Known for their legal battle with Mark Zuckerberg over Facebook, the brothers believe Bitcoin will be the payments network of the future – despite the recent fall in price of Bitcoin.
They predict that Bitcoin’s market capitalization could easily reach at least $400 billion – or the combined size of companies like American Express and Visa.
They even believe that Bitcoin could one day be similar to how we view gold now – as an asset class.
Tyler Winklevoss had this to say to CNNMoney: “If Bitcoin is a better gold or seen as a type of gold-like asset, then it could be in the trillions on a market cap. We do feel those are very real possibilities.”
Going over $1 trillion in market cap is hard to fathom for Bitcoin, especially as it is currently under $4 billion.
Jeffrey Gundlach, and many other skeptics remain convinced Bitcoin was a bubble that will soon die out. Gundlach believes that Bitcoin is “on its way to being relegated to the ash heap of digital currencies.”
The Winklevosses, however, disagree. The twins, as huge backers of Bitcoin at this point in time, stand to gain a huge profit if and when their vision for Bitcoin comes true.
The price decline and glitches don’t really worry the twins much. They see this as a buying opportunity – they’ve never sold a Bitcoin and they’re in this for the long haul now.
Mt. Gox, a Tokyo-based Bitcoin exchange, going bankrupt has raised security questions surrounding Bitcoin. Its volatility has also spooked some potential big investors.
Last week, the twins unveiled Gemini, a Bitcoin exchange for the US. Their hope is to legitimise and secure Bitcoin and make Gemini the “Nasdaq of Bitcoin.”
Coinbase, a U.S.-based Bitcoin exchange, may well have beaten them to it as they opened on Monday with backing from the likes of the New York Stock Exchange.
They are also currently awaiting regulatory approval for the first exchange-traded fund (ETF) holding Bitcoins. This would trade securities based on Bitcoin, much like GLD (the popular gold ETF) is based on gold.
The idea of a Bitcoin ETF may have some merit, according to at least some ETF veterans.
“The ETF structure is allowing more and more asset classes to become investable — and Bitcoin is one of those,” Dodd Kittsley, head of ETF strategy at Deutsche Bank, told CNNMoney. “This could be a great potential solution. We’ve seen it in less liquid markets like fixed income.”
The twins believe such an ETF would appeal to gold bugs because Bitcoin, just like gold, can be used as a hedge against inflation. They say Bitcoin is more durable, divisible and affordable than the yellow metal.
“If you like gold, there are many reasons you should like Bitcoin,” said Cameron Winklevoss.
Of course, gold has been around as an asset class for thousands of years. By comparison, Bitcoin is still just a baby.
“Wars have been fought over gold. I don’t know if the same is going to be said about Bitcoin,” said David Mazza, head of research at SPDR ETFs at State Street Global Advisors.