Winklevoss twins plan for bitcoin fund
Two young investors are trying to make the digital currency bitcoin mainstream.
Cameron and Tyler Winklevoss聽鈥� perhaps best known for suing Facebook CEO Mark Zuckerberg, claiming he stole their idea for a social network site聽鈥� announced they filed paperwork with the Securities and Exchange Commission that would allow investors to sell shares in the Winklevoss Bitcoin Trust.
After settling with Mr. Zuckerberg, the Winklevoss twins went on to become Olympic rowers, attend Harvard Business School and then invested in several start-up projects. And pending SEC approval, the brothers will become trailblazers in the bitcoin frontier.
The Winklevoss Bitcoin Trust will lend investors the opportunity to interact with the bitcoin currency by purchasing shares in the brother鈥檚 bitcoin trust. The trust will then use this money to buy bitcoins.
"The trust brings bitcoin to Main Street and mainstream investors to bitcoin,鈥� said Tyler Winklevoss. 鈥淚t eliminates the friction of buying and reduces the risks associated with storing bitcoin while offering similar investment attributes to direct ownership,鈥� he tells .听
There are currently about 1 million share offerings, which cost about $20 each. Each share will be worth a fraction of a bitcoin. The exact worth of the share in bitcoins, however, all depends on the day. 聽
And therein is bitcoin's unique problem and benefit: It is not fixed to a central bank or a government, and, thus does not have a stable exchange rate.
The crypto-currency is made, or rather 鈥渕ined,鈥� from algorithms. Perhaps particularly appealing in light of recent government surveillance reports, it is nearly impossible to track what you buy with bitcoins. It is equally hard to trace nefarious actions like money laundering or embezzling.听聽
In 2008, an anonymous open-software advocate (or advocates) under the pseudonym聽Satoshi Nakamoto crafted the currency after the financial crisis hit.
Bitcoin debuted as 鈥減eer-to-peer electronic cash system,鈥� with transactions made over secure bitcoin servers. It鈥檚 as if you paid someone in cash, face-to-face. The interaction is, theoretically, untraceable. Bitcoin operates on the same principle, just over the Internet: it鈥檚 a completely anonymous, untraceable transfer of funds.
But, Reuters financial blogger聽Felix Salmon that a system created on the mistrust of big banks is doomed to fail, and the "bitcoin bubble" is bound to pop, not least because the same brains that created the secure system also theoretically have the capability to hack into it.
The bitcoin system has come under scrutiny because of the levels of secrecy surrounding payments in bitcoin. The Winklevoss brothers hope to bring some accountability to the currency, the idea being that a currency whose value often fluctuates based on public perception, will be stabilized, and gain value, if the public thinks it is stable.
鈥淭he Shares are designed for investors seeking a cost-effective and convenient means to gain exposure to Bitcoins with minimal credit risk,鈥� reads the Winklesvoss Bitcon Trust鈥檚 registration statement with the SEC.
On Wednesday, a popular exchange rate of bitcoin to dollar was one to $85.17. This year, it's risen from $13 to as high as $266.
