The Winklevoss twins may have made news by claiming Facebook was their idea, but now, they’ve turned their attention to the bitcoin. You could say they’ve become obsessed with the digital currency. Speaking at the DealBook conference today (via CNBC), they said bitcoins are worth 100 times more than its current value today. According to Mt. Gox, the world’s largest bitcoin exchange, Bitcoins are trading for between $356 and $391 today.
Of course this is before wide coverage of Cameron and Tyler Winklevoss’ comments, so we’ll see where the price goes today.
A $400 billion market cap for bitcoins
The Winklevosses may be some of the most bullish investors alive when it comes to bitcoins. Speaking at the conference, Tyler Winklevoss said their “bull case scenario is a $400 billion market cap.” Currently the market cap on bitcoins is about $4 billion, he added.
In other words, he thinks bitcoins are worth 100 times what they’re worth now, or almost $40,000 each.
Winklevoss twins: A heavy investment into bitcoins
The Winklevoss brothers purchased $11 million in bitcoins earlier this year at around $266. The value of the virtual currency plummeted not long after that as a string of problems plagued Mt. Gox and investors worried about a bubble and potential regulatory problems on the currently unregulated currency.
Bitcoins are now nearing this month’s high of $395. Cameron Winklevoss said they view their bitcoin investment as “the idea that payments are increasingly going to use a network like the bitcoin network to move money around the world.” The brothers are so bullish on bitcoins that they are trying to create a bitcoin exchange-traded fund (ETF). They filed an amended S-1 with the Securities and Exchange Commission last month and said today that they’re still “going through the process” of getting it set up. It’s anyone’s guess whether such a strange idea for an ETF will fly with regulators at the SEC.
How bitcoins work
Those who are still scratching their heads about exactly what a bitcoin is shouldn’t worry. They’re not alone. The brothers provided an explanation of how they work, including their discovery and what they consist of. They said bitcoins are minted by “miners” about every 10 minutes. They said bitcoins are essentially a computer algorithm and that the computers needed to mine them are very specific so it wouldn’t be possible for hobbyists to get into bitcoin mining.
Bitcoins and Silk Road
U.S. officials also closed down the online illicit drug and service den Silk Road last month, seizing the website’s bitcoins. Many thought the untraceable currency was mostly used for the site’s allegedly illegal operations, so some believed demand for bitcoins would taper off since the website was shut down. However, Tyler Winklevoss said demand has remained strong since the closing of Silk Road, and he believes that the demand for bitcoins to use in illicit transactions was “clearly almost zero.”
Many mainstream merchants are also beginning to accept bitcoins for transactions. Cameron noted that Shopify and Baidu have both said recently that they will accept bitcoins as payment. Also one company is rolling out bitcoin ATMs to bring the digital currency into the real world.