Cameron and Tyler Winklevoss, tech investors who rose to prominence through their battle with former Harvard classmate and Facebook founder Mark Zuckerberg, are placing huge bets on the virtual currency Bitcoin and this week revealed their latest Bitcoin endeavor: an open API for their Bitcoin pricing index.
The JSON REST API gives developers free access to the WinkDex, which tracks the price of Bitcoin in real-time across three of the largest Bitcoin exchanges. The index, launched earlier this year, is volume weighted and is based on the price of Bitcoin in the most recent two hour period, an approach designed to help deal with the significant volatility Bitcoin has experienced in its relatively short life.
"We’ve spent a lot of time trying to build a really cool tool,” Cameron Winklevoss explained to Fortune's Daniel Roberts. "Obviously the index will be big for us because it will be used to price any future ETF. But we also wanted to build on this for the betterment of the Bitcoin community."
There is increasing competition to serve that community. A growing number of companies have flocked to build services around Bitcoin and to court businesses, investors and speculators, and there are plenty of Bitcoin APIs. While the Winklevoss twins are two of the most prominent players in the space, and are behind some of the most ambitious Bitcoin ventures, including an exchange traded fund (ETF) that the brothers expect to trade on the NASDAQ OMX market, the competition means their success in the Bitcoin market is far from guaranteed.
As it relates to their pricing index, the CEO of a Bitcoin security provider told Forbes' Roberts, "The [WinkDex] index is not, today, seen as the leading one." If the brothers have their way, the new API, which powers the official WinkDex iOS and Android apps, will help change that.
Of course, by putting their index in the hands of developers, the Winklevosses are giving up a lot of control. To Cameron Winklevoss, however, that's the "fun part" of the API offering. "It’ll be really interesting to see what people do. And even though ostensibly an API of a pricing product is not super sexy, this matters to the Bitcoin community," he said.
Disrupting Wall Street with open APIs?
While Bitcoin has fast become one of the hottest topics among technologists and tech bloggers today, Wall Street is far more skeptical about the cryptocurrency. One recent survey of financial professionals conducted by Bloomberg found that a majority see a Bitcoin bubble that will inevitably crash.
Whether Bitcoin flourishes or flounders, however, the WinkDex API demonstrates how an open, API-centric model could disrupt traditional financial firms. Many financial indices are proprietary and available for use only under paid license. In many cases, licensees access index data through rudimentary means, such as CSV downloads that aren't updated in real-time.
By making its WinkDex index readily accessible to developers and encouraging developers to use it in their applications without paying a licensing fee, the Winklevoss twins may be able to make a mark on Wall Street even if their investment in Bitcoin itself doesn't pan out.