The Winklevoss twins, former Harvard alumni who sued Mark Zuckerberg over the origins of Facebook, are claiming a new title: bitcoin moguls.
Bitcoins, a digital currency traded electrically
between buyers and sellers, garnered mainstream financial attention after its value increased by up to 1,000 percent in January.
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Currently, the supply of bitcoins is nearly 11 million, which is half the total projected fixed supply of 22 million.
In the past two months, the price of bitcoin has risen nearly sevenfold, from $20 to $135, bringing the market value to a total of $1.5 billion.
Financial experts have mixed opinions on whether the bitcoin is a self-stabilizing currency
, but the Winklevosses admitted to owning $11 million worth
, or about 1 percent of all bitcoins in existence. They were the first prominent investors to publicly disclose owning a sizable stake.
“People say it’s a Ponzi scheme, it’s a bubble,” Cameron Winklevoss told the New York Times' Dealbook. “People really don’t want to take it seriously. At some point that narrative will shift to ‘virtual currencies are here to stay.’"
Bitcoin investors like the Winklevosses faced a setback Thursday morning, after a crash left a single coin worth $120 and the entire market worth $1.3 billion. At one point, the price had plummeted 60 percent, according to Dealbook.
The Winklevosses, who first invested in the currency last summer, attribute the tumult to mere growing pains. They claim the bitcoin, which was created in 2009, and will grow into gold for the technorati.
"We’re in the early days,” Cameron Winklevoss said.
The twins are no strangers to digital ventures, some of which have been arguably riskier than others. Their first two investments were in Hukkster, a start-up shopping website, and SumZero, an online community for professional money managers.
Before that, there was ConnectU -- a social networking website the twins founded and sought Zuckerberg's engineering expertise for during their undergrad days. Zuckerberg ditched their startup and founded Facebook instead, and the twins filed an intellectual property suit against him. They eventually settled for $20 million in cash.
For now, there are few places where bitcoins can be used, but believers like the twins imagine a future where the e-cash can be used at their local Starbucks.
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“We have elected to put our money and faith in a mathematical framework that is free of politics and human error,” Tyler Winklevoss said.
Little is known about the creator of the digital currency, but bitcoin grew to prominence after the tipping point of the Eurozone financial crisis in Cyprus
, at which point the prospect of a currency free from government regulation was appealing to many Europeans.
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