You probably know about Tyler Winkelvoss (and his identical twin brother Cameron) in connection to Mark Zuckerberg and Facebook.

While at Harvard, the twins worked with Zuckerberg to develop an online campus networking site called HarvardConnection. Unbeknownst to them, Zuckerberg was setting up a rival site. As “the Facebook” became wildly successful, the Winkelvosses sued.

“The Winkelvii” moved on from the episode. In 2012 they formed Winkelvoss Capital Management, which invests in early stage startups. A year later they launched Gemini, a cryptocurrency exchange and wallet.

The Winkelvii made up for not being early investors in Facebook by becoming early holders of Bitcoin. In 2012, then the price was still extremely low, they had acquired 1 million Bitcoin. Today, that stash makes them billionaires.

That success hardly makes them an unbiased judge of the future of Bitcoin. But in “The Case for $500k Bitcoin”, Tyler Winkelvoss lays out a convincing argument, which I summarize:

The traditional stores of value have been gold and oil. They’ve always had this role aside from any practical use they may have. Gold and oil are hedges against the fluctuations of fiat currencies like the US dollar.

The US dollar has been a reliable source of value thanks to the largely good management of the US Federal Reserve plus the strength of the American economy itself. That good management has now gone out the window.

Even before the pandemic hit, the US government was spending wildly and racking up debt. The Fed “prints” (electronically) massive amounts of US dollars and buys government debt with it. In other words, money is created out of thin air.

The result has been a huge increase in the supply of money. And that nearly always leads to one thing: inflation. Inflation is now the Fed’s conscious strategy, and for good reason: the more inflation there is, the easier it is to service debt, because the debt is worth less.

The Fed’s aggressive money printing is leading to the decline of the US dollar, and straining credibility in the dollar as the world’s reserve currency.