The Impact of the Winklevoss Brothers
The more Bitcoins we have in cold storage, the fewer coins available for sale on the market. The fewer coins up for sale on exchanges and over-the-counter markets, the higher the Bitcoin price. This means we have hodlers to thank for the increase in the Bitcoin price over the years. If we are appreciating long-term holders, we can’t leave out the Winklevoss brothers. The twins used to be known for their legal fight with Mark Zuckerberg of Facebook. They also took part in the rowing event of the 2008 Beijing Olympics. It is, however, their involvement in Bitcoin and the cryptocurrency world that they are well known for in recent times. Tyler and Cameron Winklevoss are top holders of Bitcoin with about 1% of all Bitcoin in existence. Their contributions to the cryptocurrency space are discussed in this article.
Holding 1% of all Bitcoin
In 2011, after ending their lawsuit against Mark Zuckerberg and Facebook, the twins came out with $20 million dollars in cash and some Facebook equity. This could be considered some sort of victory, considering the fact the price of Facebook shares has appreciated greatly over the years. Also, by holding the shares they received in the settlement, they became owners of Facebook, which they claimed was their idea.
In the end, it was how they used the cash received in the settlement that turned out to be the best story. The Winklevoss brothers invested a huge chunk of the monies into cryptocurrencies with the target of holding roughly 1% of the Bitcoins that exist.
If you sometimes worry about the safety of your cryptocurrencies then you can imagine the headaches holding about a billion dollars in Bitcoin could cause. To allow themselves to sleep well at night, the Winklevoss brothers took cold storage to the next level. The private keys to their Bitcoins have been split and stored in different safe deposit boxes in the United States.
Investing in Crypto Businesses
The Winklevoss brothers were not satisfied with just investing in crypto. Their conviction in the technology is further demonstrated by their investments in a number of early cryptocurrency businesses. There are currently lots of businesses in the cryptocurrency ecosystem but this wasn’t the case some years ago. The few businesses that existed back then played very crucial roles and contributed to the growth of the technology. The fact that businesses like Mt. Gox were offering far from quality services but still got lots of business shows how much such services were needed in the ecosystem. By investing in Cryptocurrency businesses, the Winklevoss brothers were contributing immensely to the growth of the technology and the ecosystem.
Nathaniel Popper covers interesting stories of the twins’ business partnership with Charlie Shrem and Eric Voorhees in his book, “Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money.” In 2013, the twins invested $1.5 million in the now-defunct Bitinstant through Winklevoss Capital. Bitinstant, which was co-founded by Charlie Shrem, allowed clients to transfer fiat currencies to Bitcoin exchanges at the time.
In line with their mantra of asking for permission and not forgiveness, the twins secured a license for Gemini in 2015, making it the first licensed cryptocurrency exchange and custodian. The exchange allows clients to buy, sell and store cryptocurrencies. In December 2017, the exchange launched the first Bitcoin futures contract with the Chicago Board Operations Exchange (Cboe).
Winklevoss Capital has also invested in Earn.com which was recently acquired by Coinbase. The website allows users to monetize their time by participating in paid surveys and other tasks.
Other cryptocurrency investments made by the duo through Winklevoss Capital are Changecoin, Vault12, and Xapo. Changecoin helped facilitate online Bitcoin micropayments or tips. Vault12 decentralizes the process of storing digital assets with a network of trusted individuals and devices. The said network is cryptographically secured. With Xapo, the service provided is a Bitcoin wallet and a cold storage vault. The family office also invests in Bitcoin and Ethereum.
Beyond the Investments
Apart from making investments in the cryptocurrency space, the twins have also acted as advocates for cryptocurrencies and been trailblazers in various ways. Apart from being the first to launch Bitcoin futures contracts on Gemini, they have continuously pushed for the approval of Exchange Traded Funds (ETFs) for Bitcoin. Two attempts made by the brothers in 2013 and 2017 were rejected by the Securities and Exchange Commission (SEC) of the United States. The Bitcoin ETFs, had they been approved, would have given investors another opportunity to invest in Bitcoin without having to worry about the holding actual Bitcoin. The is, however, still a chance for Bitcoin ETFs to become a reality in the future if the SEC becomes convinced that their concerns about certain risk factors are no longer problems.
In short, the Winklevoss brothers have been promoting Bitcoin and backing their words with real work in the space. They have invested millions of dollars in Bitcoin, started crypto businesses and also worked towards helping cryptocurrencies jump various regulatory hurdles.