Who knew that Tyler and Cameron Winklevoss, known for their early involvement in Facebook, were in love with bitcoin? And do you care? You might, when you find out that they were the first to file for a bitcoin Exchange-Traded Fund (ETF) with the Securities and Exchange Commission (SEC). Some think that bitcoin ETFs will provide the ignition that bitcoin has been looking for.
In 2012, according to Forbes, while vacationing in Ibiza, the fraternal entrepreneurs were introduced to bitcoin and fancied its chances as an alternative to fiat currencies. According to Tyler, the two brothers began buying and studying the currency and were ultimately “sucked in” to the digital currency world, noting that “you don’t predict when you’re going to fall in love.”
Tyler and Cameron, who both studied economics at Harvard, are now CEO and president, respectively, of Gemini, a cryptocurrency exchange.
According to the brothers: “We figured this is probably a pretty binary outcome — it’s either a zero or an enormous new opportunity.” Or, to extend the “falling in love” analogy, bitcoin could be an enormous opportunity to be beguiled and to invest wholeheartedly, if not financially, only to find that the apple of your eye is a complete zero. We’ve all experienced those kinds of romantic relationships.
But to give the brothers the benefit of the doubt, they also claim that “bitcoin is both disruptive from a technology perspective, but there’s a tremendous power of social good behind it. So, you can both build a cool business or have a great investment return, and there’s the promise of potentially improving the remittance industry or banking the unbanked,” said Cameron.
Since falling in love with bitcoin, the Winklevoss brothers have invested in several cryptocurrency hardware and software firms to build their bitcoin exchange.
The twins’ new bitcoin ETF will be called the Winklevoss Bitcoin Trust and will trade as the ticker symbol COIN. The brothers are aware of the security issues surrounding bitcoin and recommend that exchange operators and their regulators need to look closely at “multisig” security services, which require many people to sign off on a transaction. The brothers also state that, although centralized exchanges are blamed for hacks such as Bitfinex, decentralized exchanges do not offer scale that would allow bitcoin to compete with the speed of Nasdaq or the NYSE, which is microseconds.
They do have a point there.
From Digital To Tangible — Back To Square One!
Perhaps not a scalable option in terms of security, but some bitcoin aficionados are finding ways to store coins offline, outside of a central exchange. According to The CoinTelegraph, entrepreneurs and investors are using physical bitcoin, a type of bitcoin wallet, to store bitcoin more securely, long-term and out of the reach of hackers’ grabbing gauntlets.
Physical bitcoin is stored in an offline wallet for which the private key is sealed. The owner must activate the wallet and open it up to the public blockchain for hackers to be able to access the bitcoin or for the bitcoin to be spent.
Denarium bitcoin sells physical bitcoin in gold-plated, specially-designed coins. In a show of faith in the security of centralized bitcoin exchanges, entrepreneur and technology startup investor Alistair Milne has bought a physical bitcoin wallet from Denarium as a long-term investment.
Silver Jubilee Crown coins from the U.K.'s Westminster Collection anyone?
Switzerland’s Zug A Zinger For Bitcoin
A small Swiss town called Zug, once “the poorhouse of Switzerland,” has found a potentially lucrative way to stimulate its sleepy commerce, once sustained by fishing and manufacturing.
Just south of Zurich, Zug has a population of 120,000 and one of the country's lowest tax rates, however Switzerland’s famed banking secrecy laws have facilitated Zug’s transformation into one of the wealthiest areas in Switzerland over the past 50 years, according to Reuters, and it is now the headquarters for many global companies — Glencore included.
But the town is also demonstrating its versatility as the end of banking secrecy, and new tax reforms are threatening its economy. Now, the once-sleepy town is planning to attract virtual currency and technology startups to become "Crypto Valley."
One of the first entrepreneurs to arrive was South African Johann Gevers, who brought his platform Monetas in 2013.
Gevers told Reuters: "I believe cryptofinance is the next big wave after the internet. The country that succeeds in being the friendliest jurisdiction to attract cryptofinance companies — that's going to be the financial center of the future."
So far, a dozen virtual currency companies have located in the area, including bitcoin's rival, Ethereum, and the digital currency exchange ShapeShift.
But there is one big problem facing Zug. Many cryptocurrency companies are currently subject to the same regulations as banks because they are considered deposit takers. Therefore, once a business grows to a certain level, it is required to have 10 million Swiss francs ($10 million) in paid-up capital.
Xapo is one bitcoin wallet provider that is not relocating to Switzerland until regulations are changed and private key codes to bitcoin funds are not considered deposits. Switzerland's Financial Market Supervisory Authority (FINMA) is trying to resolve the situation by suggesting that licensing requirements be relaxed for companies that do not engage in risky lending activities.
"We suggest creating a new category that is sufficiently broad and open to encompass any innovative financial service, letting markets decide which types of services will prove successful," a FINMA spokesman told Reuters. The Swiss government has asked the finance ministry for proposals this year, but any resolution would take a year to be enacted.
Recognition Of Bitcoin Or Just Good PR?
Is a new report by SWIFT evidence of bitcoin’s potential and SWIFT’s concern with the currency as a valid player in the currency space, or simply an interesting topic for pleasant dinner conversation?
KiHoon Hong of the Hongik University College of Business and co-creator of the report gave his synopsis of the report’s findings.
"Contrary to conventional wisdom, our research shows that fiat currencies crowd out bitcoin, not the reverse. What is also evident is that bitcoin poses minimal risk to financial or monetary stability. Despite this, if the acceptance of bitcoin or other virtual currencies increases significantly on a global scale, it could have significant consequences on the relevance of monetary policy, as its decentralized and independent nature makes regulatory oversight difficult.”
According to The CoinTelegraph, the mere fact that SWIFT conducted the report is proof that it is concerned about bitcoin as a competitor in the currency space, which is a valid point. But, then again, bitcoin is a popular subject to address, and the report is good PR.
Well, it’s happened. Bitcoin prices reached the $600 level, and the bullish trend is continuing — at least until the next hack, that is.
According to sources: “Prices in the $625–$650 range seem attainable in the short term. The long term could see prices move up towards $680–$700 if trend lines are correct and bullish momentum keeps up.” The price at time of press was $629.
So, let’s see what’s boosting bitty. Bitcoinist opines that Bitfinex reimbursements might be a factor, as could a new browser aptly named Brave Browser, which speeds up transactions by blocking ads and trackers that typically slow down browsers. Other factors are a potential recession in Europe and Asia and low policy rates among central banks.
Meanwhile, rumors abound of a recession in the U.S. by the end of 2017, not to mention the uncertainty associated with the presidential election. Even so, with all this doom and gloom in economies that send investors scurrying to buy bitcoin, analysts are not counting out the return of a bear scenario.
“If we see a price decline, we will likely hit support levels in the $580 range. Lower floors of $560 are possible but look inconceivable as of press time.”
Denarium customers can feel very secure with their physical bitcoin investments.