Bitcoin Billionaires Read online

  When Charlie had realized they’d all be in San Jose at the same time, he’d thought it was a perfect opportunity to get Cameron and Tyler together with Ver, and let them see that he wasn’t as radical as his online persona.

  That idea had been dead on arrival: the twins had turned the invitation down as soon as Charlie had brought it up, telling him that they needed to finish work and rest up for the following day ahead. That was when they’d both made it clear that they didn’t love the idea of him continuing to hang out with Ver, even on his own. Tyler had put it simply: “Roger has said things, and done things—you’ve got to be careful.”

  Not having the twins approval had hit Charlie hard. He knew it was foolish, but it was like high school all over again, with him in the role of the little guy, cross-eyed and bad at sports, a total nerd, back in the corner of the gym, with all the other losers.

  He shook the stupid thoughts away as he let Ver order him a whiskey. The twins weren’t being bullies; they were being cautious. Their disapproval of his friendship with Ver wasn’t some high-status thing; it was because they cared about him, he told himself. In the twins’ estimation, Ver came with dangerous baggage—not just his radical beliefs, but his past.

  The way Ver told the story—and the facts seemed to back it up—Ver had been railroaded by the U.S. government; but even so, he had spent ten months in a federal prison for selling explosive pest control products online. This fact alone was hard to look past, especially for two Harvard graduates from Greenwich, Connecticut.

  “Why don’t you tell the girls why you still believe in sky people?” Ver started, once the drinks had landed and he’d ordered some food in his facile Korean. “Or have I managed to finally win you over to reality?”

  Charlie smiled. Ver had been teasing him about his religious beliefs almost from the moment they’d finally met in person, just a few months ago. That meeting had taken place in Austria, of all places; they had both been invited to a Bitcoin summit by the Russian founder of the Mycelium electronic wallet, who was also the entrepreneur behind NEFT Vodka, the mini oil cans that Charlie kept on his desk back at the BitInstant offices in New York. Alexander Kuzmin was another great character in the world of Bitcoin: He had previously been a mayor in a small town in Siberia, where he had outlawed the use of “excuses” by any government employee. Kuzmin was now going all in on crypto and had organized the summit in Austria to learn as much as he could.

  Charlie had jumped at the invitation, since it had involved two things he loved: Bitcoin and travel. He’d ended up sharing an apartment in Vienna with Ver and Voorhees, right off the Vienna day market. They were already online friends, but getting to spend time with Ver in person had opened Charlie’s mind in ways he hadn’t expected. To Charlie, who was only twenty-two, Ver seemed incredibly well traveled and knew so much about the world. He was very open about his views, which Charlie liked about him; the guy wasn’t just trying to fit in, he was a true believer who wasn’t afraid to say just what he meant in every situation.

  The first night out in Vienna, they’d ended up at a nightclub filled with girls who weren’t exactly prostitutes, but close enough. Ver had paid the women little attention.

  “I’ve never slept with a white girl before. I only sleep with Asian women. I just can’t break the habit.”

  Charlie assumed it was a joke, but that opening had launched them into a conversation about how this tall white guy from California had ended up in Japan in the first place, and it had all gone back to that stint in prison. The way Ver explained it, he’d been taken down because of his ideology. He’d been selling what were essentially fireworks over the internet; actually, firecrackers manufactured by a company called Pest Control Report 2000, that had been selling the product online for three years without problems. But Ver wasn’t the only one selling them, just the only one arrested. Not coincidentally, at the ripe age of twenty-one he had just run for the California State Assembly as a candidate for the Libertarian Party. Already a big believer in individual freedom and the notion that the government used the threat of violence to get people to behave, he took part in a debate during the election, at which the local head of the DEA was present. During the debate, Ver had essentially called the DEA a bunch of Nazis and “jackbooted thugs.”

  Two weeks later, he had been arrested in brutal fashion. Surrounded by men with drawn guns, taken down by DEA agents for selling pest control that the government classified as illegal explosives. Ver had sold around 200 of the devices; the company he’d bought them from had itself sold 800,000, without permits, and nobody had gotten arrested. The company that manufactured the device had sold millions, and again, nobody had gotten arrested. But Ver did get arrested, and when he went to jail, it wasn’t some cushy federal camp, it was a medium security institution, the real deal.

  Ver’s ten-month stint in prison had been an enormous wake-up call; what he’d previously thought of as a theoretical and philosophical battle with overreaching government had suddenly become very real. As he told it, he’d been trying to make the world a better place by pushing libertarian ideals, and it had gotten him thrown in jail.

  At first, he’d spent his time in prison studying, reading every libertarian book he could find. Both before prison and during, he’d taken to the works of Murray Rothbard, a major twentieth-century thinker who was a founder of the ideology of anarcho-capitalism and basically called for the elimination of the centralized state in favor of individual liberty. Rothbard believed that anything the government could do, the private sector could do better; more radically, he argued that the government was “robbery systematized and writ large.” He especially was against banks, and thought of the Federal Reserve as a “form of fraud.”

  Ver’s arrest and imprisonment had also taught him a different valuable lesson; his views could get him in trouble, and the freedoms most people took for granted weren’t as guaranteed as people thought.

  As soon as Ver got out of prison, he’d moved his business and himself straight to Japan. By that point, the computer company he’d built before his imprisonment, Memory Dealers, Inc., an online retailer of computer memory chips, had made him a millionaire, and he’d had enough of living in the United States.

  For nearly a decade, though his views had remained as radical as ever, he’d stayed pretty much silent, living abroad while beginning the process of giving up his U.S. citizenship. He didn’t really want to be a citizen of anywhere: he, like Voorhees, didn’t believe in borders and states. He’d been content being a silent citizen of the world.

  And then he’d discovered Bitcoin.

  Ver first heard of Bitcoin around 2010, listening to a radio show associated with the New Hampshire Free State movement called “Freetalk Live.” At first, Ver hadn’t paid much attention to it; but when Bitcoin had come up again a few months later on the same radio show, he’d decided to do some research.

  The more he’d read about Bitcoin, the more he’d started to realize that its design and the technology behind it dovetailed beautifully with his beliefs; more than that, Ver had grown up reading and loving science fiction, and Bitcoin sounded exactly like the “cybercash” or “credits” that featured in so much of the genre. And since Ver was an entrepreneur in the computer sector, who had also spent years studying economic theory, he was in the perfect position to understand what Bitcoin was and where it could go.

  He’d begun accumulating the digital currency at a rapid pace. Nobody was exactly sure how many bitcoin he’d bought, but there were plenty of rumors that his stash might have even been larger than the twins’. And along with his growing fortune, Ver had also found his voice again through Bitcoin, it was so exactly suited to his ideological beliefs.

  From their very first meeting, Ver had begun proselytizing to Charlie. He’d sent him dozens of libertarian books and initiated many conversations questioning Charlie’s faith in religion, government, and any other big organization that used force or fear to get its way. When Charlie would ask—“yes
, but then who will build the roads?”—Ver would explain that everything in life had to be volunteered, that nothing should be forced, not even the roads. Economic and moral incentives would always be enough.

  In retrospect, Charlie had to admit, it was no wonder that Ver and the twins did not get along. Although the twins had been let down by the legal system, they didn’t want to tear it all down. The twins had grown up imbued with intense, old-world values: they were truly Men of Harvard. They had lost a fight—which only meant, to them, that they needed to fight smarter. When you lost a race in crew, you didn’t react by trying to sink all the boats. You found a way to row harder.

  Ver, on the other hand, believed the old-world structures were flawed—that the crew race was rigged from the beginning. The Establishment was built on lies and mythology—fantasies, like Charlie’s “sky people,” interpreted by rabbis pronouncing edicts that had very little to do with the real world. Although sometimes, Ver’s libertarian views seemed equally distant from the real world.

  “Reality over sky people?” Charlie said as a steaming tray of sautéed meat landed on the table between them. “Which reality? The one where we all live in some commune and volunteer to dig roads?”

  Ver skillfully jabbed at the meat with a pair of chopsticks, then fed a piece to one of the Korean girls.

  “I don’t live in a commune, I live in a beautiful apartment. And my Porsche is parked outside. Volunteerism isn’t hippy-dippy, it’s the opposite. We just don’t need Big Brother putting a gun in our mouth to get us to do what we should do on our own.”

  Charlie knew where that ideology led. Ver believed that taxes were essentially armed robbery. That serving in the military could be akin to forced murder. That anything you didn’t choose to do on your own was the same as being coerced.

  “Sometimes, you have to try to find a middle ground.”

  “The middle ground is where ideas go to die.”

  Ver didn’t believe in compromise. It was part of what made him such a force in the Bitcoin world. From the minute he’d been turned on to Bitcoin, he’d been one of its biggest cheerleaders. But unlike the twins, he had no problem with the darker side of Bitcoin: he actually loved Silk Road. Ver didn’t drink or do drugs, but he fully supported the rights of any individual to buy and sell whatever they wanted. And, Charlie believed, he also saw Bitcoin as the greatest way ever invented to bypass governmental organizations … like the DEA … or the IRS.

  “Look,” Charlie said, even though he knew he was taking himself out of the moment, forgetting that he was sitting next to a pair of beautiful women, and instead imagining he was back in the BitInstant office, “If Bitcoin is ever going to go mainstream, we have to build bridges, not burn them.”

  “You sound like Cameron. Or is it Tyler? You’re all such statists.”

  Ver (and Voorhees too) were always mocking Charlie as a statist—someone who believed that a government, a state, was necessary. But the way Ver said it, the word now seemed more than just a simple tease. No doubt, he saw the twins as part of the Establishment, part of everything he loathed.

  Charlie didn’t think it was right to hold their privilege against them. He’d watched baseball all his life; he was a diehard Mets fan. So what if the twins had started out life on third base? It was still as hard as hell to make it to home.

  “They’re true believers, like you,” he said.

  Ver poked at another piece of grilled meat.

  “In what? How much money they’re going to make?”

  As if that was such a bad thing. Charlie liked talking about the meaning of Bitcoin as much as anyone, but he considered himself an entrepreneur. At some level, weren’t they all in this for the money?

  In Silicon Valley, every pitch deck identified a problem and proposed a solution. All of them talked about changing the world, making life better for everyone. From Facebook to Apple to Uber, they were all trying to make the world a better place.

  But did any of them really mean that? Charle had to wonder.

  Charlie believed Ver did mean it; that Bitcoin, to him, was a weapon to remake the world. In multiple interviews, Ver had said that “Bitcoin was the most important human invention since the internet.” Even the twins had to respect that Roger Ver always meant what he said.

  The night wound down, the dinner ended, and Ver dropped Charlie back at his hotel, leaving with both girls for another party. Charlie had to ask himself: The world Roger Ver wanted to make, was it going too far? Was that a world Charlie wanted to live in?

  15

  IN THE AIR

  Bitcoin sounded just as good at thirty thousand feet.

  Tyler stood in front of the whiteboard that had been set up against the glossy, mahogany wood-paneled wall leading to the dining area, his black marker hovering over the chart he had just drawn, a jagged Himalayan mountain range tracking the price of bitcoin from its inception to that very day—steep rises and stomach-turning drops—a line that overall, trended ever upward. A snail’s pace at first, during those two years when nobody outside of a handful of cypherpunks, computer nerds, and math geeks congregating on alternative message boards had heard of the cryptocurrency, then launching higher just six months ago after a few more people like the twins themselves began to take notice. Then dipping slightly, before exploding skyward four weeks ago—thank you, Cyprus—hitting an incredible high of $266 a bitcoin. And then, in just the past twenty-four hours, crashing, diving, plummeting, down more than 60 percent, to a little over $120 a bitcoin.

  “Yes, it’s volatile,” Tyler finished, putting the cap back on the marker. “But that’s to be expected, as we’re still in the very early stages here. There’s still a lot of regulatory uncertainty, and there are so few people in the market, that it’s extremely sensitive to day-to-day news. But that’s exactly why we think there’s so much opportunity. With high risk comes high reward. Bitcoin is only going to attract more and more attention. Cyprus was just a starting point. People are going to realize there are better places to store their wealth than government fiat currency. And because of Bitcoin’s fixed supply, the more people buy into it, the more the price has to appreciate. Classic supply and demand.”

  Tyler looked at the small group gathered on the semicircular couch in front of him, which included his brother, of course, his head propped up next to one of the windows that lined the body of the plane. The shade had been drawn halfway, but behind Cameron, Tyler could still see wisps of clouds through the double glass. Closest to Tyler was a young man in a blue suit who’d introduced himself as an analyst; he was one of three supporting staff, two of whom were also situated around the couch, the third by the huge flat-screen TV that hung on the wall opposite the whiteboard. And then next to the young man was the owner of the private jet, Ron Burkle. One of the most successful businessmen in the country, he was a billionaire who’d built his fortune first by building and selling a supermarket chain, and then as the head of The Yucaipa Companies, LLC, a private equity outfit with billions in assets that included ownership stakes in Barneys New York, the Pittsburgh Penguins NHL hockey team, Morgans Hotel Group, and Soho House clubs.

  “I’m not sure I buy it as a currency,” Burkle said while writing notes on a pad on the table in front of him, next to lavish platters of sushi, caviar, charcuterie, cheeses, crudité, and assorted fruits that had been set down by one of the plane’s uniformed crew. “It’s a speculative play, a commodity. Like art. The value is entirely in the demand.”

  Tyler could see that his brother wanted to jump in, but they’d done enough of these presentations in the past few weeks that they both knew the script backward and forward.

  “I agree,” Tyler said. “In part, it is a store of value, one that can also be used as a medium of exchange. So just like gold, but better. Our thesis is that bitcoin will disrupt gold in the long term.”

  He could tell that Burkle was intrigued, but not convinced. That didn’t surprise him; there was so much to take in all at once, it took time fo
r even the smartest financial minds to wrap their heads around it. He appreciated that Burkle and his team were curious to learn more in the first place, and respected the fact that they were being diligent, asking questions, and coming at it with healthy skepticism. That’s how any rational, disciplined investor would and should approach anything new, especially something as wildly novel as Bitcoin—and that’s exactly why people like Burkle were so successful and wealthy.

  Other than the soft rumble and the slight lilt of what he could only describe as an elegantly appointed flying living room, Tyler could barely tell they were in the air at all. He’d been in private jets before; but even the most lavish of them, including Gulfstreams and Bombardiers, were too cramped for all six feet five inches of him to stand up straight in the fuselage. And they certainly didn’t have dining rooms, living rooms, and bedrooms with showers. Burkle’s jet was more like a jumbo jet, a converted Boeing 757 that was almost as famous in the gossip magazines as the private equity guru’s friends, who included Puff Daddy, Bill Clinton, and Leonardo DiCaprio.

  Tyler hadn’t expected to be making his presentation on Bitcoin at thirty thousand feet. But when he’d contacted Burkle’s office as part of their “Bitcoin tour,” Burkle had offered the cross-country lift.

  “What about this Silk Road business? Who actually owns bitcoin and who’s actually using it? Is it just gangsters and money-launderers?” Burkle asked.

  This question was inevitable, it had come up in every meeting; Silk Road was certainly a stain that would be difficult to wipe away. But more and more, Tyler had become convinced that the dark web drug den was more hype than anything else.

  “All of our studies show that Silk Road is actually a very small part of the Bitcoin economy. At present, less than five percent of Bitcoin transactions have anything to do with the site, and that’s only getting smaller as the Bitcoin market grows.”