The Winklevoss Twins Are Going To Store Their Bitcoins In Vaults

Posted Jul 2, 2013

According to a regulatory filing, Tyler and Cameron Winklevoss are going to store their Bitcoin investments in vaults.  Bitcoin is an open-source virtual currency that became especially popular this year.  Hackers tampered with the value of the currency, thus causing confidence in Bitcoin to slowdown.

The Winklevoss twins are known for being involved in a major lawsuit against Facebook.  The Winklevoss twins and their partner Divya Narendra filed a lawsuit against Facebook and Mark Zuckerberg.  Facebook ended up settling with the twins and Divya for $65 million.

The twins are selling the Bitcoin trust as a way for retail investors and institutional investors to get their hands on Bitcoins without having to deal with exchanges and security issues involving hackers.  The Bitcoins will be stored in secure vaults around the United States.

Cameron and Tyler Winklevoss’ firm Winklevoss IP owns intellectual property that is related to patent-pending technology which will be used by the trust.  This includes a proprietary security protocol.

Bitcoins are secret numbers that can be transferred to another computer with public-key cryptography.  The Bitcoin has a private key and if it is unencrypted, it can be sent to another computer with P2P software.  Bitcoins and private keys are often stored on a person’s computer.  Hackers can gain access to the Bitcoins this way.

Sometimes people write down private keys on a piece of paper.  If this piece of paper is lost, then the Bitcoin cannot be used.  The Winklevoss twins cannot guarantee that the security system will stop the hackers.  The filing states that the company is not liable for losses due to “failure or penetration” of the security system.

IPO: The Winklevoss twins own 1% of the world’s Bitcoins.  They have filed forms with the SEC that says they will be offering shares of the Winklevoss Bitcoin Turst to the public.  They are planning to register 1 million shares, each one representing .20 Bitcoins.  They will trade at $20 on the day of the IPO, according to Wired.

This past April, the Winklevoss’ said that they own around $11 million worth of Bitcoins.  Bitcoins were trading as high as $260 back in April.  As of yesterday, Bitcoins were trading at $87 on Mt. Gox.