Winklevoss Twins Start Bitcoin Trust Fund

Image via Twitter/Tyler Winklevoss

Since bitcoin emerged in 2009, it has grown in value and popularity. This digital form of currency allows anyone who has it to trade it for goods and services online, or convert it into real cash. Now, the Winklevoss twins, who famously claimed to have discovered Facebook, are bringing Bitcoins back into the spotlight.

Winklevoss Capital Management has registered to offer shares that will give buyers exposure to Bitcoin via an exchange-traded fund, according to an SEC filing.

The filing reads: “The Trust holds “Bitcoins,” a digital commodity based on an open source cryptographic protocol existing on the online, end-user-to-end-user network hosting the public transaction ledger, known as the “Blockchain,” and the source code comprising the basis for the cryptographic and algorithmic protocols governing the issuance of and transactions in Bitcoins,” reads the filing.

The investment objective of the Trust is for the Shares to reflect the performance of a weighted average price of Bitcoins, less the Trust’s expenses. The Sponsor believes that, for many investors, the Shares will represent a cost-effective and convenient means to access exposure to Bitcoins.”

The Winklevii, as they are popularly known, claim to own 1 percent of all Bitcoins available, according to the New York Times.

Martti Malmi, who is credited for making Bitcoin available to the general public, believes the Winklevoss trust fund is a good, albeit risky, idea. He told Business Insider:

“The ETF would make bitcoin investment easier for the big money and could improve bitcoin’s liquidity and price stability in the long run. Increase of bitcoin’s market cap would be obviously beneficial to the Winklevii, who reportedly own 1% of all the bitcoins in existence.

The risk analysis in the ETF’s registration statement presents good understanding of Bitcoin’s technological and economical aspects. I’d say it’s a risky business, but worth a try. At least it shows some good entrepreneurial spirit.”

The value of the Bitcoin fluctuates wildly. In January, it was worth $13, then in April it reached a peak value of $266, and as of this writing, 1 BTC = $90.

So how do Bitcoins work? You can obtain Bitcoins by purchasing them or mining them. Mining is a complex method that may not be worth the payout; it involves running software on your computer that race against other computers to solve complex mathematical equations that seek to find a 64-digit number. Once they are solved (if they are solved at all), your reward will be 25 Bitcoins.

Some sites have recommended joining Bitcoin groups, where you’ll split the profit with others, but the chances of solving the equations are much higher within a pool.

Storing them requires you have a wallet software or online service. Online wallets, such as CoinBase, are easier to manage. What you’ll get for just $1 depends on what the Bitcoin exchange rate is at that point in time.

Digging for Bitcoins is a time-consuming process with no guarantee of seeing any results, but the Winklevoss have the time and money to make sure their efforts with the crypto-currency are worthwhile.