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The Winklevoss Brothers on Gemini, the 'NASDAQ of Bitcoin'

(@pete_rizzo_) | Published on January 29, 2015 at 14:12 GMT
Feature

Gemini

Cameron and Tyler Winklevoss aren’t shy about issuing bold predictions for Gemini, their recently revealed bitcoin exchange project.

Calling it the "NASDAQ or Google of bitcoin", the president and CEO, respectively, believe Gemini will be the fully regulated, fully compliant and fully banked institution the US bitcoin ecosystem needs to develop to its full potential.

In a new interview with CoinDesk, the brothers – prominent bitcoin investors and two of the largest-known holders of bitcoin – opened up about Gemini, discussing why they feel the exchange can become the market leader in what has been an increasingly active part of the bitcoin space.

While neither addressed competitors directly, both alluded to how their approach with Gemini stands in contrast to the other exchanges currently in the US market, even those that have recently dominated the headlines with claimed regulated offerings.

Cameron summed up this difference, stating:

"We aren't interested in trying to find a way to be semi-operational, or operate around the fringe or hack our way in."

Competitors aside, Cameron and Tyler focused much of the interview on evoking their long history as participants in the bitcoin space in comments that suggest that, to them, the fight to build a market-leading US exchange is personal.

“Without a doubt, we spent a great deal of time properly securing our own bitcoin," Tyler said. “We felt like we were uniquely positioned to speak to those issues and take the friction and the risk and all the things that we saw and convert them into a product and an experience that we thought would be unmatched.”

Tyler went on to suggest that Gemini was also the result of their failed efforts to find a team that would be able to handle the tall task of launching an exchange in what to date has been an uncertain jurisdiction for entrepreneurs.

"We’re investors as well – we would have invested in a bitcoin exchange by now if we were confident they were covering all the bases," Tyler added.

'Best and brightest' team

As perhaps an extension of this passion, Cameron and Tyler took pains to express their belief that they have assembled the best possible team for the job.

Over the course of the interview, Cameron and Tyler rifled through the names of their employees’ former employers, mentioning the likes of sharing economy startup Airbnb, Google Wallet and tech giant Microsoft, among others.

The list of professionals now employed by Gemini includes Cem Paya, the former CSO of Airbnb and a former information security engineer at Google, and Michael Breu, a former head of security at investment management firm Bridgewater.

"Our team members are individuals who have been in companies where there were lots of assets, and valuable information at stake," Cameron pointed out.

Gemini’s no-expense-spared approach to personnel is also apparent in its choice of partners.

For example, its regulatory lawyers hail from Katten Muchin Rosenman, while its anti-money laundering (AML) and know your customer (KYC) policies were crafted by specialists K2 Intelligence, a firm that helps banks comply with the Bank Secrecy Act and Patriot Act, while crafting policies for corporate governance and compliance.

Tyler said:

“We’ve worked very hard to understand what it would take to be a fully licensed, regulated entity in all the states, and we’re making sure we get this right. We’re not pretending we’re kids that don’t have to play by certain rules, I don’t think that’s the right way to approach it."

All of this adds up to what the brothers suggested would be a complete product ready for market upon its debut.

“There’s regulation, compliance and then there’s security and product," Tyler noted. "A lot of people just look at product and forget the other three. We consider all four of these issues as crucial to being a successful business."

Front-door approach

Tyler suggested that Gemini’s proactive approach to regulation is another differentiating factor that positions it for success, as the project has actively courted the approval of regulators since its founding in February 2014.

“We felt like the only way to do this was to open up an active dialogue with the regulators, which we have done, and to establish a relationship with a US regulated bank, which we have done, and approach this with a security-first mentality from day one,” Tyler said.

While both are optimistic about launching the exchange in the first quarter of 2015, they were adamant that Gemini’s launch would be contingent on the passage of New York’s BitLicense proposal, which is expected to be finalized this month.

“We’re not launching until we’re licensed," Tyler remarked. "Most people are taking a different approach, but we're not interested in operating without a license."

Both brothers also lauded the New York State Department of Financial Services (NYDFS) and its superintendent Ben Lawsky for their progressive approach to bitcoin regulation, calling the state the “clear choice” for their headquarters.

Gemini is currently in the process of securing licenses in all necessary US states, according to Tyler, and he anticipates the exchange will serve the entire nation at launch.

Security first

Gemini
Some of the Gemini team at work.

When discussing exchange security, Cameron and Tyler here too turned attention to the team behind Gemini, noting that these personnel were the first appointed.

"When you talk to these security guys, usually they’re brought in when the train has already left the station, so it's refreshing to them that we're including them from the beginning," Tyler said.

He went on to frame this as different than existing exchanges, noting his belief that the exchange industry has already seen a few events he billed as “wake-up calls”.

While boastful about the security team behind the exchange, Cameron and Tyler were also open when discussing the specific security components that would be available at the exchange when it opens.

Planned features to be included in the Gemini exchange include multi-signature wallet support and two tiers of offline storage, dubbed 'cold' and 'cryo' for 'cryogenic' – both with different service-level agreements for access and withdrawal time.

The user-facing website will include two-factor authentication, and further internal-only sections of the site will use separate access controls that are not exposed to Internet.

Gemini will also mandate the coordinated actions of multiple employees to transfer any funds out of offline storage.

Flagship exchange

Both Cameron and Tyler stressed their belief that the lack of a leading bitcoin exchange in the US continues to set back the country’s bitcoin ecosystem.

"To us it just seemed like an obvious hole in the infrastructure. If people can't easily and safely buy and sell bitcoin, it will be harder to build the application layer of native bitcoin apps and fuel the bitcoin economy in America," Cameron said.

Part of this approach entails being inclusive with the exchange by using design elements that appeal to individuals and institutions with a big-tent philosophy.

"We are definitely targeting both individuals and institutions. Our offering will be suitable for anyone from individual hobbyist traders all the way to professional institutional traders. We are very much focused on servicing the investor crowd," Tyler explained.

The brothers expressed their belief that this balance, while difficult, is achievable provided they seek to differentiate from existing offerings.

"If you look at terminal-like systems, they look overly technical and unfriendly, and they don't need to be that way in order to be powerful," he continued. "We think we can achieve a clean, simple and friendly product that is also super powerful and robust."

Passion project

Still, Cameron and Tyler further sought to make the case that they were the right leaders for the Gemini project given their experience and background.

Both stressed that Gemini has been their day-to-day project for the last year, and that other planned efforts to launch a bitcoin exchange-traded fund (ETF) are unlikely to deter them from their work.

“Gemini is what we are and have been working on 100% of the time,” Tyler added.

Cameron went on to reiterate that the Gemini project, while set in motion last February, is the result of long-standing frustrations the brothers have had since the earliest days of the ecosystem.

“We didn’t start looking at this when Mt Gox collapsed, or when it stopped withdrawals," he continued. "We started looking at this problem almost two years ago when Cyprus happened, when Mt Gox had a DDoS attack and was down for 12 hours.”

Past issues aside, both indicated that they are eager to move forward toward helping secure a brighter future for the bitcoin ecosystem.

Cameron concluded:

"We're building the best product experience possible. If you want to think of this like how Google would approach bitcoin, so be it, Gemini is not going to be like anything else out there.”

Images via Gemini

Cameron WinklevossExchangesGeminiTyler Winklevoss

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