It is January 2014.
‘Informal Bitcoin get-together,’ says the link I’ve been texted. ‘Saturday 1pm to 4pm. Meet under the blue awning at St James Square in Spitalfields.’
I arrive about 1.45. There is no blue awning. But a group of 70 people are milling under a white one. It’s bitterly cold.
‘Ask me,’ says a sticker on the coat of a young chap with a bowler hat. So I do. Yes, this is the Bitcoin get-together.
He’s a computer programmer for a financial services company. Late twenties I’d guess. He’s been into bitcoins for a while. Thinks the price has got ahead of itself. But he’s still into it. We start talking about the future of Bitcoin; whether it’s going to change the world, that kind of thing.
A dude with a gold tooth and a blue leather jacket starts listening in.
‘You got any bitcoins, then?’ he asks after a while.
‘A couple,’ I say.
‘How did you get them?’
‘I was given them a while back.’
‘Ah.’
He thinks for a moment.
‘But have you ever actually used them?’ he asks.
‘Yeah. Once or twice. I bought weed on the Silk Road.’
‘What’s that? I’ve heard of that, I think.’
‘It’s a website where you could buy drugs and stuff – using bitcoins.’
‘What and it actually arrived?’
‘Yeah. A couple of days after I ordered it. From “Mr Clonk”.’
‘Wow!’ he says thoughtfully. I can see all sorts of ideas going through his head.
Next, I meet a middle-class white kid with tatty clothes and a confident air. He’s developing a system by which you can buy and sell goods on Amazon with bitcoins. He’s hoping to close the deal with Amazon next week.
Then I meet Fabio, an Italian computer programmer who wants to convert his brother’s pizza delivery company in Dubai to bitcoin only. Then there’s an Eastern European whose name I didn’t catch who bought bitcoins because Max Keiser told him to. He bought gold because of Max – that hasn’t worked out – but he believes in what Keiser is saying, so he bought bitcoins too. They’ve done better.
Then I meet Seshu from Bangalore who’s developing a bitcoin bank, which pays 80% interest. Yes, 80%. It also provides means by which people can make leveraged bets in bitcoins.
‘In my PR, when I talk about “leverage” and “gearing”, do you think people will understand what that means?’ he asks, concerned.
This all happens in about 15 minutes. I’m amazed at the creativity Bitcoin is inspiring and the opportunities it is creating.
A chubby posh chap in an oilskin coat stands on a table.
‘All right, we’re going to have a live auction. Could everybody gather round? The people who are selling over here. The people who are buying over here. So what am I offered?’
‘Five hundred and thirty pounds,’ comes a call. ‘Five thirty for one bitcoin.’
‘Five fifteen,’ comes an offer from a bloke with a beard who looks like Captain Birdseye.
‘Five twenty-five,’ suggests the seller.
‘Meet there?’ ventures our auctioneer.
After a moment, they both nod.
‘Sold. We have our first sale of the afternoon. Right, five twenty-five is the price. Do we have any more?’
He’s clearly done this before – and is a natural.
Over the course of the next few minutes I watch as several bitcoins change hands. Wads of notes are passed and bitcoins are transferred via mobile phone or computer.
A friend and I once got involved in a pyramid scheme in the late 1990s. You paid £3,000 to get your place on the pyramid. You then, if I remember right, had to find eight people beneath you each paying £3,000 to you, so you made £24,000. They then had to find eight more. Did I make money? Er, no. This scene reminded me of the meetings I went to then, with large wads of cash being passed about. It’s a pyramid scheme, a Ponzi scheme, a scam. Alarm bells are going off. Should I get rid of my coins here and now?
Now, like then, there are all sorts at the meeting. In addition to those already mentioned there are several Indians, a load of black guys either African or London-born, a proper Shoreditch twit with ridiculous hair and white leather jacket, people from all over Europe, a load of grungy-looking guys who are either homeless (complete with tracksuits, hoodies, roll ups, cans of lager and rotten teeth) or perennials on the festival circuit, a few couples, some city bods of various shapes and sizes, and goodness knows what else. Heck, there’s even a transvestite. I’ve never seen so much variety in 70 people – except for the fact that 90% are blokes. Some are there with an interest in the subject, but most are enticed by the lure of easy money.
That’s what has me worried. Scams play on greed. If you want to run a successful scam, don’t go after the guy who wants to work hard for his money. Scam the guy who wants to get rich quick – he’s an easier target. Sell him the pyramid scheme, the mining company, the new technology – he’s the sucker who’ll buy it. Is that what’s going on here?
‘Are these the kind of people who change the world?’ I’m asking myself. If I take a step back, the hard answer has to be no. But there is so much going on and so quickly, not just here but in the whole world of Bitcoin, that perhaps it’s just a matter of waiting for the talented and competent to rise to the top.
There’s another thing that has me concerned. I once took two of my kids to a happy-clappy church one Sunday (I wanted to get them singing more). Everyone was very, very friendly – worryingly so. They really wanted to convert you to their religion. Why, I’m not sure. So that you can be as happy as them, so that you go on the same emotional and psychological journey as them, so that their decisions are justified, and there are more people converted to the cause? All of those reasons and more, probably. But this auction reminds me of that church service.
I get talking to the chubby auctioneer. Adam is his name. Extremely polite and respectful – but cagey when I ask him what he does. He’s a former fund manager from the City, I discover, and he’s obviously been given stick for working there. I put him at ease by saying I write for MoneyWeek magazine.
It’s impossible to make any money now as an independent, he says. He used to buy distressed companies, but there are no distressed companies any more. Low interest rates have meant that what should have died lives on. If he wants to set up a fund, the regulation is so onerous that he would need to raise £100 million to make it viable. That’s impossible. Regulation has just re-enforced the monopolies of the banks. Big corporations like regulation because only they can afford it. It’s a great big barrier to entry.
‘But Bitcoin. There’s none of that in Bitcoin. It’s the future,’ he says.
He’s been called over to start another auction. A canny East End Jewish lad in his mid-30s, Paul, seems to be running things. I want to talk to him.
As the auction begins, Paul offers to buy 100 pounds’ worth of bitcoin at £500 a coin. Wanting an excuse to talk him, I accept.
‘One hundred pounds worth of bitcoin at 500. Sold,’ calls out Adam.
Paul walks over to me.
‘I’ve got to go to the cash point,’ he says. ‘Come on. I’ll buy you a coffee. It’s freezing. I need to warm up.’
The auction continues as we make our way to the cafe.
‘Five hundred anyone?’ shouts Adam the auctioneer from the table on which he’s standing.
‘Yes!’ calls out one of the homeless/festival perennials, just as we pass them.
His mates snigger.
‘Yes what?’ says Adam.
‘Er.’
The guy doesn’t know. He looks at his mates. They snigger some more.
He is skinny, about 5’8″, mid-twenties maybe, unshaven, wearing dirty grey tracksuit bottoms and not one, but two hoodies, both up over his head. Under the hoods, I make out a mischievous pair of dark eyes. A badge has been sown on to the outer hoody. It’s a CND logo with the words
‘Sean’s Outpost Homeless Outreach’.52
‘So he is homeless,’ I think. I was right. How come the homeless are interested in Bitcoin?
Underneath ‘Sean’s Outpost Homeless Outreach’ are the words ‘Satoshi Forest’, but I barely notice. I’m too busy wondering why on earth there are so many homeless at a Bitcoin meet.
The auction continues.
‘Five twenty anyone?’
‘Yes. Five twenty!’ calls out the homeless dude.
‘Bid or offer?’ asks Adam.
‘Er…Offer,’ he guesses.
He’s confused again. There’s a pause as he tries to register the question. He looks to his mates for help.
‘Do you want to buy or sell?’ asks Adam, patiently.
He’s stumped again. His mates snigger some more.
‘Yes,’ he guesses. Then he shouts out, ‘Don’t know.’
‘You’re not really cut out for capital markets, are you,’ heckles my Jewish bitcoin-buyer Paul.
Everybody laughs.
But my first thought is concern. ‘You can’t take the piss out of a homeless person like that,’ I think.
I go for my coffee with Paul. He’s a derivatives trader – friendly, open, very knowledgeable, a fantastic source of information and contacts, and extremely confident. We swap email addresses, he sends me all sorts of links to interesting Bitcoin reading – and, by agreement, we never get round to the actual bitcoin exchange. Neither of us was that bothered.
‘It was funny what you said to that homeless dude. How come there are so many homeless at a Bitcoin meet?’ I ask.
‘Homeless? Ha! That’s Amir,’ says Paul.
‘Amir? Amir Taaki?’
Amir Taaki is one of the world’s most dangerous/talented computer hackers – and one of Bitcoin’s early coders. I thought he was in Spain. I have to talk to him.
We go back to the meet. Everybody else wants to talk to Amir as well. They are all asking him who Satoshi is.
Paul introduces me to one of Amir’s mates. He can’t be more than about 25, with the worst teeth I’ve ever seen. He doesn’t talk much, just grunts in the manner of someone who’s smoked too much weed.
‘He’s got more than 900 bitcoins,’ Paul says.
‘That’s almost a million bucks!’ I exclaim.
The grungy festivalgoer laughs gormlessly.
Another, from South Wales and the sweetest man you have ever met, explains how he runs Wales’ only bitcoin-only store. He gives me a Bitcoin hat.
Finally, Paul introduces me to Amir.
We get talking. He is happy to meet for an interview. He tries to tap his email into my phone but makes a mess of it. If this guy’s a computer genius, how can he not even tap an email into a phone?
Then he adds that he doesn’t always reply to emails because he gets a lot. I know I need to pin him down there and then. I try to get his number. He’s cagey.
‘Can you do tomorrow tea-time?’
‘Yes.’
Shit, I can’t do tomorrow tea-time.
‘How about in the morning at 11?’
‘Yeah, OK. I’ll get my girlfriend to wake me up.’
She approaches. Spanish. And, like all of them, grungy and friendly.
‘This is Dominic. He’s a writer. He’s coming to do an interview in the morning. What’s our address again?’
She tells me.
At 11 the following morning, I find myself standing outside a squat in Bow.
Where Occupy and Bitcoin live together
It’s an old industrial building with a big sign that says, ‘Eastway Business Centre’. On a Sunday morning, the street is so deserted you feel like you’re one of the few survivors in a zombie movie in which the population has been wiped out.
A tattered legal notice is taped aggressively to one of the windows. ‘Section 144 LASPO does not apply’ it says (this is to prevent the squatters being evicted).
I look around the building trying to find a bell or even a front door. Everything is boarded up. I can see a couple of pairs of suspicious eyes looking at me from upstairs. I try phoning Amir, but there is no answer.
After a good quarter of an hour, through a gap in some boards, I finally spot Amir. He’s brushing his teeth.
‘I’m here to see Amir,’ I say and am waved in.
At a guess, I’d say there are about 25 people living in the squat. They’re the same kind of ‘festival goers’ that were at the meet the day before. A faint aroma of ganja wafts out of a communal eating area. As I pass, I get a strange look from a girl with dreadlocks, who seems surprised and a little nervous to see me in there. Perhaps she feels I’ve come to throw her out. Even in jeans I feel horribly overdressed.
Amir takes me upstairs to the living room. A couple is asleep on a mattress on the floor in the corner.
‘Won’t they mind us talking?’ I ask.
Amir says quite firmly, ‘If we’re disturbing them, they can go somewhere else.’
As if in reply, they pull their sleeping bags over their heads.
Amir asks another guy – unshaven, matted hair, grungy, friendly – to bring us a chai. Amir seems to have a bit of status in this place.
The chai arrives and the guy sits down with us. He wants to listen to the interview. ‘I’m interested in all this stuff,’ he says. It turns out he’s one of the ringleaders in the Occupy movement.
Amir starts talking.
I’ve always loved the way many inventions and discoveries happened by accident. Alexander Fleming didn’t clean up one day and now we have penicillin. George Crum, a chef, got so infuriated by a customer who kept sending back his potatoes that he sliced them as thin and fried them as long as he dared – and we have the potato chip (or crisp). Wilhelm Roentgen was playing around with a light and some cathode ray tubes – and we have the X-ray.
Similarly, there’s something of the accidental to Amir’s involvement with Bitcoin.
The 26-year-old Anglo-Iranian, an experienced hacker, was earning his living playing online poker. But he was frustrated with poker sites. Their fees were too high, their software dated and insecure and their encryption systems so easy to break. ‘It’s a problem you give in school to like 12-year-olds,’ he says. In other words, hackers could easily see other players’ cards. Do you know anyone who’s lost money playing online poker? Now you know why.
What’s more, onerous regulations make it difficult for new entrants to start up poker sites, leading to what he calls a ‘corrupt cartel’ that controls the sector.
So he began to develop an open-source poker app, with a way of shuffling cards in a distributed way – meaning that only those playing the game need be involved in the shuffling. There was no longer any need to put trust in a house or central server.
But he needed a money system for the bets.
‘I was searching around and talking,’ he tells me. ‘A mathematician gave me a bunch of different links. And one of them was this Bitcoin thing, and the site looked so sketchy. It was like a crappy blue webpage from, what, the nineties or something. And I was like, nah, it’s a joke project – there are tons of those projects, where a coder makes them one weekend and then gets bored or forgets about it and there’s nothing there.’
But Amir couldn’t find anything better. With no other options and ‘out of desperation’, he came back to Bitcoin and took a second look. He looked at the software, chatted to the small community of developers working on the project – Sirius, Nefario, Keeper, and Gavin Andresen.
‘Things started to make sense – this is real, this is fantastic,’ he says, excitedly. ‘I had loads of ideas for stuff that I always wanted to do, that was impossible, you know, new ways to do things, to fund open-source software, to create new projects. I was like wow, incredible. And for the next few days, I was telling everybody non-stop about it.’
He began working on various Bitcoin projects, but before long started to see problems in the Bitcoin software.
‘If you have an open-source proje
ct,’ he says, ‘the way that you get everyone, the community, to participate, is to split things into small units, specialties and so on – simple bricks that fit together nicely. Each module, each component is simple to understand, you don’t need to know what goes around it. You focus on making your brick as well as possible. And then all these bricks fit together to build a big complex system. But the Bitcoin software as it is, is just a big modular splotch, and if you change one thing, it affects all different things around it. Very complicated to deal with…I took the software and I started to improve it…we did a bunch of different things, but in the end I thought to myself, if Bitcoin is going to be such a big system, you know, on the world’s infrastructure, we need a proper base to it. So I decided to rewrite the software – not something that I recommend. I would prefer to re-factor, but I chose to re-write the code.’
He looked at synchronicity, scalability, and privacy. All too aware that software degrades with time, he worked on the architecture so that it would ‘maintain its integrity for as long as possible’.
Rags to riches, comedy and charity
There are many such accidental stories in the evolution of Bitcoin. Not only has its evolution been chaotic, unplanned and organic, so is the community that has developed around it. It is an eclectic mix of all sorts from the computer whizz to the con artist to the economist; from the opportunist to the altruist to the activist. You can look around and see whatever you want to see – whether it’s world-changers or no-hopers.
One student from Norway bought $27 worth in 2010 while studying for his degree. He forgot about them, and then remembered them three years later. That $27 had turned into $670,000. He sold half through MtGox and half through Bitcoin-24. He managed to get the money out of MtGox and bought a flat in Oslo. But the German authorities seized Bitcoin-24. With it went half of his fortune. ‘I’m not so worried about that,’ he says.
Another coder from Wales mined 7,500 bitcoins and then threw away his laptop. He spent many hours trawling the local rubbish dump trying to recover his fortune – without success.
Martti Malmi bought a beer from his friend for 10,000 BTC. His mate would later use those coins to buy a prime residence in central Helsinki.
Bitcoin Page 6