DEDICATION
FOR MY MOM AND DAD
CONTENTS
Dedication
Introduction
Part One
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Part Two
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Chapter 17
Chapter 18
Chapter 19
Chapter 20
Chapter 21
Chapter 22
Part Three
Chapter 23
Chapter 24
Chapter 25
Chapter 26
Chapter 27
Chapter 28
Chapter 29
Chapter 30
Chapter 31
Technical Appendix
Acknowledgments
Sources
Index
About the Author
Credits
Copyright
About the Publisher
INTRODUCTION
It was after midnight and
many of the guests had
already gone to bed, leaving
behind
their
amber-tailed
tumblers
of
high-end
whiskey. The poker dealer
who had been hired for the
occasion from a local casino
had left a half hour earlier,
but the remaining players had
convinced her to leave the
table and cards so that they
could keep playing. The
group still hovering over the
felt and chips was dwarfed by
the vaulted, wood-timbered
ceiling, three stories up. The
large wall of windows on the
far side of the table looked
out onto a long dock, bobbing
on the shimmering surface of
Lake Tahoe.
Sitting at one end of the
table, with his back to the
lake,
twenty-nine-year-old
Erik Voorhees didn’t look
like someone who three years
earlier had been unemployed,
mired in credit card debt, and
doing odd jobs to pay for an
apartment in New Hampshire.
Tonight Erik fitted right in
with his suede oxfords and
tailored jeans and he bantered
easily with the hedge fund
manager sitting next to him.
His hairline was already
receding, but he still had a
distinct,
fresh-faced
youthfulness to him. Showing
his boyish dimples, Erik
joked
about
his
poor
performance at their poker
game the night before, and
called it a part of his “long
game.”
“I was setting myself up
for tonight,” he said with a
broad toothy smile, before
pushing a pile of chips into
the middle of the table.
Erik could afford to
sustain the losses. He’d
recently sold a gambling
website that was powered by
the enigmatic digital money
and payment network known
as Bitcoin. He’d purchased
the gambling site back in
2012
for
about
$225,
rebranded it as SatoshiDice,
and sold it a year later for
some $11 million. He was
also sitting on a stash of
Bitcoins that he’d begun
acquiring a few years earlier
when
each
Bitcoin
was
valued at just a few dollars. A
Bitcoin
was
now
worth
around $500, sending his
holdings into the millions.
Initially snubbed by investors
and serious business folk,
Erik was now attracting a lot
of high-powered interest. He
had been invited to Lake
Tahoe by the hedge fund
manager sitting next to him at
the
poker
table,
Dan
Morehead, who had wanted
to pick the brains of those
who had already struck it rich
in the Bitcoin gold rush.
For Voorhees, like many
of
the
other
men
at
Morehead’s
house,
the
impulse that had propelled
him into this gold rush had
both everything and nothing
to do with getting rich. Soon
after he first learned about the
technology from a Facebook
post, Erik predicted that the
value of every Bitcoin would
grow astronomically. But this
growth, he had long believed,
would be a consequence of
the
multilayered
Bitcoin
computer
code
remaking
many of the prevailing power
structures
of
the
world,
including Wall Street banks
and national governments—
doing to money what the
Internet had done to the
postal service and the media
industry. As Erik saw it,
Bitcoin’s growth wouldn’t
just make him wealthy. It
would also lead to a more just
and peaceful world in which
governments
wouldn’t
be
able to pay for wars and
individuals
would
have
control over their own money
and their own destiny.
It was not surprising that
Erik, with ambitions like
these, had a turbulent journey
since
his
days
of
unemployment
in
New
Hampshire. After moving to
New York, he had helped
convince
the
Winklevoss
twins, Tyler and Cameron, of
Facebook fame, to put almost
a million dollars into a startup
he helped create, called
BitInstant.
But
that
relationship ended with a
knock-down, drag-out fight,
after which Erik resigned
from the company and moved
to Panama with his girlfriend.
More recently, Erik had
been spending many of his
days in his office in Panama,
dealing with investigators
from the US Securities and
Exchange Commission—one
of the top financial regulatory
agencies—who
were
questioning a deal in which
he’d sold stock in one of his
startups for Bitcoins. The
stock had ended up providing
his investors with big returns.
And the regulators, by Erik’s
assessment, didn’t seem to
even
understand
the
technology. But they were
right
that
he
had
not
registered his shares with
regulators. The investigation,
in any case, was better than
the situation facing one of
Erik’s former partners from
BitInstant, who had been
arrested two months earlier,
in January 2014, on charges
related to money laundering.
Erik, by now, was not
easily rattled. It helped that,
unlike
many
passionate
partisans, he had a sense of
humor about himself and the
quixotic movement he had
found himself at the middle
of.
“I try to remind myself
that Bitcoin will probably
collapse,” he said. “As bullish
as I am on it, I try to check
myself and remind myself
that new innovative things
usually fail. Just as a sanity
check.”
But he kept going, and
not just because of the money
that had piled up in his bank
account. It was also because
of the new money that he and
the other men in Lake Tahoe