



In a discussion with Fortune this week, Tyler and Cameron Winklevoss expressed their belief that Bitcoin could overtake gold’s place in the market — should the right regulatory environment emerge.





The Winklevoss twins are, of course, major players in the current cryptocurrency landscape. The pair was previously reported to be the world’s first “Bitcoin billionaires.” Together, they own Gemini, a cryptocurrency exchange.

What does effective cryptocurrency regulation look like?





It is no secret that the Winklevoss twins are champions of regulation. Headquartered in New York, Gemini is often advertised as an outwardly regulatory-compliant crypto exchange. In fact, their recent “Revolution Needs Rules” campaign echoed this sentiment with a full-page ad in the New York Times.





Their viewpoint is that in order for Bitcoin to reach its full potential, investors need to feel safe and secure in their cryptocurrency activities. This is why the Winklevoss Twins believe that regulation is an important step in allowing Bitcoin to become widely acceptable in the same way as gold.





On the surface, their call for improved cryptocurrency regulation may seem hard to dispute. But what exactly is an appropriate level of regulatory oversight? There is little industry agreement on this point, and countries around the world have adopted wildly different approaches, with Malta embracing cryptocurrencies while China often cracks down. Furthermore, as LongHash previously noted, fears about over-regulation could have contributed to several of Bitcoin’s price falls last year.





If you were to ask the Winklevoss twins what ideal regulation looks like, they would likely mention implementing some traditional financial regulatory practices and permitting legitimate Bitcoin ETFs.





“The idea is that companies that build on top of things like Bitcoin should have regulation that’s thoughtful and that doesn’t stifle innovation,” said Tyler, during his Fortune appearance.

Is Bitcoin even that similar to gold?





Bitcoin, like gold, has a finite supply, since the creator(s) behind Bitcoin built it with a maximum supply cap. This is maintained through block halving, a process which halves the reward for block confirmations every 210,000 blocks. Since the network’s launch in 2009, the block reward has halved twice and is projected to do so again in 2020.





As a result of this process, the maximum supply of Bitcoin that will ever exist is just shy of 21 million units. This does not count coins that have been lost or destroyed, which further reduces the amount of the currency that will ever be in circulation.





One of the purposes behind this design decision was to give Bitcoin a sense of value, as the currency is increasingly scarce. In many ways, this mirrors how investors view gold, as gold is also scarce — even if it doesn’t have as concrete of a supply as Bitcoin.





The Winklevoss’ twins drawing favorable comparisons between Bitcoin and gold is nothing new for industry proponents, with some comparisons dating as far back as the Bitcoin white paper. Advertising Bitcoin as a store of value is one of many ways of selling the currency to individuals that may otherwise not be interested in digital assets.





Still, the current relationship between gold and Bitcoin is not so straightforward. As LongHash recently uncovered, Bitcoin and gold do not have a significant correlation in the market’s current state. Investors are not necessarily using Bitcoin to hedge against instability in the way that they would with gold.

How far away is the Winklevoss twins’ claim?





It is difficult to assess how far away we are from realizing the Winklevoss twins’ belief that appropriate regulation could help Bitcoin one day overtake gold. Partly, it depends on how much you believe their claim that regulation is the answer.





What we do know, at least, is that more regulation could be on its way. Last week, the U.S. Securities and Exchange Commission (SEC) said that examining cryptocurrency regulation is one of its priorities for 2019. The Winklevoss twins may see this as a step closer to their vision.



