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How the Winklevoss Twins Found Vindication in a Bitcoin Fortune
- deleted 9y ago[deleted]
- TheBiv 9y ago>> They said they might look at selling when the value of all the Bitcoin in circulation approaches the value of all gold in the world — some $7 trillion or $8 trillion compared with the $310 billion value of all Bitcoin on Tuesday — given that they think Bitcoin is set to replace gold as a rare commodity. But then Tyler Winklevoss questioned even that, pointing out the ways that he believes Bitcoin is better than gold. I found this to be the most fascinating part of the article.
- dpflan 9y agoInteresting. What are the economics arguments for Bitcoin replacing gold? Does the “ease of transaction” of Bitcoin provide an implicit value over gold and is that factored into the price of Bitcoin as maybe a fixed value?
- KaoruAoiShiho 9y agoGold is just non-scalable and is bound to die eventually. If you think about it, if you're going to start a new country and a new federal reserve, how much sense does it make to ship tons of gold to Mars for example? Any store of value that makes sense for humanity in the long term has to be both digital and reflect the work/real value creation process that matters in the future. I'm not sure it's going to be bitcoin but it's definitely not gold.
- meric 9y agoGold is definitely useful for building the spacecraft going to Mars though. They cover the entire spacecraft in the stuff. It might be too useful for Mars to use as reserve! https://www.itmtrading.com/blog/aerospace-gold-the-next-frontier/ https://www.itmtrading.com/blog/aerospace-gold-the-next-fron... https://www.geek.com/news/geek-answers-why-does-nasa-use-so-much-gold-foil-1568610/ https://www.geek.com/news/geek-answers-why-does-nasa-use-so-...
- dpflan 9y ago:) thanks!
- apeace 9y ago> Does the “ease of transaction” of Bitcoin provide an implicit value over gold... I know this doesn't answer your question but it's still relevant. Currently Bitcoin is the most expensive, least convenient currency available. According to estimatefee.com it would take about a $25 fee in order to get your transaction through in an hour. My point is that nothing about Bitcoin will ever really be "implicit" like it is with gold. Gold exists as it exists, cryptocurrencies only have the properties that are created by the developers, and/or are run on machines by participants in the network. In Bitcoin's case, the developers and the network have not been able to handle the load of all the transactions. I used to be in the "Bitcoin is the new gold" camp. But after seeing what's happened with Bitcoin, I'm certain it's not that simple.
- umanwizard 9y agoIt definitely takes longer than an hour to send gold to someone on the other side of the world.
- dpflan 9y agoShould the slowed clearing rate actually reduce the value? Increased perceived value driving the price up / speculation actually causing a drop in value due to the system underlying Bitcoin?)
- felipeko 9y agoThere's a difference about Gold's rarity and Bitcoin's. Gold is rare on its kind and rare on its abundance. It may be hard to mine more gold, but it's way harder to find another gold-like commodity. Bitcoin is only rare in the abundance sense. It is hard to mine more bitcoin, but it's pretty easy to find a (arguably better) substitute for what it does. I can agree with it being better (having more utility) than gold, though. So I'd agree that the sum of all e-coins will surpass gold, but I see no reason for Bitcoin to do it alone.
- WorldMaker 9y agoBitcoin definitely isn't rare in kind as we've already seen how relatively "easy" it is to fork. Could just fork Bitcoin infinitely as one way to deal with its supposed scarcity. Bitcoin isn't even rare in the abundance sense if you consider that how hard it is to mine new coins is merely a function of a mathematical curve that can be adjusted as a software change. Certainly any change to the mining difficulty and/or coin pool ceiling would be hugely controversial, but it's not like it's mathematically impossible merely politically improbable, for now.
- derekp7 9y agoThe thing that is rare is the total amount of mining nodes behind bitcoin. That is what you are buying into, is mindshare. Of course the mining nodes are mostly profit driven. If another coin had a higher profit margin, the miners would switch over to that coin.
- WorldMaker 9y agoThat rarity too is also software controlled based on the difficulty curve. Bitcoin doesn't have to boil the oceans, it could make mining easy enough again that transactions could be mined in a coffee break on an average person's smart phone's GPU. As I said, the scarcity of Bitcoin is much more a political structure than an inherent nature of Bitcoin. The miners control Bitcoin so much as anyone does and it is their political intent as much as anything else that creates any scarcity in Bitcoin at all.
- QAPereo 9y agoTo me it just sounded like talk designed to pump the price now.
- epx 9y agoGood luck trying to make a fountain pen nib with a cryptocoin :)
- 0wing 9y agoIf you understand the computer science behind Bitcoin, you'll realize how ridiculous the false equivalency to gold is. 1. The claim of "rare" doesn't exactly hold true. Consider the 10,000 BTC pizza - how did this happen? This was the direct result of Satoshi's economic policy, granting vast sums of BTC to mint out very quickly very early for a short duration to the very small pool of people who ran the software. Satoshi's algorithm produced BTC in plentiful quantities enabling the 10,000BTC pizza - thus it wasn't rare if you were Satoshi and the dozen other early whales hording as much as possible, until the algorithm begins cutting off the production and limiting later users from producing coins, starving the economy. Now there's a psychological game being played, where public relations and marketing must convince new users to buy in. Because the exchanges are unregulated, they can manipulate the spot price though wash trading and painting the tape [2] (where trades are falsified and you just sell the same item back and forth to your friend for a higher and higher price). The supply was created by running a piece of software. It's not magic. Most of the supply was produced very early on and as much as 30% of all Bitcoins are owned by less than 100 people. Best estimates are that there are about one million holders of Bitcoin; 47 individuals hold about 30 percent, another 900 hold a further 20 percent, the next 10,000 about 25% and another million about 20%, with 5% being lost. So 1/10th of one percent represent about half the holdings of Bitcoin and 1 percent close to 80 percent (http://www.businessinsider.com/927-people-own-half- of-the-bitcoins-2013-12). The concentration of Litecoin ownership is similar (http://litecoin-rich-list.blogspot.com). Most of the big wallets have been in place from early on, so sitting back and watching your capital grow has been a very successful strategy. The distribution of Bitcoin holdings looks much like the distribution of wealth in North Korea and makes the China’s and even the US’ wealth distribution look like that of a workers’ paradise 2. Easy migration to more advanced e-cash services, LTC, XMR, ETH, so on See: https://coinmarketcap.com/currencies/views/all/ https://coinmarketcap.com/currencies/views/all/ 3. Bitcoin network requires ASIC miners, largely centralized in China [3]. Assuming the inveitable surpassing of a more advanced cryptosytem making Bitcoin obsolete, as the market is informed there will be a decline in BTC's spot price and once this falls below the cost of OPEX for miners, the hardware goes offline and the network will cease to function. Maximalists will attempt to offer an emergency fork, in any attempt to save their "investment", just as they have developed the lightening network to create centeralized payment hubs, so "investors" can act as liquidity providors and take fees, instead of miners. 4. Electricty usage is unsustainable, GOTO 3 [1] https://bitcoin.stackexchange.com/questions/86/is-it-possible-to-estimate-the-gini-coefficient-for-bitcoins-and-if-the-trend-is https://bitcoin.stackexchange.com/questions/86/is-it-possibl... http://www.businessinsider.com/bitcoin-inequality-2014-1 http://www.businessinsider.com/bitcoin-inequality-2014-1 [2] https://www.youtube.com/watch?v=6r04gfWfRkE https://www.youtube.com/watch?v=6r04gfWfRkE [3] https://qz.com/1055126/photos-china-has-one-of-worlds-largest-bitcoin-mines/ https://qz.com/1055126/photos-china-has-one-of-worlds-larges...
- sytelus 9y agoThat's quite a balony. - Both are in fixed quantity so none is more rare than other. - Gold has practical use in industry which puts lower bound on its value. BTC has no lower bound. - Gold is exchangeable virtually in any country and any culture regardless of how technologically advanced that society is. - Thousands of years of history has proven that humans have almost natural lust for this shiny metal and it gets displayed as jewelry uses. This again further sets the lower bound for gold prices. - Gold is not only rare but is virtually rust proof and can be stowed away without any advanced tech for 100s of years. BTC will be pointless if there was a natural or human made disaster and few people had electricity. - Gold is far more unlikely to be made illegal by governments. - There are no new rare metals popping up every day like whole slew of new cryptocurrencies which might fragment and trump each other. No one knows which cryptocurrency will end up dominating 10 years down the line. - BTC has huge risk of getting stolen and hacked because someone exploiting zero day vulnerabilities in your system even if you did everything you possibly could to keep your system safe. - Governments can start their secret operations to control the crypto market behind the scene, hack in to exchanges, find vulnerabilities or do dirty trades. - Crypto exchanges are wild west without regulations which means clever deep pocketed traders would be exploiting them by techniques like frontrunning, wash trades, willybot, spoofing etc. This enables big investors to profit at the expense of small investors. Above arguments should make it clear that btc has very real upper bound that it can rationally reach and its most definitely less than gold market cap. Of course, big investors can juice up things in the short term but it would be impossible to sustain irrational highs on long term.
- nathancahill 9y agoSay the guys with a significant stake in BTC.
- shostack 9y agoSo rather than just assume ulterior motives here (which I agree should be considered as a possibility whenever a big stakeholder is discussing a major investment of theirs), I wonder if there's a different question to ask. Specifically, how does the game theory play out for his comments? Does it point towards him being genuine? Or does it point to him trying to do something else?
- jpm_sd 9y agoBTC is far more likely to hit zero than to outstrip gold.
- cohnnton 9y agocan someone explain why bitcoin is rare? there are COUNTLESS cryptocurrencies out there. The only reason bitcoin is believed to be rare is blind belief, much like believing in santa claus.
- glitch003 9y agoThere will only ever be 21 million BTC. I mean, it's right there in the code for Bitcoin. Yes you can fork or create new cryptocurrencies, but they don't have the mining power of BTC, and they are inherently NOT BTC. So Bitcoin is rare, cryptocurrencies are not.
- tim333 9y agoJust now Bitcoin is down 11% (to $17k) and Bitcoin Cash up 55% (to $3.4k) as people look to it as an alternative. I'm not convinced Bitcoin will last thousands of years as a major asset the way gold has.
- kamaal 9y ago>>But then Tyler Winklevoss questioned even that, pointing out the ways that he believes Bitcoin is better than gold. :) Well. This could be another Facebook level embarrassment if it turns out false.
- raverbashing 9y agoDid they really post that QR code?
- wyldfire 9y agoInteresting that it's only one of two necessary. But given how it's posed for the photo it's (hopefully) a prop.
- 21 9y agoOr an empty address.
- achompas 9y agoIt's almost certainly a prop. At worst, a previously-used wallet that has since been emptied.
- haldora 9y agoThis is a fragmented wallet backup (Armory), so you would still need one more key before you can get access to the wallet's funds (the backup they showed requires 2 out of 3 keys for access). https://youtu.be/nyeMtM-Gclw https://youtu.be/nyeMtM-Gclw
- walshemj 9y agois it liquid in the way gold is ?
- aphextron 9y agoLiquidity problems are an issue with exchanges, not Bitcoin itself. I can email you a Bitcoin instantly. Good luck doing that with a gold bar.
- walshemj 9y agoWithout liquidity its point less and arguably worthless but you could transfer Gold ETFs electronically to me
- ithinkinstereo 9y agoBTC is pretty liquid. Tens of millions change hands hourly/daily. The linked article even cites one hodlr that purchased a professional hockey team with his crypto profits.
- dahdum 9y ago$550M on just the Coinbase BTC-USD book in the past 24 hours. $1B on Bitfinex. Liquidity is currently very strong.
- ufo 9y agoThat is trading volume, not liquidity. And we should be wary of the trading volume on bitcoin exchanges, a lot of it is manipulated. (In particular, I would never trust any numbers coming from Bitfinex)
- dahdum 9y agoCoinbase is not a sketchy exchange by any means, and while I'm cautious about Bitfinex their volume is quite believable given they are the default choice for non US persons. That's also why I quoted USD, if you include crypto-crypto volume and some of the zero fee exchanges it definitely becomes nonsense.
- Animats 9y agoHas anyone ever tried to sell a billion dollars worth of Bitcoins and collected?
- ithinkinstereo 9y agoNot sure about a billion. But many people have sold in the millions range. Maybe not at once, but over a reasonably short period of time.
- dahdum 9y agoNovogratz sold $250M of Ethereum earlier this year when the market cap was $25-35B. Bitcoin market cap is $291 billion right now and the trade volume an order of magnitude higher. So pretty sure they wouldn't have much problem unloading their position.
- meritt 9y ago> trade volume is not the same thing as liquidity
- dahdum 9y agoThey are linked very closely, especially with a volatile market like crypto. Besides, the volume is 10x what it was when Novogratz unloaded $250M on a smaller market cap. A billion would certainly move the price, but it doesn't appear it would crash it.
- meritt 9y agoI was playing around with automated trading algorithms this summer on GDAX. With a bankroll of only $2.5k USD I was routinely contributing $500k+ worth of trading volume each day (that's only 100 r/t trades with $2.5k). Surely there's a lot more sophisticated high-volume trading algorithms taking place than what I did. Take a look at GDAX's full book [1] -- Even going all the way down to a BTC price of $8600 (-50% current prices), there's only outstanding buy orders to consume 5169 BTC if someone entered a market sell order. Obviously that would trigger a lot of automated trades that don't live on the book but I think the assumption that "trading volume" == "liquidity" is very dangerous. [1] https://api.gdax.com/products/BTC-USD/book?level=3 https://api.gdax.com/products/BTC-USD/book?level=3
- aplummer 9y agoDoes anyone know the actual value of the money put into bitcoin so far vs this market cap of recent sale price x count? I'm keen to know actually how many people could withdraw at similar sale prices to now before it evaporated. Because it's so exponential, I would imagine a rapid sale of 5% would remove 90% of the value, but I'd love to know the specifics.
- saalweachter 9y agoMoney isn't "put into" Bitcoin. Every USD "put into" an exchange in exchange for Bitcoin was simultaneously taken out by the person on the other side of the trade. The future value of Bitcoin in USD is entirely dependent on people in the future wanting to buy Bitcoin for USD; if no one wants to, it is not worth any USD.
- frenchie14 9y agoI guess the question should be rephrased then as "how much have the current owners of bitcoin collectively exchanged for their coins?" This question also becomes more interesting when you factor in every coin that has been mined but not yet exchanged for money. I believe the GP is correct in guessing that the number will be much smaller than the current market cap of BTC
- aplummer 9y agoYeap this is what I meant, using 'put into' like "putting money into stocks". Good point about bitcoins that have never been exchanged.
- saalweachter 9y agoYou do put money into a company when you buy its shares ... during an IPO. Meanwhile, owning shares of a company convey fractional ownership of it, its assets, and its future earnings. People will consider the stock price of a company relative to its assets and earnings (P/E) as an indicator of whether the company is overpriced or under-priced. No one really notes the "total volume" of the trades of stocks, which is what you're asking for for Bitcoin; it isn't really a meaningful number. If people pass a stock - or a Bitcoin - back and forth for 10 trades for [$99, $101] or for 100 trades for [$99, $101], it isn't really meaningful. The best you can do for Bitcoin is to try to gauge the "depth of the market" right now, ie, how many "buy" and "sell" orders are out at what prices, how much Bitcoin you could buy or sell right now and what the average price you could buy or sell a large quantity of Bitcoin at. (Eg, if you wanted to sell X Bitcoin, you might be able to sell X/2 Bitcoin at $PRICE and X/2 Bitcoin at $PRICE/2, for an average price of $PRICE*3/4.)
- jorblumesea 9y agoHow will quantum computing impact crypto currencies? Isn't the scarcity based on the slow rate of mining, aka crypto hashing? Seems like its going to be due for some serious future disruption. Until we can find a way to manufacture gold atoms on a mass scale at least gold will continue to be scarce.
- quickthrower2 9y agoI had the same thought as you but then have a look at the Etherium fork, the Bitcoin fork etc. Bitcoin isn't the original white paper, to be carried on into infinity. Bitcoin is a brand. The white paper(s) and code can change (while honouring historic transactions) and adapt to changes in crypto, but you are still holding bitcoin, you are still buying and transaction bitcoin. The word Bitcoin is essentially a "pointer" to the current accepted bitcoin implementation.
- zik 9y agoThere are a few quantum resistant cryptocurrencies out there already. Bitcoin isn't one of them but it's well understood how to change it to be quantum resistant. When it becomes a genuine concern they'll no doubt upgrade the crypto.
- wrinkl3 9y agoIf that threat became apparent the protocol would probably just hard-fork to post-Quantum Cryptography.
- relics443 9y agoThis seems like a good indicator of a bubble. Everyone and their uncle knows a crash is coming, and these guys are shooting nonsense about regret and disappointment. 1b is a lot of money. Even for these guys.
- dingdongding 9y ago> Everyone and their uncle knows a crash is coming A crash is always coming. Be it stock market or bitcoin. Everyone knows that but nobody knows when. It is just like saying we all are gonna die. Nobody knows when.
- relics443 9y agoTrue, but someone with an end stage terminal illness shouldn't buy a car.
- captainbeardo 9y agoI'd say that's the best to buy a lambo.
- deleted 9y ago[deleted]
- oh_sigh 9y agoespecially on credit
- MichaelApproved 9y agoWhy not? What would they be saving their money for?
- krallja 9y agoDoesn’t matter. If you’re going to die soon, get a lease. Fill the car up with the remaining dollars.
- mlevental 9y agocan someone tell me something i've been wondering for a couple days now (considering taking the plunge and toying around with bitcoin): how fast can you execute trades on coinbase/gdax? obviously i'm asking if i could experiment with hft-esque strategies. is that possible or the clearing time too long? note: on a very small scale (like ~100$ total "aum")
- gomox 9y agoThere are already open source implementation of arbitrage/hft style trading bots on GitHub. This a market with a large population of software engineers. Exchanges have open APIs that you can use for trading. They execute pretty much instantly.
- asymmetric 9y agoCould you post some links? I’ve only found GunBot so far, and I wasn’t too impressed.
- pitaj 9y agoYou're gonna get killed by transaction fees.
- pests 9y agoWhat? Fees are 0.1%. that's nothing compared to fees for regular stocks exchanges. I'm perfectly fine paying 10 cents for every $100 I trade.
- dmoy 9y agoWhat are the fees for regular stock exchanges?
- jzwinck 9y agoRoughly similar: http://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2 http://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2 But GDAX is a vertically integrated exchange and retail trading platform, so the 0.1% taker fee is all you pay. A stock exchange won't talk to you directly so you must pay additional broker/clearing/bank fees. Real all-in fees for stock can be 2 USD to trade 2k USD, so 0.1%, same as GDAX. But you can also find fees of 10 USD to trade 100k USD and many other rate examples which are either higher or lower. I think a lot of people don't notice the huge difference between a traditional exchange (which does not handle money, only agreements about money) and GDAX (vertically integrated exchange + clearing house + trading application).
- aiofgniaotnio 9y agoA Bitcoin fortune on paper. It remains to be see if anyone will come out of this with real money. I'm sure they'll still be rich. But $1.65 billion rich? Probably not.
- tinkyada 9y agoPlenty of people already have. Even if they come out with only 10% of the value of their holdings that is still a Huge return for what they initially put into it
- oh_sigh 9y agoI suspect many people are holding BTC waiting for it to go to $400k or whatever.
- spookthesunset 9y ago> Plenty of people already have. Sure, by selling to greater fools. Every dime they made came out of some other fools pocket. Eventually the music is gonna stop playing and some fool is going to be left holding the bag.
- ashnyc 9y agoIf both items are products that store of value. If it cost 1x amount of energy to mine gold and 3x amount energy to mine bitcoins and keep it secure. Should bitcoin be value more than gold ?
- rotoava 9y agoI find this link it looks mine gold cost far more energy consumption. (6.6 vs 123.3 In 2016) https://srsroccoreport.com/bitcoin-vs-gold-which-ones-a-bubble-how-much-energy-do-they-really-consume/ https://srsroccoreport.com/bitcoin-vs-gold-which-ones-a-bubb...
- stevenj 9y agoI think the Winklevoss twins were rightly ridiculed for thinking they invented Facebook. However, they've made two prescient bets and deserve credit for those: (1) Getting Facebook stock instead of cash as part of their legal settlement; (2) Not only seeing bitcoin's future potential, but investing in it and sticking with it. While the final result on the second one is still TBD, they deserve credit for investing in something at a time when many thought they were stupid for doing so.
- wslh 9y agoYes, I really think that the Winklevoss twins deserve a prequel and sequel of The Social Network movie and also directed by David Fincher. There are two rare events. I assume the Winklevoss twins were exposed to less risky ventures in their life but they chose the risky ones.
- kennywinker 9y agoIt's not really risky if you're already rich and you only stand to be "slightly less rich" if you bet wrong.
- raverbashing 9y agoIt's not one or the other If you settlement was 10Mi (example), sell 1Mi shares in cash: congrats, you're rich now, then invest the remaining 9Mi in higher risk stuff
- kennywinker 9y agoThe impression I got from the documentary film "The Social Network" was that they were already pretty well off even before the fb settlement.
- jstanley 9y agoAbsolutely. The Social Network made them out to be moneygrubbing fools, but everything else I've read shows them to be actually quite intelligent and prescient.
- quickthrower2 9y agoI hope they are good guys. I hope, if bitcoin goes up more and more, they can use their resources to help solve some of the worlds problems.
- deleted 9y ago[deleted]
- 45h34jh53k4j 9y agoThe most interesting thing for ne about this article is they use a dynamic bitcoin price ticket inline. Ive never seen that in an mainstream article, it always looks so dated when looking negatively at $100 or $500 bitcoin...
- bredren 9y agoFacebook's market cap is $521 Billion. So good on them but they probably should have had more of FB.
- deleted 9y ago[deleted]
- kapauldo 9y agoMeh. They made bubble money. The end.
- brian-armstrong 9y agoThe hilarious thing is, they're not liquidating. So they may in fact lose it all in the end. Not diversifying at the current prices can only be seen as insane.
- mvindahl 9y agoAlso, selling this many bitcoin at this time is a delicate thing. The sane thing to do is offload the tulip bulbs before the market collapses, yet offloading all of the bulbs at once might flood the market and trigger the collapse. No matter what, they'll not be able to exchange all of their imaginary wealth to real wealth but they'll definitely make a killing. Unless they really intend to go down with the ship which would be poetic in its own way.
- wellboy 9y agoI think they should actualize some their gains after making a 100x profit. That's what a smart investor would do.
- TheYcMaster 9y agoWell, they were at right place at right time speaking about BTC