Bitcoin has slumped 80 percent from its high during the cryptocurrency investment craze, but two prominent backers told an audience at South by Southwest on Friday that the future of digital coins remains promising if trust can be rebuilt in them as stores of value.
Tyler and Cameron Winklevoss -- twins best known outside the crypto sector for suing Facebook over allegations that Mark Zuckerberg stole their idea for a social network when they were all students at Harvard -- renewed calls for better regulation of digital coins, echoing a "crypto needs rules" advertising campaign that their New York-based Gemini cryptocurrency exchange initiated in January.
Go to Austin360.com for a photo gallery of the Winklevoss twins at SXSW
"In order to build the future of money, you have got to build trust," Cameron Winklevoss said Friday. "You want to have a couple of layers of checks and balances (to ensure trust), and that is what regulation brings."
He and his brother said high-profile controversies involving Bitcoin and some other cryptocurrencies have largely resulted from the actions of promoters and private companies, not from technical problems with the underlying technology.
"Every Bitcoin issue has not been a Bitcoin problem -- it (stemmed from) a company built on top of Bitcoin," said Tyler Winkevoss. He said regulation could have helped in such instances.
Bitcoin, the most popular cryptocurrency, increased in value more than twenty-fold in 2017 to hit an all-time high above $20,000 near the end of the year. The huge run-up set off a frenzy among investors worldwide looking to get in early on the next hot virtual coin or token, as well as among entrepreneurs and companies angling to capitalize on the enthusiasm.
Texas has been a case in point. Last year, regulators in the state said crypto-related potential swindles had surpassed schemes involving oil and gas assets, real estate and stocks as the most popular means by which fraudsters were attempting to separate Texas investors from their money.
But the price of many cryptocurrencies — including Bitcoin, which was trading recently around $4,000 — has fallen sharply since then.
The Winklevoss twins became early Bitcoin investors after winning millions of dollars in a settlement with Facebook. In late 2015 they started Gemini, a company regulated by New York's Department of Financial Services that they said is intended as a crypto exchange and custodian for customers to "basically buy, sell and store" cryptocurrencies.
The brothers said Friday that they think it's "more likely than not" that Bitcoin will climb significantly again over the next few years, although they declined to make specific projections.
"We kind of grew up in the wild west of crypto" and are adamant that the sector has to build confidence among the public to live up to its potential, Cameron Winklevoss said. "Gemini's chief product is trust."