Everyone Is Getting Hilariously Rich and You’re Not

The revolution will be ushered in by young people who are also cryptocurrency millionaires. Oh wait, they may be broke already.

Comments: 239

  1. If these guys are so rich, why are they living out of their suitcases in a crypto-crack house communally eating Nutella and Fruit Loops?

  2. Wealth and frugality aren't mutually exclusive. Their wealth is currently virtual. They seem to be building something they believe in rather than cashing out.

  3. Because they are super young and have fun living that way.

  4. Apparently, the coins are not very liquid. You can buy them.. but you are limited on how much you can sell for cash each week. They are rich on paper.. holding illiquid assets.

  5. Virtual work, virtual computers, virtual money. I guess tangible things no longer matter. As with all investments, value is in perception. Whatever it is may not actually be worth anything (remember tulips?) It's all about perception and the art of the sale. I'll also give a nod to Rob's comment, if these guys are so rich why are they living out of suitcases communally eating cheez-its and Nutella?

  6. These are the kind of people who are considered "deplorable" here in San Francisco. They have made it almost impossible to afford living here. I hope they crash and burn...

  7. Do landlords take these currencies for real estate rental or purchase? Doubt it so please explain how this us actually floating

  8. It is truly the case that appearance and illusion are more powerful than reality. It is much easier to believe and follow than to know. Thus people long for virtual friends, go to virtual universities, to make virtual work, create and spend virtual currencies in virtual paradises until all the phantasms recede to expose the harsh reality.

  9. To all you "normies" reading this asking yourselves what it's all about: look beyond the crypto-currency excess detailed here and look into the blockchain technology on which it all runs. That's the truly revolutionary change taking place here. It absolutely will transform the world. These early adopters are like the very first people who bought Google and Amazon because they were fascinated and believed in the technology. The resulting wealth is just a side effect for many of these folks. The good news is that it's barely even started.

  10. No one's doubting blockchain. Blockchain is an innovative technology. What we're doubting is these fools and their cryptocurrency.

  11. Don't worry, we're already bored. Norm-core is always in style. [Where'd my New Balance go?]

  12. Except the high energy=cost needs means it’s all being mined in Asia now.

  13. Can't decide whether this is more sad -- cleaning ladies putting their hard-earned savings into this fantasy -- or pathetic.

  14. Back in the day, I worked for one of the hottest optical startups around. We were all going to be rich. My plebeian share was worth anywhere from $5M-$10M, gross. But, as an astute grey-beard warned with a sign on his cube: "You aren't a millionaire until you exercise your options, sell your shares, and pay your taxes". Well, our IPO got yanked, 9-11 happened, NASDAQ crashed, and the telecom winter set it. I did get a $0.09 check for my shares after the 11M:1 reverse split. These guys all have virtual money. It's worthless until it's turned into something tangible.

  15. So are the fake mink coat and hat rented?

  16. Yes that's why it's important to cash out now and then. I started investing in cryptocoin on Nov. 15. I turned $10K into $20K despite making a lot of dumb mistakes and bad trades. I took $10K back to the bank and left the remaining $10K on deposit in the exchanges, to come what may in the next two months.

  17. Interesting that these guys measure their wealth in dollars not cryptocurrency.

  18. So the guy in the fake mink coat and the Halloween hat and shoes is the goal?? I'd rather have some land.

  19. I am pretty sure he is NOT the goal and that his outfit is some kind of joke, if not for him then for most of the people around him. Most of these people are just kids or at least they're still kids in terms of lifestyle. Quick money makes people behave weirdly, especially young people who haven't built even a sense of self. It's a bad look. It looks especially bad to someone who has worked hard, has responsibilities, and not a lot of money. I think the "bad look" is the point of the article.

  20. The best quote is from law student Chante Eliaszadeh: "Obviously the bubble's going to burst and everyone's going to need a lawyer." Smart. Bet she ends up wealthiest of all.

  21. Reminds me of the old chestnut that only the merchants selling shovels got rich during the Gold Rush. Guess it's the lawyers selling advice who will make money in the Coin Rush.

  22. No, it isn't obvious a bubble is going to burst but legal marketing never stops. Therein lies a bigger bubble. If everyone needs a lawyer we need Elon to get us to Mars asap 'cause it isn't worth staying.

  23. I think most people are going to end up without causes of action, unless they are able to prove that they were defrauded and lied to and had no way to know that they were being defrauded and lied to. People are voluntarily investing in systems that are unbacked by the government and are based on speculative value, so they have no contract claims nor will they be able to prove unjust enrichment if the bottom falls out of the whole thing. They will have no tort claims because they are all apparently walking into the same dark alley everyone else is. In other words, they are gambling and know it.

  24. Like the Trump administration, this will not end well.

  25. can you do a follow-up story a year from now, to see how these "rich" guys are doing?

  26. Yes, well, I agree with the implicit point for sure -- concerning cryptocurrencies. But I would not be surprised if these fellows end up in "great" (i.e., very well paying) jobs in media/advertising. Far too many jobs are fake jobs, now. Remember, somebody out there is growing food, somebody is making clothes.

  27. Best Comment yet. Wait a year and rewrite this story.

  28. We were talking about this at Christmas lunch. My son, a previous merchant banker, is very interested. But as he says "I'm a gambler". This is premised on buy and never sell, hence HODL. Pure pyramid, you get your crypto dollars from the mugs after you who put their money in. I would do it until I got say $100,000 in value then pull it out in a real currency. Except I'm not sure how you do that. Can anyone tell me?

  29. I still don't understand what the heck a Bitcoin is - and the guys hanging out at this Crypto Club are just...I'm so grateful to have a real job.

  30. A Bitcoin is ‘mined’ when someone, usually with the aid of a powerful computer, finds a prime number which satisfies certain criteria. Whoever finds the number gets to keep the bitcoin. The blockchain is a distributed ledger system which allows everyone on the bitcoin network to see who has created each bitcoin and who transferred coins to whoever else. Mathematically, you can prove that only a certain number of these special prime numbers exist, which eliminates the possibility of runaway inflation.

  31. Now this is intriguing. Could you provide a reference for the criteria? Every subset of prime numbers meeting a certain set of criteria that I am aware of is infinite, but in some cases only a very small number of primes from that subset are known. Similar to transcendental numbers, we know there are as many of them as there are real numbers, but proving that a particular number is transcendental is hard.

  32. Oops, made a mistake. It is not known whether Mersenne primes are an infinite set. This is a conjecture; a lot of people are trying to prove that it is. Of course it is not known to be finite. I'm wondering if that was what you were referring to.

  33. There are real negative consequences here. This relentless speculation of digital fairy dust is the extraction of wealth from more productive aspects of society, and from those of us who work for a living, to some greed driven fantasy machine. There's nothing exceptional about this, it's just another tulip bubble. I still remember the start up culture of the late 90s...it's all about getting rich quick, with some fool eventually holding the bag. Don't kid yourself, this is a zero sum game. I hope it doesn't end well for these clowns, but unfortunately housekeepers like Maria get taken in and destroyed in this punk game.

  34. Currently, the prices are driven by speculation and greed. However, I would encourage you to research blockchain technology and ethereum. The blockchain revolution is just starting, there is real value being created, and it is not a zero-sum game. Best wishes to you.

  35. Bitcoin is a negative sum game. It costs real money to buy and run mining computers. The cost to run mining computers is paid for by producing more bitcoins (especially at the start) and by transaction costs (eventually all of the revenue for mining will come from transaction fees). As transaction fees are paid in bitcoin, as the price of bitcoin rises so does the transaction fee. Transaction fees have exploded as bitcoin has both risen in price and the fraction of return to miners has shifted to transaction fees. Transaction fees went from less than a penny per transaction to an average of $55.16 on December 22, 2016. Buying a pizza and paying $55 in transaction fees doesn't make much sense. Tulip bulbs are a positive sum game. Buy one, plant it, grow more.

  36. Please do a sensible article on people who exchange their bitcoins for real money. You'll find they are very few. You see, it's not that easy to cash your bitcoin in for currency like real U. S. dollars. Okay, if you don't want dollars, you'd rather have stuff, there are a handful of companies who will accept bitcoin. If I owned bitcoin, I'd be stocking up on as much stuff as people are willing to sell me. If you want to live in bitcoin world where drug dealers do business (which is why these cryptocurrencies took off in the first place,) good for you. Bitcoin traders will sucker fools in, take their U. S. dollars or other legitimate currency, and leave a whole lot of saps holding the bag. These currencies are like tulips, beanie babies, and hummels: they're only worth what people are willing to pay for them. The real world is not going away. Good luck, folks.

  37. There's much more to cryptocurrencies than bitcoin. Your analysis applies to bitcoin, but I think it doesn't apply to more complex projects such as ethereum. The current value of ethereum is driven by speculation but I believe in 2018 and 2019 we will see it driven by utility. If you see bitcoin as representative of all cryptocurrencies, please do a little research on ethereum. Prepare to have your mind blown :) Good luck to you as well.

  38. I don't understand why people think this other than willful ignorance. It takes about 30 seconds to execute a sell order of Bitcoin or Ethereum on Coinbase or Gemini (US based and insured exchanges) , and about 2-3 business days for the USD to ACH transfer into a bank account. You can also wire it if you want it faster.

  39. In other words, just like any security that takes a few days to clear a transaction, it seems easy enough to exit, as long as the bubble is inflating. What’s a couple of days? Well, as soon as he ride turns, it might as well be a couple of years. You will not be able to exit.

  40. I remember when I was a kid we use to play business, leaves from bushes were the money. We would each pick a designated amount of leaves then open businesses. Someone would make a fake restaurant serving rocks and sticks for food. Someone would make a taxi service using a wheelbarrow. Someone would open a casino where one would pay to guess where the jackpot was hidden under three rocks. Someone would open a bank and collect a fee to hold your leaves. Someone would sell art. And someone would inevitably try to pick more leaves without telling the others, breaking the rules. So we made a fake jail. I am not sure what is going on with crypto-currency, but it feels like kids playing business, picking leaves and saying it's real, and everyone in the group agrees to play for awhile. Everyone agrees that these leaves, these bitcoins, have worth. However in this game, the kids have actually figured out how to get the adults to buy some leaves with real money. And some of the adults have decided to go pick some leaves and start their own market. My question:Who decides when people get to pick new, fresh leaves? Who is their Janet Yellen, their Greenspan? What are the rules? What happens when the one with the most bitcoins cashes out, the market implodes, and everyone else is left holding leaves?

  41. Picking leaves is easy, convincing people your leaves have value is hard. There are lots of scam and overvalued projects out there and lots of speculators will get burned. However, there are several legitimate projects, such as ethereum, who currency will increase in value due to utility even after the speculation bubble pops.

  42. Bitcoins are awarded to the first person to guess an extremely large number. A contest is run about every 10 minutes so that it takes all the Bitcoin miners about 10-20 minutes to guess the number. Its all those computers guessing numbers that uses so much energy.

  43. sounds like how all "currency" starts.....

  44. Here's another acronym: FOMO (fear of missing out) effect, and it's underlying the speculation going in with crypto currencies. A bubble that can only eventually burst, disappearing into the ether south everyone's savings.... There's a major omission in this story, which is that it apparently takes a MASSIVE amount of energy to create and process the crypto coins. How much can the blockchain technology really advance before it consumes the majority of the world's energy?

  45. The amount of energy currently required to mine cryptos is absurdly large. However, traditional crypto mining and the associated energy use will be made obsolete by Proof-of-Stake consensus, being developed by ethereum researchers. Google it, it will solve the crypto energy issue.

  46. Bitcoin takes a lot of energy because of its particular consensus algorithm. There are numerous other algorithms that do not. Remember, when Bitcoin was started, they had no idea of what would happen.

  47. Thanks for the info, I'll check it out!

  48. Besides Maria the mark and the half naked woman in bondage “art”, are there any women in this game? Feels like an extension of gaming bro culture. Sounds like they’re full enough of themselves and their cult that they’ll blow themselves up. Maria, good luck but I’d suggest you get to the safe zone.

  49. Yup, I'm a woman. I am completely fascinated & inspired by the Bitcoin, the blockchain technology potential, and by the stratospheric interest in all the cryptocurrencies. I'm not young, I'm not male, and I haven't staked my entire fortune in it. 10% is the recommended amount. I have 10% of my "surplus" money in it and I have doubled my money and am on HODL!

  50. If you've doubled your money, then have you rebalanced your stake by cashing part of it out, to bring you back to the 10% of "surplus" that is "the recommended amount"? Did that work out? Let us know.

  51. The unpolished gem of interest here is blockchain technology, which to me has significant potential in revolutionizing data security and data storage. I could care less about any cryptocurrency, "mining it" or the clear lack of security in everyone's "cryptocurrency wallet."

  52. Where can I get a sweater like that??

  53. read the artcle; there is a link

  54. Currently, coins are skyrocketing due to speculation about the future price. In 2018 and 2019, I believe we will see a shift to select coins skyrocketing for more logical reasons: increased demand and decreased supply of certain coins and tokens. Take ethereum as an example: When they implement Proof of Stake (google it), "stakers" will receive a guaranteed return of at least 1-3% on their ETH. This will increase the demand, especially if the guaranteed return is 3% or higher, and decrease the tradeable supply, because ETH that is staked can't be traded. It's still very early in the blockchain revolution. Do your research and own your decision of whether or not to invest. Remember, happiness can't be bought.

  55. In the early days of the internet it seemed that every IPO was snapped up as no one wanted to miss out on the next Microsoft, Apple or whatever. Of course most of these companies tanked as no one really had any idea what they were looking at or what constituted a company worth investing in when it was "online". I'd suspect this is the same.

  56. A question that comes to mind is, if it's such a great opportunity, will you let me buy into your I.C.O. with another cryptocurrency?

  57. Perfect. Sometimes, just one well-conceived and well-phrased question is all that is needed.

  58. Yes, everyone allows this, that's how ICO investing is done.

  59. That's part of the genius. To buy into an ICO, the only accepted form of payment is often Ethereum, which at this point is an appreciating asset. So the ICO sponsors sell their brand new close-to-worthless tokens for valuable consideration without having to give up any equity in their companies. Great for them, but where is the due diligence and careful consideration on the part of investors?

  60. It is apparent that every one of these young men missed Economics 101 in (name any college or community college). Tulips, Gold, name the markets that over the centuries have inflated and burst. It looks easy until it's not. The dollar is currency that is backed by the full faith and credit of the United States - which is why it is so stable and other countries peg their own currencies to it. Bitcoin is currency that is backed by the full faith and credit of...who? These guys? Other anonymous guys on the internet? I'm with Jamie Dimon on this one, kids. Wealth takes disciple and time.

  61. Economics 101 can explain why many of the coins (NOT necessarily bitcoin) will skyrocket in the future: supply and demand. Increasing demand and fixed or decreasing supply means means increasing price. Currently supply and demands of cryptocurrencies is 100% speculation, but as blockchains start to have real world uses, the demand will shift and become more logical. Also, JP Morgan is a founding member of the Ethereum Enterprise Alliance. There's a lot more to cryptos that bitcoin. Best wishes to you.

  62. I'm with Jamie too! :"JP Morgan's Jamie Dimon softened his stance on bitcoin during an interview on Fox Business Network's "Mornings With Maria," saying he regretted earlier comments calling the virtual currency a fraud."

  63. Wall Street inflates bubbles and then pops them. There was tech in 1999-2001, housing in the runup to 2007-2008, and now...

  64. This was so well told... Cinematic. Thank you.

  65. I can't get past the bit where the 26-year-old multi-millionaire has $400,000 to invest in his early 20s. That clearly came from mom and dad (where else would it come from?). Why wasn't that examined or mentioned? I am so unimpressed that someone with access to $400,000 was able to turn it into many millions of dollars via financial investments. Just another wealthy white guy born on third who thinks he hit a triple.

  66. Sometimes I rail at myself that I didn't put money into Amazon when I realized in the late 90s they might be big. Then I remind myself that in the late 90s I could have begged, borrowed, and stole and not been able to come up with more than $500, so I suppose that shooting star wasn't meant for me anyway ;)

  67. This is not uncommon in Silicon Valley for people who happened to have gotten into the right company at the right time. For example, when Facebook went public, it reportedly minted over a thousand millionaires, some of whom came out with much more than that. This happens because employees are often paid in either stock options or stock "units" which grow with these companies' stock prices. Being unimpressed with this guy is fine, but why bring up his skin color and assume he thinks he deserved it? I know plenty of people out here who became wealthy by accident and realize it's largely because of luck.

  68. "Just another wealthy white guy born on third who thinks he hit a triple." AWD, Why is his race relevant? Since tomorrow is Martin Luther King's birthday, this might be a good time to quote him: "I look to a day when people will not be judged by the color of their skin, but by the content of their character." Maybe you should heed Dr. King's words and try to advance his cause. A good start would be to stop stereotyping people by race.

  69. "It's going to get rid of armies, man...decentralize wealth-" These people are so naive. 95% of the bitcoin wealth is owned by 4% of the people in the market. So, until the surrounding institutions in society change, a new currency (bought with real world money) isn't going to make a dent in inequality or voter power. *Blockchain* is absolutely going to change the future - but since it's not patented, its success isn't tied to these cryptocurrencies, which are extremely vulnerable to price shocks (think takedown of the Silk Road, China changing policy on this issue, other unexpected happenings). I feel really awful for the nanny in this article. All the big money has already been made, and the kingpins aren't letting go of their coins anytime soon. I don't care if they go bankrupt, but people like her, man, what a shame.

  70. Was this the call to arms during the Tulip bulb craze? I'm not worried about a lost opportunity as much as I'm worried about the aftermath of the pop. The irrational exuberance of crypto currency pricing will proly correct when wall street does. That bubble might be easier to see.

  71. Bitcoin, Shitcoin (haiku) "Crypto currencies - will decentralize wealth and - change the world order"

  72. When I first looked at bitcoin, it seemed to me to be a classic pyramid scheme. The first few people in got most of the coins, everyone else had to work like crazy to get just a tiny bit, the later you got in the harder you had to work for less and less. It looks to me now that lots of other groups are simply copying the successful scam. My bet is that eventually the whole thing will crash, just like every pyramid scheme before.

  73. It resembles, in part, a pyramid, except that multi-level schemes demand that each level add new incoming levels to support the structure which then expands exponentially as does the value (or income) of higher levels. If the pyramid simply collapses it does so when are not enough new levels coming in...as it cannot sustain its own mass. The original pyramid schemes were simply cash-in programs, no products involved.. Then the government demanded that some "product/service" of value be added, which let to the multi-level marketing product companies today (in which 99 percent of sales are actually internal from so called "partners" (the people who sign up to be reps). Reps (or "partners") make money by recruiting and signing up new Reps and selling products. Reps may feel they are saving money by purchasing the products from the multi-level marketing companies as their own-private Costco (some of the products are as good, if not better than those found at retail, some may not be so great). These internal sales are the mass that keep the current multi-level marketing companies afloat and seeking new markets (most assuredly, Asia). Personally, I have no financial involvement in any of this, but have to admit that XS by Amway may be the best energy drink on the market today. By best I mean providing energy without any of the harmful ingredients found in almost all others. But that's just my opinion.

  74. Crypto has a key advantage over traditional pyramid schemes: there is no ringleader to arrest. You can go after as many participants as you like, and likely crash the value quite a bit, but the blockchain will remain, it’s value to be inflated again and again.

  75. I like to work for money. When work involves civil rights law, it doesn't feel like work. And you don't even think about money. As soon as you can afford to do something like that, I recommend trying it. In fact, I bet a lot of people can afford it already.

  76. When work involves a daily practice of connection to one's own humanity, and then making an effort to contribute something to the rest of the human race and the world, it's called living with integrity. It doesn't matter if you are an attorney doing public interest law, a housekeeper cleaning toilets, a sales clerk at Walmart, a doctor, or a petty bureaucrat. Workers who have an ethic of caring to bring value to other humans are working an honest day's work. These self-absorbed sociopathic young white frat boys represent the worst of what it means to "work" - contributing to the enrichment of self above all, the rest of humanity be damned. The worst of these crypto traders are young Donald Trumps in the making - beware.

  77. Is it me or does it seem like so many things are flying high on artificially inflated value except for old-fashioned "work"? Does it bother anyone that "work" is the ONLY thing that can actually produce ANYTHING yet has so little value? Without "work" being accomplished, there would NO monetary value of anything.

  78. Young, educated up-and-comers see what Zuckerberg did and think they can do the same.

  79. True. And work has more than just monetary value.

  80. Where in the world did they get the idea that you could make tons of money by selling to other the people the idea of making tons of money without actually doing anything?

  81. It smells like 1928. Puffy values. Empty edifices. Sand is called bedrock.

  82. Fred Flinstone lived in Bedrock. Recall his many schemes to get rich fast?

  83. The laughing sounds you'll hear will come from those who short the crypto bubble before it bursts. The hilariously former-rich speculators will lose their shirts, pants, houses, cars, boats, businesses, families and lives....taking down the global economy with them. Oh, but nobody saw this coming.....

  84. "Those who short the crypto bubble before it bursts." Is is possible to short this though? How would that work in this instance?

  85. Reading this reminds me that at some point, I'd like to be short crypto via some well regulated futures account at some point, say via PUT options to limit the risk. The problem is the whole thing is just so insane that I have trouble trusting ANY part of it, given the level of mania occurring. I don't know if the mania will last long enough to let the new futures markets in this settle down enough to give me enough confidence to even hold puts.

  86. How do you short crypto?

  87. Oh no, I'll not be fooled by theses intangible financial 'assets." I prefer concrete investments like pet rocks and Cabbage patch dolls.

  88. Tulip bulbs Hector. The future is in tulip bulbs........

  89. Nothing retains its value like a Rolex Submariner, Daytona, or Explorer. I'd feel safer having a suitcase of genuine Rolex watches than a lot of bitcoin. A Rolex retains value better than gold.

  90. Are beanie babies chopped liver?

  91. This really does sound like The Twilight Zone. Cue Rod Serling and that music.

  92. There's a lot of skepticism in the comments. Most of the apprehension seems to be about things that are not true. Or snide comments like 'if these guys are rich why do they live together eating cereal'? I've been to these homes, and they are great - not in the sense that an elitist would look for, rather in the sense of how fulfilling they are - friends working together, helping each other, building disruptive projects. As the article says, companies are being built that are more valuable than Facebook. It's wonderful to witness, and to be a part of. I run a crypto investing company - one that surveys all active management strategies in crypto and picks the best. You can make fun of crypto investors all you want, but even just Bitcoin - which is low-performing compared to the active strategies - has appreciated 50%/month the last few months. And, as opposed to the false information I see in these comments, you can get your money out at anytime, and into USD. ($12B of bitcoin is currently traded per day). I love how crypto has brought out the best comradery of the tech community in SF and beyond. I'm proud to be a part of the community, and I'm glad I didn't stick my fingers in my ears for the last several years. Yes, the returns are beyond everyone's dreams, but the value of not only the community but also what's being built is extremely fulfilling. - Joe DiPasquale CEO, BitBull Capital, the first crypto fund of funds

  93. Cycles happen. It’s time to sell once cab drivers and housekeepers are talking about it.

  94. "And, as opposed to the false information I see in these comments, you can get your money out at anytime, and into USD." Interesting that you mention an investor can get their "money" out at any time, for some good ole "greenbacks". Other than the tracking mechanism behind these crypto currencies, where is the economic value, other than early investors cashing out and spending their greenbacks? Even if every country in the world decides to trash their current currencies, this does not solve economic inequality but only transitions the power of wealth from one small group to another.

  95. "And, as opposed to the false information I see in these comments, you can get your money out at anytime, and into USD." Yeah, sure. Are you willing to bet $$ (U.S. dollars in cash - no checks, IOUs, or cryptocurrency, thank you) on that statement?

  96. Rule of thumb, from perusing bankrupt business residue, is to stay well clear of anyone who uses alcohol on the job. Quite a lot of alcohol mentioned and visible in this article. Blockchain, as others have pointed out, is interesting. If there were only ten ideas in computer science a few years back, now there are eleven. Worthwhile business deployments of blockchain are probably beginning. As for bitcoin, the price closely tracks the Google search statistics for bitcoin. It is a way to gamble on that most fickle of things, a popular trend.

  97. Blockchain's real long term value is in making things more hacker proof. Bitcoin is for tax evasion and money laundering. Also check most of these men for child trafficking and sex abuse, at least check their travel records.

  98. Full blown alcoholism is right around the corner for that guy in the picture. I hope there is a follow up article in ten years.

  99. If retailers and businesses do not accept these crypto currencies as money, then it is -- literally -- worthless. One might as well "own" 4 million particles of dirt. Currency DEPENDS upon being able to exchange it for something else. The most important part of being an entrepreneur is creating something that people will pay you for. Fascinating article.

  100. Agreed. That’s why this sounds like a ponzie scheme to me.

  101. That’s the rub, isn’t it? One of my students has a friend who invested in bitcoin. After making quite a bit of money he decided he would sell some of his holdings and could not find a buyer. So much for his newfound wealth! Then the currency dropped, wiping out most of his investment. Stay away! That is what I tell anyone thinking of investing in this foolishness. It reminds me of a Fred Flintstone get-rich-quick scheme.

  102. When I read about Bitcoin and blockchain technology in 2014, it was explained by the creators and early adopters as a world changing movement that would not only change the way we think about money but perhaps replace it entirely. Sadly, none of those dream states came true and it has become a vehicle to make a few handful of people in silicon valley rich, which couldn't be any more similar to the status quo. As this stage, blockchain hasn't revolutionized the way society thinks about anything, it's only reinforced it.

  103. Too early and too little knowledge to make such bold conclusions. It was never claimed that Bitcoin address inequality but access to an uncensored financial system.

  104. Remember exchanging some replies with a German graduate student (probably not a student anymore) who wrote his master thesis on blockchain when Mt Goi was in the news. I still think bitcoin is more bitecon even though blockchain technology, as explored by the likes of IBM, is a legitimate, indeed powerful, technology. Good luck to those who choose to play the game. Some have no choice. Like the people who try to launder their corrupted money in China. Russia and Venazuela thought they might have a way to dodge sanctions. And once bankrupted companies like Kodak thought they could revive their company fortune by latching on crypto mining even when their balance sheets tell a different story. Good luck to those dreamers and desperadoes. For others, STAY AWAY!

  105. Wow! Blaming Kodak for writing blockchain to protect photography rights? Something that has been very costly and is largely ineffective by rights companies (typically lawyers). Maybe best that only a few due get rich with such closed minded people reading the Times.

  106. This is not going to end well. Why? The frothiness is so bad that the very wealthy speculators in these cryptocurrencies--all well-connected, highly educated white men in their 20s--are going after small-time investors like Ms. Lomeli, the house cleaner, who is not male, not young and not well connected. There are securities laws from the 1930s, and stringently policed by the Securities and Exchange Commission (SEC) and other federal agencies, along with the FBI, to keep small-time, unsophisticated investors from speculating their life savings in these rickety investment schemes. These laws were set up for a very good reason--the Great Depression opened up with a bang when millions of small-time investors lost all their savings in lightly regulated pump-and-dump investment schemes whereby these investors bought shares in these schemes through margin buying. And then they were left holding the bag, left utterly impoverished, when the bubble popped in 1929 and 1930, while the pump-and-dump speculators went laughing all the way to the bank. The smart money, including these unscrupulous rich speculators, will bail on these "investments" as soon as they smell an unraveling of this market. The people who will be fleeced out of their money will be the house cleaners like Ms. Lomeli. I hope the SEC and the feds are keeping a close eye on cryptocurrencies, and that they indict the malefactors when the tide goes out. Something very fishy is going on with these markets.

  107. I suspect that the SEC is doing nothing. Maybe the feds will when the bubble bursts, depending on who's President.

  108. "highly educated white men in their 20s" then "life savings", it doesn't make any sense. You don't have life saving in your 20s. This is actually your only chance to pay back all your dept in a year.

  109. Crypto Crackhouse it is; complete with pimps and dealers, hungry for money, and selling euphoria and promises of winning the biggest lottery in a system the small investors don't understand. With no rules.

  110. Why don't you bet on the collapse of this system if you have such a deep understanding and conviction ? Put your money where your mouth is.

  111. Right. This reminds me of the hype about Second Life, a decade ago. Same empty promises of wealth and fame built upon nothing. Remember when the zealots said we would all have avatars in a few years?

  112. Bitcoin and the other crypto currencies perform no economic function since their extreme volatility makes them thoroughly unsuitable and undesired as currencies. But Bitcoin is worse than merely a worthless fraud. It actually causes waste of enormous resources and it causes substantial air pollution and contribution to global warming. How? Because the structure of Bitcoin requires that production of an electronic Bitcoin be accomplished by an enormous amount of computing power which uses an enormous amount of electricity. Therefore, such Bitcoin "mining" locates itself where electricity is very inexpensive, like near Columbia River hydroelectric dams. While the electricity Bitcoin mining uses does not itself pollute or emit greenhouse gasses, that electricity is not available for other users and therefore more electricity must be produced by burning fossil fuels than would otherwise be necessary.

  113. That's what mass-medias claim but... 1 - The vast majority of the bitcoin circulating supply (the bitcoins that aren't lost) and ether (Ethereum) are used to make investment in tech startups. That money never sit, it's always circulating and invested. 2 - The energy used in Bitcoin mining has no competitors. Mining farm can be located anywhere, far from habitations and doesn't require transportation of goods nor ressources. It's not used by humans nor other industries and that's the reason that energy is free. It's impossible to make money in Bitcoin mining if you pay electricity, mind my words, it's impossible. Bitcoin mining use only niche-energy.

  114. Too true. It’s not difficult to generate electrons. The bigger challenge is to use those electrons for good. Don’t see much good coming out of crytocurrencies. But then again don’t see much good coming out of utilities who saddle ratepayers with debt for electricty projects which fail massively. Maybe there is too much liquidity in the system and not enough rational people with ideas that actually help humanity.

  115. Edourd: This past week, CNBC carried a video report about a Bitcoin mining company located in Wenatchee, Washington (along the Columbia river near a hydroelectric dam. That operation mines 5-7 bitcoins per day using 7.5 megawatts of electricity (electricity bill over $100,000.00/month even at the cheap rates from hydropower. They are in process of expanding to 43 megawatts. And according to the report, there are at least 2 other companies in the same local area that are also Bitcoin mining. These miners are definitely not using "free" energy. Furthermore, your use of the term "energy that is free" is similar to the foolish statements of defenders if the huge government subsidies to home solar systems. There is no such thing as free energy. And home solar is extremely inefficient and wasteful of resources. Utility scale solar electric generation costs only about half as much as home solar to produce each kilowatt of electricity.

  116. I'm a new crypto investor who was lucky to get in the market with BTC, ETH and LTC right before the recent run up in prices. I did a lot of research and continue to read up on blockchain and the dynamics affecting crypto markets, there are a lot of moving pieces to consider. I have to say the investment returns have been fun, but so has learning about the technology and the markets' evolution, it's all pretty fascinating and I can see how this can become like a hobby. My new knowledge certainly made for good conversations at holiday cocktail parties, a lot of folks are very interested and want to get involved, but are starting from scratch.

  117. It's ironic that the BitCoin conference wouldn't take BitCoin to pay for registration (within two weeks of the conference, that is) - the rational was that the transaction fee was too much, but it's probably that BitCoin was going down in value at the time. Part of the "value" of BitCoin is that it takes "enormous amount of power" to mint, er, mine one BitCoin (I think that's totally bogus, btw.... - just a story), but the same claims are not being made about the newer cyber currencies - they are just riding the coattails of how BitCoins are being made. Hey, at least BitCoins are backed by drug cartels, unlike the others.

  118. Rational thoughts: 1) All forms of currency are faith-based, including the US dollar. 2) Cryptocurrency was originally invented as a secure and anonymous way to trace transactions. 3) Those who "invest" in cryptocurrency are entering a pyramid-scheme-- gambling, but in a game where those in early have a huge advantage over those in late. 4) This bubble will burst when enough rich fools lose money in this game, because faith can deflate faster than a blink. 5) Anybody who gambles this way should keep their day job and retain wealth in more traditional currencies that are far less likely to deflate.

  119. The US is faith based but it's backed by the largest economy, backed by the strongest military ever to exist, and trusted as a reserve by all of the largest economies, including China. What's backing up Cryptocurrencies? Nothing.

  120. "Nothing is backing cryptocurrencies" is a false claim. Bitcoin is very clearly backed by joules of energy. It takes a fixed amount of energy to flip a bit on a chip, and a measurable amount of bits need to be processed to mine a Bitcoin block. The more joules of energy that are used to mine Bitcoin blocks, the more secure the network is. Even if you think that energy is the wrong abstraction to secure a currency, and military, for example, would be a better system. It's pretty nonsensical to claim that Bitcoin is "backed by nothing"

  121. Ever watch Schoolhouse Rock's "The Energy Blues?" It's about how we need to find ways to conserve energy. In a world where so many environmental woes directly result from the sheer size of our energy usage, do we really want to incentivize as much energy use as possible by making energy use a source of wealth? I don't think so. https://www.youtube.com/watch?v=0dn_pV9fbCE

  122. Irrational exuberance. It's happening again. The Fed can nip it in the bud by significantly raising interest rates, but they act in slow motion and with minimal 25 basis point rate increases. This is not rocket science, despite what Janet Yellen makes it seem when she spews her monthly financial speak. Stop the runaway stock market freight train now, or face another financial meltdown in the near future.

  123. I get that this is just a clickbait title designed to stir up everyone's fist shaking, but one of the main *points* of the article is that its *not* everyone getting rich. "The goal may be decentralization, but the money is extremely concentrated. Coinbase has more than 13 million accounts that own cryptocurrencies. Data suggests that about 94 percent of the Bitcoin wealth is held by men, and some estimate that 95 percent of the wealth is held by 4 percent of the owners. There are only a few winners here..." Uhh, hello?

  124. Thanks for this point. Bitcoin may have the power to change the infrastructure, ideally leading to a "better world." But apparently it doesn't have the power to change the character of this juvenile frat boy (and I do mean "boy") culture. Hmmmmm

  125. From the moment you read the title of this article it's designed to make you feel bad. Judging from the top voted comments here, it's working. The FOMO is real and people that haven't understood the cryptocurrency revolution as early as the people in this article aren't happy about it and literally want it to fail. Despite the fact that it carries significant technological advancements that will benefit society far more than the latest app craze like Snapchat. Two things: 1) This isn't just about some new digital currency, it's about an entire new series of decentralized technology that has the potential to change almost every industry in the world. 2) Unless the government steps in and forcibly shuts this whole thing down, the cryptocurrency market is the stock market of the 21st century. Yes, the people that got in early make the most money but the concept is the same as the stock market. This isn't a tulip craze, this isn't beanie babies. There is serious technological advancements to be found here. If there is a crash (there are 30% market correction regularly) it will rebound way faster than the dotcom bubble. People hate on the volatility of the market but in the end it's the volatility that will save it from the crash because of the fast rebound potential.

  126. Whatever you say.

  127. By the time people start reading articles like this it is too late. Recently a friend confessed he had sold all of his stock in 2009 because he thought the world was coming to and end. He has not been in since. What do you tell someone when the Dow is over 25,000? Same with housing in 2008. I heard secretaries talking about flipping houses in Florida. And then that game came crashing down. The Bitcoin craze will end with a bang also. I bought a condo in Sonoma at auction when no one wanted it. It has tripled in value! Be first and not last. Old investment pro!

  128. The attitude, the belief, that one can make millions, billions, based off what amounts to nothing more than lies, misinformation, slight-of-hand, speaks loudly to the attitude, the belief, that to get ahead, one must do anything and everything. On one hand, it sounds like an obvious truth: wealth will not simply drop into one's lap. On the other hand, it smacks of a nasty truth: one can get rich by methods, legal and illegal, that are wholly self-serving and, likely, exploitative (used quite broadly) and even destructive. Someone loses money to make someone else ultra-rich. Hence, one (of many) good arguments why there should be no Rich people: because necessarily so, there must be Poor people. Anyway, one can only hope for immediate karma in the world. A bit of rational and sane thought would be nice too, but I'll not wager on that.

  129. Money that has no backing except for what cartel figures and other criminals have provided...certainly not the fiat money backed by the "full faith and credit of the United States..." can this really be accepted as currency? How long before this government in the USA and others crack down on Bitcoin because it's also where drug money is washed and human traffickers hide their profits?

  130. And how confident are you in the "full faith and credit of the United States..." to back our currency and never let it fail? 20 trillion in debt, can we pay it back?

  131. The national debt is not a debt that needs to be "paid back" the way your or mine does, so in that sense "debt" is a misnomer. On the other hand, if the dollar were to be challenged in its status as the global reserve currency, we would have some serious problems selling T bonds, for starters, and the current price for existing issues (and the value of existing portfolios) would fall. If that were to happen, what do you suppose the fate of cryptocurrencies would be?

  132. They are under the impression that they are building something. Other than making money with a strange named currency, pray tell, what is being built, produced, created by these superficial young people? By choosing to live in dorm style houses and by choosing to wear t-shirts and beaded jewelry, traveling around to events about a currency, celebrating themselves are they not the privileged, why calling us elitist ?( I assume the readers of NYT, such as myself, although may what is called a 'bourgeois' life style, a house where we eat at the table, yet have intellectual pursuits and be an activist for political, social causes.)

  133. The "something" is Digital money that can be instantly sent anywhere in the world.

  134. Hence, making money from money. Not tangible. Helpful to criminals to move currency for obscure transactions. Not helpful to sick, to poor, not helpful in Education, in Science, not important, not helpful in any significant way to Humanity (come to think of it, even to Nature, to Animal Kingdom, shall I continue? )

  135. Capitalism kills love (google that). Everyone hated the Velvet Underground at first. This does wreak of annoying frat boy culture, but the kids who couldn't make the LAX team bro : ) Interesting article however

  136. Ha! And they’re worth more than the Goldman thieves!

  137. Bitcoin and the rest of the cryptocurrencies are an evil plague. They have absolutely no redeeming value, they perform no economic function. They are purely a vehicle for speculation. Their only potential to perform a function of economic value is as an alternative currency for economic transactions. But their extreme volatility has made them totally unsuitable and undesired to perform that function. Those who continue to promote Bitcoin and the other cryptocurrencies are doing nothing less than promoting a fraud.

  138. Bitcoin may go away but blockchain technology and cryptocurrencies are here to stay. Research ethereum (ethereum.org). This is about way more than "digital gold" or stores of value.

  139. J, enlighten us with at least one hint of what it is all about? You dont offer anything

  140. Why don't all y'all who are so skeptical of bitcoin simply do a few hours of research on it and see what you think, instead of taking to tired assumptions ("those other guys who have money from nothing") that align with your existing sociopolitical views?

  141. Perhaps I may be wrong, but this sounds much like a Ponzi scheme, which may just be on par Bernie Madoff. So, with all this new found fortunes from trading these crypto currencies, when these traders cash out to make purchases of luxury cars, etcetera, what all they cashing out with? The answer are hard curries, like the good old US dollar!

  142. Heh, heh, there's a reason it sounds like a ponzi scheme.

  143. It seems like an easy get rich quick scheme. Create a crypto. Price it at around $0.80. Market it. Make millions.

  144. This article makes me feel many unhappy emotions Sadness Disgust Jealousy Shame that I have any jealousy But mostly disgust. THIS is what Americans strive for ? These are the people who might drive the human race? Sad

  145. Maybe, the people who are improving society in useful but quiet endeavors are not newsworthy but they're out there.

  146. Forget about Panama or Cayman. Bitcoin is a financial laundromat. Put your drug, corrupt or any shady earned money in it and it will come out sparkly clean.

  147. Until it doesn't. What makes you so sure some governments haven't already tapped in and monitoring what goes on and gets the biggest players. Remember Silk Road??? That guy is in jail for life or close to it.

  148. What's the old saying? When the guy who shines your shoes is investing in the stick market it's time to get out.

  149. Ponzi scheme. Those in early may do very well. Those in later, not so much.

  150. I see many skeptics on this forum. I want to remind those who think that Bitcoin is backed by drug money that US dollar is the currency for most of the illegal trade in the world. Like cryptographic currencies, paper currencies have no intrinsic value. Cryptographic currencies are the most important innovation, since the beginning of the Internet in the early 1990's. This innovation is going to disrupt and transform the banks, stock exchanges, brokerages, insurance and majority of financial institutions including central banks in the next 20 years.

  151. Bitcoin is backed by drug money. That is not fiction but a fact. That acknowledged, Bitcoin is really no different from the thousands of other get rich schemes that have proliferated over the course of our democracy. Yes, a few will get rich, including drug dealers, but the others who sign on later in an attempt to reap profits all lose it all. That is always the way it happens. And I can't imagine Bitcoin will be the exception to the rule.

  152. "...that US dollar is the currency for most of the illegal trade in the world"... Why are you so surprised since it is also the currency used for much of the legal trade in the world as well. Now the big question. Why is that?

  153. NYC, 1996. I enjoyed dozens of parties in cavernous under-furnished “Silicon Alley” lofts with 20-somethings exactly like the individuals featured in this story, except that we had better music (Biggie, TCQ) and were graced with the presence of non-virtual females in greater proportion than the tech bros. One lad mounted a coffee table announcing the launching of a web site allowing anyone to publish an article and email it to your friends. He earnestly bellowed: “We’re gonna make everybody here RICH!” Internet self-publishing tools would eliminate the information monopolies of governments! We would build a new civilization based on truth, transparency and knowledge, as citizens would have instant access to unlimited facts! We would all get rich monetizing utopia with virtual currencies of “clicks and eyeballs” defying old laws of economic gravity! As Web 1.0 revenue models collapsed in the dot-com bust, the bricks & mortar economy was indeed disrupted by the infrastructure of the Internet, in unexpected and often dystopian ways. Similarly, ICO Ponzi schemes will soon hit their mathematical walls. From the rubble of vanished savings accounts, the underlying blockchain infrastructure will emerge to transform financial services and trusted transactions. A select few currencies and development platforms that enable blockchain, such as Ethereum, may survive to become the foundation of this new paradigm. But in the meantime, it’s back to the future. Humans. They never learn.

  154. The article says, "Investors trying to grok the landscape compare it to the dot-com bubble of the late 1990s, when valuations soared and it was hard to separate the Amazons and Googles from the Pets.coms and eToys." Most educated people say it's like the "tulip mania" that was the first stock market scam. The article also says, "Data suggests that about 94 percent of the Bitcoin wealth is held by men, and some estimate that 95 percent of the wealth is held by 4 percent of the owners." Hedge funders are the ones driving up the price, and destroying everything. They constantly betting for and against all stock just to enrich themselves with no concern for reality or the social good. Do not get sucked in. Elect people who will turn stock exchanges back into helpers for commerce - not pirates of OUR fortunes and lives.

  155. I wonder if these "men", seemingly so far removed from our system of government, actually bother to vote in our elections...

  156. Brilliant, hilarious article; anthology bound. Bowles must have struggled mightily to resist using the following references: "A company for carrying out an undertaking of great advantage, but nobody to know what it is". Mssrs. Merdle and Melmotte. "Dare to be great." Multi-level marketing. Kudos to the picture editor who resisted the easy choice of this: https://getyarn.io/yarn-clip/0982442c-0c1c-4897-9bd0-8deb2735c025 And the face-palm that followed: https://pbs.twimg.com/media/CMcQgLdW8AA0Q32.jpg No doubt Nellie Bowles will maintain contact with her subjects, to get their versions how how they handled the collapse. She even get expenses to visit the ringleaders in their New Zealand boltholes.

  157. History repeated says, in a favorite comment, "Back in the day, I worked for one of the hottest optical startups around. We were all going to be rich. My plebeian share was worth anywhere from $5M-$10M, gross. But, as an astute grey-beard warned with a sign on his cube: "You aren't a millionaire until you exercise your options, sell your shares, and pay your taxes". Well, our IPO got yanked, 9-11 happened, NASDAQ crashed, and the telecom winter set it. I did get a $0.09 check for my shares after the 11M:1 reverse split. These guys all have virtual money. It's worthless until it's turned into something tangible." Excellent post, History repeated! People simply have to understand that every aspect of "stocks" are manipulated by the Top 1% Global Financial Elite Robber Barons. Right now 401ks might be rising, and Big companies might be handing out bonuses and giving raises but THEY are the ones profiting from The Con Don's tax giveaway. An article today in Bloomberg gives a perfect example. "Hank" Paulson, who is named in the article as the second-highest winner in this payback is the one who convinced OUR U.S. government to bail out Wall Street and other markets when they crashed the economy in 2008. You get $1 they get $1MILLION dollars. WE THE PEOPLE must DEMAND SERIOUS STOCK MARKET REGULATION to stop the theft of OUR treasury and lives. https://www.bloomberg.com/news/articles/2018-01-13/bank-of-america-warra...

  158. And please notice - the true Financial Elite are buying up land and other real estate - and OUR real world resources like oil, natural gas and water - so they can control the lives of the rest of us. WE THE PEOPLE - each one of us - control it. Get YOUR money out of the gambling casinos called "markets" and buy a home or put the money into your local bank/credit union and watch what they do with it like a hawk.

  159. When the lights go out, or the fad passes, so will bitcoin. I put more faith in government than millennials.

  160. And what government success stories can you site to put your faith in government?

  161. How about the US and it's currency, the US Dollar which has fueled the world's economic well being and growth for a century.

  162. The defeat of the Axis, the establishment of the NIH, and CERN come to mind immediately, as does the eradication of illiteracy in much of the world and the provision of clean water to many who may never have had it otherwise. After all those, I have to admit I need to stop and think.

  163. Great wealth from nearly no actual work? Sounds like more stuff from the system that brought us derivatives and credit default swaps. This "financial industry," its "products," and its "workers" need to come down to the real world.

  164. I dipped my toe into Bitcoin in 2015. Nellie Bowles is the first woman that I have ever heard even mention the word 'bitcoin'. Maybe I need to get out of the house more.

  165. There will always be lottery winners, but there's more to it than that, the concepts of block-chain and crypto-currencies are real and add value and are the future of financial and trusted transactions, being decentralized. But there will be a shakeout. Bitcoin is only a proof-of-concept and first generation block-chain technology that does not scale and uses an inefficient proof-of-work method for trust. The future is looking more likely to be the third generation platforms such as Cardano, and possibly the second generation such as Ethereum, if it can successfully migrate its platform third generation and beyond with improvements such as to proof-of-stake for efficiency, scalability and sustainability.

  166. One of the primary objectives of the Federal Reserve Bank is to keep the value of the US Dollar stable, because we can’t have a functioning economy when the value of the money is bouncing around all over the place, like we have with Bitcoin. It’s dysfunctional. But, I’m intrigued by the blockchain technology Bitcoin uses. I think it could serve other useful purposes, like validating a contract, will, or maybe a person’s identity.

  167. I'm not pretending to be an investment guru but I was one of the few who was regularly dismissed for predicting the 2008 real estate collapse long before it finally occurred. My prediction was based on something I'd learned from decades of running successful businesses. When so many halfwits are able to "beat the system" with any illogical investment "opportunity" a major crash is inevitable. Voltaire observed "Religion began when the first scoundrel met the first fool." His insight is a fitting description of cryptocurrency. As long as the crypto geniuses hold onto their coins and publicize/celebrate their paperless fortunes (which are little more than numbers on computer screens), the inflated values will keep going up, or at least hold, by attracting more fools willing to overpay rather than risk missing the gravy train. The problem is that eventually, smarter investors will try to turn air into actual cash. A lucky few might walk away with huge profits. But the many who hold on too long will receive an expensive and painful lesson in how supply and demand work when the demand for a concept based on belief and faith dries up.

  168. HODL!!! The “smart” investors are just that - investors. The founders are against the financial global order. Artificial intelligence will make everyone’s job obsolete by 2030. 401ks appreciate at rates that will never take care of boomers or any subsequent generation. Wake up!

  169. You were not one of “the few”. There were many, many, many.

  170. This. I don’t understand what these valuations are based on. You can’t use bitcoin to buy most stuff. The numbers on your screen are useless until you sell to someone else. To transform your coin into cash. Ultimately the way money functions as a store of value has to be related to your ability to buy stuff with it. Food and shelter. I can’t wait for this bubble to burst, especially because I can’t stand the tech bro mentality. May they rip off each other.

  171. PT Barnum is still correct. These are merely a virtual pyramid scheme crossing wires with a Ponzi scheme. Yeah the founders get rich--sometimes--and maybe obscenely rich too, but at least a literal 'snake-oil' salesman gives you a vial of something.

  172. Banks are designed to steal! The government's monopoly on control of currency is destined to end! You can play a role in bringing it all down, man! Invest in this wacky new thing that even supporters acknowledge is currently experiencing an unsustainable bubble! Put your retirement savings into it! Put your kids' college fund into it! Please don't actually pay attention to the fops and straight-from-central-casting tech bros who are behind it all!

  173. I remember when the web was young and people said “it’s nothing but a place for criminals and pornography”. On top of that, the early web was slow, buggy, and ugly. Fortunately, some people saw the underlying value. Blockchain will have a profound impact on your money and life, eventually. Don’t throw the baby out with the bathwater.

  174. So you take real money and put it into a machine/computer. Then you wait to see if you have won anything. Your winnings come in the form of some type of token that you can't really use to buy anything unless you change it back into real money. Hmm, this is old news in Nevada; it's called gambling.

  175. It's a game of musical chairs......just wait till the music stops, Coinbase and all the other exchanges will crash because they won't be able to handle the volume, the exchange owners will cash-out first and leave the rest in the dust. Like the article said, 4% owns 95%, when they try to cash out, it's over. Anything based on speculation is fraud. If you disagree and believe that Bitcoin will hit $1,000,000 then you should cash in you 401k, max out your credit cards, and smash the piggy bank to get in now.

  176. Just me, or anyone else notice there seem to be no women in this scheme? Imagine a world where everyone lives in a greed-bubble like this. No doctors, no teachers, just millionaires created by the inverted pyramid of labor-wealth.

  177. Just the women who clean their houses...

  178. The women are smart enough not to buy into this rubbish. Maybe they have experience listening to boys like these and how their promises pan out.

  179. Let's say for the sake of argument that all the value of cryptocurrency came from non-criminal sources. Even if true the criminals would be fools to not use this amazing money laundering too. Thanks for a great article.

  180. The revolution won’t happen—at least, not with bitcoin kids leading the way. Goldman Sachs has a trading desk for crypto now. The money has been made. Now comes the finger on the scale to prop up the portfolio, as with every other commodity a bank takes on.

  181. So a Bitcoin is worth 2000, or was it 20,000. But 20,000 what? Dollars you say. Therein lies the rub. If it were really a currency you wouldn’t need to constantly quote its dollar value. You could say a Bitcoin is worth a latte, or a millionth of a mansion in Monterey. Let’s call it what it is: a collectible. This too will end in tears.

  182. During the 25 years I've lived here in the Bay Area, I've seen 2 major bubbles - and now this. Trust me, the warning signs are evident - crypto-currency mania, raw water, $6,000 per month 1 bedroom apartments, etc. The winds of change are blowing - and lots of unicorns are going to turn into donkeys.

  183. Why, as Mr. Fickel states, would the entire world reorganize itself and get rid of its armies for the benefit of the 5% of the 13,000,000 account holders? Stated another way, why would the world adopt a currency that puts all but these crypto guys at a permanent and severe disadvantage?

  184. The end is nigh....between Trump, geopolitical shifts and these greedy nerds my optimism about the next ten years is waning and I’m only in my 30s. As they say “easy come, easy go”. Funny how none of these people are trying to find ways to protect their assets..nope they just go out and buy Lamborghinis. Sigh.

  185. For some of us wealth exists in order to buy a Lamborghini. I'd rather live in a 2BR and own a 911 GT3 RS than live in a mansion and drive a slow car. I care more about cars than homes, but I do understand that property holds its value better. Lamborghinis are a lot of fun, but I'd rather have a Porsche or a McLaren. When I think about wealth, I think about driving my dream cars, skiing all winter anywhere I want, and sending my kids to private school. To me, rich = tracking a GT3 RS 30 days a year. That'd be the life. I guess I'd also like to have to Patrick Stewart and the RSC perform Macbeth for me any time I want to see it.

  186. Thanks for validating all our assumptions about the shallowness of the wealth-seeking scammers and fraudsters of your generation.

  187. The only way that bitcoin is converted to cash is by having someone exchange their dollars for a digital bitcoin. As long as you have a supply of "suckers", the bitcoin trade goes on. One day, you exhaust the supply, and every realizes the game is over. Some are navigating their exit now, and forever we will hear their stories. But the larger story will be the loss of wealth by many.

  188. Tulip bulbs all over again.

  189. Tulips are pretty flowers, and cost something at the florist's. Bitcoin?

  190. Only when there is no greater fool available to buy crypto currencies will we know what they are worth. Someone rightly said that you know who is swimming naked only when the tide goes out.

  191. Pure, natural drinking water will be worth more than gold in the future. Can't drink gold, art, diamonds, oil, dollar bills, Apple stock or bitcoin. Most of us are already late to that party. Look at people like the Bush family, who bought up 800,000 acres in Paraguay for the water rights alone. The Coca Cola company has been racing around the planet buying up all water resources for decades now. Real estate in New Zealand is also a solid investment.

  192. If the 90's told us anything- even in a bubble, investing in disruptive technology pays off in the long run. If you invested $5,000 in amazon at its initial price prior to the dot-com bubble bursting, you would be a millionaire today.

  193. Only if the technology enables a profitable business. A software company developing blockchain might be such a business. Owning bitcoin isn't---it doesn't come with rights to whatever economic value blockchain might have.

  194. For every Amazon, there were 200 or 300 companies that raised 10's of millions of dollars and folded in a puff of dust. There most valuable assets were pithy domain names they could sell for 10's of thousands of dollars and servers they sold off for pennies on the dollar.

  195. Since no one at the time could separate Amazon from the many dozens of prominent start-ups that failed, it's very difficult to maintain what you wrote — unless, that is, you can explain how investing in, say, 3 dozen companies in the late '90s including Amazon would still have paid off in the long run.

  196. The cryptocurrency culture seems as though some clever videogamers have gone on a spring break binge. Rather than to the beach, they retire deeper into online escapes. Perhaps, it is my age showing. Can anyone recommend articles by Nobel prize winning economists (Paul Krugman?) that explains the "value" on which cryptocurrencies are based?

  197. You don't need to be an economist, let alone a prize winning economist to understand. The block chain technology is complicated to explain, but Bit Coins have added a twist that is not a required part of the technology. Unlike current currencies, each digital currency has a fixed and unalterable number of coins. The architects have designed it to favor a run up in value based on scarcity.

  198. If its popular with criminals and drug dealers and money launderers, con men, grifters and frauds - it can’t be a good thing. And we all know how the dot com boom ended with investments in businesses that had no revenue monetization plan. This is the perfect current for the Trump administration - soon to be used at all of his hotels and properties. Tells you everything you need to know

  199. This is much worse than the dot-com boom. That involved real companies with real business plans and generally (like pets.com) real revenue. Many of them failed, and most were overvalued, but almost all had at least the possibility of success. Cryptocurrencies are hollow: there is nothing there of any conceivable value. Blockchain may turn out to be useful, but it is not proprietary. It isn't even patented (and if it were, bitcoin would not entitle its owners to a share of the patent rights).

  200. I have a bunch of tulips I'll sell you for Bitcoin.

  201. It will all end in tears and lawsuits. If these stories are even half-believable, and some nut case has "hundreds of millions" from his 400K "investment" and is holding onto that gain, he deserves what's coming his way.

  202. Very interesting article. I am impressed by how honest these people are. Of course this will end as previous economic bubbles have, but you cannot fault these people for being dishonest.

  203. The only honest voice I noted in the article is the core developer who said it does not solve all the problems. The value of the technology itself is separate from the value of the coins. For example, blockchain is used in Estonia's promising e-gov system. But the value of the bit coins depends on demand. So, the people in this story who are stoking demand - painting fantasies of a new consciousness, telling people they have to hold, even when they want to sell - need that demand to sustain their values. You don't think that smacks of a con game?

  204. The community is generally more honest than the rest of the world since it's bound by an ideology of transparency around the tech itself. But that also means being exposed to some of the unsavory aspects of human nature that a lot of people can't really handle. (A big reason why most people didn't get in earlier.) It's a double-edged sword but then again, you could say the same thing about how the internet developed as well, too. Progress never comes clean.

  205. The blockchain is clever and will probably have some valuable uses once its made more efficient. But a world-shaking paradigm shift it is not. At the end of the day, it's just a decentralized ledger. How many major problems are caused by a lack of a good, decentralized ledger? These cryptocurrency millionaires will be important going forward because they are millionaires, not because of cryptocurrency. And that is a wonderful distillation of capitalism's greatest flaw. Lasting wealth and power can be redistributed on the momentary and capricious whims of a few.

  206. Good points. I wish more people would recognize the distinction between a blockchain based decentralized ledger. and the current spate of digital currencies. Although blockchain is a concept that was invented to support these digital currencies, it should not be mistaken for those currencies. For sure, blockcahin will endure, due to its value with other types of assets. The fate of the privately created digital currencies remains to be seen.

  207. Bitcoin? When my local veterinarian accepts them- then I will reconsider their value.

  208. This is not going to replace money: in order to buy and sell Bitcoins you must still supply a wallet with your bank account no. or debit no.. So the banks and the Central Bank still have you. It's not the new gold, either. Gold is gold because it is rare & unique, it is scarce, malleable, inert, distinctive, non-radioactive, and it doesn't tarnish. It has a functionality that is unlike any other precious metal because it has the right combination of traits. Bitcoin is programmed to be scarce but it has no otherwise unique properties. The same goes for every cryptocurrency. The functionality of any cryptocurrency can be replicated quite easily. Eventually I would imagine the price of a cryptocurrency will purely be a function of the cost of the power needed to supply the computers to "mine" the code plus the cost of maintaining the servers to host the client programs and the price of the programmers and cryptographers to write the software. Heck, I think it will even be possible to program a bot to program cryptocurrencies, ad infinitum, so you can probably eliminate the humans, too. All people are in essence trading is a line of computer code that is a solution to a cryptographic puzzle created by a software client. There's nothing that special about that, this can be done an infinite number of times. It will be fun to watch this bubble burst. Just like it was fun to watch everyone who said that the price of housing would never go down get their same comeuppance.

  209. Capitalism is pretty simple: add value to other people and you might get paid for it. That's what is required from an economic system mostly based on private ownership of the means of production, and mostly free-to-enter markets (every economy is a mix of private and public ownership). So what's the value proposition for cryptocurrencies - how to they add value to people, aside from some people (aka Ponzi schemes) getting $$ from getting in first and taking value from the fools who get in too late - which isn't creating wealth, but simply redistributing it, like casinos (and to a certain extent stock markets do, though stock markets provide capital for enterprises to add value to people's lives and get paid for it, hopefully with some profit left over). Are cryptocurrencies providing capital to people who are solving human problems and so getting paid and earning a sufficient profit to be around next year and next decade? I can't tell. And so I can't tell whether the wild claims of creating new, wonderfully independent means of exchange are going to make the world a better place or not. Mostly or wholly, anarchy simply doesn't do that. A key to a more sustainable economy is transparency - transparency of the lifecycles of goods and services. Basic economics says that with "perfect information" markets will well serve people's needs. Do cryptocurrencies promote more transparency, or social/enviro responsibility? If so, let's use them. If not, what's their value?

  210. That's not an investment community, it's a clown party. Can one in ten of them explain blockchain? Can they explain its value without any underlying relation to assets or government guarantees, or its lack of value as a means of exchange given its volatility. For most it is merely fascination at watching a number increase. They're watching the ebb and flow of cricket scores without knowing what cricket is.

  211. Sounds like a take on pyramid schemes. I remember here in Seattle when the dot.com bubble burst after so much money had chased companies that had no viable products, services or sales. The Ferraris and high rollers that flaunted them selves and their money all over town disappeared almost overnight. The high end businesses such as restaurants, clubs and fashion retailers went dark. I expect to see a repeat performance here. The primary rule of investment is "If it sounds to good to be true it is". Let the buyer beware.

  212. These crypto-guys are selling the chance to "change the world" via their system. I would interpret this to mean they don't approve of the state of the world generally and the wealth distribution the world specifically. Yet, they accumulate wealth to take care of themselves, their closest associates and in some cases their families while hanging out and going to parties. It sounds to me that this group of youngsters is merely surfing another dotcom wave for all the fun of the moment, dodging any responsibility for anyone else's losses by shrugging off questions with dismissive "I don't know" answers and being all Yoda about their own mortality. I'm struggling to see how this is different from the highly reviled 1%.

  213. The preferred "currency" of thieves and terrorists, on a casino making a few - mostly greedy and immature - very rich. What could go wrong?!

  214. @Susan It's not like it can destabilize the entire world currency market or anything, right? I think everyone just needs to calm down.. *smirk (((waving)))

  215. This is like a game of musical chairs where, right now, there are a lot more participants than there are chairs. No one knows when the music will stop, but it will.

  216. We need to reward these young geniuses who are adding so much value to our future. How about a "crypto-currency" Oscar award? It can be a large golden bouquet of tulips in a glass vase. Except the gold won't be real. And the vase will be made out of thin-air. And there won't actually be any tulips. And it won't actually be an award. But we will all agree that there are a significant amount of people who are pretending it is. Or we can at least pretend to agree. And as long as we pretend to agree that there are significant amount of people pretending that it is a glass vase with a golden bouquet of tulips... a glass vase with golden tulips it shall be.

  217. Well said.

  218. Investing in anything requires foresight, timing and a willingness or capability to hang in there for the long run. The idea of investing in cryptocurrency is on the same level of investing in credit default swaps. ( we know what happened there ) However, the idea of possibly wresting away control of the world currency from a select few and their policy to another select few and their datamining doesn't seem that much revolutionary, but more of anarchy. Perhaps that is the whole point.

  219. Great and kinda funny article. If someone spent $500 and made millions USD, what is the problem? Obviously, these currencies can be converted to dollars, euros, and other currencies when necessary. That may be the wrong way to handle them, but who cares? Those are the terms in which we currently use to value cryptocurrencies, but that will soon change when stabilization happens. If the person that invested $400k and has not started cashing out or investing his millions then he may be a bit foolish leaving it all in cryptos but who knows what will happen. The fact is most of us (me included) invested meager amounts that have ballooned into the thousands and if it goes to millions, great!! It is doubtful I will lose very much as I invested little and will invest most of my earnings elsewhere, as people do with other currencies, when I have reached a certain point. With the costs and fluctuations as they are now, I wouldn't buy Bitcoins, but maybe buy one of the others that are still cheap. One commentator brought up that the web attracted early adopters of ill repute, therefore soiling its early reputation but then the web become the standard point of global interaction, be it communication or capitalism. A similar thing is happening here; a new standard is being born.

  220. The essence of any pyramid scheme is that those on the lowest rung — last in — always sound evangelical in their zeal to get others in. Of course, like a pyramid, each rung gets larger, until finally there are too many in, and not enough marks out there, which is when the pyramid collapses. I can't tell you how many times I've had friends (acquaintances, more like) try to entice me into one of these.

  221. Reading these comments it becomes clear that most people do not understand what cryptocurrency is, how it actually functions let alone what the value of the currency is actually based upon. It also showcases how little people understand about the global financial markets and the US dollar.

  222. I have to admit, I don't really understand the regular stock market, let alone this cryptocurrency business. I am skeptical of wealth that isn't attached to any kind of actual product, although maybe so much of the modern economy is built on smoke and mirrors and anticipated value that it doesn't really matter. What I do see, though, despite the rhetoric about liberating the world, or whatever these guys want to do, are a bunch of young men trying to find ways to get wealthy without doing any work. They might appreciate the glamour of it, but all I can see is a void of meaning. I'd rather toil meaningfully away and earn a paycheck than take a picture of my flashy clothes. Maybe I'm just an aging Gen Xer who just doesn't understand...

  223. I am one of these guys. Most of the other commentators here are criticizing cryptocurrencies and their adherents, but that begs the question: are these naysayers multi-millionaries like me? If not, they can be: open a web browser, type "create your own cryptocurrency" into the search box, and spend a couple of minutes following the instructions. Create a quantity of coins and a dollar price per coin that, when multiplied together, come out to a nice round number like $5 million (or $5b if you're feeling greedy). And voila! Now all you have to do is decide what color Lambo to rent! (Yes, sorry, rent, because the Lamborghini dealers are all still so clueless that they only accept real money).

  224. what a handsome group, making an important contribution to society! hopefully they'll all be back to driving for Uber soon.

  225. This article could have provided some better background for those of us who do not have a clue. But based on what I read, I'm not impressed by any of these people or what they are doing. While they party and yearn to buy Lamborghinis, the majority of the world is succumbing to climate change, erratic weather, poverty, lack of education, starvation (and resulting severe illness), and homelessness, as well as subjugation by tyrannical, greedy, and abusive governments (including in the USA). Really the whole bitcoin philosophy seems selfish, arrogant, and misguided. Change the world? Yes, OK then, you can start any time. There are hundreds of homeless people in my small town awaiting your vision.

  226. Probably all we need to know, is that even the people involved speak of the value of these things in terms of dollars...

  227. Focusing on the flamboyant ‘investors’ in crypto-currency fosters the impression crypto-currency warrants an initial reaction that’s derisive and born of mockery. One cannot deny the Wild West feeling but this reaction is a mistake. Blockchains and associated algorithms are compelling confluences of math, currency, and technology. Wells Fargo, Goldman Sachs, and almost all of the major Wall Street institutions are engaged in analysis of the use of crypto-currency/technology. Should Wall Street’s involvement be viewed with alarm? Perhaps. Will failure to understand these explorations create another avenue that will exploit people and deepen inequality? Probably. I jumped into Bitcoin in early 2011 to explore the technology. I have participated in ICOs (the rough equivalent of our Fiat Currency used for IPOs). been an early adopter in several of the exchanges Stellar/Lumens etc. So I am not writing from a 'fear of the unknown'. I am also not overly stylish, bell-bottoms are not in my future, and the idea of stickers on my refrigerator is an anathema. Those I have met who both understand and are aware of crypto currencies are, without exception, more like me than what is portrayed here. In the future, there may be ROI that arises from these ‘experiments’ beyond enriching a few. There may be something here that benefits society on a global basis; much like the advent of micro-lending. Few understood it would change the face of developing Nations...until then It is gambling.

  228. Why oh why do we celebrate this kind of adult immaturity so erroneously disguised as success and then somehow- worthy of emulating? Guess it's the way now of our emoji addicted world. Ugh.

  229. Much of the US economy is a scheme one way or another. People who invested in the housing market had some crazy idea that housing prices would go up forever. Ever see an amortization table for a house with a reverse mortgage. Utter nonesense how banks came up with values. At least with these cryptocurrencies, when they fail, since the backers loath government and central banks so much, they can’t seek redress from the “government”. All the risk is on them. Good luck!

  230. Metaphor Alert: the liquor shelves in Jeremy Gardner's bar/pantry look as if they're about to give way.

  231. What exactly is a 'derivative'? Even after watching the film, 'The Big Short', I still don't understand what it is. This and what is it exactly that hedge funders do that makes them all so fabulously rich? Bitcoin seems to be part of this secretive money club. In short, if you don't understand it, do not invest in it.

  232. To the best of my knowledge, a derivative is any financial product whose value depends in part on the value of a stock. Calls and puts are derivatives, because their value derives from the value of the underlying stock and they are bought and sold merely as the opportunity to buy or sell the (underlying) stock at a certain time or value. When their own value in calculated, it is calculated based upon the fluctuations or possible fluctuations of the actual stock to which is is tied. Many traders don't buy and sell stocks. They buy and sell the right to buy or a sell a stock two weeks from now. Let's say you buy a pair of BBB sneakers today. I might buy the right to purchase them from you in six months. You might think, "great. they'll be six months old and worth less they are now." I might think, "a year from now they will be a collector's item and this guy who owns them almost never wears them." So, I give you 25 dollars for the right to buy them from you on On June 14th for a fixed price (let's say what you paid minus 35 dollars). I'm betting that the sneakers increase in value. Debt swaps are also a form of derivative.

  233. Thanks rich guy! I get it now, sort of.

  234. Google and Wikipedia are your friends. No excuse anymore not to know things you want to know.

  235. Never mind that most ICOs are illegal unregistered securities offerings and a bunch of these guys are going to go to jail.

  236. If we did this with ink and paper it would quickly be treated as counterfeiting. i.e. Making up a 'currency', and then trading it for real legal tender. i.e. Fraud.

  237. If you have any doubts about crypto-currencies just read this article; it should put all your doubts to rest.

  238. These "currencies" are backed by a song and a prayer. A couple of system outages (like almost every other enterprise has had at some point even big banks, airlines and governments) possibly one that it doesn't recover from and these clowns lose everything. Or those starting one fo these decides he's heading for Bolivia. Or governments decide they've tracked enough illegal actives and finally shut them down. Good luck with your dreams. As the proverb goes, a fool and his money are soon parted.

  239. It's happened, a crypto fell some 30% in a day, and trading platform refused to remunerate investors that lost money, go figure.