure bitcoin never moves beyond black market status.

Thu, 04/11/2013 - 18:30 | 3438572 James_Cole
James_Cole's picture

Have you tried buying a computer from Amazon with an ounce of cocaine? If that doesn't work, why? Is it because Amazon doesn't accept cocaine as payment, or because the government outlaws cocaine?

Wow finally someones explained this! I've tried to order so many books on Amazon by shoving cocaine into my sd card reader and it's never worked! Gawddamn that's helpful. 

Next time I'll put gold in my sd card reader, I'm just not sure what's the best way to cut up the bars?

Thu, 04/11/2013 - 18:42 | 3438623 JoeSexPack
JoeSexPack's picture

Mt Gox closed for 1 hour.

 

"Service is down for emergency maintenance for one hour, until 2013-04-11 23:30:00 UTC. Please retry at that time"

 

Crash & burn...

Thu, 04/11/2013 - 18:44 | 3438630 Supernova Born
Supernova Born's picture

Bitcoin, magic beans that when planted create a giant sinkhole.

Thu, 04/11/2013 - 18:51 | 3438652 toys for tits
toys for tits's picture

BitTheDustCoins

Thu, 04/11/2013 - 19:22 | 3438763 fonestar
fonestar's picture

Oh is that a new quip now?  Bitchcoin, Bitcon, Bitthedustcoin, yada, yada..

Any 8-bit moron can denegrate the pinnacle of computer science, networking, cryptography, currency and more.  But now let's see you make your own contender?

Thu, 04/11/2013 - 19:29 | 3438784 Richard III
Richard III's picture

Indeed, the Winklervii already have a suite of action figures.

"Bitcoin ? Heyyy !"

http://img3.etsystatic.com/000/0/6293116/il_fullxfull.301462971.jpg

Thu, 04/11/2013 - 19:33 | 3438795 JoeSexPack
JoeSexPack's picture

"Trading is halted until 2013-04-12 02:00am UTC to allow the market to cooldown following the drop in price."

 

You do the math...

Thu, 04/11/2013 - 19:58 | 3438860 fonestar
fonestar's picture

What math?  The math that got me into Bitcoin back in 2011 or the math that made some idiots sell yesterday?

Thu, 04/11/2013 - 20:15 | 3438928 dick cheneys ghost
dick cheneys ghost's picture

Im beginning to think that you are a Winklevoss......

Thu, 04/11/2013 - 21:07 | 3439101 fonestar
fonestar's picture

Right... I forgot your technical innovation was to mail people gold & silver bars using FedEx!  Fucking brilliant!

Thu, 04/11/2013 - 21:12 | 3439112 MiguelitoRaton
MiguelitoRaton's picture

You know all those Winklevii Bitcoins in safe deposit boxes, I just finished spending them all on hookers and blow...sue me bitchez, but I'm not as easy to find as Zuckerberg!

Thu, 04/11/2013 - 22:47 | 3439378 Scarlett
Scarlett's picture

Bitcoin is dead hahaha it was all a joke hahaha it will never prove itself hahahaha it is not safe hahahaha it can't hold value hahahaha pump and dump hahahaha yadda yadda...

 

Now please stay away from bitcoin.  Sit back, sure of yourself, and do not watch our work. 

Fri, 04/12/2013 - 07:14 | 3439984 jcaz
jcaz's picture

Bitcoin was kinda interesting until these two douchebags showed their hand-  now I realize it's just a medium for fonestar to perpetuate his kiddie-porn biz......

Fri, 04/12/2013 - 00:52 | 3439655 XenoFrog
XenoFrog's picture

So much for "free of manipulation"  when the largest trading house can just close up shop if the price doesn't go in a direction they prefer.

Fri, 04/12/2013 - 01:41 | 3439732 Matt
Matt's picture

They suspended service for upgrades to handle higher volume of trades / quotes, and better resistance to DDOS attacks.

Still, having a single central pricing mechanism for what is supposed to be a decentralized currency creates such a large target for any malicious intent.

Fri, 04/12/2013 - 04:02 | 3439854 draug
draug's picture

Anyone else noticing that this "dramatic" "horrible" crash has taken the value of BTC back a whole of ... 20 day? Yeah I don't know how any market could ever survive a setback of more than two weeks from the last top.

Fri, 04/12/2013 - 06:45 | 3439947 MarcusLCrassus
MarcusLCrassus's picture

You mean like the Dow, NASDAQ and the S&P? 

Fri, 04/12/2013 - 01:45 | 3439740 resurger
resurger's picture

lol

Thu, 04/11/2013 - 20:39 | 3439000 A Nanny Moose
A Nanny Moose's picture

If BTC is anonymous, how was it possible to find out how much these guys own?

Thu, 04/11/2013 - 20:55 | 3439070 fonestar
fonestar's picture

Some silver people are mad because of Bitcoin.  Silver used to be "the crazy shit" until Bitcoin came along.

Kinda like how crystal-meth took some of the alure away from crack-cocaine for some select aficionados.

Thu, 04/11/2013 - 22:51 | 3439392 Kegfreak
Kegfreak's picture

What you seem to forget is that without silver, bitcoin does not exist.  No silver, no computing.  What is the bitcoin equivalent?  My bat-shit crazy obsession with silver has PHYSICAL value.  Crack and Meth have more value then bitcoin.  Until you can address the issues posed by the poster above, I will keep stacking.

Fri, 04/12/2013 - 00:29 | 3439606 fonestar
fonestar's picture

Idiot.  If hydrogen did not exist, neither would the planet Saturn.

Any other inane analogies?

Fri, 04/12/2013 - 08:01 | 3440042 johnQpublic
johnQpublic's picture

one real problem with bitcoin is that there isnt much of it. if they really want to crash it, they can print the money and buy and destroy it for free.

Fri, 04/12/2013 - 02:55 | 3439797 Urban Redneck
Urban Redneck's picture

Slice and Dice the Block Chain to find money supply concentration (and volatility) the keys themselves don't have to be anonymous, for example if I wanted to waste money on a piece of software from Microsoft, why would I consider sending BitCoins to an anonymously signed key, when there is no chargeback mechanism?  I know for a fact that Microsoft uses publicly signed keys for email correspondence, so if or when a supposedly legitimate business all of the sudden wants intenet "anonymously" some serious questions are raised...

However, I would assume these two went hunting in search of the press.

Fri, 04/12/2013 - 03:56 | 3439850 draug
draug's picture

First they ignore you, then they laugh at you ... <-- you are here

Thu, 04/11/2013 - 18:44 | 3438632 fonestar
fonestar's picture

Queue the gemini conspiracies now....

Thu, 04/11/2013 - 19:04 | 3438709 Ness.
Ness.'s picture

Haven't you had enough fun this week?  I'll tell ya what...  take tomorrow off, you deserve it.

 

BTW, my Bitcoin account reads

 

-1-100-1-1-100-1-1000-10-1-1-100-1-100 

 

Can you help me out with this?

 

thx

 

 

Thu, 04/11/2013 - 19:12 | 3438730 fonestar
fonestar's picture

I've never had enough of the Bitcoin experience!  I will be right back in there like a dirty shirt!!

Thu, 04/11/2013 - 19:14 | 3438737 JoeSexPack
JoeSexPack's picture

.com's, Vegas real estate, Dutch tulips...but it's different this time.

Thu, 04/11/2013 - 19:18 | 3438749 fonestar
fonestar's picture

I think you forgot UST, USD, JGB, EUR, CAD, etc, etc....

Thu, 04/11/2013 - 19:37 | 3438803 Ness.
Ness.'s picture

+1 fonestar (Darrin)

 

"You are a tenacious little monkey.  Alright, I'll do it"

 

http://www.youtube.com/watch?feature=player_detailpage&v=icDXNHF-oEw#t=306s

 

 

Thu, 04/11/2013 - 19:37 | 3438811 fonestar
fonestar's picture

Anyone who wants to get into Bitcoin is just going to have to "be the ball".  I am fine with that.

Thu, 04/11/2013 - 19:06 | 3438711 sleigher
sleigher's picture

That's just the backdoor being installed...  Or the upgrade due to increased activity...

Thu, 04/11/2013 - 19:09 | 3438721 fuu
fuu's picture

Slawterer

Thu, 04/11/2013 - 18:49 | 3438639 McMolotov
McMolotov's picture

I freely admit it's a shitty metaphor. Maybe if I'd called it Bitweed or something...

The point is, all it takes is the government saying it's a "tool of terrrrrrrrists" and mainstream retailers won't accept it. Doesn't matter if it's virtual at all. What matters is whether it's accepted, and if it's not, it's not a viable medium of exchange.

Thu, 04/11/2013 - 22:50 | 3439385 Scarlett
Scarlett's picture

Who gives a shit?  When hyperinflation starts, bitcoin will be one of the measures of the loss of purchasing power.  Just like every hyperinflation.

Thu, 04/11/2013 - 18:53 | 3438661 Kirk2NCC1701
Kirk2NCC1701's picture

How's this for irony:  Who would have thought that Paul Krugman and Gold Lovers had so much in common?  They both hate Bitcoin, because it competes with fiat and gold as a currency and assaults their plans for wealth.

     "Must diss BTC.  Must kill BTC.  Must diss BTC.  Must kill BTC...."

Personally I'm fine with having both.  What one won't do, the other one will.

Thu, 04/11/2013 - 19:02 | 3438678 Supernova Born
Supernova Born's picture

Statist propaganda to confuse the question.

Thu, 04/11/2013 - 22:50 | 3439389 Scarlett
Scarlett's picture

That's actually a very insightful observation.

Thu, 04/11/2013 - 19:04 | 3438688 defencev
defencev's picture

Who would have thought that Paul Krugman and Gold Lovers had so much in common?  They both hate Bitcoin, because it competes with fiat and gold as a currency and assaults their plans for wealth.

Interesting. Can you give related reference on Krugman? I would think Krugman shoud be a great supporter of bitcoins:

after all, it creates a lot of activity (and jobs!):of course, 95 percent of these activity is totally mindless but it never bothered Krugman...

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