- The Winklevoss twins, known for suing Mark Zuckerberg, started buying bitcoin in 2012.
- Their bitcoin holdings are now worth $1.3 billion.
- The twins keep the private key for their bitcoin fortune in multiple pieces in bank vaults around the country.
People laughed at the Winklevoss twins in 2012 when they started buying up bitcoin — lots of bitcoin.
The two Harvard-educated entrepreneurs ended up buying about 120,000 bitcoins back when the price was less than $12 per bitcoin. The siblings bought the cryptocurrency with funds they got from settling a lawsuit against Mark Zuckerberg over claims that they came up with the idea for Facebook.
Nobody’s laughing at Cameron and Tyler Winklevoss anymore. They confirmed in an interview with the New York Times that they have held on to their bitcoins as the price has skyrocketed.
That means their bitcoin fortune is worth $1.3 billion, at Tuesday’s price of $17,800 per token. “We’ve turned that laughter and ridicule into oxygen and wind at our back,” Tyler told the New York Times.
A fortune that large needs to be protected. Because bitcoin is a digital currency, if you get hacked, your bitcoins can be stolen. Earlier this month, one cryptocurrency mining service said that it had $80 million in bitcoin stolen from it, for example.
The Winklevoss twins use what’s called a “cold wallet” system to store their bitcoin fortune. Bitcoin resides in electronic “wallets,” and each wallet has a private key. If someone has your private key, they can take your bitcoin. Printing out your private key —which keeps it off the internet — helps protect it from people who are trying to steal it.
The Winklevoss twins take it one step further. They literally cut up the paper print out of their private key, then stored the various pieces in banks around the country.
Here’s how the New York Times explains it:
“The Winklevosses came up with an elaborate system to store and secure their own private keys. They cut up printouts of their private keys into pieces and then distributed them in envelopes to safe deposit boxes around the country, so if one envelope were stolen the thief would not have the entire key.”
The Winklevosses say that they use a similar system for Gemini, the bitcoin exchange they created which is licensed in New York to hold bitcoins on behalf of banks and traders. Because if the Winklevosses were to lose their bitcoin billions, that would be a tragedy — but if their exchange were to be hacked, there would be a lot of angry financiers looking for answers.