Confessions of a Crypto Millionaire

by Dan Conway

  Setting up my own systems was therapy. I bought a Google Chromebook, procured my own personally paid-for iPhone, and put up a website with SquareSpace. I updated my LinkedIn profile, changed my Twitter page, revised Medium, and posted my new career status on Facebook. While I was free from Acme, I was still in the grips of the centralized behemoths that controlled the modern Internet. These massive gated communities have taken a cut of everything, sold our data, and made all of the rules.

  It wasn’t supposed to be this way. In the 1970s and 1980s, Tim Berners-Lee, the inventor of the World Wide Web, was driven by the idea that the Internet wouldn’t be owned by anyone, that it would be a free and rollicking information superhighway. He is now working on new blockchain-heavy standards for what is collectively called Web 3.0. The goal is to move the Internet away from the current power brokers and give freedom and control back to the people. He is hopeful, even though the challenge is steep. In a Wired article, he said, “You can make the walled garden very sweet. But the jungle outside is always more appealing in the long term.”

  Someday I hoped blockchain would disrupt their stranglehold with decentralized alternatives, but that day had not yet come.

  I pounded the keyboard and put out a blog post. It encapsulated my revenge-first perspective that dovetailed with my belief in crypto. I used the upcoming Ethereum developers conference as the hook:

  Personal Computing Devices and the Coming War

  All the real action in computing has been out of our grasp for quite some time. Yes, that supercomputer in your pocket is better, faster, stronger than last year. But the thrust of its development has been to better acclimate it to the great nipple of computing power in the sky: The Cloud.

  The Cloud, i.e. server farms, are where the real action is. These vast racks of processors in air conditioned rooms, under armed guard, run our apps, set the rules, process our transactions, and upgrade the operating systems of our slave clients. Unplugged from the cloud, your computer is nothing.

  Blockchain is a buzzword that describes a rebellion in District 12. Blockchain apps run on decentralized networks — served and maintained by the computing devices of hundreds of thousands of people around the world. None of these people control the network. Each of them is rewarded individually with cryptocurrency for contributing their computing power towards its maintenance.

  Bitcoin is the oldest blockchain, and it is already three hundred thousand times more powerful than the world’s fastest supercomputer, at least 100 times more powerful than all of Google’s server farms combined.

  The bounty of decentralized networks is the wide distribution of the spoils of innovation. On the Facebook-like dApp (decentralized app) of the future, users will be rewarded if they grant access to their personal shopping habits; on the AirBnB-like dApp of the future, the server farms won’t be able to increase their cut, and a true peer-to-peer marketplace will flourish.

  A reckoning is coming, which is why you are starting to hear about blockchain in nervous corridors of power, among the disenfranchised and among the awake. Rebellions can be messy — the Bitcoin blockchain has been supplanted by Ethereum as the most decentralized network, the one less likely to ever be controlled by server farms. But all blockchains are a step in the right direction.

  Next week, at the Ethereum Devcon2 in Shanghai, thousands of developers from every corner of the world will gather. More than one hundred dApps will be showcased, discussed, and considered. Will one of these be the killer dApp that sets this rebellion in motion?

  I’d previously written a Medium story in May 2016 about how I had come to the decision to make a large investment in ether. It was a hit and had been read by fifteen thousand people. I created an online publication called Citizen Crypto with the goal of building on that audience and establishing my reputation in the community. I wrote about how blockchain could prevent fraud and embezzlement (“Organized Crime Hates Ethereum”), cut the bullshit and bring back integrity (“Your Sourpuss Grandpa Will Love Blockchain”), simplify and verify medical records (“Presidential Health on the Blockchain”), and prevent data breaches (“Yahoo’s Data Breach and the $12B Antidote”). I also wrote a piece with recommendations for PR professionals working in crypto (“Mainstream PR, Meet Cryptocurrency”) as if I were a grizzled veteran rather than someone figuring out if I could make a living in the space.

  Through one of Eileen’s contacts at the venture capital firm Redpoint, I won my first crypto account, a well-known and respected early cryptocurrency wallet company called BitGo. Their CEO, Mike Belshe, was a sharp pioneer in the space. I impressed him with my knowledge of the cryptocurrency universe, which by that time was extensive, up to a certain technical point. He brought me aboard to work on an upcoming launch. Eileen and I were relieved. We had no idea if projects and companies in this space would pay for PR until they did.

  I accelerated my outreach to the crypto community, and it felt great. I wasn’t going to turn anything down, no matter how small. I figured the best way to find clients was to start a meetup group. I called it Ethereum Economy—SF Bay Area. I wrote a Medium blog (“Enter the Ethereum Economy”) that breathlessly explained my charge:

  For those of us who believe in decentralization and have committed to the cause as a funder of a particular token, as a career move, or as an evangelist — this is a gathering place to figure out how we can help, compare notes, talk strategy, hear interesting speakers and network. We are going to need to pull on one another as this thing heats up and the real ride begins.

  Two hundred people signed up. My first meeting featured a presentation by Martin Koppelman of the prediction market dApp Gnosis, one of the hottest projects at the time. Six months later, it would be valued at an eye-popping one billion after its Initial Coin Offering. I invited my sister Kathleen and a couple of friends who were tech-savvy, mildly interested, and willing to do me a solid.

  Martin’s presentation was thorough. But it was so unbelievably dry and inscrutable that I wanted to cry. After an hour of him reviewing numbers-heavy slides in a small font with generous tangents featuring a soup of concept words like “random beacons,” “plasma diospheres,” and “the skyline number theory,” he mercifully concluded. One of my friends shot me a look that said, “You’ve harmed me, and I won’t forget this.” The other one just stared straight ahead, appearing to be in a trance. Most of the crowd seemed to love this stuff, though.

  My vision for the meetup was that I’d attract normies like me, maybe a few lawyers, some tax guys, and soft-boiled tech early adopters. We’d all speak English, for once. But this stuff was early, and the only ones willing to show up were professional mathletes, with just a smattering of dreamers like me who grasped the concept at a deep and emotional level but didn’t understand how it worked at a granular tech level. Regardless, I was psyched to have started something that brought these top-tier minds into the room. I was on my way.

  The only thing that wasn’t making sense was the price of ETH. The fundamentals of Ethereum couldn’t be better. Transactions were rising daily, hundreds of dApps were now in development, the hashpower (processing power) of the Ethereum blockchain had grown by leaps and bounds over the previous three months and the developers conference had sold out in just a few days. The DAO disaster had happened six months prior, which is a lifetime in crypto, where everything moves at warp speed, because every player is animated by money.

  While the Ethereum platform was gaining strength, the price of ETH continued its slow-motion drop. This began after the DAO hack when a splinter group formed a copycat coin. By November 28, ETH had fallen to $8.81, putting us down 50 percent. We’d only realize that loss if we sold. We had no plans to do so, but we didn’t have an unlimited runway. I constantly lurked in r/EthTrader, which was populated by crypto investors, speculators, true believers, and also trolls spreading doubt and hoping to cause a panic for the fun of it or so they could buy cheap coins. Many posts like these confidently predicted the price of ETH was going to drop
even more and might not ever rise again:

  Ethereum has no utility or even realistic impending utility at the moment. The bubble has popped until a use beyond academic masturbation is discovered. And when that use case is discovered, I might invest. Not sure it will be represented by ETH necessarily.

  Eth isn’t used for payments and there are zero dApps that are widely used or even useful at this current time. It’s already obvious from the price action today there aren’t any buyers for Eth right now.

  ETH dumping hard. Last chance to exit. I am confident we will see $3-6 before year’s end.

  Crap. I used to punch numbers into the calculator on my phone to figure out how many ETH we’d be able to buy at a particular price and how much we might make if ETH rose to certain dollar amounts. Now I’d punch numbers to figure out how much of the $100,000 we’d lost. It was more than $60,000 at this point. That was more than we’d ever had in savings, nearly half the once-in-a-lifetime nest egg we’d received the year before. At a time when I didn’t have a full-time job.

  Nighttime was my witching hour. I couldn’t sit through an entire movie or family dinner without feeling antsy and distracted. I wanted to go off somewhere by myself and work the numbers, see if I could find a different, more reassuring way to analyze our financial picture. I started going to bed earlier. I also tried my best to stay off Reddit, where every night, trolls invented new ways to tell us we were doomed.

  Eileen was oblivious to all of this. She was taking the ignorance-is-bliss route. If I’d never mentioned the crypto investment again, there was a chance it would never come up.

  At least our move to start Zealot Communications was going well. We were featured on the Mr. Reubot podcast. ETHNews wrote a story about us. At BitGo, I was exchanging emails with heavy hitters and crypto legends like Erik Voorhees, who invented the first popular Bitcoin application, Satoshi Dice, and was now running ShapeShift, a service that allowed one cryptocurrency to be easily exchanged for another. At meetups, I met other blockchain luminaries, including Andreas Antonopoulos, the well-known cryptocurrency evangelist who’d written the definitive book on Bitcoin and was now working on one for Ethereum. I interfaced with the executives at the powerful and mysterious OKCoin, a Chinese-based BitGo client and the largest digital exchange in the world by volume.

  At the BitGo holiday party, things were coming together nicely. Eileen and I sat at a five-star restaurant at the base of the Bay Bridge with a million-dollar view. I met one of their loud-talking VCs, chatted with a wasted administrative assistant, and spent time with a guy in Singapore who had been ported via video to a robot that rolled around the restaurant, running over people’s feet.

  Mike complimented my contributions to the company in front of everyone. I was having a blast. I believed in this technology and the changes it would bring to society. I was legitimately interested in each bit of content I read, and I tried to make sense of everything and put it in context.

  Unfortunately, ETH kept dropping. By December 28, it hit $7.12. Our original $100,000 investment was now worth less than $40,000.

  It looked like we’d bought at the top. We were in for the long term, sort of. We could handle a decrease in price, but if ETH stayed depressed or fell further, the strain of holding it would become a crushing weight on our shoulders, at the same time that I was forging a new career.

  But my confidence in Ethereum and its ongoing development was as strong as ever. I couldn’t avoid the dangerous thought that ETH was a bargain at these prices. I couldn’t will the price to go up, but I could reduce our average cost per ETH by buying more. Once I spun that idea in my head, I couldn’t let it go. If one hit of acid wasn’t working yet, might as well take another.

  As I walked to pick my kids up from school, I punched numbers to figure out how much our average cost would be reduced if I bought different amounts at these low prices. The more I bought, the bigger my stack, and the lower my average cost would be. These numbers were a lot more fun than the ones I’d been staring at for the past three months.

  But we didn’t have the money. We’d already invested an outrageous sum and our entire nest egg. The only pool of funds available was credit—the line of credit on our home. Racking up a big debt on our home equity line would put us in movie territory. The movie where the man ends up divorced and living on frozen dinners. His uneducated adult children use words like “ain’t” and phrases like, “No one ever done that before, me don’t think.”

  Eileen’s strategy to deal with ETH volatility was to tune it out completely. She didn’t want to talk about it. Now that her trips were scheduled, she told me I should do what I thought was right. She was happy that I had a PR client in the crypto space and was making money. The BitGo holiday dinner, attended by legit VCs and the normal tech types she was familiar with, gave her confidence that crypto wasn’t just me and a group of folks from the mental hospital.

  I set up a call with a couple of other Ethereum enthusiasts I’d met along the way. I told them that I was thinking about making another investment. Each said they wanted to buy more, but they didn’t have the cash. I said I was considering putting $15,000 more in, much less than I was. They laughed and said that was a bigger play than they could make. I was reminded that I was already in deep. I was a whale, and I’d bet more of my net worth than anyone I’d ever heard of.

  Had my measured risk morphed into self-destructive recklessness? Was I getting too emotional about this investment? I thought of my two great-grandfathers. One shot a man in the 1860s in a bar fight, and the other had been shot and killed in a bar fight around the same time. Both apparently lost their cool and acted on a dangerous impulse. And it cost them. Yet more relations who’d done some crazy shit.

  I thought about one of my own decision points.

  One summer night when I was sixteen, some friends and I were drinking beers and smoking cheap cigars in an abandoned parking lot. Suddenly, a big caravan of punks showed up, and they were looking to fight. We wore pegged pants and listened to New Order and the Cure. We weren’t pussies, but we weren’t looking for a brawl.

  A short, stocky guy pulled his shirt off and slapped the cigar out of my friend’s mouth. Then the one with an earring approached me quietly, watching my every move. He was measuring the right angle to clock me. This was it. I should have begged for mercy. He might have had a weapon.

  I said, “Hey, calm down, man,” and slammed my fist into his head. That surprised him. It was a direct hit, and he fell to the ground. He shrieked and grabbed his ear. I’d put his pretty little earring right into the side of his head. He looked up at me in fear, worried that I might punch him again.

  We fought the rest of them off as best we could. I ended up with a black eye and a few bumps and bruises. It was one of the greatest nights of my life.

  Confidence had always been my problem at work. Amidst org charts, best practices, and other bullshit, I’d lost my mojo. I had tried to stifle the crazy side of my personality that was associated with Flip Side. But it was also the source of my courage. Rather than risk acting out, I’d withdrawn completely, leaving only a shallow version of myself at work, exhibiting feeble abilities.

  Flip Side was the reckless brother who loved me but kept fucking my life up. Now he said he could right all his past wrongs, if only I’d listen to him. He knew how to summon all the rage, the chips on our shoulder, the desperation of wanting to be ok. If I could do this one insane thing, he would save me. I’d have to give him control, but we could win it all.

  “This time, I’m right!” he said.

  I could see it. I could feel it. I was ready. Fuck them and fuck it. I went all in.

  In the winter of 2017, over a period of weeks, I visited Wells Fargo three times. I transferred an increasing amount of dollars from our home equity line to Gemini. After each transfer, I went home and started buying ETH slowly so I didn’t cause a run-up. I wanted to keep things quiet so I could accumulate in peace.

  When it was all said and done
, the debt on our line of credit exceeded $200,000. I bought 21,116 ETH that winter. Our average buy-in price was now $11.21. In total, we owned 26,750 ETH. Our total investment was more than $300,000.

  In crypto, everyone talks about whales, the ones with the massive number of coins. They are a mythical force, making loads of money by knowing what’s going to happen next. They move their huge stacks for maximum advantage while everyone else is in the dark. I always pictured them as Gordon Gekko or Mr. Robot. A mix of tech billionaires and cold-blooded traders, with maybe a few Russian oligarchs thrown in. I don’t think anyone thought it was a guy like me, sitting in his upstairs bedroom, buying more ETH than most people thought was prudent, then going downstairs and trying like hell to change the water filter in the refrigerator.

  Eileen walked into the kitchen just as I was ready to give up with the filter. She started pouring the kids’ milks for dinner.

  “Well, we’ve done it,” I said.

  I saw an instant of terror in her eyes. When I worked for Eileen at Macromedia sixteen years before, she always seemed to know everything that was going on in her department, even if she only drifted into any particular meeting for a few minutes. She had that type of brain. But she didn’t always let on that she did.

  Later, I asked her if she had ever been nervous about the ETH investment. A strange question, since who wouldn’t be, but one I needed to ask, considering her apparent complete lack of curiosity or concern during this period. She surprised me. She said that this was the only time she was actually afraid. But the other thing she sensed at that moment, which generated a more powerful feeling than the fear, was the fact that I was actually happy.

  Despite my mania, I was happy, and that was good for the whole family. She didn’t stop me from making this investment because she didn’t want to break the spell I was under. That’s a proof point to how miserable I’d been, how miserable I’d made her and the kids during my time at Acme and during my addict years. It’s also evidence of her being slightly crazy herself because who would be willing to do that? She’s obviously either a spiritual healer of unlimited power or a dangerous psychopath.