Bitcoin Billionaires: A True Story of Genius, Betrayal, and Redemption

by Ben Mezrich

The technology behind Bitcoin isn’t a fad, or a bubble, or a scheme; it’s a fundamental paradigm shift, and it will eventually change everything.

Litigation had highs and lows, but beneath the surface there lurked a primal energy; at its heart, it was war.

Mediation didn’t feel like war. It was more like a really long bus ride that ended only when everyone on board got tired enough of the scenery to agree on a destination.

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?

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.

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.”

If music could transcend the physical world into the digital world then why couldn’t money?

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.

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.

Sometimes you ask and you ask and you ask for a sign, for just a little hint this way or that, for a bolt flashing down from the sky, lighting the way in front of you, and you get nothing, not a blink, not even a firefly. And sometimes, you get a goddamn burning bush.

Even their mathematical father had to agree: a second act with the enormous potential of Bitcoin seemed like it was worth the risk. It wasn’t often you got a second chance to catch lightning in a bottle.

In the world of virtual currency, paranoia had no bounds—in the end, only the paranoid would survive.

The past was gone. Bitcoin was the future. And Cameron and his brother had leaped headlong into that future. All told, they had spent a little over two million dollars so far, and they would eventually pour in over eleven million dollars to complete their goal. It was, perhaps, the largest bet anyone in the world had made on virtual currency. Maybe only Satoshi, if he was real, and still alive, had more bitcoin. Either way, the Winklevoss twins were on their way to owning 1 percent of all bitcoin in existence. All there was, and all there ever would be. And that stash, that fortune—put them at the dead center of the crypto revolution.

Life is a storm. You will bask in the sunlight one moment, be shattered on the rocks the next. What makes you a man is what you do when that storm comes. —ALEXANDRE DUMAS, The Count of Monte Cristo

A full two-thirds of all deposits over a hundred thousand euros were Russian.

What do you do when you wake up one day to discover that the money in your bank account is gone? That all you have is whatever’s in your pocket? How do you survive?

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.

Specifically, their meeting with Obopay had yielded an important partnership: Obopay, a licensed money transmitter, had agreed to essentially rent their licenses to BitInstant so it could transmit money in accordance with state money transmission laws, which, for the first time, made Charlie’s company legally compliant, something Charlie and his team had pretty much ignored up until that point.

‘We have elected to put our money and faith in a mathematical framework that is free of politics and human error.’ ”

It was that determination and strength that had led to this front-page story. The piece wasn’t an accident; Tyler and his brother had worked hard to convince Nathaniel Popper, one of the most brilliant business voices at the New York Times, to write what would be his first Bitcoin story. They’d pitched him on the idea that they were the first legitimate investors to amass a large stake of bitcoin, when no venture funds in Silicon Valley would touch it with a ten-foot ethernet cable.

PayPal still ran over the copper wires of the legacy banking system. They had changed the way people made payments. But they had not changed the world.

There was a time and a place for the suits, and this was something the Bitcoin world would need to learn to understand, because it might help decide whether Bitcoin went the way of the automobile, or the tulip.

The difference between asking someone and telling someone to do something is fundamental. It’s the same as the difference between making love and being raped.”

Cameron and Tyler Winklevoss had just officially become the world’s first known Bitcoin billionaires.

We’ve watched Facebook grow and change over the past decade, and similarly, it will be interesting to see where Bitcoin goes. In my opinion, the story of this new era of cryptocurrencies is just beginning.

The irony is that Bitcoin and its hashes may very well do what Facebook so spectacularly failed to do—protect its users’ data from hackers, misuse, and overarching authority, and allow a form of online communication that is entirely and truly free.