I’D LIKE TO believe that I wasn’t jumping on the bandwagon. But don’t we all tell ourselves little white lies to keep our self-worth intact?
It was November 2017. I was jolted awake by the rousing sound of a deliciously obnoxious four-stroke engine. The alarm clock sound, ‘motorcycle’, blared out of my iPhone’s speakers, an inch from my ear. I smiled sleepily to myself, my petrol-head nostalgia pleasingly sated before I’d even thrown off my doona. Opening my eyes provided a little less joy: still dark outside. The jury remained out on whether my Sudanese-born, Brisbane-raised body would ever become accustomed to the European winter’s apparent allergy to light. Sun – if any would be able to make its way through the dense layer of grey draped over London – wouldn’t make an appearance until well after 8 am. By then, though, it wouldn’t matter much: I would be deep in the throes of my daily cryptocurrency market routine.
You may have heard of cryptocurrency before. If not, you have probably come across a headline with the term ‘bitcoin’, the original ‘crypto’. You may have even considered dabbling in investing yourself, and then talked to a financially savvy mate of yours who dismissed the whole thing as a fad.
So, what is bitcoin even about? Why would anyone be interested? And how on Earth did I, a woman with next-to-no interest in the financial sector, end up being a person with a morning cryptocurrency market routine?
It started with £200, curiosity, and a little too much spare time.
THE END OF 2017 marked a pivotal moment, both for me and the world of cryptocurrency. The bitcoin price was skyrocketing, making it nigh on impossible to escape the hype. Its reach was so absolute that my own financially disinterested mother was asking about buying bitcoin in the family WhatsApp group (‘Do I keep them in the house?’ she asked). I was on a wild ride of my own: coming off an incredibly tumultuous year and having recently arrived in London, I was settling in and up for trying new things. It was either get a haircut or start investing in cryptocurrency, I thought to myself, and figured I needed all the hair I could grow to keep me warm in the winter months. Cryptocurrency it was.
I really wanted to believe that I wasn’t just following a trend. But, like every other boisterous internet user who began buying bitcoin in the latter half of 2017, I was intoxicated by the promise of a bit of online magic that would – apparently overnight – make me rich. What made it even more fascinating was the core technology behind it all: blockchain. Not only was bitcoin going to make us all monied, but blockchain technology seemed to hold the key to solving many of the wicked, systemic societal problems that were, until now, proving intractable. Bitcoin and the blockchain design behind it were therefore not mere novelty, but transformative technologies that held the promise of getting us out of the mess we were in.
BITCOIN WAS DEVELOPED after the global financial crisis of 2008, as an alternative system of currency that did not depend on financial institutions. It should come as little surprise that, by 2017 – a year notable for the lowest recorded levels of trust in institutions across the world[i] – a decentralised system that eschewed all traditional forms of governance and regulation rose to such sweeping popularity.
Bitcoin’s story is as compelling as it is mysterious, imbuing the entire technology with Netflix-worthy novelty and intrigue. In August 2008, the URL bitcoin.org was quietly registered, and two months later a nine-page white paper titled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ was circulated on a cryptography mailing list by…who? Even today, the identity of bitcoin’s developer is known only by the author’s alias, ‘Satoshi Nakamoto’. Nakamoto’s vision for bitcoin was laid out in the paper: it was to be ‘a purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution’.[ii]
Although the whitepaper didn’t make headlines at the time, it did pique the interest of Hal Finney, a console-game developer and an early member of the ‘cypherpunk’ movement. Cypherpunks comprise programmers, engineers and activists who advocate for a ‘digital world free of corruption and manipulation [from governments]’, and promote enhanced privacy as a means of achieving this. Finney wrote on a bitcoin forum of Satoshi’s announcement four years later: ‘He got a skeptical [sic] reception at best. Cryptographers have seen too many grand schemes by clueless noobs. They tend to have a knee jerk reaction.’[iii] Finney was more optimistic, immediately offering to work with Nakamoto.
On 3 January 2009, the bitcoin network came into existence with the first block – the ‘genesis block’ – being created by Nakamoto. Hal Finney was the first recipient of a bitcoin transaction.
Think of the genesis block as the first loop in a chain or the first living organism on Earth. Every bitcoin transaction can be traced back to this single block, like an online ‘foundation stone’. Inside this digital container, Nakamoto left fifty bitcoins (BTC) and the following text: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
The text was the headline of London’s The Times paper that morning, interpreted by cryptographers as a timestamp of the origin date. It is also seen as a commentary on the state of the banking system, ostensibly bitcoin’s raison d’être. The revolution had begun, and it was not being televised, but broadcast on a network of nodes, via the internet, in a way that history could never rewrite.
SO HOW DOES bitcoin work, and what makes it revolutionary?
It’s helpful to think of bitcoin as ‘electronic cash’ or an ‘electronic asset’. It is a unit of value that can be bought, sold and exchanged for other currencies. As per the white paper, a maximum of twenty-one million bitcoins are allowed in circulation (as of writing, 17.5 million have already been ‘mined’ – stay tuned for an explanation). This makes bitcoin a scarce and limited resource: digital ‘gold’, if you will. It is entirely virtual – there is no ‘coin’, per se – but the value is implied in the transaction that is then recorded on a distributed, public ledger. As a user or ‘owner’ of a bitcoin, you own a private key (a string of random numbers and letters) that is able to unlock the value of a particular transaction, signed with a public key.
In essence, the public key is like the number of a safety deposit box and the private key is like the physical key you keep for the box. The blockchain ‘ledger’ is then like a room full of folders (or ‘blocks’) that are all connected to each other with a unique ‘padlock’ (based on the timestamp of the transaction), making a ‘blockchain’. Inside each folder is a bunch of transactions that say ‘X has transferred Y BTC to Z’, where X and Z refer to safety deposit box numbers. Once your transaction is in a block, and attached to the chain, it can’t be changed, because to access it you would have to open every single digital ‘padlock’ in front of it. Every single bitcoin transaction ever is in this same room, so there are a lot of digital padlocks to open, and every time a new block is added (every ten minutes) you would have to start again. Also, you would have to open all the digital padlocks in all the rooms at the same time, because all the copies have to be exactly the same. This chain, or ledger, sits on nodes (powerful computers) around the world. Some of these nodes are in the bedrooms of individuals like me, some are huge set-ups run by teams in Russia and China. All of these nodes have the exact same copy of the ledger (thus, it’s distributed), and anyone – including you or me – can see all the transactions that have ever occurred (thus, it’s public).[iv]
Like gold, bitcoin is ‘mined’. Unlike gold, this process exists entirely digitally: ‘mining’ is the process whereby computers compete to solve a mathematical problem while processing bitcoin transactions. The difficult mathematical problems are part of what makes the whole network secure: this ‘proof-of-work’ required to add a block to the local blockchain (that is, adding a new folder with a digital padlock to the room) is resource intensive, requiring substantial computer power and electricity. The bitcoin network is essentially impossible to hack because there is literally too much work to do. However, as an incentive to do the work of processing transactions, miners are rewarded with new bitcoins. So, bitcoin mining allows the network to be safe while also adding new coins to the system.
What does this look like in practice? Well, say I want to send Griffith Review 0.1 BTC for this edition of the publication (given that 0.1 BTC is currently valued at US$3,500, I would be drastically overpaying, but let’s leave that aside for now). I would open my bitcoin wallet through a web browser or app (using both my public and private key) and enter Griffith Review’s bitcoin address, a secure version of their public key/safety deposit box number – like an email address. My transaction (a digital note that says: ‘Yassmin sends 0.1 BTC to Griffith Review’) would be broadcast to all nodes on the network for validation. The computers would run some basic tests on the transaction, like checking that the code is technically correct (have I spelt everything correctly?), that the file is not too large (right paper size?), and that the transaction is unique (have I sent the same 0.1 BTC to anyone else?). Once the nodes have validated that it is a legitimate transaction, my transaction sits in a pool of transactions, waiting to be recorded on the bitcoin blockchain. This is the open and distributed ledger saved on nodes around the world. Every ten minutes or so, each node collects a group of transactions – including mine – into a block (like putting a set of those digital notes into a new folder) and then starts to solve the computational problem (proof-of-work) required for that block to be added (attached with a digital padlock). The first node to solve the maths problem ‘wins’, adding the block to the chain and being rewarded with a bitcoin – essentially being paid by the system for its effort. My transaction is now part of the bitcoin blockchain, and the additional 0.1 BTC will now be reflected in Griffith Review’s bitcoin account.
It wasn’t until 2010 that the implications of the bitcoin network started becoming apparent. Initially, it was predominantly used as an alternative payment system for the anonymous purchase of drugs and weapons on the dark web. This changed over time, and cryptocurrencies began to be used as capital-raising mechanisms. Similar to an initial public offering on the stock market, initial coin offerings began to promulgate widely, although the entire landscape was highly unregulated.
In early 2017, bitcoin began to be seen as an alternative to gold as a store of value, and some cryptocurrencies were utilised as a stopgap against a depreciating currency. Venezuelans, for example, were rumoured to be some of the largest and most active purchasers of crypto, using it in place of the hyperinflated local currency. There were also stories of refugees converting their money into cryptocurrency before fleeing their homes, holding it in an online wallet and then converting it back to a local currency when they got settled into their new home. Whether or not these rumours were true, crypto-hobbyists like me ate up them up with relish: they made us feel like we were really on the cutting edge of something that was changing the world. Bitcoin was designed to make transactions immutable (unable to be changed), public
(so fraud would be impossible) and anonymous (no personal information on the network). The network is also decentralised and trustless: no third party (like a bank or government) could hold total control, and none was required for a transaction to occur. Finally, the system is secure and essentially unhackable. The bitcoin white paper had introduced a possible framework for an entirely new financial system.
But the revolution extends beyond bitcoin. Blockchain technology is a whole new way of recording information. It means computers can talk to each other directly and record transactions efficiently, verifiably and permanently without needing a ‘trusted third party’. This has implications beyond just the financial world: it affects logistics, insurance, contracts – any industry that records transactions. Total adoption of blockchain could eliminate the need for ‘trusted third-party’ services like lawyers, brokers and bankers. It’s a foundational technology, like the technology behind the internet. It’s a new way of thinking about trust, and it is here to stay.
READING BITCOIN’S BIRTH story, snuggled in bed one afternoon in a dark London flat, had me enthralled. A new piece of technology with an unknown creator, founded with something called a ‘genesis block’, potentially revolutionising the entire financial system and the concept of trust, all complete with cryptic messages left in the code? Dan Brown had met the utopian version of Black Mirror, and I couldn’t get enough of it. I loved the story behind bitcoin and the promise of blockchain technology. This was the answer. This would lead us to secure financial futures, a world where we could remain private and protected, free from the world’s current structural inequality and hierarchy of wealth. This would allow us to buy a house with a single avocado.
I drank the Kool-Aid, gulped it without taking a breath, and jumped right in.
I started humbly, buying the cryptocurrency basics through my online bank, Revolut. I wasn’t ready for the public key/private key/bitcoin wallet business just yet. The app made buying the three biggest currencies at the time super easy: bitcoin, ether and litecoin. The process was just like converting my dollars into pounds – something I could do with the tap of a button. In late 2017, £200 bought me 0.01818 BTC, and within a few days, my portfolio had grown 7 per cent. That would be a decent quarterly return on an investment, let alone the return after less than a week. If it continued to grow this quickly, I could double my money in a fortnight, I thought, falling into the same trap that many bitcoin newcomers had before me. I felt the rushing thrill of fast money, and a sense that maybe I had become part of something wild, something big. A few days later, I sat down and set myself up on the major cryptocurrency exchanges, conducting my first proper fiat investment and beginning to trade in earnest. (‘Fiat’ is a currency that doesn’t have intrinsic value, but has value because a government has declared it to be legal tender. I’d converted $1,000 into BTC.) I was officially crypto obsessed.
In early December 2017, I had invested $3,000 and my portfolio value was $6,000. I had doubled my money in less than two weeks. I was on a high. My mornings had become a whirlwind.
Step one: check portfolio for any movement.
After trialling various applications that claimed to have the most intuitive user interface or the most comprehensive portfolio options, I settled on the industry standard: Delta. The Delta Crypto Portfolio Tracker famously gives you ‘all you need to know about your whole portfolio at a glance’. As such, it would be mere moments after I silenced my alarm clock’s blaring that I’d tap on the little black icon on my phone’s home screen to open the app and begin my crypto-routine. I’d squint to make out whether or not my investment had grown or shrunk in the five or so hours since I’d fallen asleep. A little green arrow underneath my total portfolio figure would tell me my investments had done well overnight and grown. That would mean I could begin my day with a sense of calm. An upside-down red arrow, on the other hand, would cause my heart to plummet like a lead balloon and would often be followed by a squeal and slight panic. But no matter: given the state of the market in the fourth quarter of 2017, there were rarely any red arrows…
Step two: check individual investments.
Scanning down the screen, I would take in the individual movements of each crypto to check their overnight performances. My portfolio was mixed: like most, a percentage of my investment sat in bitcoin and ether (ETH), while the rest was a random mix of solid bets and odd hopefuls. It was wise to always have a stash of BTC as a base investment, like gold. ETH was the best ‘liquid’ cryptocurrency: it had a faster transaction time, and new cryptos were being built on the Ethereum network so one could easily exchange ETH for other cryptocurrencies directly. The rest of my crypto investments held various levels of risk; some I’d chosen after serious consideration, and others were total punts. XRP, DENT, NEO, RaiBlocks, Oyster, Propy and more: any one of these coins could grow fifty- or a hundred-fold overnight, taking my investment, as they say in the crypto world, ‘to the moon’.
Step three: check the socials.
Most of my information about crypto came from the same place that fed the Arab Spring: the internet. Whether you preferred Reddit, Discord, Telegram, WhatsApp, Facebook or Twitter, online was the place to get your crypto-info fix. My first stop was usually the Reddit crypto front page, where I would spend fifteen minutes or so scanning for any serious news, before falling into a hole of memes and videos about the latest ICO or the next crypto that would go to the moon.
Step four: Get out of bed. It’s gotta happen at some point, right?
In mid December 2017, I had invested $5,000 into a portfolio valued at $11,000. I was starting to write a wish list of the things I would buy when I hit six figures.
WITH UNABASHED ENTHUSIASM, I threw myself wholeheartedly into the world of crypto. It helped that I had found myself in London, a particularly finance-obsessed city. By pure luck, I’d also booked a long-term Airbnb in the perfect spot to take advantage of this crypto-wave. The flat was a London-sized one-bedroom apartment in East London near Old Street, or what is quite geekily known as the ‘Silicon Roundabout’. And by London-sized, I mean tiny. The kitchen doubled as the dining room, and the bathroom doubled as a laundry, linen cupboard and plant nursery. As we stood in his cramped kitchen one day in mid December, I asked my host, James, for his advice on getting involved in the crypto world in London IRL (in real life). ‘There are lots of meet ups you can go to,’ he told me. James worked for a start-up in the fintech (financial technology) sector, so I trusted his word, signing up for every meet-up in a one-mile radius. And oh, was the world of crypto meet-ups fascinating!
My first crypto meet-up was relatively modest: a nondescript café in the Old Street tube station. The sky outside had already resigned itself to an exhausted grey; inside, the café was stiflingly warm. There was something poetic about the choice of location: we were in a place of transition, a spot where people pause in the middle of a journey but which never counts as the final destination. That’s where we crypto-hobbyists felt the cryptocurrency/blockchain world was: in a state of transition, before it got onto the tube to its next destination of total domination.
I had found the meet-up quite quickly: they were the only group in the café, three men sitting together awkwardly around a long table. I joined them tentatively, and after fifteen minutes or so of stilted conversation I asked the man immediately to my left, dressed in green khakis and a large, black jacket, what we were waiting for. ‘Oh, we’re waiting for Vlad! He’s the one who set this meet-up up. We’re waiting for him.’ One of the other men murmured in agreement and began telling me about Vlad in a reverent tone. He was one of the Originals, I was told. He’d been involved in bitcoin for years, since maybe 2009! He’s the guy to talk to about the bitcoin price. He will know what’s going to happen! He even mines bitcoins! He has his own nodes, mining cloud, everything!
The famed Vlad eventually arrived, half an hour after the agreed meeting time. He strode in with an agitated gait and the demeanour of a man who believed in his cause but was paranoid that everyone was out to get him. He spoke rapidly, in a thick Russian accent, about the recent upheaval in the cryptocurrency world. He seemed only mildly interested in asking others their opinions. He dismissed all crypto except for bitcoin – but this was a specifically bitcoin meet, not a general cryptocurrency event or blockchain bash. Of course, this kind of hang-out would be geared towards the purists, the ‘true believers’ who thought bitcoin was the only cryptocurrency worth its server space.
MY NEXT FEW weeks were full of random crypto meet-ups in unusual settings and with unique characters. This included when blockchain rules the world!, an event held at the local WeWork with hundreds of attendees crammed into the co-working space’s ground-floor lobby. WeWork is a US-based start-up that provides ‘cool’ (but, in my opinion, bland and uninspired) co-working spaces for tech start-ups in almost a hundred cities around the world. They are known for having disrupted the office real-estate market: their valuation as of January this year was US$47 billion, and they manage ten million square feet of office space. This WeWork meet-up was classic a ‘techbro’ bash: beer and pizza were free, the room was full of young white men in hoodies and converse shoes, and the stench of unfettered capitalism hung in the air. See, while blockchain and crypto hold revolutionary potential for many social issues, what people really love about it is the potential to make a lot of money, very rapidly. Nothing like a get-rich-quick scheme to get the masses frothing.
I began to see familiar faces at these events, and they would recognise me. Fair enough: there weren’t loads of turbaned Sudanese women at these soirees. I started getting invited to private crypto events, although I stayed away from those, slightly unsure of the men’s intentions. But I continued making my way around the public meet-ups, including an event with a crypto trader who presented his predictions for the year wearing cowboy boots and a cowboy hat. It was a look made even more sensational by the fact that he was a young man of Chinese appearance, who spoke almost exclusively in memes and crypto jargon. Almost everyone in that room had owned bitcoin for longer than five years; I felt strangely proud for having made it onto the guest list. I wasn’t like one of those ‘newbies’, I told myself, as I ate another slice of free pizza (techbros don’t know how to order any other type of food) and looked at the enormous line-up to get in. But of course, I was exactly like all those other newbies. I was only in the room because I’d signed up to the event ridiculously early; I just wasn’t ready to admit to my self-delusion just yet. And it wasn’t just my place in the crypto world that I was deluding myself about. I was unwilling to ask myself any of the tough questions: what was all this really built on? Was there even substance to the hype? Was I truly in this because of the revolutionary potential, or because I liked the idea of fast money?
My faith, Islam, forbids gambling. And there were moments when I wondered if I was flagrantly disregarding this edict by participating in the wildly volatile and speculative game that was the cryptocurrency market. There seemed to be no real logic to what assets would do, no sense to what would rise and fall, no reality to what people were even selling. And that’s an important point to note: the way that things worked meant that you didn’t even need to have a workable product yet to set up an initial coin offering (ICO) and start making money by selling the ‘coins’ for fiat. An ICO, like an initial public offering, is a way to raise money for a project. Companies were starting with the idea of building apps based on blockchain technology (typically on top of the Ethereum network). Once they came up with an idea, they would set up an ICO and sell coins, or ‘tokens’, to raise the money to build the technology. Due to the unregulated nature of the market, though, anyone could make anything up, sell the idea, take people’s fiat for tokens and then disappear. That was the risk you took when you invested in a new currency. Sometimes they grew a thousand-fold in a month; sometimes they were a total scam. Sometimes they would grow a hundred-fold overnight and they were still a scam. It made no sense. It really was the wild, wild west.
I became addicted. Crypto took up all my time. I tried to convince my little brother to put his savings into bitcoin. I spoke about it to anyone who would listen, checked the market obsessively. When not trading, I spent time on the online platforms that would give me more information. There were secret Facebook groups and chat groups where people would share information about new currencies (coins or tokens) hitting the exchanges, price predictions, and the co-ordination of ‘pumps and dumps’, in which groups of users would all buy a currency to raise its price then sell it all at once to crash it, making a healthy profit along the way. I spent New Year’s Eve with a group of friends in a house near Lake Como in Italy, standing on the balcony over one of the most beautiful scenes in the world, unable to resist the urge to refresh my Delta portfolio. That trip, I sold $5,000 worth of RaiBlocks to a friend, a process known as ‘taking out my principal’. I had now made my fiat investment back, and anything I was now making was ‘free money’ – and gosh, who doesn’t love free money?
But alas, all good things must come to an end.
JANUARY 2018 WAS not a good month for the cryptocurrency market. Compare this: BTC hit US$20,089 on 17 December 2017. By 17 January 2018, the price was almost half that, at US$11,431. It was a slow, inexorable downhill run from there.
Opening my Delta app became increasingly dispiriting: the happy green arrows were completely replaced by sad, upside-down, red triangles. One day, in mid March, I woke up, fumbling with my phone to switch the damn alarm off, and decided to go to the bathroom and brush my teeth instead of checking my portfolio. The next day, I did the same thing. I felt a sliver of guilt, an urge to check the bitcoin price, but it was a slight tug rather than the irresistible pull I had become accustomed to.
When I did eventually check my portfolio, it was valued at $600. Not quite enough for a house deposit yet. Not even a week’s rent, if we’re being perfectly honest. If only I could pay in avocadoes. A month later, I deleted the app from my phone. Crypto slunk out of my life, replaced with real-life friends and an obsession with privacy that coincided neatly with the Cambridge Analytica scandals of early 2018. I’d found something else to fill my time.
I WISH I could say that I didn’t jump on the bandwagon – but by god, I did. I hopped right on with the rest of the impressionables, hungry for easy money and that bloodless revolution. I could cloak my brief obsession in all sorts of moralising reasons, but the reality is perhaps much simpler: history is replete with get-rich-quick bubbles, and this was one that fit our world perfectly. It was based on new technology, built on online hype and sustained by dark internet humour – all with the promise of a solution that was also making the world a fairer place. And why did ‘fairness’ matter? Yes, there was an element of anti-establishment rhetoric that wanted anarchy for the sake of it. But I was also part of an entire generation that had been burnt by a neoliberal, capitalist system that wasn’t setting us up for a life of stability or success. We were the generation that had been told that working hard would get you far, and then popped out of colleges and universities to find ourselves steeped in austerity, uncertainty and unemployment. Our democratic governments seemed deeply uninterested in our welfare, concerned more with maintaining power and their own legacies. Our parents had expectations that were formed in a world very unlike the one we were currently living in. And don’t even get me started on the financial sector. Blockchain technology held a promise of something else. Of a parallel system we could design and no-one else could control. It smelled like freedom.
Where has that promise gone? Ultimately, blockchain technology, of which cryptocurrency is one part, is revolutionary – but it’s in its deeply nascent stages. Think of it like the early days of TCP/IP (transmission control protocol/internet protocol), the technology behind the internet. TCP/IP was developed in 1972. The world wide web was not developed for public use until the 1990s, and it wasn’t until the early 2000s that we began to see the possibility of things we take for granted now, like social media and digital maps. Facebook would have been impossible to conceive of in 1972. But decades of development allow for all sorts of new applications of a technology to be dreamed up and created.
Personally, that’s where I think we’re at. As a technology, blockchain is in the 1970s stage of the internet: we have no real idea what applications it may have just yet. The difference with blockchain is that institutions have a lot more to lose. The political implications of a system that cuts out the middleman, or of a currency that governments cannot control, is destabilising for those in power. So, this revolution, like almost all before it, will face immense resistance to widespread adoption. Where does this leave us? Time will tell. I’m not necessarily going to throw any more of my fiat at any company with ‘blockchain’ in its name just yet, though I’m still pretty pumped. To the moon with us all.