> Well, some people want exposure to bitcoins without necessarily understanding the block chain, recourse or anything really. That's the whole pitch behind everything the Winklevosses do in this domain.

Yes and no. They initially wanted to open up the bitcoin market to institutional investors who want exposure without having to change anything in the trading software they use, the accounting structures etc. This meant: provide a bitcoin security that can be traded by wall street typically, such as an ETF on the NYSE or NASDAQ or something to that effect.

Barry Silbert's Second Market (definitely a wall street player) got there first in terms of accounting structures. They created a bitcoin security that anyone can buy and put on the books just like any other security (like some oil or wheat derivatives or whatever). But that was still sort of an old-fashion security that you buy on the phone rather than on an automated exchange. Not something that pension funds, university endowment funds etc can easily get into and scale up, but it opened up the bitcoin market to say small family wealth funds that wanted some exposure to the bitcoin price. Bitcoin is one of those things that is likely to either go to $0 or become 3 orders of magnitude more valuable. So if you believe there's a 10% chance that'll happen, investing $100k has an expected value of $9.9m, of course these are just made up numbers but this is often the rationale for investing even modest amounts of money. Silbert's GBTC (marketed under Grayscale) did fairly well but in wall street terms it's a really tiny fund (iirc about $50m or so).

The 'holy grail' for bitcoin investment right now would probably be an ETF. Basically the above security, but then traded on an exchange, a derivative of bitcoins trading on mainstream exchanges (i.e. exposure to bitcoin's price potential traded on exchanges where anyone can easily and automatically buy in without having to know anything about bitcoin or change accounting/audit practices). The Winklevoss's pitch was always to set up that ETF, which they're still working on, and the fact they just launched a normal exchange tells me they're either 1) building up the orderbooks, building relations with investors and building up liquidity etc a bit for a potential ETF launch later down the line or 2) the ETF is facing major, perhaps insurmountable roadblocks so they're pivoting to something less ambitious which is launch their own exchange. (which generally sucks because 1) there are major established players, like Coinbase, which are true software companies with half a billion dollar valuations, solid engineering teams and a big headstart, and 2) because none of the big players, like an investment fund, will be likely to register for your tiny exchange just to trade some bitcoin. They did get a lot of the legal frameworks right though, so it may be an interesting partner for investors nonetheless.)

As for security... well bitcoins are obviously not FDIC insured, but their security looks really tight, I'd feel very comfortable trading with them. [0][1] They still offer the 'you don't need to know anything about bitcoin or worry about security' pitch, but you still need to register with them rather than just select their security on the NYSE and click 'buy', and that doesn't fly for most big investment funds with strict auditing and accounting practices and automated trading teams. We'll see how it works out.

[0] https://exchange.gemini.com/security
[1] https://www.reddit.com/r/IAmA/comments/3nu7gj/we_are_cameron...