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Bring on the Bitcoin

Regulations: Winklevoss
By Cadie Thompson | Jun. 14th, 2013 Send to Kindle

Tyler and Cameron Winklevoss

Government regulations will actually help bitcoin, not hurt it,

digital currency entrepreneur Cameron Winklevoss says.

During a panel discussion at the NExT conference entrepreneurial

event in New York, he said regulations will help give credibility to
bitcoin, which has a reputation of being used by criminals
laundering dirty money.

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"If and when it does get more regulated, which I think, personally,
in the bitcoin world, we love regulation. I don't want to facilitate
bad uses of money as much as anybody else. So I don't really have
an issue with that," the co-founder of Winklevoss Capital Fund
said Thursday.

(Read More: Never Mind Facebook; Winklevoss Twins Rule in

Digital Money)

Bitcoin, an open-source digital currency, allows parties to transfer

money without the use of traditional banking or money transfer
systems. Its value fluctuates based on supply and demand.

Cameron and his identical twin Tyler, was not present at

Thursday's event, are widely known for their legal battle with
Facebook CEO Mark Zuckerberg. But the two have been making a
splash on the venture capital scene with their investments in
bitcoin. In April, they told The New York Times they had an $11
million stake in the digital currency.

(Read More: How Bitcoin Is Sacrificing Its Soul to Survive)

While Cameron Winklevoss said he sees huge potential in the

bitcoin realm, he said his firm only considers investments in start-
ups that are addressing government regulatory issues.

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"It's easy for technologists to only want to focus on the

technology aspect and how the company is being disruptive on
that level. But sort of the part that is not as fun is dealing with
regulation and getting all your ducks in a row. But it's also really
sort of the most important parts," Winklevoss said. "The people
who are not complying will lose their bank account and be shut
down very quickly."

Although bitcoin simplifies the process of transferring money and

is cheaper than traditional methods, it remains controversial
because law enforcement and regulators see it as a way for
criminals to launder money.

(Read More: After Government Raid, Jittery Future for Bitcoin)

But the argument against bitcoin based on criminal activity is

hyped, said Charlie Shrem, founder and CEO of BitInstant, a
bitcoin exchange that Winklevoss is invested in.

"When bitcoin first came out it was like the wild west," Shrem said.
"Who are the first people who are going to use any kind of new
technology? The ones who need it the most. Who are the ones
who need to use any financial system the most? The ones being
pushed out of the current financial system. So obviously, when the
first software comes out, these are going to be the first ones who
run to it."
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(Read More: US Busts Bitcoin-Like System Liberty Reserve in

Costa Rica)

Andrew Chang, a founding partner of Liberty City Investors, said

during the event that bitcoin can actually be likened to the early
Internet days before mainstream consumers had adopted it.

As more investments pour into bitcoin start-ups, more engineers

and entrepreneurs will be attracted to it, and the image of its use
by criminals will go away, Chang said.

"The reality of how many illicit transactions are happening [is]

totally overblown. It's just a matter of time and education," he
said.

Winklevoss said that the notion that more harm than good could
come from bitcoin is flawed.

"For me, anonymity is just one of many offerings. Certainly, people

will latch onto certain aspects of bitcoin, but I think there are so
many things bitcoin does well," Winklevoss said.

One area where it could make a big impact is in micro-payments,

Winklevoss said. He gave the example of using bitcoins to pay
small fees online for access to content, like a quarter to read an
article.

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"People, generally, tend to latch onto the most exciting narrative,"

Winklevoss said. "It's exciting to say 'hey, what is this rogue
currency being used to purchase all this illicit stuff?' But that
narrative is definitely changing considerably and that comes with
the maturity of the currency."

_ By CNBC's Cadie Thompson. Follow her on Twitter

@CadieThompson.

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