Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money by Nathaniel Popper

Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money by Nathaniel Popper

Author:Nathaniel Popper [Popper, Nathaniel]
Language: eng
Format: azw3
Publisher: HarperCollins
Published: 2016-05-17T04:00:00+00:00


IN THE DAYS that followed, Mt. Gox reopened for business and the price stabilized around $100. But many believed that the recent price crash proved the flaws in the whole concept. Felix Salmon, a financial columnist at Reuters, wrote a widely circulated article pointing out that the volatile price of Bitcoin made it nearly impossible to use for its most basic purpose, as currency. If consumers didn’t know whether a Bitcoin would be worth $10 or $100 tomorrow they would be unlikely to spend their coins and merchants would similarly be unlikely to accept them. Even this critic, though, saw something elegant in the network underlying Bitcoin.

“For the time being, Bitcoin is in many ways the best and cleanest payments mechanism the world has ever seen,” Salmon wrote. “So if we’re ever going to create something better, we’re going to have to learn from what Bitcoin does right—as well as what it does wrong.”

The day after the crash, the Winklevoss twins finally went public in the New York Times with their now significant stake in Bitcoin—worth some $10 million. The interest was not restricted to the United States. A few weeks after the crash, a national television station in China broadcast a half-hour segment on the new enthusiasts in that country, and several local entrepreneurs began setting up exchanges to buy Bitcoins using yuan.

Despite the crash, everyone with a Bitcoin idea found that there was now no shortage of eager investors in Silicon Valley. In May, Pete Thiel’s Founders Fund announced that it was putting $2 million into BitPay, the payment processing company that allowed merchants to accept Bitcoin and end up with dollars in their bank—taking advantage of the Bitcoin network’s quick and cheap transactions.

But the company that was attracting the most attention was Coinbase, founded by the veterans of Airbnb and Goldman Sachs. The twentysomething cofounders had clean-cut looks and soft-spoken ways that naturally engendered confidence. Investors liked that the pair avoided the ideological talk of overthrowing the Fed and instead sold their company as a safe and easy place for consumers to buy and hold coins that wouldn’t be subject to endless delays and scrutiny from the authorities. They also had real professional experience at well-known companies, something that had been in short supply in the Bitcoin world up to this point.

After consultations with Wences, Micky decided to team up with the New York venture capitalist Fred Wilson to put $5 million into Coinbase. It was the largest publicized investment in a Bitcoin company to date, by a wide margin, and the first time an established venture capitalist like Wilson had put serious money into the space. The rest of Silicon Valley took notice.



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