the world were worth about
the same amount as the
company Urban Outfitters,
the purveyor of ripped jeans
and dorm room decorations—
around $5 billion.
“That’s just pretty wild,
right?” Morehead said. “I
think when they dig up our
society, all Planet of Apes–
style, in a couple of centuries,
Bitcoin is probably going to
have had a greater impact on
the
world
than
Urban
Outfitters. We’re still in early
days.”
Many
bankers,
economists, and government
officials
dismissed
the
Bitcoin fanatics as naive
promoters of a speculative
frenzy not unlike the Dutch
tulip mania four centuries
earlier. On several occasions,
the Bitcoin story bore out the
warnings
of
the
critics,
illustrating
the
dangers
involved in moving toward a
more digitized world with no
central authority. Just a few
weeks before Morehead’s
gathering, the largest Bitcoin
company in the world, the
exchange known as Mt. Gox,
announced that it had lost the
equivalent of about $400
million worth of its users’
Bitcoins and was going out of
business—the latest of many
such scandals to hit Bitcoin
users.
But none of the crises
managed
to
destroy
the
enthusiasm of the Bitcoin
believers, and the number of
users kept growing through
thick and thin. At the time of
Morehead’s gathering, more
than 5 million Bitcoin wallets
had been opened up on
various websites, most of
them outside the United
States.
The
people
at
Morehead’s
house
represented the wide variety
of characters who had been
drawn in: they included a
former Wal-Mart executive
who had flown in from
China,
a
recent
college
graduate from Slovenia, a
banker from London, and two
old fraternity brothers from
Georgia Tech. Some were
motivated by their skepticism
toward
the
government,
others by their hatred of the
big banks, and yet others by
more
intimate,
personal
experiences.
The
Chinese
Wal-Mart
executive,
for
instance, had grown up with
grandparents who escaped the
communist revolution with
only the wealth they had
stored
in
gold.
Bitcoin
seemed to him like a much
more
easily
transportable
alternative in an uncertain
world.
It was these people, in
different places with different
motivations, who had built
Bitcoin and were continuing
to do so, and who are the
subject of this story. The
creator of Bitcoin, Satoshi,
disappeared back in 2011,
leaving behind open source
software that the users of
Bitcoin could update and
improve. Five years later, it
was estimated that only 15
percent of the basic Bitcoin
computer code was the same
as what Satoshi had written.
Beyond the work on the
software, Bitcoin, like all
money, was always only as
useful and powerful as the
number of people using it.
Each new person who joined
in made it that much more
likely to survive.
This, then, is not a normal
startup story, about a lone
genius molding the world in
his image and making gobs of
money. It is, instead, a tale of
a group invention that tapped
into many of the prevailing
currents of our time: the
anger at the government and
Wall
Street;
the
battles
between Silicon Valley and
the financial industry; and the
hopes we have placed in
technology to save us from
our own human frailty, as
well as the fear that the power
of technology can generate.
Each of the people discussed
in this book had his or her
own reason for chasing this
new idea, but all their lives
have been shaped by the
ambitions, greed, idealism,
and human frailty that have
elevated Bitcoin from an
obscure academic paper to a
billion-dollar industry.
For some participants, the
outcome has been the type of
wealth
on
display
at
Morehead’s house, where the
stone
entranceway
is
decorated with Morehead’s
personal heraldic crest. For
others, it has ended in poverty
and even prison. Bitcoin itself
is always one big hack away
from total failure. But even if
it does collapse, it has already
provided one of the most
fascinating tests of how
money works, who benefits
from it, and how it might be
improved. It is unlikely to
replace the dollar in five
years, but it provides a
glimpse of where we might
be when the government
inevitably stops printing the
faces of dead presidents on
expensive paper.
The morning after the big
poker game, as the guests
were packing up to go,
Voorhees sat at the end of the
pier
behind
Morehead’s
house, which was sitting high
above the water after a winter
with little snowfall. The joy
he had shown at the poker
table the night before was
gone. He had a look of
chagrin on his face as he
talked
about
his
recent
decision to resign as the CEO
of the Bitcoin startup he had
been running in Panama. His
position with the company
had prevented him from
speaking
about
the
revolutionary
potential
of
Bitcoin, for fear that it could
hurt his company.
“My
passion
is
not
running a business, it is
building the Bitcoin world,”
he explained.
On top of that, his
girlfriend had grown tired of
living in Panama and Erik
was missing his family back
in the United States. In a few
weeks he was planning to
move back to Colorado,
where he grew up. Because of
Bitcoin, though, he would be
going home a very different
person from what he was
when he left. It was a
situation that many of his
fellow
Bitcoiners
could
sympathize with.
PART ONE
CHAPTER 1
January 10, 2009
It was a Saturday. It was his
son’s birthday. The Santa
Barbara
weather
was
beautiful. And his sister-in-
law was in from France. But
Hal Finney needed to be at
his computer. This was a day
he had been anticipating for
months and, in some sense,
for decades.
Hal didn’t even try to
explain to his wife, Fran,
what was occupying him. She
was a physical therapist and
rarely
understood