
How the Winklevoss Twins Found Vindication in a Bitcoin Fortune - rafaelc
https://www.nytimes.com/2017/12/19/technology/bitcoin-winklevoss-twins.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=second-column-region&region=top-news&WT.nav=top-news&_r=0
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stevenj
I 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.

~~~
rubicon33
The deserve credit for what? For getting lucky on FB settlement and BTC rise?
I mean, it's not like they actually built something meaningful and
productive... Not sure how much "credit" they deserve.

~~~
pmorici
They didn't just buy btc and sit on it. They also contributed greatly to the
ecosystem. They built and run the Gemini Bitcoin exchange, they are trying to
get a Bitcoin ETF approved, the CBOE bases their futures pricing on mechanisms
they put in place. They have done a ton and built a ton.

------
TheBiv
>> 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.

~~~
sytelus
That'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.

~~~
pingec
One disadvantage of gold I can think of is you cannot hide it in your head.

~~~
loceng
No one can steal it from you with 50%+1 CPU resources though.

~~~
chrisco255
The 51% attack allows you to double spend. It doesn't allow you to steal other
people's coin.

~~~
lern_too_spel
By allowing you to double spend, it reduces confidence in coins you buy to
zero, which reduces the value of all coins to zero. You still have your coins,
but they aren't worth anything.

~~~
chrisco255
Which is exactly why no one would spend the crazy amounts of money it takes to
execute a 51% attack. It would be like self-immolation. Billions of dollars in
equipment and energy and you'd have 51% of a worthless network. In practice,
you would have to control much more than 51% of the network, because you'd
have to catch up to the 49% that are still hashing away.

~~~
Retric
Unless they are a government, shorted bitcoins, or own a massive stake in a
competitor etc.

PS: Remember the value of Bitcoin is limited as a function of the cost of that
51% attack. If the price increases by 10x the transaction fees need to also
increase by 10x or Bitcoin becomes less secure.

~~~
joering2
This idea comes back many times... but I don't see a reason why government
would want to short bitcoins or disturb the market to get their hands in it.

1\. They have BEP printing press; instead of stealing or brute forcing into
bitcoin and then selling the loot for $, the might as well ask Bernanke to
print few thousands more sheets of 100 dollar bills (of course not legally but
i'm sure there is some overprint like in any business).

2\. screwing people out of bitcoins would mean screwing US citizens as well.
Why would any part of government do that just to upset Congress and get
themselves in front of bunch of congresspeople for grilling? Doesn't make
sense.

~~~
Retric
Government is unrelated to shorting, Governments may chose to destroy Bitcoin
for the same reason the may ban it. Basically, currency controls etc.

Someone shorting Bitcoin on the other hand has an economic incentive to
destroy it. The cost benefit of doing so scales with the size of their short
vs the current hashing power. But, a malware writer may have access to a 51%
attack briefly without owning any equipment.

------
aplummer
Does 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.

~~~
Lon7
Bank of America and Bitcoin both have market caps of ~$290 billion. Bank of
America usually sees huge trading volume for a stock and it traded about $1.8
billion of volume today. BTC/USD alone has done $3 billion today.

I realize it's not a perfect comparison, but I think it highlights the fact
that large sales aren't going to just decimate bitcoin's value.

~~~
spookthesunset
> BTC/USD alone has done $3 billion today.

Given those figures come from the completely unregulated, unaudited,
incredibly sketchy exchanges themselves, I would take that with a huge grain
of salt. Odds are good a vast majority of that $3 billion is trades using
funny money or, for all you know, made up out of thin air. Easy to just trade
with yourself all day...

------
relics443
This 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
> 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
True, but someone with an end stage terminal illness shouldn't buy a car.

~~~
captainbeardo
I'd say that's the best to buy a lambo.

~~~
oh_sigh
especially on credit

------
jorblumesea
How 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
I 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.

------
Animats
Has anyone ever tried to sell a billion dollars worth of Bitcoins and
collected?

~~~
dahdum
Novogratz 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
> trade volume

is not the same thing as liquidity

~~~
dahdum
They 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
I 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)

~~~
wils1245
It’s been so crazy to see things like that just papered over in thread after
thread. People talk about trading volume as though they have the faintest idea
what the true, non manipulative volume is. The term “market cap” being thrown
around as though anything remotely close to the figure could be realized.

I’m starting to lose sympathy for the people who are ultimately going to get
hurt when this crashes. The signs are not hard to see at all.

~~~
spookthesunset
> The signs are not hard to see at all.

Oh but this time it's different™

Seriously though, given all these trades occur on god knows what kind of
sketchy exchanges for all we know half that stuff is literally random inserts
in a database with no bearing in reality at all. Toss in "innovative" things
like Tether and who really knows what the true value of BTC is.

This stuff is gonna fail, and fail hard. Hopefully for good. BTC and the whole
crypto bandwagon is a massive, _massive_ waste of energy.

------
brian-armstrong
The 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
Also, 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.

------
45h34jh53k4j
The 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...

------
quickthrower2
I 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.

------
aiofgniaotnio
A 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
Plenty 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
I suspect many people are holding BTC waiting for it to go to $400k or
whatever.

------
mlevental
can 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")

~~~
pitaj
You're gonna get killed by transaction fees.

~~~
pests
What? 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
What are the fees for regular stock exchanges?

~~~
jzwinck
Roughly 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).

------
raverbashing
Did they really post that QR code?

~~~
wyldfire
Interesting that it's only one of two necessary.

But given how it's posed for the photo it's (hopefully) a prop.

~~~
21
Or an empty address.

------
TheYcMaster
Well, they were at right place at right time speaking about BTC

------
wellboy
I think they should actualize some their gains after making a 100x profit.

That's what a smart investor would do.

------
ashnyc
If 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
I 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-
bubb...](https://srsroccoreport.com/bitcoin-vs-gold-which-ones-a-bubble-how-
much-energy-do-they-really-consume/)

------
walshemj
is it liquid in the way gold is ?

~~~
aphextron
Liquidity 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
Without liquidity its point less and arguably worthless but you could transfer
Gold ETFs electronically to me

~~~
ithinkinstereo
BTC 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
$550M on just the Coinbase BTC-USD book in the past 24 hours. $1B on Bitfinex.
Liquidity is currently very strong.

~~~
ufo
That 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
Ok...last 10 minutes proved your point. That was bananas.

~~~
ufo
What happened?

~~~
dahdum
Coinbase added Bitcoin Cash to GDAX.

BTC plummeted from mid $17.8k to $14.9k in 15 minutes, now back to $16.6k. ETH
from $857 to $700 same period, back to $771 now.

Good times...

------
bredren
Facebook's market cap is $521 Billion. So good on them but they probably
should have had more of FB.

