BY REPORTING BY JOY CRANE, NOAH HUROWITZ, MAX READ, MARGARET RHODES, AND KATY SCHNEIDER. DEC 24, 2017 18
Here, our super-simplified explanation—and what to know about the crypto-craze before it implodes.
Bitcoin[a] (₿) is a cryptocurrency. It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people using the name Satoshi Nakamoto and was released as open-source software in 2009.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. Research produced by University of Cambridge estimates that in 2017, there were 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.
A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Cryptocurrencies use decentralized control as opposed to centralized digital currency and central banking systems.
A blockchain, originally block chain, is a growing list of records, called blocks, that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a Merkle tree).
By design, a blockchain is resistant to modification of the data. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way". For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks.
Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority. Although blockchain records are not unalterable, blockchains may be considered secure by design and exemplify a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been claimed with a blockchain.
MAYBE IT WAS that story you heard about the guy who bought a Lamborghini with money he made off something you didn’t even really know existed until six months ago. Maybe it’s those eye-popping charts you keep seeing—from $5,800 per unit to $19,000 per unit in just one month! Maybe all your friends are constantly watching their phones, tracking their own investments, and you just hate feeling left out (and wondering how the hell they found out about this gold rush first!). However you heard about it, you are now, finally—but cautiously!—intrigued. The problem is, well, what … is a bitcoin, exactly? Secretly, you know you don’t understand the thing, even though you may pretend to. Isn’t it mostly for buying drugs? Where would I even buy one? And aren’t I too late to be asking these questions, let alone actually investing in it?
All right. Seriously. Remind me what a bitcoin is?
A bitcoin is one unit of an anonymous digital currency called, yes, bitcoin.
Hang on: “anonymous ... digital ... currency”?
That’s what it was built to be, at least—a theoretically untraceable and unhackable version of PayPal, more or less. But so many people got so excited about buying into the system that a market developed around buying and selling it—with bitcoin becoming less important as a currency than as a commodity, like gold. You can still buy things in bitcoin (like you can with gold, sort of), but many more people are now using it as an investment vehicle.
So bitcoin is a currency and a commodity?
Something like that. Fundamentally, bitcoin is a secure system for storing and exchanging money anonymously on the internet. In some contexts, it works like untraceable money (for, say, buying drugs on the dark net); in others, it works like a safety-deposit box without a bank (like when it’s used to store money away from the prying eyes of governments); in still others, it’s a tradable financial asset like a stock or bond (you could use bitcoin to become a millionaire). But each of these metaphors has limitations, too. Unlike most currencies, bitcoin is not supervised or endorsed by any government; it has incredible price volatility, which makes transactions complicated and undermines the safety-deposit-box approach; and, unlike the stock market, where valuations are based at least theoretically on expectations of future company value, there is no “fundamental” basis of speculative value for bitcoin.
Wait: Is bitcoin ... real?
No, but then again, neither is the dollar.
But the dollar is backed by the U.S. government.
Who needs a central government when you’ve got an unhackable, unfoolable currency?
I’m already lost. Why would anyone buy a bitcoin?
For the same reason you’d buy anything: Because you think a bitcoin is worth something. And there are a few different reasons to think it is. Maybe what’s valuable to you is bitcoin’s anonymity: A lot of people really like operating anonymously on the internet. Plus, if you want to move your money out of an economically or politically unstable country without being hit with taxes or currency controls, converting your fortune to bitcoin might help. Or maybe what’s valuable to you is bitcoin’s whole philosophy—you believe it will someday be widely adopted as a day-to-day currency, and you want to buy in early. But those are the reasons people originally got into bitcoin—the true-believer stage. Now people are getting in because they think they can make money—the investment stage. In that case, what’s valuable is, well, the fact that everyone else is buying bitcoin and you think its price will keep rising.
I mean, will its price keep rising?
That depends. Unlike most regular currencies, whose purchasing power declines over time, bitcoin was designed to be deflationary: There are a limited number of total bitcoins, and new ones are added to the market slowly. What drives the price up is if more and more people show up hoping to buy the existing coins, thereby bidding up their value. But that’s a big if—if bitcoins never reach widespread adoption, or if they’re too difficult to convert into more usable cash, their value will go down.
But where did bitcoin come from?
In 2008, a pseudonymous programmer called Satoshi Nakamoto developed bitcoin, a system that seemed to secure financial transactions outside the authority of a central bank. It distributed the task of verifying transactions across a whole network of computers.
So that was Satoshi’s big innovation?
Yes: to secure transactions without the oversight of the government. If you send bitcoin to someone, your transaction is added to a record of every transaction across the entire network, from the very first bitcoin onward—essentially, a long bank ledger that everyone in the bitcoin network has a copy of. This record is called the “blockchain,” and, thanks to some neat cryptographic work, it is nearly impossible to forge, fool, or tamper with. Which all makes cryptocurrency look, suddenly, like a safe way to conduct business.
You said “cryptocurrency”—don’t you just mean bitcoin?
Actually, no. With Satoshi’s blessing, bitcoin’s basic decentralized, anonymous structure was pretty quickly adopted and used by other digital currencies, which tend to get lumped together into the cool-sounding grouping “crypto,” as in, “My yoga instructor made millions in crypto.”
Where else might a yoga instructor invest?
The most famous cryptocurrency besides bitcoin might be Ether, which is intended less as a currency than as a platform for decentralized, algorithmically executed “smart contracts”—but is still traded like a currency. Then there’s Litecoin, which attempts to be bitcoin’s more efficient cousin. And if you feel like those cryptocurrencies are lacking a certain je ne sais quoi—like, say, a cute mascot—you might invest in Dogecoin, a Shiba Inu– themed coin started as a joke in 2013 that now has a market capitalization of over $700 million.
What’s this “mining” thing I’ve heard about?
At all hours of the day, all over the network, computers (called miners) race to package recent transactions on the network into an unfakeable unit (called a block) of the blockchain. Blocks are created every ten minutes or so; this is the authenticating process, sort of like when a credit-card company verifies you have available funds. Essentially, miners are doing the work of encrypting transactions. For what reward? The first miner to create a verified block—one that follows the cryptographic rules laid out by Satoshi Nakamoto—is rewarded with a certain number of bitcoins.
Could I mine my own?
Yes, theoretically, but unless you live next to a power plant and own an airplane hangar’s worth of computers, it’s probably impossible. Creating a block requires a lot of computing power—in part to ensure that it would be too energy-intensive and expensive to sabotage the blockchain with false transactions, and in part to keep bitcoin scarce. And while that works great for bitcoin, it’s less impressive for the rest of the world: One hotly disputed estimate holds that bitcoin mining currently uses as much energy as all of Denmark. You’re probably better off just buying from someone who already owns some, on one of many exchanges.
So how do I buy bitcoin?
If an ATM seems ridiculous, go to the app store and download the bitcoin-trading app Coinbase. It’s the favorite for newcomers looking to pocket their first bitcoin; it has a clean interface and a polite, patient tone escorting you along “the easiest on-ramp to the bitcoin world.” Sign up, connect your bank account or debit card, and scroll to the bottom of the page, where a button beckons: buy bitcoin now. Debit-and credit-card users can front up to $750, the weekly purchase limit.
Can I trust Coinbase?
You can trust Coinbase as much as you can trust anything in the cryptocurrency trading space, which is … not much. In December, Coinbase announced it would investigate its employees for “insider trading”—but good luck regulating “insider trading” among cryptocurrencies.
Now that I’ve bought my bitcoins, where ... are they? Can I even ask?
Bitcoins are, obviously, not physical, so it’s not like they’re filling up a vault or someone’s mattress. Basically, bitcoins reside at “addresses”—long strings of letters and numbers—and the blockchain (which, remember, is distributed in full across the network) says how many bitcoins are at each address. In order to move bitcoins from one address to another—to pay someone, say—you need to use your address’s corresponding private key, which is a lengthy, complicated password you’re given when you open a new address using your choice of software. Don’t forget it! You might end up like Mark Frauenfelder, who wrote in Wired about resorting to a hypnotherapist to remember how to access an address where he’d stored $30,000 worth of bitcoins.
How can I check my bitcoin account? I mean, I guess, my address?
Most people use a “wallet,” a piece of software or hardware that makes it easy to keep track of your bitcoin. One of the most popular software wallets is Exodus (exodus.io), which offers “normal people” access to cryptopia. You can transfer bitcoin from your Coinbase account to your Exodus wallet easily, though know that while cryptos held behind your Exodus fortress are much more secure than those stored in internet-based Coinbase, savvy hackers still break in on a regular basis. If you’re feeling especially paranoid, reduce your chances of getting hacked with a “cold wallet,” hardware that stores crypto offline, such as Trezor and Ledger Nano S. You insert it into a USB port, move your bitcoin from your Coinbase address to the address provided with the new cold wallet, and unplug it from your computer.
What if I don’t want to bother with any of that?
If you have an IRA or 401(k) account with brokers such as Charles Schwab, TD Ameritrade, Fidelity, or E-Trade, you can gain exposure to crypto’s price volatility without owning a single shard of crypto by buying shares in the Bitcoin Investment Trust (symbol: GBTC), managed by Grayscale Investments, an investment management firm that deals exclusively in crypto. For the rough equivalent of one bitcoin’s worth of exposure, buy ten shares.
How can I keep from getting scammed, hacked, or ripped off?
Some very smart people might tell you that the best way to avoid a crypto scam is to invest your money in a diverse portfolio of low-fee stock-market index funds. But who wants to listen to them? The best way to avoid a scam, properly speaking, is to keep your money in the best-known cryptocurrencies (like bitcoin) and use the biggest exchanges (like Coinbase)—but that’s not a guarantee you won’t lose your money if the market crashes. Otherwise, make sure you do your research on what you’re investing in, especially by reading any announcements and white papers for ICOs.
Wait, what’s an ICO?
An ICO is either a hip, sexy new way for entrepreneurs to bypass VCs and raise money from the people, or it’s the biggest opportunity for internet scammers in years. Maybe it’s both! ICO stands for “initial coin offering,” and at its core, it’s a fundraising drive, almost like a Kickstarter. People financially back a project—usually a business, like a cloud-storage network called Filecoin—by buying “tokens” (essentially in-house cryptocurrency) that can generally be exchanged for the goods that will eventually be offered by the project. In the case of Filecoin, for example, you can exchange your filecoins for storage—or you can sell them on a cryptocurrency exchange, like you might bitcoin. (This has been compared to raising money for an airline by selling frequent-flier miles.) If that sounds financially risky—and legally dubious—that’s because it is. A number of ICOs are scams, such as the Diamond Reserve Club, which falsely claimed to be backed by real diamonds. Participants are increasingly getting calls from the SEC, which began filing ICO fraud charges this year.
Whoa, my bitcoin went up 20 percent. How can I cash out?
Had enough, huh? If you want to cash a small amount—three figures, say—in an exchange like Coinbase, it’s easy to use the app to sell and cash out to an attached bank or PayPal account. (It may take a few days to clear.) But for all its secrecy and anonymity, bitcoin is not really a take-the-money-and-run kind of investment. In the four figures and above, you’re likely to start running up against weekly transaction limits, established by exchanges to keep the markets relatively stable. If you’re looking to dump actual bitcoin millions all at once, your only option might be a site like LocalBitcoins, which helps connect buyers with sellers IRL. (Bring a bodyguard.) Well: That, or buy a lot of drugs on the dark net.
I probably should have asked this before, but are cryptocurrencies ... legal?
In the U.S., yes: Buying, selling, trading, and holding cryptocurrencies is legal in G7 countries, provided you pay your taxes. To track the evolving legal landscape, go to bitlegal.io.
I have to pay taxes on my computer money?
Cryptocurrencies are assets, according to the IRS and SEC. Crypto is neither a foreign nor domestic currency, no matter how you use it (in America, at least). Come tax season, your bitcoin earnings will be subject to taxation. In its 2014 notice, the IRS confirmed that underreporting or failure to report cryptocurrency-derived gains would be subject to penalties. So every time you use crypto, you might trigger a gain or a loss.
This seems like an awfully lonely hobby—how am I supposed to meet anyone?
Like anything you do primarily on your computer, bitcoin and cryptocurrency have large communities of obsessives who get together regularly to give advice, swap stories, and enjoy the IRL company of other human beings. Here are the ones worth going to:
CRYPTOCURRENCY TRADERS & INVESTORS
A bimonthly workshop led by crypto currency-hedge-funder Chris Dannen, who gives an introduction to crypto trading, covers the coins he considers worth investing in, and discusses portfolio strategy.
THE CRYPTOCIRCLE SOCIAL MEET-UP
A monthly discussion of the latest in cryptocurrency, bitcoin, and blockchain, held at Jay-Z’s 40/40 club, that includes food and beverages. Or as they advertise it: “All the luxury that Crypto Wizards deserve.”
A recurring gathering of New York bitcoin fans, meant for both beginners “looking to learn what all the fuss is about” and “die-hard Bitcoiners pursuing a business in bitcoins.” Recent sessions have included “Structuring Legally Compliant Token Sales” and “What the Ethereum Bug Means for the Security of Blockchain.”
But … it’s a bubble, isn’t it?
On some level, bubble is a confusing term for bitcoin: If there is no fundamental value to compare the price to, who’s to say it’s too high? But, no, yeah, it’s probably a bubble.
Is this the kind of thing that’s going to blow up the real economy?
If the bubble pops now, the U.S. economy as a whole is probably okay—not enough people have put money into cryptocurrency markets for a crash to make a huge dent. But some bitcoin skeptics have warned that new futures markets might eventually introduce systemic risks, and it’s not exactly comforting to see CNBC headlines like “People Are Taking Out Mortgages to Buy Bitcoin, Says Securities Regulator.”
So ... should I buy bitcoin or not?
In the spirit of Satoshi Nakamoto, here’s an algorithm: Rate your appetite for risk on a scale of zero (lily-livered) to five (iron-stomached). Rate your FOMO on a scale of zero (comatose) to five (desperate to belong). Multiply those two numbers together, and then multiply the product by your salary, minus the amount of debt you’re in. Divide that figure by 10,000, and invest that much money in bitcoin. So you make $75,000, have a low tolerance for risk (one), but a high fear of missing out (five)? Invest $37.50 and not a penny more. You never know!
Can I really just buy it at my bodega?
(1) Yes. New York City is dotted with bitcoin ATMs, where users can put in cash and load up their “wallets” with fractions of bitcoin. The machines make it easy for casual users to turn cash into crypto and are often found in delis. Some of them, though not all, even allow you to take out American cash in exchange for bitcoin.
(2) ATM users simply set up a wallet using the machine—those who already have a wallet can add to their existing account—and then begin feeding cash into the ATM to add to their bitcoin account.
(3) This bitcoin machine, located in a Greenwich Village bodega, is manufactured by Coinsource, which operates about 40 ATMs in the city. Coinsource pays businesses a flat fee, starting at $300 a month, to host its machines.
Why Does Everyone Keep Telling Me to #BTFD?
Much of crypto’s slang comes from traditional finance, but this digitally native generation of self-taught traders has additional vocabulary all its own.
BAGS: Cryptoassets being held, generally as longer-term plays.
BITCOIN MAXIMALISTS: The truest believers in bitcoin’s original mission and design, often paired with a disdain for altcoins.
#BTFD: “Buy the fucking dip.” Advice to other traders to pick up a coin that’s presumably hit bottom.
#DYOR: Do your own research. The trader’s caveat that advice shouldn’t be taken on face value.
EXIT SCAM: Traditionally a term for dark-net markets and vendors that, after building up a good reputation, accumulate bitcoins and disappear; exit scams are also feared by ICO (see page 62) participants who worry that, once they’ve raised hundreds of millions in hard-to-trace money, the developers will take the money and run.
FIAT: Government-issued currency.
FUD: “Fear, uncertainty, and doubt.” A non-crypto term that describes attempts to scare weak-handed coin-holders into selling their positions, often with rumors of exit scams or hacks; the cheap, dumped coins are then picked up by the FUD-ers.
HODL: The intentionally misspelled word HODL has its roots in a December 2013 post on the Bitcoin Talk forum, “I AM HODLING”; when the author couldn’t be bothered to fix his typo, the community turned it into a verb: to HODL. HODL is an effective litmus test for sussing out newcomers.
#LAMBO: A running joke among traders: You’re crypto-rich when you can buy a Lamborghini.
#MOON: A rapid price increase.
PUMP: A rapid price increase believed to be the result of market manipulation, a.k.a. pump and dump.
SHITCOINS: Pejorative term for altcoins, especially low-cap coins.
SATS: Short for satoshis, currently the smallest unit of a single bitcoin, useful for tracking coin prices.
WHALE: Anyone holding enough of any given coin to manipulate the market by himself, often used as a bogeyman to explain unwanted price movements.
How Much Money Can I Really Make on This?
And what’s it like to be a crypto day trader?
BY JEFF KOYEN
IT’S A LAZY SUNDAY morning, and I’m away from my family, sitting in a hotel room in Montreal, and I’ve got $160,000 in my pocket. Or, rather, my “pocket.”
With a few mouse clicks, I could liquidate my positions and transfer the proceeds (minus fees) into my bank account overnight. But here’s the rub: Twenty-four hours earlier, my portfolio, which I started six months ago with an investment of just $3,000, was worth less than $80,000. Overnight, one of my positions—a low-cap coin named Verge—caught fire on the Asian markets. By the same time tomorrow, that $80,000 might evaporate. Or double again.
Welcome to the wild world of cryptocurrency. For every 1,000-times windfall, thousands more in investments have gone south over the past nine years, wiping out trading accounts and nest eggs. As a bitcoin enthusiast since 2013 and casual crypto trader since 2015, I’ve had my share of euphoric wins and heart-crushing losses. But I’m also a grown man with a family—I don’t Google sports cars when I’m ahead; my dreams involve 529 plans and down payments.
And yet I’m just as susceptible to wide-eyed greed. Sitting in my hotel room in Montreal, I could have cashed out at $160,000, pocketing enough to cross “college funds” off my to-do list. I could have returned to Brooklyn with the better part of a down payment in hand. But no. Forget a down payment, I thought, watching .5¢ turn into .6¢ on my phone, translating to another $16,000. “Let’s go brownstone shopping with cash.”
I SIGNED ON to Silk Road in October 2011, a few months after Adrian Chen introduced the illicit dark-net marketplace to the general public on Gawker. At the time, a single bitcoin cost $4.10. I know the exact price because I have the outbound emails where I excitedly told friends about this new anonymous digital currency. But I’d probably remember anyway, because regret over the missed opportunity still burns. How could it not? Like everyone else who failed to become a bitcoin multimillionaire in 2017 by spending $1,000 in 2011, I did not see the future clearly enough.
When I learned about altcoins and crypto trading a few years later, I was determined to not make the same mistake. At latest count, there are more than 1,300 different coins and tokens; most, but not all, are traded freely on various cryptocurrency-exchange platforms, which can offer even more high-speed gains, if you’re willing to stomach some losses along the way. Starting in 2014, with every paycheck, I squirreled away a few bucks into Coinbase, the popular, user-friendly exchange. With bitcoin trading around $350, these wee investments added up, and once I’d accumulated a few coins, I got to work.
At a glance, crypto most closely resembles foreign-currency trading. On exchanges—more than a dozen, at least—cryptocurrency pairs are bought and sold using dashboards that would be familiar to any E-Trade user. Rather than trade British pounds against the U.S. dollar, one might buy Ripple using Ether.
But crypto moves more like the stock market—a completely unregulated stock market. Prices bounce wildly with rumors and announcements; insider tips are exchanged in private chat groups; pump-and-dumps are organized by whales at the expense of naïve newcomers. For day traders, keeping up with the news can quickly become a full-time job.
Consider my Verge position, for example. On April 15, 2017, I noticed an unusual amount of Twitter chatter about XVG, its trading symbol. I spent an hour researching Verge—it was formerly known as DogecoinDark; it had recently rebranded; its primary purpose was facilitating anonymous transactions.
In theory, every coin and token has its own raison d’être. For example, no fewer than five cryptocurrencies are competing to fix the legal cannabis industry’s banking problems.
I happen to believe there’s a strong future for privacy-oriented cryptocurrencies, so I looked up Verge’s price history. It was trading at nine satoshi (.00000001 bitcoin)—or $.00000009. For $530, I bought around 5 million. When the price dipped two weeks later, I bought another 5 million at five satoshi, about $300 total. Over the next few months, Verge would catch the attention of more traders, which led to more Twitter buzz; the price climbed slowly. I bought 6 million more at 18 and 50 satoshi, yielding a price-cost average of 13 satoshi.
Two months after that initial buy, sitting in that hotel room in Montreal, Verge spiked to more than 220 satoshi. This happened for no good reason I could find. Cryptocurrencies don’t release earnings; they don’t announce dividends. Maybe a secret pump-and-dump group was targeting Verge, or maybe the developer shared a new software update in a Telegram channel. Point is, somewhere someone sparked a buying spree that, if this were the stock market, would be catnip for the SEC.
Verge is just one of 100 trades I’ve made since opening my day-trading account with three bitcoin, then worth about $1,100 apiece. With my eyes wide open to the risks, I started by researching every altcoin listed on the top-100 list by market cap, looking for meaningful price actions. I got into Ethereum at about $9 (now trading north of $750, though I sold at $300). I flipped modest positions in Ripple, Blackcoin, Factom, and dozens more, scalping most for 10 percent to 50 percent returns in less than 24 hours. I’ve had losses, of course, but I protect myself with strict stop-loss orders.
It’s been an amazing run, but I’ve been more lucky than skilled. A smarter trader would’ve sold his Verge long ago; for better or worse, I’ve stubbornly held. This hasn’t been easy. I’ve seen skeptics converge on Twitter, crashing the price by 30 percent. But I’ve also ridden dramatic upticks. When tech raconteur John McAfee tweeted his support for Verge, prices climbed more than 100 percent overnight.
Very few people have the stomach for such dramatic swings—my wife included. When it comes to investing, she’d rather I took a few smart positions, let them run, and not talk about it too much. But she’s also come to appreciate my strategy; we’ve enjoyed a few upgrades around the apartment.
Having held onto my Verge through many peaks and dips, I couldn’t resist last week’s rally. I cashed out 85 percent of my holdings at an average 445 satoshis—a tidy 30-something-fold gain. But consider that I bought when bitcoin was trading at $1,100 and—though it’s not quite brownstone money—I’ve done much better than $160,000.
Who Else Besides Jeff Is Making Money?
Your neighbors, most likely. Here are some New Yorkers who are spending their crypto windfall.
“I cashed out some of it over the summer to pay off student loans. I kind of regret that.”
CHRISTINA LUPINACCI: “In 2013, I bought a tenth of a bitcoin, but just to get a meme coin called Dogecoin. It was a joke. Then I forgot about it. In 2016, a friend posted some article about bitcoin on Facebook, and I was like, ‘Oh, yeah, whatever happened to that?’”
“Sending $33,000 in bitcoin to private school instead of writing a check feels like Monopoly money.”
JON AND SAMANTHA FOX
JON: Nine months ago, we bought ten bitcoins, so we put $30,000 in the market. And then we quickly transferred some of that to Ethereum.
SAMANTHA: We got an email from the Montessori school saying that they accepted bitcoin, and it was a no-brainer.
JON: We paid it all at once a few weeks ago, the day they accepted us. The school sends us their 30-digit code, I log into my Trezor, send the money to this code, and it transfers. At some point, we could switch everything over to cryptocurrency.
SAMANTHA: We’d have to discuss that.
“The most extravagant purchase I’ve made is an Arne Jacobsen egg chair.”
MATT RUSSELL: “In 2013, I paid $120 for one bitcoin. In 2015, I sold my apartment and bought $50,000 of bitcoin. I’m now comfortable enough where I do not have to worry about living for the next five years, and I’m probably underselling that.”
Who’s Making Boatloads of Money?
→ SATOSHI NAKAMOTO The designer of bitcoin is estimated to have around 1 million bitcoins—or more than $15 billion. → TIM DRAPER The venture capitalist bought 30,000 bitcoins at an auction conducted by the U.S. Marshals Service, which had seized the tokens as part of its case against Silk Road. He paid about $18 million for the block; today, the value is more than $500 million. → CAMERON AND TYLER WINKLEVOSS The twins famous for not founding Facebook, who started the cryptocurrency exchange Gemini, told the New York Times in 2013 that they owned more than $11 million worth of bitcoin (which today would be worth more than $1 billion). → BRIAN ARMSTRONG He’s the CEO of Coinbase, which this year was valued in a new financing round at $1.6 billion—the first blockchain company to reach “unicorn” status.
Can I Spend My Bitcoin on Anything Besides Drugs and, Like, Assassinations?
Sure! Just head to Fort Greene, which has inadvertently become the real-world cryptocurrency capital of New York thanks to Daniel Sim, who introduced the payment at a number of stores owned by his family, including a restaurant, three grocery stores, and a nail salon clustered in the neighborhood. When the rare customer paying with bitcoin comes in, an employee at one of the stores will either text Sim for the payment QR code or just give his number to the customer and complete the transaction via text. Sim says there have been only a few transactions in recent months: “Nobody is really selling bitcoin right now while its value is so high.”
1. LEAN CRUST
737 Fulton St.
2. GREENE AVE MARKET
17 Greene Ave.
3. MIRAI WELLNESS SPA
670 Fulton St.
4. FRESH GARDEN
729 Fulton St.
5. GREENE-VILLE GARDEN
373 Myrtle Ave.
Got Any Investing Advice?
We don’t, but this 23-year-old who quit his job to become an informal crypto adviser does.
Last year, Ian Petrarca left his postgrad job in audio production to build mining computers. Building turned into trading which turned into cryptocurrency consulting. Now Petrarca, who lives in his mother’s apartment in Tribeca, does this full time and has some thoughts that may just confuse you more.
1 “The bitcoin futures market, which opened in early December, is much less volatile than the cryptocurrency markets, and safer for non-crypto experts to ease into. (Though you’ll usually need at least $25,000 to buy into it.)”
2 “Follow Charlie Lee (@SatoshiLite), the creator of Litecoin. He was one of the first people to alert everyone that the Chinese exchanges were closing.”
3 “I’m interested in proof-of-stake coins, which use a lot less energy than proof-of-work coins like bitcoin. Ethereum is switching to that mode. POS is the future of crypto, in my opinion.”
4 “Never margin trade—when you leverage your trade with borrowed money for a larger return—with bitcoin. Because the price of bitcoin rises and falls so dramatically, margin trading is super-risky, and you’ll be held responsible for the money you borrowed if it takes a big dip.”
Photograph by Bobby Doherty
ILLUSTRATIONS BY TOMI UM
The bottom line is for the people to regain their original, moral principles, which have intentionally been watered out over the past generations by our press, TV, and other media owned by the Illuminati/Bilderberger Group, corrupting our morals by making misbehavior acceptable to our society. Only in this way shall we conquer this oncoming wave of evil.
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