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How the Winklevoss twins made over S$2 billion investing in cryptocurrency

Bitcoin Billionaires: A True Story of Genius, Betrayal, and Redemption charts the narrative of identical twins Cameron and Tyler Winklevoss, who lost out to Mark Zuckerberg at the dawn of social networking.

How the Winklevoss twins made over S$2 billion investing in cryptocurrency

Entrepreneurs Tyler and Cameron Winklevoss arrive at the Met Gala in New York, May 2, 2016. (File photo: Reuters/Lucas Jackson)

Some books aren’t really books at all: They’re thinly disguised movie pitches that have been fleshed out to sit between hard covers.

Bitcoin Billionaires, the tale of the strait-laced Winklevoss twins and their unlikely venture into the chaotic world of bitcoin, is one such work. Its exploration of one of the most interesting techno-ideological experiments and financial manias of recent years isn’t more than skin-deep. But for a primer to the cryptocurrency phenomenon and a brush with some of the characters who gave it life, it serves a purpose.

(Photo: Amazon)

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This book begins with the final legal showdown with Zuckerberg. The twins emerge with a US$65 million (S$89 million) settlement – not pocket change, but still a pittance compared with the wealth Facebook has generated. They put some of the money to good use. Cameron and Tyler were early to bitcoin. Starting in 2011 they bought up one per cent of all the bitcoin in circulation for a total of S$11 million. By late 2017, with the price of the cryptocurrency surging past US$10,000, they were worth a combined US$2 billion, making them the billionaires of the title.

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The contrast with Zuckerberg’s creation is one of the things that makes this so intriguing. To true believers, cryptocurrencies promise a decentralised online world, in contrast to the “walled garden” of Facebook. This hints at a future where each person can control their own data and transact freely, setting the terms for all their digital interactions.

Have the brothers finally got one over on their nemesis? Near the end of Bitcoin Billionaires, the Facebook chief is sitting at his screen, tapping out his thoughts about the crypto phenomenon. An epilogue suggests itself. As the FT reported recently, among the potential partners Facebook has discussed its crypto plans with is the Winklevoss brothers’ own digital currency exchange, Gemini. Will the old enemies become peers in this new world, or will Zuckerberg outflank the twins once again?

Unfortunately, the “Revenge of the Winklevii” is not a strong enough storyline to sustain Bitcoin Billionaires. By the second half of the book, their path to vindication has lost its zing. What began as a succession of wild parties is followed by an invitation to speak at a bitcoin conference, an appearance before New York regulators, and an encounter with Facebook co-founder Dustin Moskovitz (after a dramatic build-up they just share an awkward hug and walk away).

The brothers themselves never become interesting enough to support the story. Mezrich works hard to free them from their stock media personas — the Olympic rowers who lost out to the visionary Zuckerberg and tried to cash in on his success. Instead, though, he locks them into a different cliche: The upright Men of Harvard, driven by a strict honour code, who were unfairly cheated and are out to earn respect.

A second – and more interesting – narrative thread comes to the fore as the book progresses. The libertarians, opportunists and speculators who were drawn to the bitcoin cryptocurrency in its early days make up a colourful supporting cast. Most of them remain at one remove, never seen in full.

One character emerges from this background. Not one of the ideologues, coder Charlie Shrem is still swept up by the enthusiasm of the moment. His start-up, BitInstant, was one of the first to make it easy to buy and sell bitcoin. Success turns his head, and he falls into a frenetic party scene.

Shrem lacks the discipline needed to run a booming financial business, and is eventually accused by the FBI of turning a blind eye to drug money laundering taking place on BitInstant, among other offences. He is sentenced to two years.

Better books will surely be written about the cryptocurrency phenomenon, including the early free-for-all that is traced in this book. But this is still an easy read for anyone willing to go along with the reconstructed dialogue and cinematic scene-hopping that are part of the genre. You could read it now, or just wait for the movie.

Bitcoin Billionaires: A True Story of Genius, Betrayal, and Redemption is available at Books Kinokuniya

By Richard Waters © 2019 The Financial Times

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