Could the World's First Bitcoin Billionaires Cash Out? We Asked Experts
The Winklevoss twins are the world’s first bitcoin billionaires, but that doesn’t mean they’re about to cash out and make it rain. In fact, if Cameron and Tyler Winklevoss tried to convert their cryptocurrency into United States dollars, they’d probably crash the market and lose their fortune.
“Typical trading volumes across the major exchanges are only about $2 billion globally, so it would not be possible to convert $1 billion quickly [without] significantly depressing the market,” David Wells, general manager at bitcoin trading services firm itBit, tells Inverse.The 36-year-old Winklevosses, immortalized in the movie The Social Network for their claim that Mark Zuckerberg stole their idea for Facebook, made headlines earlier this month for what bitcoin’s surging value meant for their purchase of $11 million in bitcoin four years ago. When the cryptocurrency reached $11,826, they became the first investors to get $1 billion returns. Since then, it’s crawled even higher to edge the $20,000 mark. Surely they’d want to take some of that out, right?
However, in this scenario, we’re assuming the Winklevosses want as much of their bitcoin value as possible. Giant sell orders would cause the bidding price for buying bitcoin to decline.“Although the cryptocurrency market has grown rapidly over the last few months, it is still a very illiquid market, particularly on the public exchanges,” Thomas Glucksmann, head of marketing at bitcoin token exchange Gatecoin, tells Inverse. “So, for those individuals looking to cash out larger amounts, they would need to use a service facilitating over-the-counter (OTC) transactions.”With OTC trades, a buyer says how much they want to buy or sell, and the service tries to find a suitable match. A broker acts as the intermediary and negotiates a price, including the broker’s fee. Because these are big sums we’re talking about, the parties will probably use escrow services and law firms to make sure there’s trust on both sides. Depending on the parties and jurisdictions, they will need to comply with tax rules, know-your-client processes, and anti-money laundering requirements....MORE
But, but...what about trust?
Here's Satoshi's "Bitcoin: A Peer-to-Peer Electronic Cash System". It begins:
Abstract.So in the second sentence of the white paper we're talking trust.
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network...
Over the course of the nine page paper there are probably a couple dozen usages of trust or trusted and getting away from the need for same. It's sort of the whole point of the protocols.
Next up, don't get me started on phonii second declension plural Winklevosses.