The Winklevoss twins are moving on from Facebook and looking to bitcoins as their chance at digital fortune. According to a New York Times profile, Cameron and Tyler Winklevoss own close to 1 percent of all bitcoins on the market, worth approximately $11 million.
In the NYT profile, the Winklevoss twins are revealed to own one of the largest shares of bitcoins, the digital currency that has recently become almost as valuable as gold, currently available. The Winklevii, as they are known, have slowly accrued a massive amount of bitcoins since last summer, NYT notes. Last year, bitcoins were worth around $20, and, considering their new-found value, an early investment by the Winklevoss twins could lead to a massive payday.
As of the article's publication on Thursday, bitcoins were worth around $120 with the entire market being worth approximately $1.3 billion. According to the Winklevoss twins, their bitcoin portfolio was worth around $11 million, approximately 1 percent of the bitcoin market, NYT reports.
Bitcoins, and their owners, were tricky to pin down as part of the appeal was the general anonymity associated with the currency. The Winklevoss twins are the first public figures to openly disclose how much they have invested in the virtual currency.
Bitcoins are not regulated by a bank, and trading happens online. Bitcoin transactions are handled on peer-to-peer networks, with bitcoin miners, who operate the servers, approving each bitcoin transaction and the value of a bitcoin being determined by its users.
Some fear that the digital currency could be used for money laundering or other illegal activities while it slowly becomes an accepted form of currency in legitimate digital retailers. The U.S. Department of Treasury most recently said virtual currencies, such as bitcoins, need to begin establishing more rules to curb possible criminal activity.
With the value of bitcoins reaching all-time highs on Wednesday, around $266, the bubble seems to have burst as the value of bitcoins has steadily increased since crossing the $200 mark. NYT relates the bitcoin craze to "tulip mania" in 1637 where the price for Dutch tulip bulbs reached astronomically high prices before collapsing. Steve Hanke, a professor at Johns Hopkins University that is an expert in alternative currencies, said to NYT, "To say highly speculative would be the understatement of the century."
The Winklevoss twins are joined by venture capitalists and hedge fund companies looking to find a fortune with the virtual currency. Cameron Winklevoss said to NYT that he understands the skepticism surrounding bitcoins but believes "at some point that narrative will shift to 'virtual currencies are here to stay.' We’re in the early days."
Bitcoins lost a lot of their value by Thursday, down $140 from the previous day's high, and Friday's news is even bleaker for the virtual currency, according to NYT. The price of bitcoins are even lower than Thursday's value of $160. Trading for bitcoins on Mt. Gox was around $69, with Business Insider noting that the price of bitcoins was as low as $60. As quickly as bitcoin has risen to prominence, it has fallen, but it is too early to predict if bitcoins will continue to lose value. There could be a point where bitcoins settle into a stable price range instead of the $100 fluctuations over the last three days.
Charles Poladian joined IBTimes in October 2012 and, when not reporting on all things topical, can be found reading or photographing concerts.