VIC — Winklevoss Twins and Bitcoin

By Travis Johnson, Stock Gumshoe, September 17, 2013

The Winklevoss twins came to talk to talk about Bitcoin. Which is definitely the least typical presentation I’ve seen at the Value Investing Congress — these are my notes from the talk.

Bitcoin is a math-based asset created over a decentralized peer to peer network.

They are hoping to convince us that Bitcoin will be the “Internet of Money.”

The creator of bitcoin is fictitious, we know nothing more about him. He left the code and a white paper but no real trace of who he might be, it could be one person or many. It was launched in the wake of the global financial crisis.

Why is the person anonymous under the Satoshi Nakamoto name? If American, it would be illegal to create a currency.

The code is completely open source, there are no secrets in bitcoin, no one has a monopoly of information.

The root of the problem with the current system is the amount of trust needed to make it work.

What is bitcoin? Commodity, currency or technology?

Bitcoin vs. Fiat currency:

Bitcoin is more scarce and controlled. There will never be more than 21 million bitcoins in circulation, and we’ll reach that number in 2040 — the amount created annually halves every four years.

Both are portable, though bitcoin has to be electronic and more divisible.

The US Dollar has better authenticity verification but is harder to store. Bitcoin is supposedly harder to counterfeit — bitcoin banks have been hacked, but bitcoin itself has not.

The biggest weakness of bitcoin is that there is no widespread use.

Compared to gold?

Both are scarce, gold is tougher to move and divide. Both are hard to authenticate, gold is harder to store and less fungible. Neither is in widespread use as a currency.

Technology?

Bitcoin is a peer to peer network protocol — similar to http or smtp or voip for web, email and voice we have BtcP as a protocol for bitcoin.

Bank wires are slower and expensive, fast services like Western Union are expensive. Bitcoin is free and instant and bypasses the old, balkanized and slow banking systems.

Bitcoins are not subject to “bail ins” like the haircut Cypriot savers took oast year. He also gave examples of FDR’s gold confiscation and the capital controls in Argentina, which drove up bitcoin prices in Argentina. They pitch it as potentially ...

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