Winklevoss twins become first Bitcoin billionaires | Hacker News Reader

Winklevoss twins become first Bitcoin billionaires

telegraph.co.uk

81 pointsandygcook99 comments

Wow, admittedly my perception of these guys was totally skewed after seeing the movie The Social Network. When I read about their original investment in 2013 I totally wrote it off as being a hairbrained move. Clearly succumbed to my own biases in passing that unfair judgment. Good for them for being so savvy.

Or....it was a hair-brained move, but it happened to turn out well for them, and now you're succumbing to post-fact rationalisation bias that rich gamblers who get a payout at a point in time actually know what they're doing...

Edit: ironically?, the fact that most people partake in this bias actually increases such people's likelihood of being successful in the future.

Or it was neither a brilliant nor a hair-brained move and was a reasonably calculated risk which paid off likely due to a mix of luck and prescience? There were many reasonable, intelligent people out there who weren't blinded by the anarchy/libertarian hype and yet still speculated Bitcoin's price would skyrocket based on rational predictions and bets.

The fact that these guys were partly on the ground floor for the rise of one of the most influential tech companies in the world and very much on the ground floor for one of the (so far) highest ROI assets and biggest technological advances (practical blockchain, consensus, and cryptocurrency tech; not Bitcoin in particular) of the past 50 years shows that at the very least they're probably not bozo meatheads in the way Sorkin and Fincher portrayed them (as entertaining as the movie was).

Folks, the word is spelled harebrained.

Thanks. I was so used to seeing hairbrained that I assumed it was the correct spelling.

I'm impressed that you created a new account to contribute to the conversation with such a substantive, thought-prevoking comment.

All sorts of things push people over the edge to finally make an account :). While it's true that his comment doesn't add much to the discourse, there probably are lots of folks that never realized that it's referring to a hare.

Your comment though is approximately an attack on a person who finally took the time to create an account only to get downvoted. A downvote is discouragement enough; no need to reiterate.

To be honest, if not for this comment, I would have learned something wrong today.

PS - English isn't my first language.

It's "thought-provoking", not "thought-prevoking".

Thank you, Merriam-Webster.

The name's Noah.

If you put all of your savings into Bitcoin, it is a stupid move, no matter what the outcome was. You might look smart now, but you really weren't.

If you knew about bitcoin in the early days (<$1000), it was a good move to invest a small percentage into this high risk, huge potential payoff, no matter what the outcome would be.

Considering the history of these twins, I think they are better at calculating risks and potential payoffs than most of us here.

> they are better at calculating risks and potential payoffs than most of us here.

They also have more play money to throw at risky ventures, and the connections to hear about them early

In the case of Bitcoin, that is a really cheap shot.

Most of us here are in tech, and I found out about Bitcoin when it was at $1. (which was already late according to some).

And about the play money, I hope everyone here has $50 that they would not miss that much if it would suddenly disappear.

Buy $1 bitcoins for $50. You do the math.

Could be, but a re-evaluation of my past harsh assumptions felt more constructive than further writing them off in my head as inept. I don’t know how many others are out there that I can say originated the idea for Facebook (at least in its Harvard-only original form) AND were early to get involved big with Bitcoin (and now, at least on paper, are billionaires because of that insight/luck/combo whatever).

Never trust a hollywood adaptation to be remotely historically accurate or honest.

That's why they say "based on a true story" instead of "this is a true story". They can change whatever they want and call it artistic license.

Yup, totally agree. Probably also because there’s no written record of what was actually said or done in the majority of micro-events that help to define personalities and setup plot lines (eg the opening bar scene at Thirsty Scholar in The Social Network between Mark Zuckerberg and his love interest).

Hmm, well clearly in this case I was wrong about these guys, but I have to disagree on your comment about never trusting Hollywood adaptations to be remotely historically accurate or honest. Personally I think Hollywood adaptations generally get the broad points correct, so they are generally accurate and honest (eg Howard Hughes was a reclusive hermit toward the end of his life, as portrayed by Leo DiCaprio in The Aviator).

That is one movie, Hollywood often portrays Jessie James as a Robin Hood-like figure, taking from the rich and giving to the poor. In reality, he was murderous bandit.

True, and yet those are also only several movies of many tens of thousands. I don't think this debate would be resolved back and forth example for example. Instead, replace the OP's use of the word never with "only sometimes", "don't usually", or even "more often than not don't", and the comment would be more reflective of its underlying nature: opinion, absent hard data.

The fun of some debates is that they are never resolved.

Agreed!

The twins are more or less villains in the movie, but I'd say they aren't presented as stupid or inept.

Agreed. One of my biases was to equate inability to execute on an idea but ultimately claim credit for its successful execution as ineptitude. Clearly this was an incorrect and unfair assumption.

You don't judge a move in poker by its outcome, but rather if it made sense given what information was available. You may not be this type of person normally, but I find that most people I come across have an incredibly hard time evaluating choices based on what information was available when they were made and not by their outcome.

They have net worth of $500m. They invested 2% of their net worth in to bitcoins. This is not savvy, it's just simple diversification that probably everyone in this net worth level is doing. The article reports it incorrectly that they are "first bitcoin billionaires". If you had $1 billion net worth you probably had at least a million dollars (0.1% of your assets) invested in such exotic things that would have high risk, high rewards.

Satoshi Nakamoto was the first bitcoin billionaire, quite a while ago. Assuming Satoshi is one person. But I suppose nobody really knows who it is.

Li Xiaolai reportedly had over 100,000 BTC as well (https://www.coindesk.com/chinas-bitcoin-millionaire/).

that was my first thought too, satoshi is if memory serves worth around 11 billion now so even if the reality is that he is a few people theyre all probably billionaires

It is claimed Satoshi has around 1M BTC[0]. But this is only "worth" something if the private keys haven't been lost, forgotten, or intentionally or accidentally destroyed, and given the lack of movement there is no evidence of this.

[0] https://bitslog.wordpress.com/2013/04/17/the-well-deserved-f...

I don't understand the liquidity of bitcoin, maybe someone can please explain to me.

If I'd bought what today is, say, $100M, and I wanted to cash all of it out tomorrow, could I do it? Could I actually have $100M in my bank account the next day?

Edit: ok, not in one day. Let's say, over 6 months, whatever it takes. Can I withdraw $100M?

Actually, opposite all other answers here, YES.

If you were withdrawing $100M in BTC you wouldn’t do it using an exchange, you would use an OTC dealer, and yes you could absolutely do it in far less than 6 months.

Here’s a good intro blog post, you can find more by searching for “bitcoin otc” or various phrases containing “whales” (term for someone with lots of digital currency). https://vinnylingham.com/the-1-dont-use-bitcoin-exchanges-ff...

Also, noting: this article’s title is misleading or false. There are other and previous bitcoin billionaires who are not as public about it, though the actual article qualifies the claim a bit. Finalky: seeing all of the replies that state emphatically “no” and explain why makes me doubt all answers on hacker news that I trust.

Now I'm no crypto-currency expert, but from the outside looking in it seems like: In theory Bitcoin is worth $10k each or whatever it is now, but in actuality it's only worth whatever arbitrary limits the various 'exchanges' set on real-money withdraws? So how is this "decentralized"? There's still a semi-central location you have to go to in order to get any real, actual currency out of it.

Transactions in bitcoin, eg sending a bitcoin from one wallet to another, occur on the blockchain and are decentralized. The fiat value of bitcoin, however, is determined by supply and demand for that bitcoin-fiat cross, just like anything else in open markets. That trading for these crosses occur on the exchanges.

> There's still a semi-central location you have to go to in order to get any real, actual currency out of it

This is definitely still the case. The exchanges themselves, though, could potentially be implemented via blockchain. This would likely reduce transaction costs and could make them more secure. In this case the would actually be decentralized.

Once you have some cryptocurrency in your wallet, you don't go to the exchanges to do transactions. All transactions on the blockchain are done in a decentralised way without a 3rd party.

Most exchanges have limits on how much you can cash out per day so it's very unlikely you could do 100M in one pop.

To give you some concrete data: Right now you can do on GDAX and sell $10 million in BTC with only about 5% slippage. If you spread it out you can sell $100 million in 6 months no problem.

You can easily withdraw 100M and the only thing that will take weeks to process is the bank transfers.

According to coinmarket cap, daily volume is consistently 5bn+ a day now

A guy I used to work with quit many years ago to trade bitcoin.

He developed some buy/sell strategies that netted small profits, but he said it was hard to scale it up.

IIRC he said some days his trades alone counted for 10% of trading on the exchange. No idea which exchange it was or how long ago.

This also is basically buy-sell neutral, trying to get in/out same number of coins per day or per week. A number of other bitcoin market makers probably do something similar.

Given that, I wouldn't naively assume a daily volume number on exchange means the exchange could absorb an increase of one-sided sell orders that's even a good fraction of that volume notional without a major price drop.

Also given the lack of regulation I wonder how much of that volume is churning. Ie, fake trades just to increase volume (something illegal on regulated exchanges for stocks, swaps, and other financial products). Bitcoin billionaires have major incentives to keep BTC prices high, and I could seem them easily paying 'negligible' transaction costs to create artificial volume.

But of course I have no idea (like everybody else on this thread).

How much was he trading with? $1,000 - $10,000 - $100,000?

No idea, just that he claimed 10% of volume on some days (which is in cumulative # of bitcoins, not # of trades).

Does that answer the question at all? :-)

Very, very much no.

How long I wonder before we reach the top of this particular bubble.

If anything, this story is likely to perpetuate the bull market in Crypto for a while longer. We'll probably get more stories of the most unlikely bitcoin billionaires over the next few months which will just add more fuel to the fire.

My guess is that some sort of action by financial regulators will cause the bubble to burst, but quite when that happens who knows. In the meantime, its going to be fascinating to see how it develops. Its history in the making, a case study for the future.

gold is a 2000 years bubble, which financial regulator, US accounts for 25% of the trading volume, in Japan is legal tender, the problem for 1 single country to let's say ban it, is that you don't want to be left behind, unless you're a dictatorship.

Up this. In the last few months, I've seen people buy mining computers without doing their homework. Who controls the bitcoins that's mined ? They can't really say. Will it still be profitable when the next generation mining equipment is plugged into some very cheap electricity source ? No clue.

All kinds of advertisments for shady bitcoin services aimed at the general public.

To me this is just the typical example of people that profited handsomely because of: 1- being sons of rich people and 2- being disgustingly lucky

Bitcoin is a braindead bubble with no fundamentals whatsoever, these guys just happened to have a few million lying around, they put it into something that made absolutely zero sense and ended up billionaires.

> being disgustingly lucky

Getting lucky once can happen. Getting lucky twice, with Facebook and Bitcoin, is so improbable that it asks for a different kind of explanation.

Lots of people with high risk-tolerance got kind of rich by buying Bitcoin early. The only difference with the Winklevosses is that they had a lot more money to leverage in that early investment. It's not improbable that someone was going to have a lot of money and put it into Bitcoin.

It's also not improbable that someone got involved in the earliest stage of what was Facebook by pure luck.

However, both those things together are starting to get just a little bit improbable from the pure luck standpoint, don't you think?

Any professional investor is riding on a combination of a very long lucky streak, and portfolio-based risk-adjusting. Paying attention to the Winklevosses here is a selection effect; you're ignoring everyone who executed the exact same investment strategy they did, but ended up making bad bets rather than good ones.

You can entirely explain away the Winklevoss' success by supposing an investor pool of sufficient size that you can pick a set of first-pass winners (1:10000, say) and then pick a second-pass winner from that set (1:10000 again), where they happened to be the ones to be drawn, and everyone else wasn't. The sheer number of people trying to win explains away the improbability required to win—in exactly the same way that the number of people entered into a lottery explains away the improbability of the winner's guess.

Also, we only know who the Winklevosses are because they were a first-pass winner. So there's no reason to privilege them here; it'd make much more sense to look at all first-pass winners (in this case, early Facebook investors), rather than this random famous example of one, and then ask about this set's cumulative probability of at least one of them having gotten even richer from an early Bitcoin investment.

You could've bought 100 bitcoin when it cost $0.01 and today be a millionaire. Did you?

As I could have bought dogecoin and a million other examples of total nonsense.

Instead I bought stocks that trebled in price and made some financial sense, and will keep making financial sense in the future.

So did they, but they choose differently.

Then why do you accuse them when you had the exact same chances and only your respective choices produced the different outcomes?

Yeah, but dogecoin still isn't worth anything and most of the altcoins from christmas past aren't either. You know what is, Mr. Skeptic? Two things: the jealousy you're feeling because they made a calculated risk and it paid off, and the fiat value of BTC as an asset. So run back to your stocks, keep making the same trades everybody else does in the name of "sense" and tell me how you feel when all that "sense" your talking about collapses in two years when the economy cycles.

They finally got their wish after they weren't able to do it with Facebook.

"with no fundamentals whatsoever"

It's a sad state of the HN community that this post isn't already downvoted into oblivion.

edit: Oh look, a throwaway account!

Wouldn't you agree that probably 90% of the current price is driven by FOMO and people putting money in bitcoin because "it's rising" or "my friend doubled his money while sitting on the toilet, so ill buy some of it" ?

There are other currencies with vastly superior usage properties (for example ethereum), for which I could understand an investment based on the fact they might actually be adopted as infrastructure

No.

I'm constantly buffled how HN audience completely misses the fact that Bitcoin is nowadays used in most of street-level drug transactions that give it most of it's liquidity.

Only if they sell, and wouldn't a $1B sale pretty much tank it? Is there enough financial coverage from the banking sector behind the exchange houses to cover such a large sell?

Daily trading volume of Bitcoin is around $500M: https://coinmarketcap.com/exchanges/volume/24-hour/

Obviously they wouldn't place a single sell order for the whole lot. If they wanted to get out of Bitcoin entirely, they'd do it gradually.

Daily trading of bitcoin is 5b$

Thats just one single exhange fuer one single fiat currency pair

Guess what there is Euros, KRW, Jen, Rimimbi.

Insane to see how buthurt HN is ober missing out on one of the best tech opportunities in the last decade.

Many here will probably hate the big family Christmas gathering because every relative assumes that the geeky guy surly must have bought some bitcoins.

But HN is no better then IBM or Dell. Its always easy to bash IBM and the way they went under, but beeing mid 30s and dismissing Cryptocurrency as fad of some kid traders is just the same.

Having said that, does anyone have an inspirational name for my Yacht? Satoshicruise?

> missing out on one of the best tech opportunities in the last decade.

Can you enlighten me on what's "best" is in this tech opportunity?

To compare:

During Singles Day AliBaba had a peak of 325 thousand transactions per second.

Bitcoin struggles to make 4 while consuming a power equivalent of several small countries.

Thats like WarnerBrothers saying in 1995 That movie streaming will never be a thing because its ridiculous to stream with a 56k Modem. Now we have Netflix and Youtube etc.

I could go on and on, but the kneejerk resistance is extremely polarised and I feel like preaching the Internet in 1995 to some 65year old Executives at a newspaper.

Watch this to remind yourself that the internet was not always around. https://www.youtube.com/watch?v=_L3Y2_YiT-A

There was some other interview where Marc Andressen holds a presentation of the Netscape browser and is asked by a reporter what cool websites he can show or think of. He didn't have a good answer and for sure were not able to predict products like Facebook.

Watch this if you want to here some good arguments. https://www.youtube.com/watch?v=9SYVX2wcMVM

> Thats like WarnerBrothers saying in 1995 That movie streaming will never be a thing because its ridiculous to stream with a 56k Modem. Now we have Netflix and Youtube etc.

False analogy.

> I could go on and on

Please do. You haven't event started.

> the kneejerk resistance is extremely polarised and I feel like preaching the Internet in 1995 to some 65year old Executives at a newspaper.

Nope. You haven't event started preaching, much less to a 65 year old.

> Watch this to remind yourself that the internet was not always around

What does this have to do with bitcoin? Oh. Right. Nothing

> presentation of the Netscape browser

I've yet to see you go and on about bitcoin. So far you're rehashing stories about the Internet.

> Watch this if you want to here some good arguments.

An hour-long video can be easily distilled into a number of bullet points. Please, do go "on and on".

Gl in the future dinosaur

Well surely they don't have to sell all at once.. they can bleed it probably at a pretty high rate for a long time.. they may never get to $1B, but surely they could make tons of money selling.. so long as they pick a rate sufficient to not tank the coin.

Also we know $11m is not all the money they had.. so these guys have been crushing it otherwise for a while now I believe.. Its pretty incredible how successful they are.

It helps to start out rich and then go to Harvard.

True. But surely this isn’t the only reason for their success. Kudos for their being successful, given their predisposed privilege, as there are many in their shoes who would have otherwise squandered it.

I guess I don't really understand the point of it, but what is $1B "worth" of Bitcoin actually useful for? I saw one of the other comments link to daily trading volume, but I read those values as consisting of putting a dollar value on Bitcoin movement within the ecosystem, not crossing boundaries - am I correct?

So given the practicalities of shifting the value outside of the Bitcoin economy, the main value seems to be in speculating that this specific cryptocurrency is the future and will take on a dominant value in the real world in exchange for goods and labour, and its volatility seems to make that less likely lest everyone turns into the person who "paid X Bitcoin for a pizza on YYYY-MM-DD and now it's worth Y".

Am I missing something important here? I'm not an economist, and only have a broad understanding of the technology behind Bitcoin, but I don't see the point unless one day we start saying "$1 buys X bitcoin" and not the other way around.

Edit: It's telling that I hit post and then spent minutes obsessing over 'YYYY' and 'Y' being used in same sentence to mean different things :/

Just think of it as owning a share of a stock.

This is true of any company equity as well. If Bezos decided to unload his entire stake in amazon, for example, the stock price would tank. At that level, it's all based on valuation, not liquidation value

If Bezos just hopped into his Etrade account and hit the "sell all" button (just pretend it works that way), the stock would absolutely crater, at least for a bit. In practice, he'd find institutional-ish investors who were interested in buying a sizeable investment in Amazon, and he'd sell directly to them in a private deal. That kind of stuff happens all the time; I think, it's called a block trade... https://en.m.wikipedia.org/wiki/Block_trade

Right, but there is a fundamental value to Amazon. The stocking never go to zero dollars just because of Bezos selling because the company is clearly worth more than that.

If the Winklevoss twins tried to sell just 1% of their stake, $10 million, what would happen to the price of bitcoin? Would they have $990 million of bitcoin left?

I’m guessing it would be a hell of a lot less. I think it would cause a panic.

I’m not going to say would go to zero, but I’m willing to bet it would drop a TON more than Amazon stock would if Bezos sold 1%.

USD trade volume for bitcoin has been around 2 to 11 trillion in the last month.

https://coinmarketcap.com/currencies/bitcoin/historical-data...

Not much would happen if recent history is a guide. One day in mid-September 2017, $4.2 billion of Bitcoin changed hands, and the price that day went up about 5%. That volume followed a rumor that China was cracking down on cryptocurrency exchanges.

I can't say I spend much time watching the tape, but I have seen >100-BTC trades on GDAX in the past, and at current prices your what-if scenario involves a sale of about 909 BTC.

https://www.cryptocoinsnews.com/11-billion-24-hour-cryptocur...

according to the depth chart on GDAX, you could sell 10M$ in BTC and the price would dip by.... les than 300$ to 10850$.

100M$ in BTC would send the price in the 7000s

I'm pretty sure bitcoin is hell of a lot more illiquid than amazon stock is...

Well, according to marketwatch, if I am reading it correctly, the average trade volume of Amazon stock is 3.5 million.

USD trade volume of bitcoin is between 2 and 11 trillion.

https://www.marketwatch.com/investing/stock/amzn

https://coinmarketcap.com/currencies/bitcoin/historical-data...

The only unique thing about this story is the amount of money they initially gambled.

There are lots of people who gambled on bitcoin in 2013, and the only difference is that they couldn't afford to gamble $8million.

I don't really find that particularly interesting or newsworthy

I always think once you are lucky, twice you are good

Unpacking that for others:

The Winklevoss twins were onto something with social networks. Then they were onto something with bitcoin. So basically they're not just lucky but good at catching onto the next new thing.

Without seeing how many failed investments they’ve made that’s not really a fair assumption.

My opinion as well!

Meanwhile Mark Zuckerberg is worth $70B so the nerds still win

At the current growth rates, they will easily beat Zuckerberg to $1 trillion of personal wealth. If the current growth rates could be sustained, in 10 years their personal wealth will rival the GDP of the entire country.

Roger Ver is also a Bitcoin multi Billionaire.

Proof?

He signed a message a while ago with a large amount of BTC and is known to be one of the earliest BTC whales.

This dude on HN is worth some $3bn, assuming he HODLed (EDIT to add: he/she bought 259684 BTC for $3000 in the wake of Mt Gox)

https://news.ycombinator.com/item?id=2676263

is not bad, if they sell and the bitcoin price crashes, so what if it crashes, will only get more adoption, because is more useful than gold, especially with the new generation, and gold market cap is so much bigger than bitcoin, I would love a crash to buy some, rather than spending it on things I don't really need.

Glad for these guys. Murky Marc stolen their idea and fucked it up, 1b is a nice compensation for that!

Well deserved.

Lottery winners hailed as geniuses, news at 11.

We do not know about their other investments that tanked. This is how investment world generally works. You lose most your bets but the one bet that gives result pays for it and more.

They seem to have a knack of making big money from other people's projects.

This comment is totally Off topic. Thats a warning so that if you'd rather stay on topic it doesn't waste your time!

I'm not sure if your account is banned @pussypusspuss.. but it seems like a cruel fate to be commenting, have your comments removed, and have no knowledge of your punishment. I think itd be better if you knew your condition so I'm leaving this comment to let you know. I hope the rest of hacker news doesn't mind this!

Reply on news.ycombinator.com