Cameron and Tyler Winklevoss, early Bitcoin investors and founder of Gemini exchange, still think it’s really early for Bitcoin.
“Bitcoin is gold 2.0,” said Tyler at Bitcoin Conference 2021 in a fireside chat moderated by Anthony Pompliano. “It will disrupt gold. So, its market cap has to be ten trillion or more, because that’s the market cap of gold. Bitcoin’s hovering around $1 trillion now. It’s, at least conservatively, a 10x from here. Even at $35,000 it feels like a really good buying opportunity long term, because at a $10 trillion market cap, one bitcoin will be worth $500,000. That could happen inside this decade…So, we’re hodlers at least until $500,000. And then at that point, you won’t even have to sell, because you can borrow off it or whatever.”
Cameron agrees that the twins’ thesis hasn’t played out yet. “We’re like 1/12 of the way there. And when we wrote that thought piece in August , Bitcoin was at $13,000. It hit $64,000. The story is really just playing out. It’s just getting started.”
The Winklevoss gold thesis postulates Bitcoin is in the process of disrupting the gold market. “That’s the conservative bull case,” said Tyler. “Obviously, Bitcoin’s a lot more than gold: it’s an open source project that continues to evolve, and can do so much more. It can become the global reserve digital currency of the world, of the galaxy. When we get to Mars, what’s the currency going to be? Is it going to be dollars? No. It’s going to be Bitcoin.”
“Bitcoin is software, gold is hardware,” said Cameron. “You can do so much more with software and iterate at such a faster clip. 10 trillion is the conservative bull scenario. Gold likely contracts over the next 25 years. You put a probe on an asteroid with trillions of dollars of gold. There’s so much gold in this universe. It’s plentiful, like sand. Just on this planet, it’s a little bit more scarce.”
“[Gold] is scarce, not fixed,” said Tyler. “A lot of people don’t understand that. Bitcoin is the only fixed asset that I know of in the world, in the galaxy. It’s the hardest, soundest money we’ve ever known. Two-thirds of the gold supply has been mined since 1950. As the price for gold goes up, people find ways to mine it. It becomes more profitable.” Tyler mentions technological breakthroughs, too, which could increase the supply of gold. At this point, the two begin finishing each other’s sentences.
“No technological breakthrough can change the supply of Bitcoin,” said Tyler.
“It does not expand with an increase of demand or technology,” said Cameron.
“Or price,” added Tyler.
“It just doesn’t happen. There’s no commodity like that ever,” said Cameron. “First of its kind.”
The Bitcoin Industry
The Winklevoss twins underscored the growth of the Bitcoin industry. Mr. Pompliano, dressed in a jet black t-shirt and ashen jeans which were on the skinnier side of things, asked how many people attended the Amsterdam Bitcoin conference in 2013. The two signaled towards the front row—a few hundred people, including the workers in booths.
“We thought it was crazy not to be there,” said Tyler, wearing a blue Gemini shirt and brown pants. “We know this is the biggest best kept secret in the world that nobody is talking about.”
They anticipated the day a Bitcoin 2021 would happen: 20,000 people attending a Bitcoin conference “bigger than ComicCon” was “always a win, not an if” to them.
“Talk about mainstreaming and global and everything,” says Cameron.
Bitcoin’s Early Days
“But, back then there was no license in the US. 95% of the volume was going through Mt. Gox, which was a Magic [The Gathering] trading card exchange that pivoted into Bitcoin in Tokyo. We bought a lot of Bitcoin there. Then we built our own cold storage system and flew around the country and stored it in safety deposit boxes.” He said they wanted to build Gemini to make it easier to buy, sell, and store Bitcoin, and give access, like an on ramp. But, there was no license. The CFTC hadn’t opined, the SEC hadnt opined., and there’s no New York Trust Company licenses.” The IRS had yet to issue guidance.
“So it was a complete question mark. Is Bitcoin going to be outlawed in the US? What is Bitcoin?” said Tyler. “Thankfully, bitcoins are considered a commodity like gold through an enforcement action by the CFTC, called the CoinFlip action, which has been upheld by the courts. “But, there was no precedent. There was a big question.”
“That came two years later in 2015,” said Cameron. “So, it wasn’t like it was around the corner. It was like years later, where some of this guidance and clarity came about. And the hardest thing, when we were starting Gemini was getting a bank relationship. That was one of the biggest challenges. And we went to store some of our private keys and banks. They actually rejected us, because they saw our name, and they saw Bitcoin and they said, ‘We don’t want any of that.’ So we had to break in a little bit, like a reverse bank heist, so you can store your stuff in a bank vault—kind of ironic.”
Bitcoin was just completely unknown at that time. “It’s amazing how far we’ve come,” said Tyler. “We have legal jurisdiction around Bitcoin. We understand it’s money, courts say it’s money. It’s like gold. So much has happened. The infrastructure that’s been built: you can go to reliable exchanges and buy this stuff. You can get Ledger Nano wallets, and all these great things that just didn’t exist, in our experience, buying Bitcoin early on.” Good timing.
Covid-19, Inflation & Bitcoin
“The biggest skeptics in the world, died in the wool Wall Streeters, all came running back to Bitcoin during the pandemic,” said Tyler. “When the markets melted for about that week, and then people got above water, people saw what was happening with the US dollar.” People can do simple math and look at the Fed’s balance sheet.
“They see it ballooning. They see the stimulus. And they know what’s been happening even up to the pandemic. We’ve been on the turbo button printing, printing, printing, debt piling up. We’ve gotta smash the turbo button to get through the pandemic or the lockdown.” The gold 2.0 story has resonated as a hedge against inflation.
Bitcoin & Inflation
“Bitcoin is the world’s best hedge against inflation. It’s the hardest, soundest money. It’s better, it’s harder than gold. And so all of those folks that would have been calling Bitcoin a fraud, skeptical, ‘I’m not really into technology. I don’t get it.’ They saw what was happening with the fiat regime. The US dollar is the ultimate shitcoin, the euro…”
“Bitcoin’s biggest booster is the Fed,” said Cameron. Pomp then asked him to show off his white shirt, with a black, white, and gray picture of the Federal Reserve upon it and the text “RAGE AGAINST THE MACHINE” written in black letters beneath.
“Let’s rage against the machine,” said a smiling Cameron as he stood. His black pants didn’t cover his lower leg, and his livid high top boots covered his ankles. The crowd cheered.
“Bitcoin has been having trillion dollar advertisements,” said Tyler. “The Fed is the biggest champion.”
“It’s organic money, it’s not fiat,” said Cameron. “There’s no government law or decree saying you have to use it. The people who choose Bitcoin, they choose it out of free will, because they want it.”
“And you can’t get stopped out of Bitcoin,” said Tyler. “The blockchain doesn’t call the broker and say stop trading GameStop. “It’s a level, freer, democratic playing field. What was really happening in the US dollar, the fiat regimes, during the lockdowns, pushed people,a deluge, into Bitcoin in some sort of shelter from the oncoming flood and scourge of inflation, which has been all around us. It’s washing all around. Look at asset prices. People who measure CPI, the price of a bar of soap— that’s such BS. It’s been here for a long time. And, it’s only coming worse.”
“And your CPI isn’t really a great measure of inflation,” interjected Cameron.
“No,” Tyler agreed.
“As the stock market rips during a lockdown, as real estate prices continue to break records,” said Tyler.
“Small businesses get destroyed,” added Cameron.
Financialization Of Bitcoin
Cameron believes the financialization of Bitcoin creates greater price discovery, noting that it is amazing you can HODL your Bitcoin and earn interest on certain platforms, his own Gemini platform included. “You can’t get anything like that from a bank in the traditional system.”
The brothers are excited about the Gemini credit card. “We have over 250,000 people on the waitlist,” said Cameron. “You can earn Bitcoin rewards, while using that card and your general spending behavior. It’s great [for] individual empowerment. You’re already doing this behavior, and now you can invest in the future of money and HODL, and not earn silly flimsy airline miles or whatever. It’s going to be a really mainstreaming moment, because people don’t have to think about when they buy bitcoin. It takes the timing piece out of it, because a lot of people say, ‘Well, when do I buy?’ You don’t have to time that. It’s really helpful. It’s going to be like the AOL CD Roms or discs that were in the magazines back in the 1990s that onboarded millions of people on the internet. Credit cards are a really great access point to get into the space.”
“Imagine you buy, let’s say, a flat screen TV,” said Tyler. “You earn 3% back in Bitcoin. One day that Bitcoin might be worth more than the TV itself.” A few audience members clapped.
“Airline miles aren’t going to do that. Points from whatever other credit cards. It’s a complete black box. What are the exchange rates? Just gimmicks, right? But, at least you have a chance with Bitcoin to actually turn spending into investing, which is just a no-brainer. I’m gonna do this all day long. Why would you not stack SATs as you spend your US dollar shitcoin?”
A lot of people don’t realize you don’t have to buy just one bitcoin, observes Cameron. “You can come to Gemini and buy $5 worth of Bitcoin or fractions, but a lot of people say, ‘Oh, it’s $35,000, I’ll never afford it. You can buy a small piece. And, a fun fact, there’s 46 million millionaires on the planet. There’s only 21 million bitcoins. They won’t own Bitcoin. So, if you own a Bitcoin today, you will be a millionaire in the future, for sure…Congratulations.” The audience clapped and one or two cheered.
Public Companies Adopting Bitcoin
Pompliano asks what gets the two excited about the future of Bitcoin. That there’s about 40 or 50,000 publicly traded companies globally on global exchanges, Tyler points out, underscoring the potential for growth.
He elaborated: “32 of them have Bitcoin on their balance sheet: Square, MicroStrategy, Tesla. Only 32. Do we think that number’s going down or going up? What happens when that number is 100, 500, 10,000, 100,000? What does that do to the price of Bitcoin? It’s like the second pitch of the first inning, in terms of where this thing could go. When the companies all have Bitcoin on their balance sheet, then a central bank’s going to follow, because they have gold on their balance sheet. They do that because they know what they’re doing by printing money, right? They stack gold. They’re just going to start stacking bitcoins.
“Don’t watch what they say, watch what they do,” said Cameron. “And they’re stacking gold, because that’s what they know how to do. But, they will stack.”
“You’re going to have more companies doing this,” said Tyler. “You’re going to have central banks, you’re going to have countries.” He adds that how it all plays out will take time and depends on what happens with the debt loads and the fiat regimes which are “making it very easy for Bitcoin.”
The Gemini Opportunity Fund
“Pomp” prompts Cameron and Tyler, who keynoted Bitcoin 2013 as the price of Bitcoin hovered at $130 with a market cap of approximately $3 billion, to discuss the importance of crypto development. “Without Bitcoin Core development, we don’t get anywhere, right?” said Cameron. “If we don’t secure the network, we don’t scale it, we don’t make it more sustainable, then it doesn’t matter what we do. So, it’s very important to support and give back.” The Gemini Opportunity Fund supports those efforts.
“We’ve sponsored three core devs, and we just started it last fall,” said Tyler. “We were on Peter McCormack’s podcast and he sort of….”
“Did Peter strong arm you into doing it?” asked Pomp
“Ehh..a little bit,” replied Tyler.
“Just a little bit,” said Cameron, as he held up his arm with his hand in a fist except for his thumb and index finger touching so as to demonstrate just how ‘little’ McCormack had strongarmed them. Cameron noted that they had committed $1.5 million to the dev fund at that point.
“Just imagine what happens when you come on the best podcast rather than the second best,” said Pomp.
“It’s going to be expensive,” quipped Cameron.
“You start paying us, right?” asked Tyler, who acknowledges they are grateful to Peter for encouraging them to get involved in Bitcoin core development.
Pompliano then asks about the Gemini platform and the retail user. “This has always been a retail driven phenomenon from day one,” said Tyler. “Banks don’t know how to get their head around it, their compliance office okay with it. Wall Street’s still not even there. But, it’s really been a movement of the people.”
Simplifying Bitcoin To Empower The Individual
“It’s all about the individual and empowering the individual,” said Cameron. “And that’s why we started Gemini to build simple, safe, reliable products to empower people to get into crypto, and it still is an individual movement. It’s everybody in this room. It’s not like a nameless organization or faceless organization–it’s really all of you.”
“So we’ve seen that and that just the new baseline, the level of support for Bitcoin, the understanding, the people in it, it’s incredible,” said Tyler, as some in the crowd had only begun to applaud before stopping as few others joined in. “2017 was an interesting year. It was exciting. This is an order of magnitude, bigger, more substantial, and even if there’s a correction, or another crypto winter, or whatever, because things can get over excited, it’s just gonna be a completely different market and baseline. We’re really excited. And that’s going to happen again in the next halvening, and the US dollar is going to keep getting printed at the same time. We think it’s super early days. We’ve never been more bullish. We think there’s at least a 10x from here, in terms of price appreciation for Bitcoin, and very likely much more.”
What You Can Do For Bitcoin
Pomp asks how the audience can continue to grow Bitcoin. “Continuing to tell our story around Bitcoin being a freedom fighter, and the most powerful thing for personal freedom since the personal computer, the internet, and the printing pass,” replied Cameron. “It’s really amazing. And we just need to keep telling that story, and fighting the FUD. Bitcoin could be the impetus for a huge renaissance in renewables. We need to tell that story more. That’s really important.”
“We could be on typewriters. It’s more green than smartphones, but like we understand the value there,” said Tyler. “How important is our freedom, the printing press, personal computer, the early open internet, so this is super important and meaningful stuff.”
Pomp asks if Cameron and Tyler dollar cost average or if they even stack at all? “We’re going to use the Gemini credit cards,” assured Tyler. “We’re not dummies. You can never have enough Bitcoin. We wish we bought earlier, we wish we bought more. Everybody says that, no matter how much you have. And we’ll look back on today like it was so early. I wish I bought at $35,000 or whatever. It’s super early days. It’s maybe like the late nineties of the internet, but now you can own a piece of the internet. You don’t have to pick the racehorse necessarily. So, just own a piece of Bitcoin and it’s going to work out.”