The Winklevoss twins talk Bitcoin futures and fears


TRISH: BITCOIN BOUNCING BACK FOLLOWING A PRETTY STEEP DROP LAST WEEK OF MORE THAN 40% FROM RECORD HIGHS THE WEEK BEFORE THAT. MARIA BARTIROMO SPOKE WITH THE WINKLEVOSS TWINS WHO FOUND AN EXCHANGE FOR THE VIRTUAL CURRENCY AND THEY HAD SOME WORDS FOR THOSE WHO MAY FEAR A BITCOIN BUBBLE. WATCH.>>TO THIS POINT IT’S BASICALLY BEEN A SPOT MARKET AND SO THIS IS THE FIRST TIME THAT PEOPLE CAN ACTUALLY EXPRESS EASILY A SHORT POSITION ON BITCOIN SO WHAT THAT’S GOING TO DO IS CREATE A TRULY TWO-SIDED MARKET WHICH SHOULD REDUCE VOLATILITY JUST MAKE IT EASIER FOR INSTITUTIONS AND INDIVIDUALS TO GAIN ACCESS AND EXPOSURE TO CAN BUY IT WITH CASH AND YOU SETTLE OUT IN CASH, SO YOU DON’T EXPOSURE TO IT SO IT’S JUST ANOTHER FINANCIAL PRODUCT AND EASIER WAY TO GET ACCESS. MARIA: IT CERTAINLY GIVES YOU MORE LIQUIDITY THAT’S FOR SURE AND TYLER YOU BOTH MADE THE PUT THEIR MONEY WHERE THEIR CALLING BITCOIN A FRAUD, SO IF YOU THINK IT’S A FRAUD GO SHORT IT.>>ABSOLUTELY YEAH. WE’VE BEEN WORKING REALLY HARD ANYBODY WHO SAYS THAT IT’S A FRAUD OR BUBBLE YOU CAN GO PUT RIGHT. NOW, YOU CAN ACTUALLY YOU COULD BET AGAINST THIS, SO WE ENCOURAGE JAMIE DIAMOND, WE ENCOURAGE HIM TO PERSONALLY BET AGAINST THIS BITCOIN, TAKE JPMORGAN’S BALANCE SHEET TO BET AGAINST BITCOIN. WE’LL SEE WHAT HAPPENS, BUT NOW THEY CAN DO IT INSTEAD OF JUST SORT OF THROWING STONES. MARIA: BUT TYLER YOU’VE GOT TO EXPLAIN THIS BECAUSE PEOPLE ARE WHEN I LOOK AT THE DOLLAR, THE FAITH OF THE U.S. GOVERNMENT. WHAT IS BITCOIN BACKED BY?>>SO IT’S A GREAT QUESTION. SO BITCOIN WE THINK OF BITCOIN AS GOLD AND I THINK IF YOU LOOK INTRINSIC VALUE OF GOLD BUT THAT REALLY DOESN’T EXPLAIN THE VALUE OF GOLD. IT MIGHT EXPLAIN 10-15% OF THE ACTUAL VALUE OF GOLD. WE’LL ALL ACCEPT GOLD AND AS A COLLECTIVE ACCEPTANCE AND VALUE THAT WAY, BITCOIN IN ADDITION TO COMING INTO THE SYSTEM BY THE DAY HAS THE MINING NETWORK WHICH ONE OF THE LARGEST COMPUTER NETWORKS IN THE WORLD AND IT’S BACKED BY CRYPTOGRAPHY. A LOT OF PEOPLE WOULD SAY A GOVERNMENT HAS COUNTERPARTY RISK THE GOVERNMENT LIFE SPAN OF A CURRENCY IS ROUGHLY 27 YEARS. LOOK NO FURTHER THAN THE DOLLAR, THEY HAVE I THINK A TRILLION IS REALLY TERRIBLE AND SO YES, LIVING IN THE U.S. WE LOOK AT THE U.S. DOLLAR AND WE SAY WELL WHAT’S WRONG WITH THAT AND IT’S A PRETTY DECENT VALUE BUT IN REALITY, MOST CURRENCIES OUT THERE FAIL. MARIA: SO HOW MANY BITCOINS DO YOU BOTH OWN?>>WE’RE NOT COMMENTING ON THAT RIGHT NOW. MARIA: WHY NOT?>>BECAUSE WE ARE HERE TO TALK ABOUT THE BITCOIN FUTURES DOLLAR SPIKE, 1000 CONTRACTS TRADING HANDS IN THE FIRST HOUR AND EXCHANGE HALT HAPPENED BECAUSE OF THE VOLATILITY AND THE WEBSITE CRASH. ALL IN LESS THAN 24 HOURS. WE KNOW THAT THE CURRENCY HAS RISEN MORE THAN 1500% THIS YEAR, ACTUALLY 2000% THIS YEAR SO LET ME ASK YOU MAYBE BITCOIN IS REAL , BUT IS IT A BUBBLE?>>PEOPLE USE THE WORD BUBBLE AND THIS IS BASICALLY BITCOIN’S 20TH BUBBLE THAT WE CAME IN FIVE YEARS AGO AND REMEMBER WHEN BITCOIN WAS A BUBBLE AT $30, BITCOIN WAS A BUBBLE AT $100, AT YOU KNOW, GOLDS BEEN A BUBBLE FOR THOUSANDS OF YEARS BUT THE BUBBLE FRAMEWORK IS REALLY NOT CORRECT TO PUT AGAINST BITCOIN. WHEN YOU THINK OF A COMPANY AND THEIR STOCK PRICE. IF THEY PRODUCE X AMOUNT OF UNIT S ONE YEAR AND THE SAME AMOUNT OF UNITS THE NEXT YEAR AND THE STOCK PRICE GOES UP AND CHANGED OF THE COMPANY WE SAY THAT COMPANY IS OVERVALUED BUT BITCOIN IS NOT A COMPANY. IT IS A NETWORK AND THE VALUE OF NETWORKS IS NET CASH LAW. IT’S N SQUARED SO THE AMOUNT OF USERS ON A NETWORK IS N, AND SO IF I’M THE ONLY PERSON IN THE WORLD WHO HAS A PHONE AND IT’S NOT VERY VALUABLE I CAN’T CALL YOU BUT IF YOU BUY A PHONE YOU’VE ACTUALLY INCREASED THE SUDDEN MY PHONE IS USEFUL. SAME THING WITH THE SOCIAL NETWORK. IF YOU LOOK AT FACEBOOK THE ALL OF A SUDDEN A HUNDRED PEOPLE YOU CAN CONNECT WITH PEOPLE SHARE STORIES AND PICTURES. MARIA: IT’S A GOOD ANALYSIS. THAT’S ALL OF A SUDDEN THE VALUE GETS GREATER AND THAT’S HOW WE PEOPLE BELIEVE IN THE U.S. PEOPLE BELIEVE IN BITCOIN IT HAS VALUE. PEOPLE BELIEVE IN GOLD IT HAS VALUE AND THAT’S NOT A LINEAR INCREASE. BY DEFINITION THE MORE PEOPLE THAT GET IN THE BITCOIN, IT MAKES IT MORE VALUABLE AND WHEN WE TRY AND TAKE LIKE EQUITIES OR STOCK BUBBLE TYPE FRAMEWORKS TO BITCOIN, IT’S REALLY MISS GUIDED BECAUSE IT’S A NETWORK. MARIA: HAVE YOU SOLD ANY BITCOIN S SO FAR?>>WELL WE’VE DEFINITELY PURCHASED TICKETS TO SPACE WITH BITCOIN A COUPLE YEARS AGO AND WE CLEARLY OVER PAID FOR THAT BUT LOOK, WE BELIEVE LONG TERM THERE’S STILL A LONG WAY FOR BITCOIN’S VALUE TO GO FROM HERE. WE THINK THAT IT IS GOLD 2.0 AND DISRUPTING POTENTIALLY GOLD WHICH IS A $6 TRILLION MARKET CAP SO IF YOU LOOK AT BITCOIN TODAY AT 300 BILLION, IT LOOKS LIKE IT’S CERTAINLY APPRECIATED LOOK AT THE PROPERTIES OF GOLD, THEY MAKE GOLD GOLD LIKE SCARCITY, DI VISIBILITY, PORT ABILITY, BITCOIN EQUALS OR SURPASSED THE GOLD ACROSS EACH ACTUALLY FIXED AT 21 MILLION. IT’S DIVISIBLE INTO A HUNDRED MILLION PIECES AND ACTUALLY HARD TO CUT UP BARS OF GOLD AND THEY’RE HARD TO MOVE. THEY’RE NOT NEARLY AS PORTABLE AND PART OF THIS I THINK IS A LITTLE BIT OF A GENERATION ALL THING I HATE TO SAY THAT BUT IF YOU TALK TO MILLENNIALS OR KIDS ON THE STREET, THEY DON’T WANT HARDWARE. THEY WANT SOFTWARE. THEY GET BITCOIN, THERE’S NO EXPLANATION NECESSARY, THEY DON’T TALK ABOUT WANTING TO WEAR THEY REALLY WANT A, THEY LIVE IN THE TIME AND BITCOIN IS MONEY E-MAIL AND EVERYTHING ELSE. GOLD IS JUST THE OLD WORLD. IT HAD ITS PLACE, ITS HAD A GREAT 3000-YEAR RUN AND BITCOIN, YOU KNOW HAS ONLY BEEN HERE FOR 10 YEARS BUT IT’S REALLY CUTTING IN QUITE A BIT.>>I MEAN TO SAY LIKE THAT’S OBVIOUSLY RIGHT. TAKING A BREAK FROM THE REAL WORLD AND GOING TO THE ONLINE WORLD USED TO BE HOW THINGS WERE NOW PEOPLE TAKE A BREAK FROM THE ONLINE WORLD AND STEP INTO THE REAL WORLD FOR LIKE BE RIGHT BACK FOR LIKE 10 MINUTES BUT THEY’RE REALLY LIVING MOST OF THEIR LIVES IN A DIGITAL WORLD. MARIA: ARE YOU SURPRISED AT THIS BUT YOU WERE RIGHT.>>SO WHEN WE FIRST FOUND BITCOIN OR FIRST CAME ACROSS IT, IT SOUNDS LIKE A HUGE IDEA. IT’S KIND OF CRAZY AND IT’S NOT BACK IN 2012, BUT KEPT LEARNING, KEPT TALKING TO PEOPLE ABOUT IT, KEPT ASKING QUESTIONS, KEPT GETTING INCREDIBLE ANSWERS BACK, AND I JUST COULDN’T SEE HOW THIS COULD WORK OR WOULDN’T WORK. MAYBE THAT’S WHAT MAKES US LIKE WE’RE SORT OF WANT TO DIG DEEPER AND BELIEVE AND LOOK FOR THAT PASSIONATE ABOUT IT BUT YOU KNOW , AGAIN, WE REALLY COULDN’T SEE HOW OR WHY WE WOULDN’T BE HERE TODAY TALKING TO YOU HAVING THIS CONVERSATION, SO THAT WAS SORT OF OUR THINKING THE WHOLE TIME. EITHER A ZERO OR POTENTIALLY AS LARGE AS GOLD OR EVEN BIGGER, MAYBE WE JUST SEE THE WORLD DIFFERENTLY AND WE’RE ONE OF THE FEW THAT SAW IT THAT WAY BUT THAT’S KIND OF THE OUTCOME THAT WE ENVISIONED AND I THINK IT’S NOT REALLY A SURPRISE THAT WE’RE

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