Bitcoin Billionaires Read online

  Okay, he wasn’t sure that Jobs’s Mac was in the Smithsonian, but it damn well should have been, and Charlie’s desk was going to end up right next to it. In California, they launched revolutions from garages: Jobs and Woz building personal computers next to a rack of pocket wrenches in a garage in Los Altos, Bill Hewitt and Dave Packard making oscillators behind barn-like doors in a garage in Palo Alto, and Larry Page and Sergey Brin inventing Google as Stanford grad students in Susan Wojcicki’s garage in Menlo Park. But in Brooklyn, there weren’t many garages; there were basements. And in the part of Brooklyn where Charlie grew up, those basements were crowded, dark, dingy, and usually smelled a little bit like brisket.

  From above, the urban neighborhood of narrow streets spanning Avenue I to Avenue V, Nostrand to West Sixth Street, might have looked like any other section of the borough, but in reality, Charlie’s home sat right in the center of the seventy-five-thousand-member-strong Syrian Orthodox Jewish community—an ethnic, religious, and cultural island unto itself. Although the “SYs,” as they called themselves, did not dress in the black garb of other Orthodox Jewish sects—a choice made in part to allow them to flourish entrepreneurially and financially in the wider community of other Jews and gentiles—the Syrian Orthodox Jews were held together by strict traditions and codes dating back generations. Most draconian of these codes—a law known as the “Edict” set down by a group of Syrian rabbis in 1935—made sure the sect would remain insular: “No male or female member of our community has the right to intermarry with non-Jews; this law covers conversion, which we consider to be fictitious and valueless.” But despite these mostly successful blinkered rabbinical strategies, which had kept the Syrian Jewish community intact—all of Charlie’s cousins, uncles and aunts, grandparents, and family going back generations lived within a quarter mile of his house—and are firmly lodged in the Brooklyn landscape—the SYs had simultaneously managed to extend themselves outward in financial empires, in areas including real estate, retail, electronics, and, more often now, technology.

  Charlie reached the desk and dropped into his chair, yanking out the earbuds and resting his phone next to the keyboard. Then he powered up his computer, heading right for his Skype account.

  It took less than a minute for his business partner to appear in the lower left corner, shrunk down so that Charlie could talk while simultaneously monitoring the computer code that was now free-flowing like a river down the center of his screen.

  “You’re late,” his business partner croaked through the internal microphone of Charlie’s computer. “Is this becoming a habit for you?”

  Charlie kept his attention on the streaming code. He’d grown used to Gareth Nelson’s conversational style: his usual lack of social conventions, his abrupt vocal patterns, and of course his heavy Welsh accent, which made half of what he said pretty much incomprehensible. This largely explained why most of their interactions had occurred over email or instant messenger. In fact, Charlie believed that in total, he’d probably spent less than seventeen minutes actually conversing by voice with his business partner in all the time he had known him. Over text, Gareth’s accent didn’t get in the way, and his Asperger’s was a great benefit. The guy didn’t waste any words; everything was business, which made him the perfect sort of partner and counterbalance to Charlie.

  “This looks really good,” Charlie said, jabbing at the code. “The transactions will go smoothly, and the servers look like they can handle a pretty large customer base. It’s a great starting place.”

  He was nearly bouncing in his chair as he made the calculations in his head. Although he was small, he was constantly in motion, which made him often appear to take up much more space than his frame would have suggested. He also had a tendency to talk really fast; actually, everything about him moved fast. His feet, his mouth, his brain. Even his hair follicles; his cheeks and chin were in a constant state of overgrowth and, even at noon, were covered by what could only be described as something several hours beyond a five o’clock shadow.

  The speed at which his mind moved was probably the reason why during college he’d shifted his focus from tinkering with electronics to computer coding, eventually teaching himself to become a world-class hacker. Working on hardware was slow, meticulous; but when you were coding or hacking, you traveled at the speed of electricity. Of course, hacking had its risks, and you could get yourself into a lot of trouble if you weren’t careful.

  When Charlie had hacked into the University of Ghana, he’d actually sent them a private briefing afterward, detailing their security vulnerabilities. It was a courtesy in security circles known as “responsible disclosure.” He’d also worked his way into an airport’s security system in Germany and grown a following on hacking forums under the avatar “Yankee,” a nod to his New York roots.

  Charlie wasn’t a black hat, a malicious hacker in search of monetary gain; he was something closer to a white hat, drawn in by the puzzle and the challenge of finding security flaws. It was hacking that had actually led him to the new business he was about to launch with Gareth, his autistic Welsh partner, a man he’d never met in person. A business that Charlie considered a truly revolutionary moment in tech history.

  His newest adventure had begun almost three years earlier, while he was still a college senior. After an uneventful day spent commenting on a variety of hacking forums, Charlie had suddenly seen a strange little email that had been sent out to a cryptography mailing list. The email had come from someone named Satoshi Nakamoto. In the email, Satoshi had stated that he’d developed a brand-new virtual currency, which he’d then described, in detail, in an attached “white paper.”

  At first, Charlie had thought the email was a joke. Stupid bullshit, he’d told himself. Who was this Satoshi Nakamoto, anyway? Charlie looked around hacker forums for more background on this Satoshi character but could find nothing. Stranger still, Satoshi, who claimed to be a Japanese man in his midthirties, wrote his emails in perfect, idiomatic English. Once Charlie read the white paper, however, it was obvious that Satoshi was a polymath, a multidisciplinary genius who was an expert in cryptography, math, computer science, peer-to-peer networking, economics, and more. How could this person be that smart and accomplished and yet be a ghost to the internet, a complete phantom? How could Charlie not at least even know of him?

  Or her.

  Or them.

  Charlie would have gone on with his life, ignored the email and the white paper, if it wasn’t for the enthusiasm of a new, online friend he’d met while perusing crypto boards and forums under the handle “Yankee”: the autistic Welshman Gareth Nelson. From their many exchanges, Charlie knew that Gareth wasn’t the type to get excited easily; hell, before Satoshi and his white paper, Charlie hadn’t thought the guy was even physically capable of getting excited.

  But Gareth was certainly excited now: this was something big, important.

  Revolutionary.

  Over the ensuing years, Charlie had realized that the Welshman was right.

  He moved his face closer to the screen as the last few lines of code flowed upward. He was totally in the zone, barely listening as Gareth offered comments from his Skype corner, as the EDM music still leaked, in tinny twists, out of the earbuds on the desk by Charlie’s cell phone, as footsteps reverberated through the basement ceiling above him: his mom, working on that brisket.

  Almost three years after reading Satoshi’s white paper, Charlie was certain: it was going to change everything.

  And Charlie was going to ride that change right out of his mother’s basement and into history.

  6

  FINDING LOVE IN A HOPELESS PLACE

  “Money as a social network. Well, it’s certainly an interesting take.”

  Tyler propped himself up on one elbow, his body stretched out awkwardly on an eggshell-white daybed. He was decked out in a crisp, white linen shirt, a brightly colored Vilebrequin swimsuit, and a woven straw fedora. Cameron was on a similar lounger to his left, shir
tless, wearing equally brightly colored swim trunks. A canopy offered some respite from the sun beating down, while a Mediterranean breeze cooled the scalding beach as it rolled off the sea.

  “You know a thing or two about social networks—and I know money. Money connects people. It’s a form of communication. And it’s about time that it truly went virtual.”

  The muscled guy they’d met at Pacha the night before—David Azar, an entrepreneur from Brooklyn who, it turned out, owned a chain of check-cashing businesses—was directly across from them, white shirt open past his sternum, squatting cross-legged on a piece of furniture that was somewhere between a beanbag chair and an ottoman. Right beside the daybed a wooden, sun-streaked table supported a metropolis of rosé bottles, glass champagne flutes, and trays piled high with fruit.

  The three were smack dead in the middle of Blue Marlin Ibiza, arguably the most famous VIP beach club in the world, a mixed-use slice of paradise that was part high-end restaurant and part European day party. A daybed ran four hundred euros, just for the afternoon, and the ones behind the DJ went for three times that. Nobody hit the Blue Marlin on a Sunday afternoon to talk shop; this place was all about sun, top-shelf alcohol, pulsing music, and some of the best people watching and celebrity spotting in the Eastern Hemisphere.

  The crowd, whether splayed out on matching daybeds, dining at the attached five-star restaurant, or undulating in sarongs and espadrilles on the roped-off dance floor, was mostly European and almost universally stunning. The women glimmered in tiny bikinis, tops sometimes missing. The men, shirtless or draped in white muslin or linen, were almost universally chiseled and tan. There were models everywhere, some with names and faces the monozygotes recognized. One girl, two beds over, had been featured in the inflight magazine tucked into the airplane seat magazine holders of the Iberia Airlines flight they’d hopped from Barcelona to the Spanish island. Maybe she’d arrived at Blue Marlin by way of the long, fashion runway–like wooden path that led directly from the center of the beach club to the sea, where the tenders and Jet Skis shuttled guests back and forth between the hotspot and the megayachts parked farther out in the protected bay. Each new arrival warranted whispers, but nobody reached for cell phones. At Blue Marlin, even the most famous people in the world were simply part of the scenery.

  “If whatever you’re selling can help our deposit make its way over the Atlantic to our villa’s landlord, I’m all ears,” Tyler said, shifting his attention from the wooden runway, where a pair of Italian Instagram stars strolled by on impossibly high Louboutins.

  In fact, the trouble with their villa deposit, which still hadn’t arrived two days into their trip, underscored just how money worked—or didn’t work—in the year 2012. You could connect with anyone anywhere in the world using Facebook; you could speak with anyone anywhere in the world using Skype; you could communicate with anyone anywhere in the world using email, and all for next to no cost. But good luck if you wanted to send them money—it wasn’t much easier to send money around the world in 2012 than it was when Pacha first opened its doors in 1973. You still had to use the Balkanized, legacy banking system, which was built before the internet even existed, littered with middlemen and rent-seekers all along the way. And only if the central authorities of this network allowed it to happen, would your money move at a snail’s pace from point A to point B. The truth was, even in 2012, if you wanted to get money from New York to Ibiza, the fastest and surest way was to hop a plane from JFK with a bag full of cash.

  Instead the twins had arrived in Ibiza well before the deposit on their rented villa; thankfully, their landlord—an always smiling Italian transplant, who apparently would also be acting as their chauffeur, picking them up at the airport in a tricked-out SUV, smartphones in each hand, and a Bluetooth headset lodged in his hair—understood how the international economy worked, and just as often didn’t.

  “What I’m talking about,” Azar said, sipping his wine, “is something completely new. Truly digital money, decentralized, that’s exchanged like email. There’s no middlemen. There’s no authority. Money that moves at the speed of electricity, over the internet. A system that does for money what Napster did for music.”

  Tyler glanced back toward the DJ booth, where a young Frenchman was bouncing up and down behind his computer system. The crowd on the dance floor moved with him, lithe bodies so close together it was hard to see where one limb ended and another began.

  Less than a decade ago, a DJ would have had to lug hundreds of vinyl records in heavy metal cases around with him to every gig. Today the same DJ could carry his entire set on a USB stick or thumb drive in his pocket. If music could transcend the physical world into the digital world then why couldn’t money?

  In fact, in many ways, money had already gone digital. When you deposited money—say, a hundred dollars—into a bank, that bank didn’t store your money in some vault somewhere, waiting for you to retrieve it. That hundred dollars immediately went digital; in fact, banks hardly stored any actual money at all. By federal banking law, banks in the United States only needed to keep 10 percent of the money deposited in actual, liquid reserve. Which meant if you deposited a hundred dollars into a bank, you only actually had ten real dollars on hold in some vault. The other ninety dollars? Digital, ones and zeros on some computer hard drive, or off in the cloud.

  The only physical money anyone really had was what was in his or her wallet. The rest had already been turned into data, by the middlemen, who took a fee.

  The new form of money Azar was talking about skipped that step. It was already data.

  Digital, decentralized, no authority. It was a sales pitch—and there was no doubt, Azar came on like a compelling salesman. In fact, the way he talked, his enthusiasm—he seemed like he’d just walked off the lot of an auto dealership back in Brooklyn. But, like the French DJ, he was hitting all the right notes.

  Money, as it currently stood, ran through a system controlled by powerful arbiters: Visa, MasterCard, Western Union, governments near and far. It was a system that could seem arbitrary, with obvious flaws—lag times, unexplained fees, bureaucratic logjams.

  Tyler and his brother had just fled to Ibiza after facing off against other types of arbitrary systems; first the California federal courts, where the central authority was a judge named James Ware, who had decreed that the twins couldn’t reopen their case against Facebook. (Never mind that for years, Ware had lied about having a younger brother who was the victim of a racially charged murder during the civil rights movement—an untruth that had led to a judicial reprimand.) And then their case had shifted to the Ninth Circuit Court of Appeals, where the central authority was Chief Justice Alex Kozinski, who had upheld Judge Ware’s ruling. (Never mind that for years, Kozinski had been accused of sexually harassing his female clerks—pulling up pornographic photos in front of them on his computer while they were in his chambers, and previously, allegedly, maintaining a server that contained sexually explicit images, including one of naked women on all fours painted to look like cows.)

  Digital, decentralized, no arbitrary authority.

  Whether it was the setting, or the timing—Tyler felt drawn to the Brooklyn salesman’s pitch.

  “Like Napster,” Azar continued, “it’s peer-to-peer. And it’s all out in the open. There’s no inside baseball, no insider information, it’s all open-source and democratic. And this new system of money is based on math, not humans.”

  Azar refilled his glass from one of the bottles on the table between them.

  “It’s called Bitcoin,” he finished, holding his glass up to the sun. “It’s a form of cryptocurrency.”

  “Cryptocurrency,” Cameron repeated, from his daybed. “It sounds criminal. Is it legal?”

  “I don’t think the word applies. That’s part of Bitcoin’s brilliance. It functions without government approval. There’s no headquarters to raid, and it can’t be stopped without stopping the internet itself.”

  Stopping the internet? Ty
ler could tell the muscled salesman was spinning dialogue at them; he didn’t seem to be technically minded, or really have a deep knowledge of what he was selling, beyond his pitch. But, as he’d said, he knew money. Not Wall Street money—but the sort of money you come across from owning a chain of check-cashing businesses extending outward from the Syrian Orthodox Jewish section of Brooklyn. He understood the emotional connection of currency, the desperation of those trying to cash checks who were unable to access the traditional banking system. He knew all about velocity and liquidity.

  “Traditional cash is all about trust,” Azar continued. “You have to have faith in the machinery of the system, and you have to trust the middlemen. With Bitcoin, you don’t have to trust a-n-y-b-o-d-y. Because, like I said, it’s all based on math.”

  Tyler glanced at his brother, who seemed as focused on the salesman and his pitch as he was. This was something that neither of them had ever heard of before; not in any of the startup pitch decks they’d been sent, not during any of those Silicon Valley meetings. Not at the Oasis, not anywhere on Sand Hill Road. It wasn’t clear, yet, how this … cryptocurrency worked—or how math was involved. But a system that didn’t rely on trust, that didn’t involve an authority—it seemed too good to be true.

  “Tyler! Over here! I thought I saw you guys at Pacha last night! Come join us for a drink!”

  Tyler looked past Azar, in the direction of where the voice was coming from, and recognized a group of Americans waving at him from four daybeds down. He recognized at least two of them from back in New York: a tall art fiend named Josh, or Jason, who Tyler believed ran a gallery downtown, dedicated to early 1970s graffiti masters, and a brunette in what looked to be a macramé bikini. The rest of the group looked similarly hip, none of them over the age of twenty-five, none of them strangers to this party island, halfway around the world from where they’d grown up. Wealthy millennials with big bank accounts and a dozen credit cards between them; no doubt, this crew of “influencers” had helped build Facebook with their bare thumbs. Tyler was certain that none of these people had ever heard of Bitcoin. The money they knew best was the type that was passed down from generation to generation, worn around their fingers, necks, maybe even toes.