The Winklevoss Twins Explain Bitcoin

We arrive at Winklevoss Capital on a sunny January Wednesday, asking the twin entrepreneurs to explain bitcoin in a way that actually makes sense. Their answer? It’s simply digital money—money obtained either through a software-run equation, a process called mining, or by exchanging money, goods or other services with people who already own bitcoin.

“From the moment bitcoin first appeared in 2008, we were fascinated,” Cameron explains. “But the issue was, Tyler and I had to jump through rings of fire to buy bitcoin—send large amounts of money to unregulated overseas exchanges… No average person would take that risk.”

It’s why the 35-year-olds created Gemini, the United States’s first licensed exchange for buying and selling bitcoin. They’ve made the currency as safe and easy to access as stock on the NASDAQ, attempting to bring into the popular culture of finance.

But does the average person really need to own bitcoin? Should we care that it’s now more accessible? The Winklevii make their case.

Bringing bitcoin to the mainland of finance

Bitcoin’s software is open source, meaning anyone can edit it.
“Satoshi Nakamoto, the anonymous person behind bitcoin, disappeared a year or so later after it’s release. And because of that, he made sure anyone could audit the code. As long as enough people download the version with your changes, then that becomes bitcoin… This removes the element of trust—trust in your bank, your banker, in middlemen. Instead, trust is dispersed across the bitcoin community.” – Tyler

There is no Godlike figure.
“There’s no one person or governing body, so, everyone who owns, touches and is invested in bitcoin has a say in its future… Which, yes, does occasionally mean it takes longer to reach a consensus. But can you name another financial institution that allows you—the individual, the client—that kind of power? It’s a total shift.” – Cameron

It’s hard for governments to control.
“It’s also very difficult to hack, control or censor bitcoin. And because bitcoin isn’t tied to a government, anyone hoping to stop it really would have to shut off the internet… It’s also less exposed to external forces like cyber warfare, for example.” – Cameron

PRO: IT'S THE FIRST CROWDSOURCED CURRENCY

“Can you name another institution that allows you—the individual, the client—that kind of power?”

“Bitcoin removes the element of trust—trust in your bank, your banker, in middlemen.”

Because bitcoin is borderless, sending money is as easy as sending an email.
“Bitcoin’s superhero power is decentralization—that it’s borderless. This enables you to send money anywhere in the world in less than an hour, so long as that person has an Internet connection… Considering most transfers, even domestic ones, take three, maybe five days—and that other solutions have strict transfer limits—the speed of bitcoin is pretty groundbreaking.” – Tyler

There are also no intermediaries.
“You know when you use your Visa card and it takes days for the charge to post? Well, that’s because it’s passing through a series of intermediaries who touch every transaction… But bitcoin, because it operates on its own network, skips that entirely, allowing it to move even faster.” – Cameron

And why is it so important for money to travel quickly?
“People want the same level of service from the financial industry that they expect from other aspects of their lives, like food delivery. They crave products that are fast and easy and the way money currently moves on the Internet is simply too slow and outdated… But we didn’t think the solution was simply adding additional layers to an existing system—we needed new answers built from scratch, like bitcoin.” – Tyler

Pro: It's fast AF

“The way money moves on the Internet is simply too slow and outdated.”

“People want the same level of service from the financial industry that they expect from other aspects of their lives, like food delivery.”

The cryptocurrency is seriously confusing.
“[Laughs]. Honestly the most confusing thing about bitcoin is that they decided to name both the network and the currency the same thing. Bitcoin with a capital ‘b’ denotes the network; bitcoin with a lowercase ‘b’ denotes the token. I never understood that decision.” – Cameron

It has competition.
“There are hundreds of other digital currencies and networks, like Ether, but only five or 10 people consider viable. And while bitcoin is by far the oldest and most advanced, we believe teach currency will need to perform different functions to merit worth and avoid redundancy.” – Tyler

Can it scale?
“There’s a lot of debate around scalability—how many transactions can be sent in what amount of time; how to continue mining bitcoin. Because it’s kind of like the California Gold Rush: If you went there in 1849, it was really easy to find gold; but as more and more people depleted the resource, it became harder to find. Bitcoin are definitely more difficult to mine than they were at the beginning… We think that’s a good thing, though, because the fact that bitcoin is scarce is exactly why it holds so much value.” – Tyler

Cons: What are they

Industry

Tech

Written By

Emily Siegel

Written On

02.07.2017

Mike Strasser

CEO & Cofounder, Motiv

Tech

Andre Lorenceau

CEO & Founder, LiveLike

Tech

General Assembly

Anna Lindow, VP of Partnerships

Tyler & Cameron Winklevoss

Bringing bitcoin to the mainland of finance

PRO: IT'S THE FIRST CROWDSOURCED CURRENCY

Pro: It's fast AF