Bitcoin, the Winklevoss Twins and Money Tech

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My favorite moment in The Social Network, a film that skewers Facebook founder Mark Zuckerberg, is when the Beatles song “Baby You’re a Rich Man” bubbles up at the end. In a postscript, we learn that the Winklevoss Twins, Cam and Tyler, received a settlement of 66 million dollars for having been wronged by the fledgling Facebook founder.

$66M is a nice little chunk of change any way you cut it, and these Harvard boys were no dummies, despite the sleight of hand interception that taught them a valuable life lesson: “Fool us once, shame on you; fool us twice, shame on us.”

All this came to mind when I came across this story about the writer who wrote that original book. He’s produced a sequel, once again featuring the Winklevoss boys, called Bitcoin Billionaires. I couldn’t find any reviews on Amazon, so maybe reading about billionaires has become a bit passé, though it may be the newness of the manuscript.

In 1991–92 the fad was Rookie Cards, as in Baseball card collecting. Today it’s a whole new ball game… called Bitcoin. Or Blockchain. Or Cryptocurrency. And like card collecting, this past year the game had all the earmarks of the historic Dutch Tulip Bulb Mania in the 1630s. It seems unbelievable to consider that the first use of Bitcoin to make a real world transaction (2010) went down like this: 10,000 Bitcoin units for two pizzas. Yikes! Within the past year one Bitcoin was valued at $11,500, though the high tide has receded somewhat since then.

In the center of it all are the Winklevoss Twins, who very early in the game were quietly accumulating Bitcoin wealth, as early as 2012, purportedly hoarding up to 1% of all the bitcoin in the world.

In 2013 the Winklevoss Twins met with Travis Johnson, a.k.a. Stock Gumshoe, to explain the new “Internet of Money.” You can read Johnson’s notes here.

The more one reads about cryptocurrency the more bizarre it seems. When I read about people who “mine bitcoin” my mind drifts to images of picks and pans in the Black Hills (1870s) or California 1849. Here is a pretty thorough explanation of how bitcoin mining works.

For the average layperson the whole crypto scene seems so mysterious that one can’t help but wonder what the unexpected consequences will be. People are so susceptible to hype. Even if the CEO of IBM says this is going to be “BIG” it doesn’t mean it’s going to be big for you.

In July the Winklevoss Twins had hoped to get SEC approval for their Cryptocurrency ETF, legitimizing their current activities and making it easier for others to fund the game. Getting SEC approval would pave the way for common folk to profit from crypto while avoiding thieves and scammers. The SEC denied their most current application, citing “market manipulation and investor protection issues.”

It’s hard to say how far or how fast the crypto currency market will grow. What seems certain is that with increased awareness, and the potential wealth variable, there are a lot more people thinking about it today, trying to get their arms around it, to determine where the opportunities really lay.

There was a time when electric light bulbs were scoffed at. Decca Records failed to sign The Beatles because the “electric guitar was on the way out.” It wasn’t that long ago personal computers were perceived as silly and irrelevant. Who can say for sure where this crypto scene will take us? One thing certain, the future remains unwrit.

Graphic at top of page created by the author.

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