The Winklevosses’ “bridge to the future of money” comes with a new cryptocurrency
Cameron and Tyler Winklevoss are again making crypto headlines, this time for launching their own “regulated stablecoin.” The Gemini dollar is an Ethereum-based crypto-token meant to be pegged to the US dollar. Gemini exchange account holders can convert US dollars to the new tokens, which can be sent to Ethereum addresses or converted back into dollars. The twins promise not only that each circulating Gemini dollar will be backed by a real dollar in a bank deposit, but also that the deposit will be “examined monthly by an independent registered public accounting firm to verify the 1:1 peg.” Perhaps most important, it has earned the blessing of the New York Department of Financial Services.
The new coin enters an already crowded and noisy field. The appeal of stablecoins is written right into their name: cryptocurrencies are nothing if not volatile, and pegging tokens to fiat currency means investors can switch from other crypto assets into something they know won’t crater in value. They’re generally thought of as a way for people to consolidate gains after a rise in crypto prices, but they could also make cryptocurrency a more useful store of value and form of payment. The idea has caught on. Gemini wasn’t even the only dollar-pegged token to launch yesterday—the blockchain startup Paxos announced its own Ethereum-based token, which will follow a similar model. Both of those coins, which are fully and transparently collateralized, are a far cry from the most popular stablecoin, Tether, which hasn’t yet been proved to be fully backed. They are also distinct from a number of other well-funded projects that are not backed by fiat money and instead use complicated algorithmic schemes to maintain their pegs (see “Stablecoins are trending, but they may ignore basic economics”).
In a field where so many observers and enthusiasts are hyper-focused on short-term price movements, the Winklevoss twins are looking toward the long term. They’ve built a popular, regulated exchange and are creating a self-regulating organization meant to stamp out the kinds of shady industry practices that have kept regulators skeptical and institutional investors on the sidelines. They’re exploring new technical approaches to securely storing cryptographic keys. The Gemini dollar, they say, will give fiat currency “the same desirable technological qualities of cryptocurrencies,” and bring them closer to accomplishing their stated mission: to “build a bridge to the future of money.”
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