After losing an epic battle with Mark Zuckerberg over ownership of Facebook and being shunned in Silicon Valley, CAMERON and TYLER WINKLEVOSS are back—this time as budding Bitcoin billionaires at the center of the future of money, the creative economy and quite possibly a new operating model for Big Tech itself.
Identical twin billionaires Cameron and Tyler Winklevoss saunter into their empty 17th-floor offices in Manhattan’s Flatiron district wearing designer high-tops, black jeans and matching sweatshirts made by the high-end streetwear brand Heron Preston. The sweatshirts—Cameron’s is red, Tyler’s white—are emblazoned with a NASA logo, which the twins picked because it echoes the space-exploration theme behind the brand of their seven-year-old cryptocurrency trading operation, Gemini. In addition to being the Zodiac sign symbolized by twins, it was the name of NASA’s second space mission—the one just prior to Apollo 11, which put the first man on the moon.
“We actually call our employees astronauts,” Cameron says. “We’re all astronauts building on the frontier of money and the frontier of art and the frontier of finance.” Accustomed to finishing his brother’s thoughts, Tyler chimes in:“We feel like we’re on a spaceship, exploring a new frontier.”
Photographer Michael Prince and digital artist Yoshi Sodeoka collaborated to produce this 15-second rendering of Forbes magazine’s 2021 international billionaires issue cover. It is being sold at auction on Wednesday as an NFT artwork. The proceeds will go to the Committee to Protect Journalists and The International Women’s Media Foundation. Read More
Photo by Michael Prince for Forbes, Illustration by Yoshi Sodeoka for Forbes
On this sunny March day, the spaceship is hitting warp speed. The price of Bitcoin is about to reach an all-time high of $58,000 (it sold for $8 in 2012 when the brothers began investing some $10 million in the digital currency), rocketing their combined net worth to $6 billion. Their latest investment, fast-growing Bitcoin lending giant Block-Fi, just announced it has raised $350 million, valuing the company at $3 billion.
And the 39-year-old brothers’ hottest venture, digital art auction platform Nifty Gateway, is basking in the glow of a sale at Christie’s, where the gavel is about to fall on the 255-year-old auction house’s first-ever sale of a nonfungible token (NFT) artwork, a one-of-a-kind computer file tracked on a digital ledger known as a blockchain. Nifty Gateway put the artist, Mike Winkelmann, who goes by Beeple, on the map through a series of “drops” starting last year. Before the day ends, Gemini’s custodial business, which houses digital assets securely, will receive a $69 million cryptocurrency payment for Beeple on behalf of Christie’s, making his “Everydays: The First 5,000 Days” the third-most-expensive work sold by a living artist, after Jeff Koons and David Hockney.
Much of the world still thinks of the 6-foot-5 twins as the crew-rowing chumps played by Armie Hammer in The Social Network, the hit 2010 movie about Facebook. At Harvard, classmate Mark Zuckerberg had swiped their idea for a social networking site, building an empire with 2.8 billion worldwide users and a personal fortune now worth $97 billion. A dozen years after they settled with Zuckerberg for $65 million in Facebook stock and cash, the Winklevii, as they are widely known, have emerged as leaders of a technological movement whose core operating principle involves digitizing the records of all assets globally, decentralizing control and cutting out gatekeepers—including Facebook.
Blockchain, the technology underlying Bitcoin and other cryptocurrencies, is already disrupting money and banking, as giant financial firms such as PayPal, Square, JPMorgan, Fidelity and Northern Trust embrace Bitcoin and jockey for position in a future awash in digital assets. At the same time, big companies including Boeing, Samsung, Tesla and Novartis are using the new technology to improve their supply chains, share customer data and speed up business processes. In some cases they’re adding Bitcoin to their balance sheets. In 2020, Bitcoin returned more than 300%, against 18% for the S&P 500.
The Winklevii say they’re just getting started. Through their holding company, Gemini Space Station, which owns their crypto exchange and Nifty Gateway, and via investments made by their family office, Winklevoss Capital, the duo have invested in no fewer than 25 digital asset startups. These fledgling companies are laying the foundation for what the brothers hope will be a new virtual world that they and others call the “metaverse,” in which digital assets like art, music, real estate and even entire businesses are created, bought and sold—and, most importantly, governed—by the blockchain. Many of the companies they’re backing are positioned to thrive in this three-dimensional version of the internet ruled via peer-to-peer computer networks, where participants rather than powerful companies profit.
“The idea of a centralized social network is just not going to exist five or 10 years in the future,” Tyler predicts when asked about Facebook. “There’s a membrane or a chasm between the old world and this new crypto-native universe. And we’re the conduit helping people transcend the offline into the online.”
The fact that two Greenwich, Connecticut–raised men of Harvard, both former Olympians, find themselves at the center of an antiestablishment movement whose most notable use case to date has been a thriving online bazaar selling illegal drugs speaks volumes about how far the Winklevii have come from their days in Cambridge, Massachusetts, grappling with Mark Zuckerberg.
After settling their arbitration with Facebook and competing in the 2008 Olympics in Beijing, the Winklevoss brothers headed to Oxford University to earn their MBAs in 2010 and then formed Winklevoss Capital to make venture investments. Eager to join the cadre of firms on Sand Hill Road funding today’s great technology companies, the twins soon realized that they were effectively shunned in Silicon Valley. Startup after startup, fearful of reprisals from juggernaut Facebook and its growing network, refused to take their capital.
Within 24 hours of meeting with the Winklevoss twins in 2019, Griffin (left) and Duncan Cock Foster had received an overture from Gemini to buy Nifty Gateway. The NFT auction house was recently valued at $1 billion.
As recounted in Ben Mezrich’s 2019 book Bitcoin Billionaires, it was during a vacation on the Mediterranean resort isle of Ibiza in June 2012 that the twins were first introduced to Bitcoin by early adopters who, like the Winklevii, were traditional-tech outsiders. The notion that money was the ultimate social network, and that Bitcoin was free from central-bank control and backed by mathematical certainty, appealed to the highly disciplined athletes.
After the brothers returned to New York, they began using their Facebook money to buy up Bitcoin. “We found the community super-welcoming,” says Tyler, who tends to be the more analytical twin. (Cameron is the more creative.)
In May 2013, they invested $1.5 million in a Brooklyn based exchange called BitInstant, which charged people a fee to exchange dollars for Bitcoin in just minutes. The business grew rapidly—reportedly accounting for 30% of all Bitcoin purchases. Unfortunately, some of those purchases were laundering money for drug dealers selling on the dark-web drug bazaar Silk Road, and by the end of the year the site was shuttered. Its computer-genius CEO, Charlie Shrem, whom the Winklevii embraced, was arrested and spent a year in federal prison for running an unlicensed operation.
Facing another brush with ignominy, the brothers decided that if they were going to succeed in this nascent marketplace they needed to be hands-on—and, more importantly, they needed to bring order to a chaotic, unregulated industry. In 2014, they founded their own cryptocurrency exchange, Gemini.
In the early days, Gemini was little more than a place to buy and sell Bitcoin, but today it offers trading and custody for 33 cryptocurrencies, including ether, a coin equipped with a native computer language that lets developers build applications without central servers; zcash, a privacy-protecting token based on Bitcoin; and mana, the native cryptocurrency of a virtual-reality world called Decentraland. The twins also have their own ethereum-based token called Gemini Dollar, which is pegged to the value of the U.S. dollar and therefore stable.
Among crypto exchanges (there are now more than 300), Gemini became, in October 2015, one of the first Bitcoin-focused financial institutions to be designated a trust bank by the New York State Department of Financial Services. This meant it was subject to the same regulatory requirements as banks like State Street and Northern Trust and enabled it to take deposits in all 50 states.
Though Gemini’s trading volume ($29 billion in the last 12 months) is much lower than that of giants like Binance and Coinbase, it rivals them in industry “trust” scores, which carry considerable weight in a market where exchanges are often hacked and fake trading volume is commonplace. Given the current environment of nosebleed valuations like Coinbase’s $68 billion, Gemini could likely fetch $5 billion if it ever needed outside funding.
While Facebook’s early corporate mantra was “move fast and break things,” the Winklevii, who famously asked then–Harvard president Larry Summers to enforce the college’s “Standards of Conduct” against Zuckerberg, have always operated under an “ask permission first, not forgiveness later” ethos. A poster on the wall of their office from Gemini’s recent New York subway marketing campaign depicts the Founding Fathers of the United States with the words THE REVOLUTION NEEDS RULES.
Heavily promoting its operation as the “regulated” crypto exchange, Gemini is positioning itself to profit when the Securities and Exchange Commission finally approves crypto exchange-traded funds, which have already been approved in Canada and overseas. Starting in 2013, the Winklevii began applying to the SEC to launch a Bitcoin ETF. So far they’ve been turned down twice, the last time in 2018, with the SEC citing the immaturity of the industry.
Today, there are six crypto ETF applications pending at the SEC from the likes of Wisdom Tree, Van Eck, Fidelity, First Trust and Anthony Scaramucci’s Skybridge Financial. Gemini, which now offers customers a Bitcoin rewards credit card and a savings account that pays 7% interest on crypto deposits, has an application pending with the SEC to open an alternative marketplace for trading stocks and other securities issued on a blockchain.
“Gemini is the bridge where people can migrate away from centralized finance, from their current bank, and into this new world,” Cameron says. “Our business model is not based on information or monetizing privacy. It’s based on marketplaces and trading fees.”
Among the twins’ growing collection of cryptofocused startups, none is getting more buzz and showing more potential than its NFT marketplace, auction platform Nifty Gateway.
The company was founded in November 2018 by Duncan and Griffin Cock Foster, 26, also identical twins and rowers, who say they took up the sport after watching The Social Network in high school. Both had just graduated from college in 2017—Duncan from Washington University in St. Louis with a degree in computer science and Griffin from Emory in mathematics. During his senior year, Duncan began dabbling in CryptoKitties, a digital craze similar to the decades-ago mania for Beanie Babies, only one in which users create, collect and trade unique animated felines, registering each using a non-fungible token on the ethereum blockchain.
Beeple’s “SPONGEBOB HILLARYPANTS” sold for $55,000 in 2020. In February one of his NFT singles traded for $6.6 million.
“Everyone had the same complaint,” Duncan said in a 2019 interview. “Buying NFTs was too complicated. We started Nifty Gateway to solve access issues, and we will not rest until 1 billion people are collecting NFTs.”
At first the Cock Fosters designed Nifty Gateway not as an NFT auction platform but simply as a way to buy NFTs with Mastercards and Visas instead of going through the arduous process of purchasing them with ether. In fact, the Winklevii first stumbled upon Nifty Gateway in July 2019 at the Contemporary and Digital Art Fair in New York. A work called “CryptoPunk 4530,” featuring a woman with a mohawk smoking a cigarette, rendered in the blocky style of an old-fashioned video game, had caught Tyler’s eye. The image was one of 10,000 similar but unique portraits created by Google veterans Matt Hall and John Watkinson and initially given away free. The price was $5,000. Tyler used his phone to create an account on Nifty Gateway, paying with his credit card.
As soon as the Winklevii returned to their office, Gemini’s vice president of engineering, Eric Winer, told them he had been keeping an eye on Nifty Gateway, which had just emerged from Adam Draper’s BoostVC accelerator boot camp. A month later, Gemini struck a deal to buy the seven-month-old startup. The Cock Fosters moved to an Airbnb in Brooklyn and worked with Gemini’s engineers to build what is now the world’s most exclusive digital-art platform. While numerous digital platforms operate more like eBay and are open to all creators, Nifty Gateway selectively curates its artists and sells their works in “drops,” taking a page from fashion brands like Nike and Supreme.
The Beeple Bubble: “tom hanks beating the shit out of coronavirus," an NFT artwork by the graphic designer known as Beeple, sold for $107,000 in 2020.
The NFT art market has exploded. In February, Nifty Gateway accounted for $75 million of the $91 million in NFT art auctioned on the top seven online platforms, according to data compiled by CryptoArt.io. As of late March, it had sold $132 million of the $188 million worth of such work bought by collectors. When the Cock Fosters launched Nifty Gateway a year ago, monthly sales were less than $100,000.
No NFT artist has gotten richer off the craze than Mike Winkelmann, a.k.a. Beeple_Crap, a 39-year-old father of two in Charleston, South Carolina, who earned a computer science degree at Purdue and studied no art past high school. He uses 3D-graphics software to generate artwork that is outrageous and often revolting. One piece depicts a naked Donald Trump eating a hamburger while sitting atop a train wreck that’s being consumed by giant coronavirus particles. Another shows Kim Jong-un dressed as Toy Story’s Buzz Lightyear with fake breasts.
As a hobby, Beeple created a digital image every day for more than ten years, posting his provocative “Everydays,” depicting dystopian visions of pop culture and politics, to social media sites like Facebook and Instagram. The work earned him a cult following on the internet, but he couldn’t monetize the digital medium, which was as easy to copy as simply right-clicking a mouse.
Last fall, Nifty Gateway began reaching out to artists, trying to populate its new exclusive platform with interesting and valuable digital art. Given Beeple’s 1 million Instagram followers, he was an obvious choice. After educating Winkelmann about NFTs, engineers at Nifty Gateway explained how he could program art to be dynamic, changing at different points in time, or based on a given outcome. He was already touching on political themes in his “Everydays” and saw the 2020 election as his opportunity to make a mark.
If Trump were reelected, Beeple’s “Crossroad” NFT would transform into a naked, sweaty, muscular strongman walking menacingly through fire. If he lost, the NFT would turn into a looping video of Trump lying facedown beneath a rainbow, with words like loser painted on his naked body, as a bird styled after Twitter’s logo chirped away. On October 31, “Crossroad” became the hottest ticket on Nifty Gateway, selling for $66,666.66 to a 32-year-old Miami-based digital-asset speculator with a Columbia MBA. The buyer put the work back up for sale on Nifty Gateway and sold it in February for $6.6 million, making a 90-fold profit. Beeple earned about $660,000 due to the platform’s fee structure, which invites artists to collect a 10% royalty on all aftermarket sales.
Drops Beeple auctioned for $1 each now trade for hundreds of thousands of dollars, earning him at least $10,000 per transaction. His various NFTs sold for a total of $10 million on Nifty Gateway in the weeks before his $69 million sale on March 11. The Winklevii’s NFT platform, which charges artists 15%, has been a lifechanger for Winkelmann. It has also created a booming business for Nifty Gateway.
“We’re doing $4 million in five minutes now,” says Cameron of drops that a year ago would have brought $50,000 on a good day. Adds Tyler: “Basically, the entire art world, the entire entertainment world, is knocking down the door.”
The gold rush in digital art and collectibles being minted and sold on Nifty Gateway and other NFT platforms like NBA Top Shot won’t last forever. But just as some dot-com-bubble companies like Amazon survived and eventually thrived, the Winklevii are building Nifty Gateway and Gemini for the long run as a marketplace and custodian for all manner of assets, including property deeds, passports, commodities, collectibles, videogame characters, movies, music and event tickets.
“You want to pick that niche where there’s real market uptake,” Cameron says. “You don’t want to boil the ocean.”
Ultimately, the twins see their two marketplaces, Gemini and Nifty Gateway, integrated into a single dashboard where NFTs will be used as collateral for loans, enabling owners to tap their digital assets for funding without having to sell them. Tyler and Cameron also envision a future in which the due diligence they perform to verify a user’s identity could be issued as an NFT, letting users prove they’ve passed strict requirements—think Facebook, but with irrefutable identity confirmation.
“We very much saw ourselves in Duncan and Griffin [far right],” says Tyler (second from right) of the Cock Foster twins. “These guys had this passion, this conviction, and everyone around them was saying they were crazy.”
“It’s almost like compliance as a service could be baked into an NFT token that Gemini issued,” Tyler says.
Another major area of investment for the Winklevii is blockchain-based applications that support decentralization—the idea that tech companies like Google, Facebook and Microsoft will no longer be necessary because web services and applications will be created, operated and governed by users.
Back in 2014, Winklevoss Capital joined forces with San Francisco’s open-source developer Protocol Labs, investing in a seed round to finance various projects that would create a new internet infrastructure that doesn’t rely on centralized servers. One of its efforts, Filecoin, is intended to power a network for computer storage in which users around the world rent out their unused hard-drive space and in return receive ethereum blockchain–based tokens called filecoins as payment. There are already 250,000 such computers, or “nodes,” linked into a decentralized cloud computer. Filecoin has recently been on a tear: Its tokens have surged 350% so far this year, and it has a market capitalization in excess of $6 billion.
In June, Protocol Labs is hosting a workshop to build decentralized versions of Amazon, Google and Facebook that instead of relying on revenue from advertising targeting their users’ personal information will reward them with filecoin tokens. One day filecoin-connected computers could rival the cloud services of these tech giants.
Oasis Labs, based in San Francisco, is another promising Winklevii-owned startup. Run by a security and artificial-intelligence professor at the University of California at Berkeley, the company specializes in ultrasensitive data like human genome codes. The idea is that users will control their own data and be compensated for its use by corporations.
Winklevoss Capital portfolio member Stacks supports multiple projects aimed squarely at challenging centralized control by Big Tech. Boom is its decentralized wallet for creating and sending NFTs; Pravica is a decentralized communication platform that integrates email, chat and video into a single place; Sigle is a decentralized version of WordPress for making websites.
“Within the next decade, you’re going to see social protocols take off and people building decentralized forms of these services,” Tyler says.
The twins’ most recent investment, Artie, builds video games that don’t need to be downloaded and in-game digital assets that can be exported, traded on open markets and even imported into competing games. Artie’s “app-less” games use assets issued on the ethereum blockchain and can stream from anywhere, similar to how YouTube embed codes allow its videos to be played on any website.
Billionaire Zynga founder and CEO Mark Pincus is among the investors in Artie, as is YouTube cofounder Chad Hurley. “We’re seeing that consumers want to break down these walled gardens,” says Artie cofounder Armando Kirwin. “They want more choices, they don’t want monopolies, they want a return to the free and open web. And that’s the last sanctuary that we have.”
Of course, the irony of any serious effort to build a decentralized metaverse is that its chief architects will ultimately become unnecessary. Tyler and Cameron Winklevoss seem unconcerned. A Citibank analyst recently predicted that the price of Bitcoin could pass $300,000 within the the next few years.
“Decentralization is a spectrum,” says Cameron, looking out his window toward New York’s Chrysler Building. “Our goal was not to be the gatekeepers.”
It’s still early days in the blockchain revolution. Mark Zuckerberg, take note.