Bitcoin just keeps going up despite repeated comparisons to the Dutch tulip bulb mania and crash centuries ago. Now, according to the news, there are two bitcoin billionaires, the Winklevoss twins. These guys successfully sued Marc Zuckerberg for $64 million claiming that he stole the idea for Facebook from Harvard Connection, of which they were co-founders. That is where the money came from to buy bitcoins. Business Insider notes the billionaire status of the Winklevoss boys as bitcoin goes above $11,500.
Bitcoin’s rise comes amid continued interest in the digital currency from both ordinary investors and institutions. Last week it emerged that exchange operator Nasdaq could follow rival CME Group in launching bitcoin future contracts next year, a sign that professional investors are increasingly taking the asset seriously.
Former Olympic rowers Cameron and Tyler Winklevoss disclosed in 2013 that they owned $11 million worth of bitcoin. The cryptocurrencies meteoric rise since then – it has risen over 1,000% this year alone – has propelled that investment to over $1 billion, according to the Telegraph.
Could you be a bitcoin billionaire? First, it helps to start with a few million and then you need to go back in time to at least before the start of 2017 for the most recent impressive run up. But people are still putting money into bitcoin so it would appear that folks still expect to make money, a lot of it, on bitcoin. Is that realistic?
The Other Side of the “Bit” Coin
The folks who believed that paper money would become worthless back in the 1970s bought gold. They did so again in the first decade of this century. Now bitcoin seems to have taken the place of gold for those who distrust other means of investing, creating and holding wealth. What do other billionaires think about bitcoin? Coin Desk quotes both Carl Icahn and Warren Buffett in saying that bitcoin seems like a bubble.
Billionaire investor Carl Icahn has jumped on the bandwagon of financial bigwigs saying bitcoin is in a bubble.
The investor further compared the bitcoin market to 18th-century Mississippi land bubble before it finally collapsed. “To me, this is what this is,” he said.
His comments follow similar comments from investor Warren Buffett in October, describing bitcoin as a “real bubble.” Buffett said at the time, “People get excited from big price movements, and Wall Street accommodates,” while criticizing the idea of applying a value to bitcoin.
If you listen to these guys the odds of you being a bitcoin billionaire are pretty small even if you invested a billion today. Our question is if this is a version of pump and dump seen with penny stocks traded over the counter. In a traditional pump and dump scheme there are folks who have an established position in a stock. They promote the heck out of it and sell when their hype brings in buyers and drives the price up. Although the bitcoin market is a lot bigger than a penny stock market cap the mechanics could be the same with a few folks in dominant positions able to manipulate the market for their personal gain. If you have money that you can afford to lose you might want to put a little into bitcoin to see if you can make a little money but this is not where to put your retirement savings.