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How the Winklevoss Twins Store Their Cryptocurrency Fortune
The Winklevoss twins, who became the first bitcoin billionaires, have come up with an innovative way to store their fortune in cryptocurrencies. (See more: Winklevoss Twins Are Bitcoin’s First Billionaires)
In an interview with the New York Times Last year, they detailed how their approach to securing private keys, which control access to bitcoin, provided a blueprint for the security architecture of their Gemini exchange platform. The Gemini platform is one of the few certified and regulated cryptocurrency exchanges in the world and is obligated to protect customer assets.
There weren’t many online wallets and exchanges when the Winklevoss brothers started investing in cryptocurrency. Those that did exist were prone to hacking.
To protect their bitcoin holdings, the brothers distributed fragments of a printout of their private keys to multiple safe deposits across the United States. This ensured that even if thieves got their hands on one fragment of the private key, the rest would still be out of reach. (See also: What are the safest ways to store your Bitcoin?(Note: Isn’t that true?)
According to the Times article, the Winklevoss twins used a similar approach at Gemini. “Getting into the company’s wallets requires multiple signatures from cryptographically sealed devices that have never been connected to the Internet,” they explained. This approach has attracted investors to their exchange. The Times article quotes a managing partner of a virtual currency hedge fund as saying that Gemini is one of the few exchanges he trusts as a platform.
Of course, the exchange’s approach does not absolve bitcoin holders of the responsibility of ensuring the security of their keys. However, it significantly reduces the chances of Gemini being hacked. In addition to volatile cryptocurrency price swings and outages, security has emerged as another significant issue for exchanges.
Over the years, numerous accidents have occurred of hacking and security compromises have had a negative effect on the reputation of the cryptocurrency ecosystem. As bitcoin and the overall cryptocurrency ecosystem moves toward mainstream awareness and adoption, this could prove to be a strong selling proposition for Gemini in a landscape littered with hacked cryptocurrency exchanges.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the author to invest in cryptocurrencies or other ICOs. Because each individual’s situation is unique, you should always consult with a qualified professional before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date of this writing, the author holds 0.001 bitcoin.