Quoted: Winklevoss twins, founders — of a planned bitcoin IPO

“The trust may not have adequate sources of recovery if its bitcoins are lost, stolen or destroyed.”

Cameron and Tyler Winklevoss, from an SEC filing for the Winklevoss Bitcoin Trust dated July 1. And that’s only one of the many risks listed in the filing. The twins, known for suing Facebook CEO Mark Zuckerberg over the founding of the company, a few months ago expressed their belief and investment in the fledgling digital currency known as bitcoin. Now they want to give other believers, enthusiasts and speculators a chance to get in on the action by creating an exchange-traded fund. The public offering of $20 million would amount to 0.2 bitcoin per share.

But back to the risks. Let’s go to the filing: “The further development and acceptance of the Bitcoin Network and other Digital Math-Based Asset systems, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate.” One factor is the lack of widespread acceptance, although that could be helped if, say, PayPal were to accept it as a form of payment. (A couple of months ago, PayPal President David Marcus said the company is “kind of thinking about” including bitcoin.)

Also, volatility. The value of bitcoins has fluctuated wildly in the wake of other factors such as attacks on exchanges or the electronic wallets that store them. As Reuters pointed out recently, the value of each bitcoin was $13 in January and $266 in April. The current average market value of one bitcoin is about $88.

Then there’s regulation. For example, as the Merc’s Dan Nakaso wrote recently, California regulators sent a cease-and-desist letter to the BitCoin Foundation as the state tries to figure out what the heck bitcoins are and whether they fall under its financial code. And the U.S. government has shut down a bitcoin exchange overseas. It also restricted fund transfers in and out of another exchange called Mt. Gox.

But besides the Winklevoss effort, the bitcoin industry continues to move forward. Mt. Gox reportedly has filed to register with the Treasury Department. And we’ve mentioned before that some venture capitalists are betting on bitcoins’ future.


Photo of Cameron, left, and Tyler Winklevoss from Getty Images


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