continued
to
grow.
By
September
two
other
exchanges
were
up
and
running with a full-time staff.
But BTC China was already
doing twice the volume of the
other
exchanges
in
the
country, and Bobby Lee
didn’t intend to lose his early
lead. He inked a deal to take a
$5 million investment from
Lightspeed
Capital,
the
venture capital firm that had
previously backed Wences
Casares’s company Lemon.
Shortly
thereafter,
as
a
promotional tool, BTC China
marked China National Day
by removing the 0.3 percent
commission that customers
had to pay on every trade. In
China, unlike anywhere else
in the world, it was now
essentially
free
to
trade
Bitcoin.
The real ascent in China
began in mid-October, after
the arrest of Ross Ulbricht,
when a division of Baidu, the
search engine giant and the
fifth-most-visited website in
the world, announced it
would be accepting Bitcoin
payments. A close look at the
announcement revealed that it
applied only to a tiny security
service run by Baidu, Jiasule,
but it gave Bitcoin a patina of
legitimacy that it had so far
lacked in China.
In the week after the
Baidu
announcement,
the
price of Bitcoin moved up not
just in China but around the
world, from about $140 to
$200, with the volume of
trading climbing faster in
China than anywhere else. On
October 19, forty thousand
Bitcoins changed hands on
BTC China, nearly twenty
times the number that had
been traded on most days in
September. In mid-October,
BTC China saw the most
volume of any exchange in
the world during a few days
—the first time that any
exchange other than Mt. Gox
or Bitstamp had held this
record. It was evident that
China was leading the price
up because the price was
rising faster in yuan than it
was in dollars. In Shanghai,
Bobby began furiously hiring
people to try to fill the space
in his still half-empty office.
China was not the only
source of momentum in the
markets during this period.
Many of the people who had
attended Dan Morehead’s
gathering in Lake Tahoe had
traveled on to Las Vegas for
the Money 2020 conference,
the same financial-industry
conference that Roger Ver
and
Charlie
Shrem
had
attended the year before.
When Charlie was there, only
one Bitcoin company had
been exhibiting, BitInstant.
This time around, Bitcoin
companies
flooded
the
exhibition hall and there were
three
different
panels
dedicated to the subject.
Then on November 3, the
chief executive of eBay, John
Donahoe, said in an interview
with the Financial Times that
PayPal
was
looking
at
creating a digital wallet that
could
eventually
hold
Bitcoins. After Donahoe’s
comments came out, the
price,
which
had
been
hovering around $215, began
rising, and three days later it
surpassed the previous record
price of $267 that had been
set on Mt. Gox during the
April pandemonium.
That same day, Bobby
Lee was with his staff on a
retreat to Shengsi Island.
Much of the trip was spent
trying to deal with the
onslaught of new accounts
and
customer
service
requests. The pressure didn’t
relent for the trip back the
next day. Bobby’s exchange
handled sixty thousand coins
in one day for the first time
ever, as the price leaped
above $300 on Mt. Gox.
During this period, BTC
China
was
seeing
more
trading volume than any other
exchange in the world almost
every day, and the price in
yuan was about 5 to 10
percent higher than it was on
Mt. Gox and Bitstamp (when
the exchange rate between the
dollar and yuan was taken
into account). On Saturday,
with everyone still in the
office, the price surged again,
jumping from 2,100 to 2,500
yuan, or some 20 percent, in
the course of a few hours. On
the dollar exchanges the price
was approaching $400. At the
end of a nonstop weekend of
work, Bobby sent an e-mail
to motivate his staff:
During the coming
days, the market will
continue to be super
hot, and our workload
will be non-stop.
I urge everyone to
stay focused, do our
job, and keep up the
high quality.
Once the market
cools down, with
more normal trading
volumes, then we can
take a break and
evaluate how things
go.
Everyone
looked
for
reasons that could explain the
continuing rise but, as is often
the
case
in
speculative
markets, the upward moves
seemed to be less dependent
on outside events than they
were on previous upward
moves in the market. Bobby
had guessed so many months
before that the Chinese would
want to bet on something that
seemed to have momentum,
and Bitcoin’s ascent was
proving him right.
In the midst of this,
Bobby and his cofounders
decided to do their part to
increase the excitement by
making
a
public
announcement about the $5
million investment they had
secured back in September
and had kept quiet until now.
Over
the
weekend
of
November 16 and 17, Bobby
worked with his investor and
a few news sites to prepare an
announcement for Monday
morning. When the story hit,
the already rising price began
to move that much faster,
rising 15 percent in the course
of a few hours, to a price that
was already more than twice
what it had been at the
beginning of the month. But
this was to be only the start of
a very long day.
CHAPTER 26
November 18, 2013
Several hours after Bobby
Lee announced the $5 million
investment
in
Shanghai,
Patrick Murck, the general
counsel
of
the
Bitcoin
Foundation, woke up in a
hotel room in Washington,
DC, and checked on Bitcoin’s
rising price. After putting on
his plain black suit and
carefully
attaching
an
American flag pin to his
lapel, he left his room,
carrying the testimony that he
had been writing for the last
few weeks and that he was
about to present to the United
States Senate.
Since appearing at the
private
meeting
with
lawmakers back in August,
Patrick had spent much of his