Winklevoss twins take Bitcoin to the next level

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The Winklevoss twins are famous for their tech entrepreneurship, claiming Facebook’s CEO Mark Zuckerberg stole their idea for the social network, winning a $65 million settlement in that dispute, being Olympic rowers, and their venture capitalism in the world of tech startups. Now they can add Bitcoin investors to that list.

Cameron and Tyler Winklevoss have filed a proposal with regulators at the U.S. Securities and Exchange Commission to operate an exchange trade for the digital currency, initially selling $20 million worth of shares, according to Reuters. Together, they reportedly own about 1% of all Bitcoins, so it comes as no surprise that the twins have an interest in establishing the legitimacy of the currency — something of which investors have yet to be convinced.

The first of many apprehensions surrounding bitcoins are their volatile value. The currency fluctuated so dramatically in April that many who had been watching its trajectory discounted its future as a viable currency. Plummeting to half of its value in one day drew attention to Bitcoin, but mostly in a negative light.

Hacking is no small worry, either. The ease and swiftness with which international hacker schemes unfold is a reality that the twins make no effort to deny. Their filing makes a point of conveying that they cannot guarantee the safety of investors’ bitcoins:

While the Sponsor believes it has developed a proprietary Security System reasonably designed to safeguard, to the extent possible, the Trust’s Bitcoins from theft, loss, destruction or other issues relating to hackers and technological attack, the Security System is not impenetrable and may not be free from defect, and any loss due to a security breach or software defect will be borne by the Trust, absent gross negligence, willful misconduct or fraud on the part of the Sponsor, the Trustee or their agents.

Still, investors have implied interest in bitcoin-related services. Among those interested is Chris Dixon, previous backer of Skype and Oddcast. And the trade of Bitcoin in general continues to grow as more vendors accept bitcoins at food and retail locations.

The filing explains that the twins plan on storing investors’ bitcoins in a network of virtual vaults — mimicking in metaphor the physical vaults used to house gold — a notion that calls into question the method through which Bitcoin is governed. No country owns it, no company owns it, and the only system through which they are attainable is the website Mt. Gox. A regulatory trading system seems to upend the very concept of a currency that started out completely decentralized.