by Dan Conway
My low point came one day in mid-July when I was helping my aunt clean out her apartment. Some other relatives were also helping, and they kept asking me about ETH. Between the realization that we’d be digging through dusty boxes for the next few hours and that my ETH-based freedom might be gone forever, I felt ill and had to rest outside the room for a few minutes.
On July 16, 2017, ETH sank to $133. We were still up $3 million. But it was dropping, and I kept thinking of how I didn’t have any clients and how I’d burned a bridge with BitGo.
More than anything, I was pissed. That night I logged into r/EthTrader and pounded out this defiant screed to rally the troops:
I won’t sell a single damn coin during this downturn. I’ll let it go to zero before capitulating. I didn’t get into Ethereum as a normal investor, I got into this as a true believer, and that is what I am today. (Yes, I’m a verified moonkid, trolls—check back with me in a few months and a few years, and let’s compare notes.).
Ethereum grabbed a hold of me in a way that no other technology ever has. Its potential inspired me. I could feel it in my bones, and I still do. So I don’t treat my investment in ETH as a stock or a mutual fund—I treat it as a bet on a better future, on something big that requires vision and balls in order to stay the course.
When this thing turns back up ... hold on tight, because you are going to see something truly extraordinary. Or you can try to time the market, sell now and panic buy as the exchanges shut down and you are stuck with fiat.
But I’m ready to sacrifice all of my dear profits all the way down to the bottom, because like Kaiser Soze, I’d rather kill my dear coins entirely than give up hope and sell into this Fear, Uncertainty and Doubt.
Kaiser Soze killed his wife and children rather than give his enemies leverage. Looking back, that’s a pretty serious comparison. I knew that by holding I was risking the substantial windfall we’d already won. But my goal was fuck-you money. Period. I had no interest in getting a nice nest egg and then going back to work. I wanted out of the workforce. I’d already left. I wasn’t going back.
Eileen was still not asking about the price, so I didn’t bring it up.
***
Even amidst the drop, people from all over the world wanted in. The devastation I was living was a buying opportunity for many. By this time, the crypto infrastructure was creaking under the weight of increased activity. All of the buying and now all of the selling was slowing down the exchanges, making it hard for people to get money in or out. Coinbase reported that they were signing up fifty thousand new customers per day in 2017.
God help you if you needed technical support. It simply wasn’t available. If your application or trading was irregular in any way, the exchanges would simply freeze your account rather than risk running afoul of the Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines they were trying to follow. They simply didn’t have enough staff to fix individual problems. They were in full triage mode, which left thousands of customers at the biggest exchanges, especially Coinbase, with no recourse. Three of my friends simply couldn’t get their applications approved and moved to second-tier exchanges with more difficult fiat on-ramps and sketchier provenance.
It seemed that everyone I’d ever told about crypto wanted to talk with me. The guy at the mailbox store where I made copies, the nice motherly lady at my Saturday night twelve-step meeting, an old colleague from Acme who had been cast off like me, old friends of Eileen who had seen my crypto posts on Facebook, my own college and high school friends, and even the neighbor down the street who was a retired insurance salesman.
Did I know of another exchange that could sign them up quick? Should they sell their ETH? They’ve sold their ETH. Should they buy back in? Is bitcoin going to pop? What’s the next big ICO? Is this crash a buying opportunity? Excitement and mania and panic and FOMO and FUD all danced together around a campfire as I slowly turned on the spit, my dream of a clean exit cooked right out of me.
I told all of the people contacting me that I wasn’t talking about crypto right now. As the voicemails, emails, and tagged Facebook posts piled up, I wanted to leave an auto reply that said: JUST HOLD ETH, YOU FUCKING COWARDS.
Chapter Twenty-Five
Head Above Water
During this troubling time, I did what I always did when my hands were shaking. I visited r/Ethereum, where the discussion is focused on product development, not the price of ETH. Before raw price movements took over my brain, this was where I had spent a lot of time trying to scratch out what was happening. I’d collect signals from third parties building things on Ethereum. I’d evaluate the logic of developers who said this or that could be disrupted at future stages. Not quite quantitative analysis, but it’s what I was capable of.
The dialogue and collaboration in the Ethereum developer community never stopped, no matter what was happening, price-wise. The Metropolis Part 1 upgrade, named Byzantium, was being finalized. It would make the Ethereum Virtual Machine more approachable and provide smart contract developers more options and stability. zk-SNARKS functionality was also being prepared, which would soon add the most advanced privacy features to the Ethereum blockchain. At a technical level, I knew enough about these things to grunt, “Good,” before flipping back to r/EthTrader to see if the price had stopped dropping.
I always knew Ethereum was raw, experimental in most ways, and fraught with difficult development hurdles in the months and years ahead, especially the challenge to scale while remaining decentralized—the blockchain holy grail. But visiting r/Ethereum now gave me confidence. The rational side of my investor brain, the side that had never been drawn to a speculative investment before ETH, was still satisfied with the empirical evidence. It still seemed that Ethereum had no bounds, that time and development hours were the only critical barriers to achieving widespread adoption, one decentralized app at a time.
***
ETH had more to say, despite the ICO madness and the glee of skeptics during the summer crash.
In early August, it started going back up, and fast. On August 8, it hit $275. I saw Sean at a drop-off for one of our sons’ mutual friend’s birthday party. I looked him in the eye and asked, “When are you going to tell me about that family vacation?”
I was ready for our next cash-out. A sum my previous self would have considered a massive, unbelievable, piss-my-pants-in-jubilation amount of money.
Why now? This was the best way to ensure that I could still hold an enormous stack no matter what crypto had in store for us. Cashing out a large chunk also allowed me to make a deal with Eileen that would remove additional pressure. With this money, we could live for years without working. This gave her the confidence to join me in the world of Not Having a Job, at least for the time being. This was good news, because she was growing tired of meeting client deadlines while I tinkered with the initial outline of this book at Philz Coffee and complained about what hard work it was.
I agreed that if she quit her remaining clients, and then everything went to shit and ETH collapsed, I’d be the one having to go back to work first. I was extremely confident, rightly or wrongly, that with a multi-year runway, ETH would rise up in value, making my miserable return to work theoretical only.
On August 31, we sold 7,365 ETH at approximately $366 for $2.7 million, leaving us with about two million after tax. I wired it to Wells Fargo, lickety-split, no problems at all. I could see the money right there. Two-point-seven million. U.S. dollars. In our account. The vases didn’t fall off the wall, my eyes didn’t bleed, paparazzi didn’t gather on the front lawn. But we now had two million, after tax, sitting in our bank account. Ho-hum.
Eileen didn’t seem to register the two million the same way I did. She was happy, of course, but ready to move on after a brief conversation. I could spend all day talking about the money we now had, the big money we might still get. Her instinct was that these conversations were unholy, so she avoided them.
Despite her reticence, we a
lso discussed the elephant in the room—our plan to eventually sell the majority of our coins to earn permanent financial independence. This had been the goal all along, and it suddenly seemed plausible. Sean ran the numbers. We would unquestionably be set for life with nine million dollars, after taxes. We could live a fabulous life, spending the interest and principal as necessary. We could weather any financial crisis. That was now the goal. But while we agreed on the total dollar amount we needed, we didn’t settle on a final number of ETH we would keep. I had no intention of selling all of our ETH, no matter how high it went in the short term. So we didn’t have a firm sell strategy.
In the fall of 2017, we were in a benign purgatory. We had no income, but we had plenty of money. It was suspended animation. It felt like the cord could be cut at any moment, even though our bank account said otherwise. I was still totally aligned with Flip Side. We were celebrating our vision and guts. But in the back of my mind, I thought of the Kennedys. I often wondered if they’d brought down mythical forces upon them for reaching so high. Now I couldn’t shake the thought that maybe I’d done the same.
My sister, who’d already raised her four children and needed less money than us, made her move. On October 1, 2017, she completed selling two million dollars worth of ETH and retired permanently. At her going-away party, everyone wanted to know about this mysterious investment that had skyrocketed. Was it too late to get in? It always is, isn’t it?
On October 9, 2017, on the eve of Kathleen’s trip of a lifetime to India, the Tubbs Fire descended on Santa Rosa like a blowtorch and burned her house to the ground. The fire was so fierce and caused such devastation that it led the national news for days. The next morning, after staying up all night watching coverage, I noticed my thumb was trembling. A quick Google search confirmed my suspicion. This could be the first sign of ALS. Was the universe balancing out our good fortune?
On November 15, I was eating lunch with my mom, sister, and brother, when I received a text from Eileen. “Were you trying to add a phone to our account?” She’d received a text from our carrier. This sounded like phone porting, the most devastating crypto theft exploit. I jumped up as if something had sunk its fangs into me, startling my mother and hitting my head on the umbrella at this suddenly annoying sidewalk bistro. I stormed down the street, yelling into my phone at Eileen like I was trying to sell a thousand shares of stock before the market crashed in Trading Places.
“Can you please CALL THEM NOW?” I pleaded.
She was at yard duty at the school and wasn’t allowed to make a call. I let my voice go low and said, “It needs to be you who calls, because you received the text. If you want to see it all get stolen, that’s fine.”
She exited the yard and made the call. It turned out to be a phony text, a phishing attempt by hackers impersonating our carrier. As long as Eileen hadn’t clicked on the link (she hadn’t), we were fine. Thankfully no child was injured during her absence from yard duty, as far as I know. At least my thumb had stopped trembling.
Eileen wasn’t thrilled with my reaction. I apologized. I realized we needed help on the cybersecurity front. So we splurged on a private digital security firm that now monitors every Internet-connected device in our family and employs other security measures. We also installed a home alarm system. I considered getting a weapon but realized I was going overboard.
***
Through October and November, ETH hibernated, holding its price for what seemed like a year. In crypto, this was usually a sign that something batshit crazy was about to happen.
In Taipei, on November 25, Vitalik gave a detailed lecture about the future of Ethereum. He laid out the road map for what he dubbed Ethereum 2.0 and explained how Ethereum would implement a theoretical scalability breakthrough called sharding and a new smart contract programming language called Viper. He also spoke at length about the eventual upgrade from Ethereum’s proof of work algorithm, which most blockchains, including Bitcoin, utilized. Ethereum was moving to proof of stake which required much less energy. It would enable real decentralized apps for the first time.
ETH started climbing again, this time with determination. After sitting below $400 for the previous few months, it quickly rose to $475.
And then it became clear that the fall break was just the eye of the storm as ETH picked up its Category 5 fury. Everything jumped back into action.
The crypto and business press were eager to be the first to announce the next ETH bull. Seeking Alpha blared, “Buy Ethereum Now, Before Its Tech Takes Off.”
It was furious. It was crazy. It was a once-in-a-lifetime storm surge, and we just needed to hold on. On December 12, 2017, ETH hit $522. We were up $8 million on our remaining ETH.
This is fucking nuts, agreed everyone everywhere.
On December 14, 2017, ETH hit $700. We were making more than a million dollars a day. We were up $10 million on our remaining ETH.
Once again, I couldn’t get over how right I’d been. I would sit on the same couch where I’d had my humiliating video interview eleven months before and relive what was happening to us, even though I was still living it. I’d been in this fever dream for a while. It was like one day I had claimed aliens were going to land in our backyard. Everyone thought I was crazy. Then, one day, the most powerful spotlight anyone had ever seen shone down on our house. Our dog started barking, the kids panicked and Eileen ran to get the suitcases. “They’ve arrived!” I’d say. “Nothing to worry about—they are friendly.”
Vitalik, the oldest soul in the room, someone who never seemed to care much about the price of ETH, chimed in on Twitter about the growing discrepancy between the price of ETH and its promising yet still immature technology:
How many unbanked people have we banked? How much censorship-resistant commerce for the common people have we enabled? How many dApps [distributed applications] have we created that have substantial usage? How much value is stored in smart contracts that actually do anything interesting? How many Venezuelans have actually been protected by us from hyperinflation? How much actual usage of micropayment channels is there actually in reality?
Interesting questions, but none of us cared, because we were making so much money.
Now everyone in the world wanted to know about crypto. The interest level felt ten times more intense than it had been just a few months earlier. My twelve-year-old son Danny told me he wanted to buy Komodo coin. It’s a sure thing, he said. He also told me he was going to start his own blog called The Crypto Kid. What the hell did he know about it?
I flipped on the show Silicon Valley to get my mind off everything, only to realize the entire Season Four was based on a technology that sounded a lot like Ethereum. I turned it off when Pied Piper suffered a 51 percent attack, a crypto doomsday scenario involving a blockchain being destroyed.
Of course, I was having trouble sleeping. I’d wake up at three a.m. and feel those scratchy sheets in the downstairs guest bedroom where I sometimes slept when I was restless and didn’t want to wake Eileen. I refused to check the price of ETH. But I always did. Then my body got used to the drill, and I’d wake up every night at the witching hour, looking for my fix. This kind of thing wasn’t supposed to happen unless you were in a movie or the subject of an urban legend.
Ethereum was in the Tornado, a term coined by Geoffrey Moore and well-known in tech circles, when everyone wants a piece of the technology, wants to be a part of it in any way possible. All they had to do was buy ETH.
A new meme called the Flippening took hold in the crypto community and mainstream press. It refers to the moment when Ethereum overtakes Bitcoin as the blockchain with the most value. Both coins had skyrocketed, but ETH was going up more. Were the Flippening to occur, ETH would replace bitcoin as the first crypto among peers. ETH would become the crypto reserve currency with the most fiat on-ramps. Its price would go ballistic.
I always thought ETH would skyrocket when the first dApp achieved mainstream usage a year or two or three down the line. Even
to a speculator like me, this felt too much, too fast. But maybe this was what the Beatles felt like when they got too big, too fast. Ultimately, who cared, they were the Beatles!
On December 20, 2017, ETH hit $827. We were up $12 million on our remaining ETH.
Then, of course, Sean called me. He asked if we wanted to meet again now that we could achieve our goal of financial independence. I liked that idea. This would be a victory lap, an opportunity to talk about ETH in a focused way for an hour.
As Eileen and I walked through the door, we were greeted by one of his junior staffers who loved to talk about crypto.
“Wow, crazy times!” he said. “How are you guys doing?”
“Well, I’ll tell you, it’s really strange and glorious at the same time. ETH is about to overtake Bitcoin, and then the real show will start. It’s like the Wild West. Very insane and obviously good for us.”
I felt like a celebrity.
Then I told anecdotes about r/EthTrader speculation, crypto hacks, mainstream press coverage, people I knew who were now jumping in to invest and other related stories. I kept talking even as we were sitting down in the boardroom with Sean and the rest of the team waiting for me to finish so we could start the meeting.
I remembered how Prince Charming, at the top of his game at Acme, used to go off on personal anecdotes that he found amusing. He didn’t seem to care if others had to listen to them, because what he was saying was obviously worth it. Now I was happy to share my charming observations and tangents with this group.
Finally, the meeting started. Sean had prepared.
An assistant flipped on the overhead projector. Suddenly there were charts and graphs. Each showed different cash-out scenarios for turning our ETH into dollars. Each scenario delivered the same punchline: it was almost time. It just depended on how much ETH I wanted to keep for the long term, how much skin I still wanted in the game.
I’d been running my own numbers in my head, and I was having a hard time tracking my calculations to Sean’s. It was confusing. His charts reminded me of prison cells.