For all the fuss that’s been made over one of the most high-profile rivalries in the tech space, Tyler and Cameron Winklevoss have a decidedly pragmatic message for their former Harvard classmate, Mark Zuckerberg, over his cryptocurrency project: “Welcome to the party.”
The Winklevoss twins, one of the earliest proponents of crypto -- and Bitcoin, in particular -- are speaking out for the first time since Zuckerberg’s Facebook Inc. (FB.O) announced plans to launch a digital token. The social media giant’s project has helped to resurrect coin prices and brought back the hype prevalent during the height of crypto mania in 2017, even as it’s drawn the ire of regulators and policy makers, who have privacy and data concerns.
But when it comes to social networking platform’s entrance, the brothers who won an estimated US$65 million settlement in 2008 over the creation of Facebook, are asking: “What took you so long?”
While the Winklevosses have been a fixture in the crypto space for years, Facebook’s just now taking the plunge with its token called Libra. The company has vast resources –- it has more than 2 billion active users and posted US$56 billion in revenue last year. And it has the ambitions to match, too: Facebook aims to challenge the dollar and contribute to a fairer financial system.
Libra is a blockchain-based digital token that the company envisions will be used to pay for goods and services around the world. It is also a so-called stablecoin that will be backed by a basket of securities and currencies such as the dollar or euro.
Libra has been “very good for crypto and very good for Bitcoin,” said Tyler Winklevoss at an event at New York’s 92Y on Tuesday, which drew a crowd of about 600. “A company with the stature of Facebook talking about the word ‘crypto’ demystifies it, takes out some fear for some people -- it might add other fear for different reasons, maybe privacy or whatnot -- but the fact that a publicly traded company that’s a huge part of our economy actually is doing something really serious in crypto very much mainstreams it and I think it’s a big win for our space.”
The 37-year-old brothers, who gained widespread fame following the release of the 2010 movie “The Social Network,” founded Gemini Trust Co., a crypto exchange, about four years ago. It was one of the first companies to win regulatory approval from New York state to launch its own stablecoin, the Gemini dollar. Many now see Facebook’s Libra directly competing with Gemini’s product.
Gemini Dollar’s market cap currently hovers around US$10 million, compared with market-leader Tether’s US$3.5 billion, according to CoinMarketCap.com. That’s partly because few major exchanges list the coin as a base pair, said Eric Turner, director of research at Messari, in an email.
"Libra is definitely a threat to stablecoins that want to grow beyond trading use cases since Facebook has the potential to dominate digital commerce and payments," said Turner.
But Libra’s success is far from guaranteed. U.S. regulators have already expressed qualms about its efficacy and have raised alarms over privacy issues. Both the House and Senate are holding hearings next week on Libra. It’s even brought scrutiny from the Federal Reserve, with Chairman Jerome Powell saying Wednesday during Congressional testimony that concerns need to be thoroughly addressed.
“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” Powell told the House Financial Services Committee.
Facebook this week sought to mitigate some of those concerns, saying its purpose is to create a secure and low-cost way for consumers to send money around the globe.
The Winklevosses have similarly advocated for greater regulatory oversight. In March, the brothers preached trust and heightened regulation as the antidote to fraud in the crypto market. They now predict that major internet and social media giants will unveil their own crypto or stablecoin projects within about two years.
“Everybody is coming into crypto,” said Cameron Winklevoss during the talk at the 92Y. “In the next two years, every FAANG -- you know, Facebook, Apple, Netflix, Amazon -- are probably going to have their own coins or projects and they’re probably watching Libra closely to see how it fares.”
It’s been a good year for the Winklevosses, who have seen their combined net worth double thanks to Bitcoin’s meteoric rise. Their combined fortune climbed to more than US$1.5 billion from US$654 million at the beginning of the year, according to the Bloomberg Billionaires Index. Bitcoin is up more than 230 per cent in that period and was trading not far from its 2019 high of $13,880 Wednesday.
“Our thesis is that the space is here to stay and it’s only getting bigger,” Tyler Winklevoss said. “We’re long-term Hodlers,” he said, referring to the crypto term of holding on for dear life.