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So what the Winklevoss brothers are saying, and convincingly so, is that a Bitcoin isn’t really money at all. It’s a commodity.
It’s less an underground electronic dollar, maybe a bit more like gold — only more volatile, far scarcer and far less well understood. And a Bitcoin fund will appeal to the same kind of paranoid thinker — distrustful of conventional currencies and central bankers — that piled into gold and drove the price to its 2011 high.
Even the Winklevoss brothers, who emerged as Bitcoin magnates in the spring, can get themselves mixed up on what is useful in exchange and what’s a good store of value.
As the brothers talked up the currency aspects in an interview in April with the New York Times, Tyler Winklevoss then added this: “We have elected to put our money and faith in a mathematical framework that is free of politics and human error.”
Their fund’s registration statement has the look and feel of a real securities offering, and it has language that’s a bit more grounded than what they told reporters. It explains that “the value of Bitcoins is determined by the value that various market participants place on Bitcoins through their transactions.”
Just like everything else human beings trade.
And in the thousands of years humans have been doing so, there’s been plenty of human errors in the pricing of assets. If the Winklevoss brothers manage to get this Bitcoin fund of theirs launched, they will likely prove that point in spades.