Number Go Up: Inside Crypto's Wild Rise and Staggering Fall

by Zeke Faux

From the beginning, I thought that crypto was pretty dumb. And it turned out to be even dumber than I imagined. Never before has so much wealth been generated with such flimsy schemes. But what shocked me was not the vapidity of the crypto bros. It was how their heedlessness had devastating consequences for people across the world. By the end, I’d find myself in Cambodia, investigating how crypto fueled a vast human-trafficking scheme run by Chinese gangsters.

in general I was good at writing about scams. I liked figuring out how con men were exploiting legal loopholes, unraveling their tricky contracts, and tracing their offshore shell corporations. Crypto didn’t hold the same appeal for me. I’d resisted the topic whenever it came up at work. It seemed so obvious. The coins were transparently useless, and people were buying them anyway. A journalist composing a painstaking exposé of a crypto scam seemed like a restaurant critic writing a takedown of Taco Bell.

In an old document I discovered on Tether’s website, I found a list of the risks of buying the cryptocurrency. The company said it could go bankrupt, or the unspecified bank holding its money could, or a government could confiscate its assets. Last on the list: “We could abscond with the reserve funds.” I made a note of that one.

The system depends on economic incentives. The miners who confirm transactions have made such a large financial investment—in buying computers to compete in the guessing game—that it wouldn’t make economic sense to undermine Bitcoin by entering false transactions. But that also means it does make economic sense to run tons of computers to guess random numbers in hopes of winning the Bitcoin reward. As one person famously put it on Twitter, “Imagine if keeping your car idling 24/7 produced solved Sudokus you could trade for heroin.”

as of 2023, about 85 percent of the electricity used for Bitcoin mining came from coal and natural-gas plants. By some estimates, Bitcoin mining consumed as much energy as the entire country of Argentina, population 46 million. If this all sounds insane to you: I know. I am with you.

Mashinsky said banks like J.P. Morgan were dishonest when they claimed they could only afford to pay tiny interest rates to savers. “Somebody is lying,” Mashinsky said. “Either the bank is lying or Celsius is lying.” I was pretty sure I knew who was lying, and it wasn’t J.P. Morgan.

Another man told me Pierce was building a spaceport on an old army base in Puerto Rico. An obnoxious guy who described himself as a “futurist” told me a story about a time in Ibiza when Pierce went three days without sleeping. “He’s surrounded by people who are benevolent dolphins and not sharks,” he said. He then asked me to smell a pastry for him before he ate it, telling me he was allergic to raspberries.

Thiel had delivered a speech at the conference that day in which he called Warren Buffett a “sociopathic grandpa” for doubting Bitcoin. He did not tell the audience that the venture capital firm he co-founded, Founders Fund, had recently sold off the vast majority of its crypto holdings.

A succinct summary of everything one needs to know about Thiel.

(“Mt. Gox” stands for Magic: The Gathering Online eXchange.) Unsurprisingly, a former trading card website proved to be a bad custodian for billions of dollars. Its security and record keeping were so poor that hackers would steal Bitcoins as soon as users deposited them. Mt. Gox filed for bankruptcy in 2014, and owned up to the fact that it had lost 7 percent of all Bitcoins in existence.

With help from Mayweather, Centra raised about $25 million. But like most of the companies that raised money with ICOs, it was a total scam. It never issued its crypto debit card, or anything else at all. Even the CEO listed on its website didn’t exist—his picture was a stock photo. It would later be revealed that its founders, including a pot-smoking, opioid-addled twenty-six-year-old who ran a Miami exotic car rental business, had paid Mayweather $100,000 for his endorsement.

I couldn’t believe that every day, people sent millions of perfectly good U.S. dollars to the Inspector Gadget creator’s Bahamian bank in exchange for digital tokens conjured by the Mighty Ducks guy and run by executives who were targets of a U.S. criminal investigation.

After about an hour, Bankman-Fried stirred, ate a package of Nutter Butters, then closed his eyes again. I saw myself out.

the thought of methodically gathering facts to disprove their ridiculous promises was exhausting. It reminded me of a maxim called the “bullshit asymmetry principle,” coined by an Italian programmer. He was describing the challenge of debunking falsehoods in the internet age. “The amount of energy needed to refute bullshit is an order of magnitude bigger than to produce it,” the programmer, Alberto Brandolini, wrote in 2013.

A COMMON MISCONCEPTION about NFTs is that the buyer owns a unique, verifiable digital image. That’s not the case. There’s nothing stopping anyone from simply right-clicking Justin Bieber’s ape and downloading the image file to their computer. The replica is indistinguishable from the $1.3 million original, and perfectly usable for a profile picture. What a Bored Ape buyer pays hundreds of thousands of dollars for is not a digital ape cartoon—it’s the ability to prove they are the one who paid hundreds of thousands of dollars for a digital ape cartoon.

I could see how it all might make sense if I was planning to get rich and then hide my winnings from the IRS. The fox icon did not ask for my name or Social Security number. But I couldn’t imagine that anyone would be willing to go through this risky and ridiculously complicated process without the hope of generational wealth on the other end. And I definitely didn’t believe that Jimmy Fallon or Steph Curry had done it themselves.

Nobody wanted blorps or fleezels. The $60 billion was gone.

The epitaph for all of crypto could be simply this

“Bees don’t waste their time explaining to flies that honey is better than shit.”