Winklevoss twins who claimed to have dreamed up Facebook become the world's first Bitcoin billionaires after investing just $11m in the booming cryptocurrency
- The Winklevoss twins hit a milestone as the price of a bitcoin soaring to?$11,413.46 on Monday morning
- It is estimated that the twins bought the?cryptocurrency at around $120 early on
- They bought their bitcoins using money from their lawsuit with Facebook's Mark Zuckerberg
- They used $11million of a $65million settlement from that suit in which they alleged Zuckerberg stole their idea for the social media site?
The Winklevoss twins are the world’s first bitcoin billionaires.??
Tyler and Cameron Winklevoss, who sued Facebook's Mark Zuckerberg claiming he stole their idea for the social networking site, have invested and reaped a 10,000 per cent rise in the cryptocurrency to become billionaires.?
The twins walked away from their 2004?suit against Zuckerberg with a staggering $65million settlement, and used $11million of it to purchase the bitcoins.?
Cameron Winklevoss (L) and twin brother Tyler Winklevoss have become the world's first Bitcoin billionaires?
The twins, who were nicknamed Winklevii, invested early on in Bitcoin and their purchase allowed them?to control nearly 1 percent of bitcoins.
It is unclear as to when exactly they invested in the cryptocurrency and the trading fluctuates. It was trading for under $250 for most of the year and then dropped to $150 for several months.
Fortune?reports the twins purchased the currency at?$120, which would have gotten them roughly 91,666 bitcoins.
The brothers have reportedly not sold a single one of their bitcoins, as they've watched it soar in value recently. ?
As of Monday morning, a coin was valued at $11,413.46 on Monday morning, bringing the value of their investment to $1.046 billion.
The twins used part of their settlement with Facebook's Mark Zuckerberg to buy $11million worth of bitcoins early on
Winklevii tried to create an ETF or an Exchange Traded Fund for the cryptocurrency, which would have opened it up to institutional investing.
That didn't happen as the?U.S. Securities and Exchange Commission rejected the application, citing the possibility of fraud.
The twins, who also competed as rowers in 2008 Beijing Olympics, still don't get close to their archnemesis Zuckerberg's net worth of $70 billion.
What is Bitcoin??
Bitcoin is a virtual currency, the first of a new form of money held only online that can be used either to spend like ‘cash’ or as an investment a little like a commodity such as gold.
Bitcoin, like other similar electronic currencies that have followed (Ethereum, Litecoin, Zcash and Dash), are stored online in a ‘digital wallet’ and then spent on goods and services. Alternatively, you can exchange it for a traditional currency such as sterling. This can be done using a special pre-payment card that converts the cryptocurrency when a purchase is made.
HOW DOES IT WORK – AND HOW DO YOU BUY IT?
When Bitcoin was invented in 2009, it was aimed at techies who ‘mined’ for it using ‘Blockchain’ technology. Blockchain allows transactions to be managed cheaply, securely and anonymously in a kind of devolved online ledger with records of transactions held on thousands of computers.
To release coins a ‘miner’ had to verify each transaction by solving a complex maths problem. But today, the Bitcoin revolution has extended beyond the techies and miners. Cryptocurrencies can now be purchased from specialist exchanges such as Coinbase, Kraken, Bittylicious and Bitstamp.
You can usually pay for the currency by credit or debit card or bank transfer. Exchanges are likely to make a charge for each purchase of cryptocurrency. For example, Coinbase charges 3.99 per cent for card purchases.
Oliver Isaacs, a technology investor and expert in cryptocurrencies, says: ‘You can send a currency to another person’s digital wallet so a Christmas present could be on the cards.’
WHY HAS BITCOIN’S VALUE BOOMED?
The number of Bitcoins in circulation will never exceed 21 million. About 16 million have already been ‘mined’. The limit was set by a mysterious coding genius with the pseudonym Satoshi Nakamoto, the creator of Bitcoin. This aims to ensure it will always have scarcity value.
The recent price rise – a nine-fold leap since the beginning of this year alone to $11,000 (￡8,000) at one point last week for a single Bitcoin – is partly due to growing interest from institutional investors and hedge funds.
But it is possible to purchase as little as a one hundred millionth of a Bitcoin (0.00000001 Bitcoin) – called a Satoshi.
WHERE AND HOW TO SPEND IT
A number of online and physical shops accept Bitcoin – from pubs and florists to holiday booking websites and charities.
Shoppers can pay online or use an app on their phone. They need to set up a virtual wallet first to store their coins. This acts like a bank account for receiving or using virtual currency – but without any consumer protection. To find shops accepting the currency visit wheretospendbitcoins.co.uk.
SHOULD YOU BUY? 'One year's winner can be next year's loser'
Warnings abound that investors’ heated love affair with Bitcoin can only end in tears.
The number of boasts of fortunes made from Bitcoin should ring alarm bells. Remember the rapid rise in share prices ahead of the bursting of the technology bubble in 2000?
Some experts warn of a 30 per cent ‘correction’ in the Bitcoin price as soon as January. Others believe governments will clamp down because the secretive nature of these currencies makes them popular with criminals and also because they might undermine international currencies.
Justin Urquhart Stewart, of wealth manager Seven Investment Management, says: ‘Bitcoin’s relentless march has the hallmarks of an investment trap. Investing in something just because it has gone up has never been sensible. One year’s winner can all too easily become next year’s loser.’
But he is attracted to the technology behind the currency. He adds: ‘Blockchain is more than a mechanism for moving money. It is about secure control of data and information. It could also be used in industries beyond financial services such as retail, healthcare and real estate.’
Patrick Connolly, of financial adviser Chase de Vere, is nervous of the hype over an investment that is neither regulated nor offers consumer protection.
He says: ‘We are not recommending any Bitcoin investments to our clients. Many people are investing without understanding the risks.’
Benjamin Dives of start-up London Block Exchange says: ‘If you are looking to invest you really need to do your homework.’
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