Digital Gold

parked and raced into the AP

building. A few managed to

squeeze onto the elevator

with Nakamoto and the AP

reporter. The reporters once

again asked Nakamoto if he

was the creator of Bitcoin and

he once again denied it before

disappearing into the AP

offices.

With

the

reporters

stationed outside the AP

office

waiting

for

Nakamoto’s next move, the

focus

turned

back

to

Goodman’s article, which

was now being looked at with

a

more

skeptical

eye.

Commentators on Reddit and

Twitter pointed out that

Goodman’s evidence was

almost

entirely

circumstantial, other than the

quote she got from him in his

driveway.

As

Gavin

Andresen wrote on Reddit, in

an angry open letter to

Goodman, what she reported

Nakamoto

saying

could

“simply be an old man saying

ANYTHING to get you to go

away and leave him alone.”

Several people were also

combing through examples of

Dorian Nakamoto’s writing

that had been found online.

While the Bitcoin creator’s

early writing had been crisp

and even elegant, Dorian

Nakamoto’s

reviews

on

Amazon and his letters to a

model-train

magazine

suggested a man with a

mediocre handle on the

English language. In an

Amazon review of Danish

butter cookies, he wrote:

it has lots of buttery

taste

the shipment went

well. i’ve had a nice

comment from my

kids. it’s a perfect

xmas and i would say,

for other occasions.

As the afternoon went on,

a growing number of people

concluded that Goodman’s

article

was

aggressive

journalism

gone

terribly

wrong. The AP’s story and

video from its interview with

Dorian Nakamoto did nothing

to improve Goodman’s case.

Dorian clearly and explicitly

denied that he had anything to

do with Bitcoin. He seemed

to have little familiarity with

the technology, calling it

“Bitcom” at several points,

and implying it was a

company at another point.

The final piece of bad news

for Goodman came that night,

on

the

P2P

Foundation

website, where the creator of

Bitcoin had posted a few

items about Bitcoin back in

2009. In the first post since

2009—and

the

first

communication from Satoshi

in any form since 2011—the

user Satoshi Nakamoto wrote

five words: “I am not Dorian

Nakamoto.”

None of this evidence, in

fact, proved that Dorian was

not Nakamoto. If Dorian was

Satoshi, he could have gone

home from the AP office,

logged into his P2P account,

and made the post. And if

Satoshi was as smart as some

people believed, he would

have known exactly what to

say to convince people he

wasn’t Satoshi (he would

have also had to be a very

good actor). But in either

case, the events of the day

underscored

just

how

committed Satoshi still was to

remaining anonymous. The

reexamination of the evidence

also pointed back to the hoard

of Bitcoins that Satoshi had

mined during the first year of

the

network’s

existence,

when his computers kept the

system

running.

An

Argentinian security expert,

Sergio Lerner, had done a

thorough study tracing the

patterns of Satoshi’s mining

during

that

time

and

concluded

that

he

had

captured well over a million

Bitcoins, worth nearly $1

billion now. More impressive

than that, though, was the

security expert’s conclusion,

from a careful analysis of the

blockchain, that Satoshi had

never spent a single one of

the Bitcoins he had created.

His work in creating the

system really did seem to be a

selfless act.

In addition to what the

day

had

revealed

about

Satoshi

Nakamoto,

the

incident suggested that the

identity of Satoshi Nakamoto

really didn’t matter much. For

a few hours on the morning

of March 6, the world had

believed that the creator of

Bitcoin

was

an

aging

libertarian and model-train

enthusiast living with his

mother. The price of Bitcoin

didn’t move much in either

direction.

The

Bitcoin

protocol was now maintained

by Gavin Andresen and a

team of developers and the

code spoke for itself. Even if

Satoshi

had

returned,

it

seemed he wouldn’t have

much to do.

FOR THE FUTURE of Satoshi’s

creation, the more important

event on March 6 was one

that few people knew took

place. Just hours after the

Newsweek headline started

making its way around the

Internet, four men took the

stage at an auditorium in the

New York headquarters of

the

Wall

Street

giant

Goldman Sachs.

This

was

a

private

conference for some of the

bank’s most powerful hedge

fund clients. In addition to

appearances

from

former

New

York

City

mayor

Michael

Bloomberg,

the

former head of the Bank of

England, and the former

president of the World Bank,

Goldman had put together a

four-person panel to educate

its

clients

on

virtual

currencies. The panel was led

by the cohead of technology

at Goldman, a tall, bald

physics PhD named Paul

Walker.

He

opened

the

fireside chat by describing the

two things about Bitcoin that

everyone seemed to be able to

agree on: “It’s something on

the internet that seems to be

worth money, and it seems to

have been invented by a

mysterious

person.”

But,

Walker said, in a joking

reference to the morning’s

story from Newsweek, “the

last part may no longer be

true.”

Sitting next to Walker

were Barry Silbert and Chris

Larsen. Larsen was the man

Jed McCaleb had brought on

to run his new cryptocurrency

startup, Ripple. Most men in

the room were wearing ties,

but in true Silicon Valley

style, Larsen and Silbert were

not. The fourth member of

the panel was the former head

of the Financial Crimes

Enforcement

Network,

or

FinCen, James Freis.

Barry asked how many

people in the room were

skeptical

about

virtual

currencies,

and

a

good

majority of them put their

hands up. Barry noted how

different this gathering was

from the elite circles on the

West Coast, where at recent

events

he’d

attended

a

minority of the participants

had expressed skepticism.

Barry said it reminded him of

the early days of the Internet

when everyone in the tech

industry was leaving good

jobs to try to cash in on the

new idea.

“It’s either going to

change

everything,

or

nothing,” Silbert said.

To appeal to all the

financial minds in the room,

Larsen said that all the early

problems surrounding Bitcoin

had obscured the fact that the

technology

underlying

it

made something possible that

had never been possible

before.

“The world now knows

how to confirm financial

transactions without a central

operator,” he said.

It was, though, Walker,

the high-ranking Goldman

executive, who provided the

most encouraging comments

about the technology. He said

the

conceptual

advances

made by Bitcoin weren’t just

clever; they were useful in

ways that could influence the

future financial system. He

had obviously been spending

a lot of time studying this and

was clearly impressed by

what he saw. He suggested

that

Goldman

was

not

planning to buy or sell

Bitcoins, but he indicated that

the bank was taking a hard

look at how the blockchain

might be used to change basic

things about how banks do

business. It currently took the

bank three or so days to settle

stock trades. What if that

could happen instantly and be

recorded on a blockchain for

everyone to see?

Barry Silbert and Chris

Larsen were beaming. Few

things could help a financial

cause more than getting the

imprimatur of the firm known

as “the smartest on Wall

Street,” a bank renowned for

always seeing what was

coming around the next

corner and making the right

bets. Walker wasn’t making

any official announcements,

but everyone could see the

Goldman executive was into

this.

Walker

reflected

an

increasingly

widespread

fascination in financial circles

with the blockchain concept

underlying

the

Bitcoin

technology. Many bankers

had begun to understand what

Gavin Andresen had seen

back in 2010 when he first

became entranced by the idea

of a financial network with no

single point of failure. For

banks that were terrified of

cyber attacks, the idea of a

payment network that could

keep running even if one

player, or one set of servers,

got taken out was incredibly

attractive. More broadly, the

banks were waking up to

several increasingly viable

efforts to decentralize finance

and take business that had

belonged to the big banks.

Crowdfunding

companies

like Kickstarter, and peer-to-

peer lending services like

Lending Club, were trying to

directly connect borrowers

and savers, so that a bank was

not

necessary.

The

blockchain seemed to present

a decentralized alternative to

an even more basic part of the

banking industry’s business

—payments.

The banks were notably

not becoming any more

friendly toward working with

Bitcoin

the

currency.

JPMorgan’s

operating

committee, led by Jamie

Dimon, decided in the spring

of 2014 that it would not

work

with

any

Bitcoin

companies. At events in

California with tech moguls,

Dimon spoke derisively about

Bitcoin and the ambitions of

Silicon Valley to take over

Wall

Street’s

business.

Dimon said that JPMorgan

and the other banks weren’t

going to go down without a

fight. At one point, JPMorgan

threatened to stop providing

services even to other banks

that had Bitcoin companies as

customers—like

the

European bank working with

Bitstamp. Other American

banks went so far as to close

down

the

accounts

of

individuals who transferred

money to Bitcoin exchanges.

But inside almost all these

banks, there were people who

loved the concept of a

decentralized financial system

like

Bitcoin.

JPMorgan

maintained

a

so-called

Bitcoin Working Group, with

about two dozen members

from across the bank and

around the world, which was

led by the bank’s head of

strategy and which was

looking at how the ideas

behind Bitcoin might be

harnessed by the financial

industry.

This

JPMorgan

group

began secretly working with

the other major banks in the

country, all of which are part

of an organization known as

The Clearing House, on a

bold experimental effort to

create a new blockchain that

would be jointly run by the

computers of the largest

banks and serve as the

backbone for a new, instant

payment system that might

replace Visa, MasterCard,

and wire transfers. Such a

blockchain would not need to

rely

on

the

anonymous

miners powering the Bitcoin

blockchain. But it could

ensure there would no longer

be a single point of failure in

the payment network. If

Visa’s systems came under

attack, all the stores using

Visa were screwed. But if one

bank

maintaining

a

blockchain

came

under

attack, all the other banks

could keep the blockchain

going.

For

many

technology

experts at banks, the most

valuable potential use of the

blockchain was not small

payments but very large ones,

which are responsible for the

vast majority of the money

moving between banks each

day. In the stock trading

business, for example, the

lengthy

settlement

and

clearing process means that

the money and shares are all

but frozen for three days.

Given the sums involved,

even the few days that the

money is in transit carry

significant costs and risks. As

a result, various banks began

looking at ways they could

use

the

blockchain

technology to make these

sorts

of

large

transfers

quickly and securely. For

many banks, the biggest

stumbling block was the

inherent unreliability of the

Bitcoin blockchain, which is,

of

course,

powered

by

thousands

of

unvetted

computers around the world,

all of which could stop

supporting the blockchain at

any moment. This increased

the desire to find a way to

create

blockchains

independent of Bitcoin. The

Federal Reserve had its own

internal teams looking at how

to harness the blockchain

technology and potentially

even Bitcoin itself.

Many in the existing

Bitcoin community scoffed at

the idea that the blockchain

concept could be separated

from the currency. As they

viewed it, the currency, and

the mining of the currency,

was what gave users the

incentive to join and power

the blockchain. Given that a

blockchain could be taken

over and subverted if an

attacker controlled more than

50 percent of the computing

power on the network, a

blockchain

was

only

as

secure as the amount of

computing power hooked into

the network. A blockchain

run by a few dozen banks

would be much easier to

overwhelm than the Bitcoin

network,

which

now

commanded

more

raw

computing power than all the

major

supercomputers

combined.

Bitcoin mining, which

had once been a thing that

Martti Malmi and Gavin

Andresen could participate in

with just their laptops, was

indeed well on the road to

becoming

an

industrial

enterprise. One of the big

players

was

21e6,

the

secretive project founded by

Balaji Srinivasan and funded,

in

part,

by

Andreessen

Horowitz. Balaji had been

among the first to see that as

the chips became more high

powered,

the

factor

determining who would profit

from Bitcoin mining would

be the energy costs involved

in powering and cooling the

chips. A chip that was fast but

ate up energy and got hot—

requiring cooling—could end

up costing more in electricity

bills

than

it

earned

in

Bitcoins. To cut down on

power costs, Balaji’s team

had designed a system that

kept the chips immersed in

mineral oil, which absorbed

the

heat

and

eliminated

cooling

costs.

The

data

centers

running

21e6

machines were now the single

biggest source of mining

power in the United States.

And

21e6

was

already

working

on

its

next

generation of chips, with code

names

like

Yoda

and

Gandalf.

In

China

some

entrepreneurial young men

with

access

to

cheap

hardware straight from the

factories realized that their

country provided its own

advantage for cutting down

on power costs: corruption.

One mining operation near

Beijing set up right next to a

coal power plant, where it got

its power practically free

thanks to the relationship

between the power company

and the owner of the mining

computers. Another so-called

mining farm was set up in

Inner Mongolia where cheap

power was plentiful. Mining

was particularly popular in

China because it provided a

way for Chinese citizens to

acquire

Bitcoins

without

going

through

the

increasingly restricted Bitcoin

exchanges.

Surpassing all these other

mining operations, though,

was a company created by a

reclusive

Ukrainian

programmer, Val Nebesny,

who had designed several

generations of ASIC chips

after

reportedly

teaching

himself

chip

architecture

from a textbook. Initially, Val

Nebesny and his business

partner Val Vavilov had

packaged

the

chips

in

computers that they sold to

other Bitcoiners, under the

brand name Bitfury. But over

time the two Vals kept more

and more of the computers

for themselves and put them

in data centers spread around

the world, in places that

offered

cheap

energy,

including the Republic of

Georgia and Iceland. These

operations

were

literally

minting money. Val Nebesny

was so valuable that Bitfury

did not disclose where he

lived, though he was rumored

to have moved from Ukraine

to Spain. And Bitfury was so

good that it soon threatened

to represent more than 50

percent of the total mining

power in the world; this

would give it commanding

power over the functioning of

the network. The company

managed to assuage concerns,

somewhat, only when it

promised never to go above

40 percent of the mining

power online at any time.

Bitfury, of course, had an

interest in doing this because

if people lost faith in the

network, the Bitcoins being

mined by the company would

become worthless.

THE TWO

VALS

running

Bitfury were rare as outsiders

who were succeeding in the

new, more sophisticated, and

heavily scrutinized Bitcoin

world.

The

Vals

were

certainly not entirely alone.

Roger Ver, who had recently

managed to renounce his

United

States

citizenship,

after years of trying, owned

Blockchain.info, which was

doing better than ever. The

number of wallets hosted by

the company had passed 1

million in January and in

March was approaching 1.5

million.

It

became

increasingly

clear

that

Blockchain.info’s

careful

structure—holding

only

encrypted

files

for

its

customers—allowed

it

to

totally avoid the regulations

coming

down

on

other

Bitcoin companies. Roger

was

constantly

getting

entreaties

from

venture

capitalists who wanted to pay

millions for some of his 80

percent stake in the company.

Newcomers to the Bitcoin

world were trying to emulate

the Blockchain.info model

and create technology that

could allow Bitcoin to work

as originally intended and

escape regulations.

But most of the outsiders

who had been pioneers in the

early days of Bitcoin had not

been able to transition to the

new world. Charlie Shrem

was sitting at home, under

house arrest, while Mark

Karpeles was dealing with

prosecutors who were looking

to punish him for the role he

played in the ruin of Mt. Gox.

The

early

Bitcoin

aficionados had certainly not

gone away or lost heart. The

online forums were still as

lively as ever. But whereas

these people had mixed and

mingled

with

the

big

investors

at

the

Bitcoin

conference in 2013, they were

now part of an isolated

community that was cut off

from the more sophisticated

investors and programmers.

This was not dissimilar to

other protest movements that

had sprung up after the

financial crisis. Occupy Wall

Street, which initially drew

lots of attention—and raised

issues that became a part of

the

national

debate—

ultimately

splintered

into

many groups and disappeared

from the public spotlight.

The

marginalization

facing the early Bitcoin

community was on display at

a conference for the more

ideologically minded Bitcoin

community in early March

2014, held by the Texas

Bitcoin Association at a

Formula One racetrack on the

outskirts of Austin, Texas.

Austin was a fitting place for

the event because this was

where Ross Ulbricht had

grown up and founded Silk

Road, the truest experiment in

many of the early ideals.

Ross was now in jail in

Brooklyn, awaiting trial, and

his parents had moved to

New York to be closer to

him. But his mother, Lyn,

returned to Austin for the

conference.

Now

raising

funds

for

Ross’s

legal

defense, she explained that

the Bitcoins Ross had when

he was arrested had all been

confiscated and the family

was using its savings to pay

for his expensive lawyers.

At the conference, she

looked shrunken, but she was

treated like an honored guest

and she delivered greetings

from Ross, who called her

frequently from prison in

Brooklyn, where he said he

was doing well, practicing

yoga, and serving as a tutor

for other inmates as he

awaited trial. The market that

Ross

had

created

was

generally viewed, in this

crowd, as a moral good that

had allowed people to make

their own choices about how

they wanted to live, without

government intrusion. Rather

than doing any sort of evil,

Silk Road had made the

world a safer place by

allowing people to buy their

drugs from the safety of their

home.

The accusations that Ross

had solicited assassins to

murder people were more

divisive. In legal papers,

prosecutors

in

Maryland

charged Ross with hiring the

Silk Road user nob (actually

an undercover agent) to

murder

Curtis

Green.

Prosecutors in New York

accused Ross of hiring the

Silk Road user redandwhite

to kill several Silk Road

scammers. But there was no

evidence in either case that

anyone ended up dead (in the

redandwhite case, Canadian

police could not turn up

anyone matching the names

of the people Ross allegedly

tried to have killed). What’s

more,

in

the

indictment

moving toward trial, these

accusations of murder for hire

were not included as formal

charges. Ross’s mother said it

was

terribly

unfair

for

prosecutors to pin these

accusations on Ross if they

were not willing to charge

him. But even if Ross had

done the things the agents

claimed, there were plenty of

conference attendees willing

to argue that he had made the

right decision.

“What if the scammer

was going to expose every

Silk Road customer?” one

young man asked at one of

the conference happy hours.

“He was doing no one any

good. Ross did something to

protect all of those thousands

of customers.”

Aside

from

Lyn

Ulbricht’s appearance, the

most memorable part of the

conference

was

Charlie

Shrem’s virtual appearance.

He couldn’t travel to Texas,

of course, but the organizers

got him on Skype and

projected a live feed of

Charlie, from his basement

bedroom with his guitars

behind him. Charlie was

wearing a brown “BOUGHT

WITH BITCOINS” T-shirt that

he’d worn two months earlier

when he met Nic Cary for

drinks, before his arrest.

Charlie was in the midst

of trying to negotiate a

settlement

with

the

government to lessen the time

he’d

have

to

serve—

eventually, as a result of these

talks, Charlie would plead

guilty to one count of aiding

and abetting an unlicensed

money-transmitting business

and accept a one-year prison

sentence. In the meantime,

his lawyer had told him to

avoid making any public

statements that might hurt the

talks. But his loquaciousness

and desire for attention were

irrepressible. This kid, who

had once been called Statist

for his mainstream politics,

now gave a fiery talk that was

a play on a well-traveled

speech delivered by the

founder of the Pirate Party

several years earlier.

Friends, citizens,

Bitcoiners, there is

nothing new under the

sun.

My name is

Charlie Shrem, and I

speak to you from

under house arrest.

During the last

few weeks, we’ve

seen several examples

of legal outbursts.

We’ve seen the police

abusing the measures

available to them.

We’ve seen the

actions of the

financial services

industry. We’ve seen

high-profile

politicians mobilizing

in order to protect the

financial and banking

industry.

All of this is

scandalous without

parallel. That is why I

stand here today.

When it ended, some

twenty minutes later, there

was a smattering of applause

and

shouts.

Charlie

complained

that

his

connection was making it

hard for him to hear the

crowd’s response. But the

people who got up to ask him

questions told him he was a

hero.

“We all love you. You are

still a huge part of this

community,” said the shaggy-

bearded founder of a Bitcoin

charity. “What kind of beer

should we send to you?

Because you said you were

looking for six packs.”

“I love Blue Moon, but

anything exotic is good,”

Charlie said.

“All right, cool. Stay

strong Charlie!” the man

shouted with a raised fist.

ALMOST NONE OF the more

recent, moneyed arrivals at

Bitcoin showed up for the

conference at the race track.

But many of them did fly to

Austin just as the conference

was ending, to attend another

conference,

SXSW,

the

storied

public

gathering

where Silicon Valley mingled

with celebrities. On the first

day of SXSW, in a marquee

session with Google chairman

Eric

Schmidt,

Google’s

“director of ideas,” Jared

Cohen,

responded

to

a

question about Bitcoin with

his conclusion: “I think it’s

very obvious to all of us that

cryptocurrencies

are

inevitable.”

Fred Ehrsam, the former

Goldman Sachs trader who

had

joined

the

Bitcoin

company Coinbase a year

earlier, was given the honor

of his own SXSW session—

not a shared panel with other

entrepreneurs—and it was put

in one of the largest rooms in

the convention center, which

quickly filled up. In the

question-and-answer session

that followed Ehrsam’s talk,

Lyn Ulbricht was the first one

in line at the microphone. She

said something about using

Bitcoin for charity, but she

was clearly there to make a

plug for Ross’s legal defense

fund, which she told Ehrsam

was hosted on Coinbase.

Whereas Lyn had been a star

at the Bitcoin conference,

here she was an unhappy

reminder of a side of Bitcoin

that

Ehrsam

and

others

wanted to put behind them.

Fred responded politely and

fumbled to find something to

say about the value of Bitcoin

for

charitable

donations

broadly. But Fred was not shy

about his belief in the

transformative impact that

Bitcoin

would

ultimately

make as it became “the

prevalent transaction medium

on the internet.”

Fred’s biggest backer,

Marc

Andreessen,

was

increasingly vocal about his

belief that the Silk Roads of

the world were quickly giving

way to more Coinbases.

Andreessen frequently noted

that in the early days of the

Internet,

when

he

was

creating

the

first

web

browser, the new technology

had lacked the infrastructure

that would have made it

appealing to a mainstream

audience, and so it was

relegated to fringe groups that

were willing to experiment

with new technology. In time,

though, “the fringe characters

tend to get alienated and then

tend to move on to the next

fringe technology.”

“You don’t get the new

technology

from

the

mainstream,” he said. “My

prediction is actually that the

libertarians are going to turn

on Bitcoin. I think that’s

about two years out.”

SXSW underscored how

thoroughly Silicon Valley

was winning the battle to

shape and define the Bitcoin

technology. The gathering

also

served

as

a

stark

reminder of how Silicon

Valley had, more broadly,

emerged as the big winner

after the financial crisis. With

Wall Street in retreat, these

were the new billionaire

power brokers, flying around

the country in private jets. On

Saturday night Ehrsam was

invited to an exclusive party

hosted

by

Andreessen

Horowitz. At the party, which

was attended by celebrities

like Ashton Kutscher, Ehrsam

talked about Bitcoin with Ben

Horowitz and the rapper, Nas,

whom Horowitz had brought

on as an investor in Coinbase.

The big names like Horowitz

at SXSW reiterated what

world-changing

new

technologies, such as Bitcoin,

the tech industry was helping

to bring to the world. In an

onstage conversation between

Nas and Horowitz, Horowitz

called Bitcoin “the internet of

money,” with the potential to

help

billions

of

people.

Andreessen Horowitz had

recently closed a $1.5 billion

fund, and the partners said

privately that they wanted to

spend as much as $200

million of that on Bitcoin and

blockchain startups, if they

could find deserving ones.

But the week in Austin

couldn’t

help

fueling

suspicion that perhaps, as in

the old way of doing things,

the economic benefits of all

the new technology were, at

least so far, accruing to only a

small elite, while the 99

percent that Occupy Wall

Street had worried about were

left reading about it at home

on

Reddit

and

Twitter.

Bitcoin itself faced the same

concerns.

Years

earlier,

Bitcoin had promised that it

would spread its benefits to

all its users, but by 2014 large

chunks

of

the

Bitcoin

economy were owned by a

few people who had been

wealthy

enough

before

Bitcoin came along to invest

in this new system. Most of

the new coins being released

each day were collected by a

few large mining syndicates.

If this was the new world, it

didn’t seem all that different

from the old one—at least not

yet.

CHAPTER 31

March 21, 2014

Many of the early adopters

who had managed to stick

around and make something

of themselves flew out for the

second occurrence of Bitcoin

Pacifica at Dan Morehead’s

vacation home on Lake

Tahoe, where a large staff

catered to the crowd’s every

desire, allowing Morehead to

play the relaxed host in his

elegant black loafers and a

pinkish red shirt that set off

his perfect tan.

Among the guests was

Jed McCaleb, the founder of

Mt. Gox, who had recently

been

helping

Morehead’s

firm look for new Bitcoin

investments. Jed spent a lot of

time at Morehead’s house

talking to Jesse Powell,

someone he had first met at

the 2011 Bitcoin conference

in New York. Jesse, who was

sporting

sweatpants

and

athletic

socks,

was

still

working on the exchange that

he had begun building after

traveling to Tokyo in 2011

and seeing what a mess Mt.

Gox was. Three of the young

men who ran the successor to

Mt. Gox, Bitstamp, had flown

in from Slovenia and were

buzzing about the matching

Teslas they had recently

purchased with some of the

profits from their business.

Roger Ver couldn’t make

it to Tahoe. He had recently

renounced

his

American

citizenship and become a

citizen of Saint Kitts-Nevis,

which offers passports to

people who buy at least

$450,000 of real estate on the

island. Roger had applied for

a visa to come to Morehead’s

event, but the American

government had denied the

request. Roger’s old friend

Erik Voorhees was in Tahoe,

up from Panama where he

was spending his time dealing

with

the

Securities

and

Exchange

Commission

investigation of the shares he

had sold in SatoshiDice. Erik

had come to be viewed as one

of the few people who

managed

to

remain

ideologically

engaged

without

letting

ideology

totally

overwhelm

their

business

instincts.

The

company that Erik founded

after leaving Charlie Shrem’s

BitInstant, Coinapult, was

aiming to make it easier to

send Bitcoin by e-mail and

text message. But the conflict

between

ideology

and

commerce

had,

in

fact,

become too much for Erik to

bear. The investigation by the

Securities

and

Exchange

Commission had forced him

to sell some of his Bitcoin

holdings to pay for a lawyer.

He

worried

that

if

he

continued

to

speak

out

politically

his

company

would become a target of

government officials. Rather

than drawing back from the

politics, he had decided to

leave his company and move

with his fiancée back to

Colorado.

“The way I felt I could

contribute best is by being a

very outspoken advocate for

what Bitcoin stands for,” he

said.

For

many

of

the

attendees, though, the biggest

celebrity at the gathering was

a reclusive man who was

essentially unknown to the

outside world. Nick Szabo

had been deeply involved

with the Cypherpunks back in

the early days and in 1998

had invented bit gold, one of

the most commonly cited

forerunners of Bitcoin. More

recently he had become, for

many Bitcoin insiders, the

most likely candidate for

Satoshi Nakamoto.

Nick

was

nearly

as

mysterious

as

Satoshi

himself. He kept a blog where

he occasionally wrote learned

essays on topics like online

security, monetary history,

and property law. But there

was no public record of

where he worked and lived,

and some people questioned

whether he was a real person.

Nick’s writing, though, would

put him on anyone’s short list

for Satoshi. Back in the

1990s, he wrote more than

just

about

any

other

Cypherpunk

about

the

promise of digital money,

culminating in his proposal

for bit gold. Just a few

months before Bitcoin was

released, in April 2008, Nick

had posted on his blog an

item in which he talked about

creating a trial model of bit

gold and asked if anyone

wanted to help him “code one

up.” In August of that year, at

the same time that Satoshi

was

privately

e-mailing

Adam Back about Bitcoin for

the first time, Nick offered on

his blog to sell some old

collectible private banknotes,

to help deal with “personal

cash flow needs.” At about

the same time, he wrote a

burst of blog posts about the

history of money, smart

contracts, and bit gold, and

said that if he could make bit

gold work it would be the

“first online currency based

on highly distributed trust and

unforgeable costliness rather

than trust in a single entity

and traditional accounting

controls.”

When Satoshi’s white

paper came out publicly three

months later, it cited two

other obvious forerunners of

Bitcoin—b-money

and

hashcash—but did not cite

Nick’s work. During this

period, Nick maintained what

many people later came to

think was a rather suspicious

silence, despite the fact that

this was a project that he’d

been involved in for over a

decade. Most bizarrely, Nick

altered the dates on his 2008

postings about bit gold to

make it appear as though they

had been published after

Bitcoin was released, rather

than before.

Not long before the Tahoe

gathering, a blogger who

went by the name Skye Grey

had posted two persuasive

essays

comparing

Nick’s

online writing with that of

Satoshi, and concluded that

the similarities in style and

word choice were unlikely to

be a coincidence. Both Nick

and Satoshi, Skye Grey

wrote, made “repeated use of

‘of course’ without isolating

commas,

contrary

to

convention” and “repeated

use of ‘timestamp’ as a verb,”

among other such tics. Then

there were smaller eyebrow-

raising details, like Satoshi

Nakamoto’s initials being a

transposition

of

Nick

Szabo’s.

Nick had made a brief

statement, by e-mail, to deny

that he was Satoshi, but that

didn’t quiet the speculation.

At Morehead’s gathering,

people spoke in hushed tones

about things they’d overheard

Nick saying. Nick showed up

at

Morehead’s

private

gathering because a few

months earlier he had quietly

joined

a

cryptocurrency

startup that was operating in

stealth mode. The startup,

Vaurum, was based a few

blocks from Wences’s office

in Palo Alto and focused on

the task of matching up big

holders of Bitcoin wanting to

buy and sell. Nick, though,

had joined Vaurum to do

more sophisticated work on

so-called

smart

contracts,

which would allow people to

record their ownership of a

house

or

car

into

the

blockchain, and transfer that

ownership with the use of a

private key, something Nick

had been thinking about for

over a decade. This was the

kind of thing that Satoshi was

writing

about

at

the

beginning, but Satoshi had

believed that these more

advanced

uses

of

the

blockchain would take off

only after Bitcoin caught on

as a currency.

At Morehead’s house, it

was obvious that Nick was a

guy who lived a life of the

mind. His large frame was

covered haphazardly with old

jeans and a flannel shirt. His

beat-up black sneakers looked

as if they’d been purchased

back in the days of DigiCash.

His hair was an unkempt ring

around his scalp, not unlike a

monk’s tonsure just after a

long nap.

In Tahoe, Szabo didn’t

seek out conversation and

didn’t make much eye contact

when engaged. He had a

seemingly perpetual smirk on

his sleepy, bearded face.

Most of the other attendees

watched him from a distance,

waiting for him to open up.

During the cocktail hour

before dinner, on Friday

night, when the topic of

Satoshi came up in the small

group where he was standing,

he took the opportunity to

sound

off

on

all

the

mischaracterizations of him,

including

the

frequent

descriptions of him as a law

professor

at

George

Washington University—and

the notion that he created

Bitcoin.

“Well, I will say this, in

the hope of setting the record

straight,” he said with an acid

note in his voice. “I’m not

Satoshi, and I’m not a college

professor. In fact I never was

a college professor. How the

media got a hold of that, I

don’t know.”

“Even I thought you were

a college professor,” a New

York trader, standing next to

Nick, said with a laugh.

Nick did use a George

Washington e-mail address,

but he explained that this was

because he had gone to law

school at the university in

mid-career, “just for the

reality check of what I’d been

thinking about.” He had paid

the tuition thanks to some

stock options he had from his

earlier days as a security

programmer. He had returned

to school in part because he

had become convinced that

the singular focus on markets,

among

libertarians

and

cryptoanarchists, was naive.

Szabo believed that society

had

multiple

“protocols”

beneath markets, such as the

legal

system,

which

determined

how

markets

worked. All of this, though,

had just been a hobby for

Nick, until very recently.

“The

cryptocurrency

economy is actually big

enough that I can actually

make a living out of it,” Nick

said with a bit of a chortle.

As he walked over to the

big living room, for dinner,

Nick explained that he traced

the germ of all this back to

his childhood in Washington

State and his father, who

came to the United States

after fighting in the 1956

Hungarian revolution, which

the Soviets crushed.

“We’re fairly rebellious

sorts,” he said of his family.

“To really have the freedom

to be creative you have to

think outside the box.”

This

was

about

as

personal as Nick got in

discussing his motivations.

He was a person who liked

thinking about the world—

not himself—and this is one

of

the

most

useful

characteristics for someone

trying to create great things.

At dinner, everyone was

too polite to speculate about

Nick, but the Newsweek story

of a few weeks earlier

naturally

kicked

off

conversations at the different

tables about Bitcoin’s origins.

“Is there no doubt in any

of your minds that maybe this

was a product of the NSA?”

asked the New York trader

who had been talking with

Nick before dinner.

Erik Voorhees scoffed

and said that the government

would have been unlikely to

come up with something so

brilliant. But the trader cited

his own work experience at

the NSA, and said Erik was

underestimating the level of

intelligence the NSA attracts.

Erik, always willing to listen

and learn, said that if it was

the NSA, “it is the best thing

the government has ever

done.”

Erik’s pet theory was that

Satoshi was actually a small

circle of programmers at

some major tech firm, who

had been assigned by their

company to come up with a

new form of online money.

When the project had come

back and was deemed too

dangerous by the higher-ups

the creators decided to put it

out anonymously—they “felt

really strongly that this was

something important they

discovered and went rogue

with it,” Erik explained, even

while noting, with a laugh,

that he had no actual evidence

to back up his hypothesis.

Most of the weekend,

though, was spent talking not

about Satoshi, but instead

about

the

incredible

challenges that everyone in

this group faced. The one-two

punch of Charlie Shrem’s

arrest and Mt. Gox’s collapse

had killed much of the hope

that Bitcoin would gain

mainstream

acceptance

anytime soon.

Dan Morehead had been

running

his

Bitcoin

operations

from

inside

Fortress’s

San

Francisco

offices, and there had been a

vague plan for his small team

to be integrated into Fortress,

a publicly traded company.

With all the crises, though,

Pete Briger had let Dan know

that Fortress was not going to

be able to have a formal role.

Dan was going to have to

move his staff, operating

under the name of his old

hedge fund, Pantera Capital,

out of Fortress’s offices.

Things did seem to be

going well for the old college

fraternity

brothers

who

founded Bitpay, both of

whom were in Tahoe. They

had signed up lots of new

online merchants who were

happy to find a cheaper way

to process online transactions

—the 1 percent that Bitpay

charged versus the 2 to 3

percent charged by credit

cards—without

worrying

about chargebacks. But it was

now becoming evident that

consumers had much less of a

reason than merchants to use

Bitcoin for online purchases.

Consumers, after all, never

see the 2.5 percent processing

fee that merchants pay, so

products aren’t cheaper when

purchased with Bitcoin. And

consumers

generally

like

having the peace of mind

offered by chargebacks. For

the sake of Bitcoin as a

whole, there were many who

worried that the consumers

who were buying things

online through Bitpay were

pushing the price of Bitcoin

down; generally when online

retailers accepted Bitcoins

they immediately sold them

off for dollars, creating a

downward pressure on the

overall price.

Bobby Lee talked at

Tahoe

about

the

many

unusual stresses of running a

virtual-currency startup in

China. After the government

had forced the payment

processors to cut off Bitcoin

exchanges back in December,

Bobby’s

competitors

had

quickly opened bank accounts

where

customers

could

deposit funds. Bobby had

chosen not to follow the same

path—it seemed to violate the

clear intent of the statement

from the Chinese regulators

in December. Bobby had

grown

up

working

for

American companies, which

generally tried to obey, or at

least give the appearance of

obeying, not just the letter but

also the spirit of the rules.

Bobby had internalized this

cultural code. But as Bobby

watched

his

business

dwindle, and his competitors

thrive,

his

Chinese

cofounders pushed him to

understand

that

Chinese

regulators weren’t looking to

enforce a strict reading of the

law—they just didn’t want to

have anything shoved in their

face.

“Turns out, in China,

there’s no ethics—there’s no

moral

obligation,”

Bobby

would say of his discovery,

with a hint of amusement and

a

dash

of

frustration.

“Westerners see that as a bad

thing. Chinese see that as,

‘We’re being flexible.’”

With a sense that he was

caught in a street fight and

limiting himself to punching

with boxing gloves, Bobby

eventually

bent

to

the

Chinese

way

of

doing

business and opened up the

company’s bank accounts to

customer

deposits

shortly

before coming to Tahoe.

“If no one listens, and

there is no penalty, our

competitors do what’s best

for them and then we’re left

in

the

dust,”

Bobby

explained. “So instead we

decided to embrace the local

method.”

There were, though, limits

to how far Bobby would go in

his hunt for business. He was

outspoken about his belief

that his competitors were

faking their volume numbers

to make it look as though

they were attracting more

business. He also initially

declined to follow the lead of

one

of

his

increasingly

successful

competitors,

OKCoin,

which

had

introduced what is known as

margin trading. Customers of

OKCoin could essentially

borrow

money

to

make

bigger bets on Bitcoin. If the

price went up, customers

could pay back the borrowed

money, but if it went down

the customers quickly lost

their original money—the

normal outcome in margin

trading. This didn’t seem to

Bobby like a good formula

for a long-term business,

though he was coming to

reconsider all of his Western

judgments.

Despite all the challenges,

Bobby was clearly having a

good time, enjoying the

audacity and inventiveness

that were required of an

entrepreneur in China. He

was making plans to move his

staff into bigger offices and

he

had

announced

his

candidacy for one of the

Bitcoin Foundation seats that

Charlie Shrem and Mark

Karpeles had vacated—a seat

he would eventually win. In

Tahoe, he was the very

picture of the fun-loving,

confident risk taker, sweeping

the poker games. He likened

his situation in China to being

in a tunnel with no clear way

out.

“Everyone behind me is

like, ‘Dude, Bobby it’s a dead

end, you are not going to get

out,’” he said. “But I’m like,

‘If I get out, the prize is so

huge.”

The weekend provided

plenty of reminders of why

everyone had gotten into this

in the first place. After dinner

on

Friday

night,

Dan

introduced

a

celebrated

economics

professor

at

Stanford, Susan Athey, a

winner

of

the

most

prestigious award for young

economists, who had recently

been

diving

into

the

blockchain technology. She

told

the

group

of

her

discovery of Bitcoin in the

spring of 2013. At the time

she went to her academic

colleagues and found that

“none of them could wrap

their head around it.” That

provoked her to look more

deeply, and as she did, she

slowly came to understand

the

potentially

enormous

implications

of

the

technology:

“We all hear the store of

value. Here’s a way to move

money and to buy things

outside the law. Maybe it’s a

competitor to fiat currency. Is

it a disrupter to the traditional

banking sector; an enabler of

e-commerce and remittances;

a superior internal ledger

system for multinationals?

That’s not what all the

reporters are asking about but

that’s another possibility that

we see.

“By the time I felt like I

really understood it I was

really excited to share that

knowledge, and discuss it

with a wider audience,” she

said. “You want everyone to

understand it too so that

they’ll really appreciate the

really massiveness of this

innovation.

“It’s not just a thing, it’s a

phenomenon.”

GAVIN ANDRESEN HAD been

invited to Dan Morehead’s

house in Lake Tahoe, but he

had elected to stay home in

Amherst. He was receiving

many invitations to swanky

gatherings

and

turning

essentially all of them down

—though he did accept an

invitation to speak to the local

Rotary Club. When he had

been asked to attend the

prestigious Aspen Institute, a

friend had urged him to go.

“It will change your life,”

the friend told him.

“I don’t want my life to

change,” he responded. “I

like my life.”

He had certainly profited

from Bitcoin’s rise: he had

been paid by the foundation

in Bitcoins since 2012 when

each Bitcoin was worth $10.

His wife had pushed him to

use some of the money to get

his own office in downtown

Amherst, and a second car for

the family. But the car they

chose was a modest black

Nissan Leaf. And for an

extravagant family vacation,

he planned a trip to visit his

mother in Washington State

for a Women’s Auxiliary

ceremony. For the first time,

Gavin hadn’t worried about

the prices of the hotels he was

booking, and he planned a

helicopter trip for his family

to see Mount Hood.

Gavin

was

similarly

understated about Bitcoin. He

still lived for the project, but

like other developers he was

deeply aware of the flaws that

still existed. He called the

software that Satoshi had

created

a

“hairball”

containing lots of different

things stuck together. As he

saw

it,

the

volunteer

developers were still trying to

untangle

it.

He

was

particularly focused on the

limited

number

of

transactions that were being

confirmed and recorded on

the blockchain with each new

block. On average, there were

only about four hundred

transactions

getting

confirmed every ten minutes

in

mid-2014.

If

Bitcoin

wanted to compete with

payment networks like Visa,

which

processed

two

thousand transactions each

second, the software was

going to need to change

significantly.

Among

the

broader

community

of

Bitcoin

programmers

there

was

constant griping about the

increasing centralization of

the entire Bitcoin ecosystem.

The

network

had

been

designed to encourage all of

its users to participate. But

now, only people with access

to super-powered computer

chips and cheap energy were

able to take part in the mining

and

transaction

recording

process—something that a

small handful of companies

were dominating. As had

happened

with

several

previous

decentralized

systems,

this

one

had

naturally

tended

toward

greater centralization because

of

the

efficiency

made

possible by specialization.

This looked, increasingly,

like Napster giving way to

iTunes. In that case, the old

power brokers—the record

labels—were destroyed, but

they

were

mostly

just

replaced by a new set of

power players.

Gavin rarely brought it up

publicly,

but

there

was

another,

more

frightening

problem that didn’t appear to

have any immediate solution.

There

were

a

growing

number

of

examples

of

Bitcoin

being

used

by

criminals to demand and

collect ransom, which was

much easier with Bitcoin than

with traditional means of

payment. When criminals

accepted cash for ransom

they had to physically collect

the money at some point,

which

provided

some

indication of their location. If

ransom was sent digitally via

PayPal, it didn’t require a

physical handoff, but the

payment

could

later

be

reversed.

With

Bitcoin,

criminals could demand that a

victim send money remotely,

and once it was sent, there

was no reversing it. The

previous fall, a malware

program

known

as

CryptoLocker had surfaced,

which had the ability to seize

computers and lock the hard

drive until a Bitcoin ransom

was paid. The fears about

ransom were a large part of

the

reason

that

many

Bitcoiners had been angry at

Newsweek

for

“outing”

Dorian Nakamoto. If he had

really been Satoshi, his outing

would have made all of his

family members unusually

vulnerable to kidnapping and

demands

for

payoffs

of

various sorts.

Gavin didn’t know it, but

for

months,

a

hacker

demanding

ransom

was

targeting Hal Finney and his

family, despite the fact that

Finney had been rendered

almost entirely unable to

move or communicate by his

disease. The attack came to a

terrifying climax when the

hacker called the police and

reported that a murder was

taking place at Hal’s house;

this forced the local police

and

fire

department

to

evacuate Hal and his family,

a taxing experience that came

just a few months before his

death. Roger Ver had dealt

with what appeared to be the

same hacker, but beat him off

after offering a public bounty

for his capture. The best

solution to this threat seemed

to be wallets that were

programmed to allow for

reversible transactions. In the

meantime,

many

Bitcoin

developers

emphasized,

whenever possible, that they

did not keep most of their

money in Bitcoins.

The developers, though,

appeared to have a staying

power that eluded many of

the other early adopters of

Bitcoin, in large part because

of

their

more

practical

approach to the project. Jeff

Garzik, the programmer in

North Carolina who had

gotten involved back in 2010,

had been hired by Bitpay to

work on the Bitcoin protocol

full-time. Martti Malmi had

recently quit his job in

Helsinki

after

a

new

payments startup invited him

to come on board, knowing

about

his

history

with

Bitcoin. Adam Back, the

creator of hashcash back in

1997, had recently started

working with an investor on a

bold new project that aimed

to make it possible to take

Bitcoins

off

the

main

blockchain and on to so-

called sidechains, where new

applications could be built.

The small team of core

developers

working

with

Gavin was made up of people

who had gotten involved back

in 2010 or 2011 and managed

to stay out of the spotlight

almost entirely—men like

Gregory

Maxwell

and

Wladimir J. van der Laan.

The person responsible for

writing the majority of the

updated Bitcoin core protocol

was a thirty-year-old Belgian

whom many Bitcoiners had

never heard of, Pieter Wuille.

It came to seem that the

people who wanted Bitcoin to

do the least for them were the

ones who were managing to

do the most for Bitcoin.

WENCES CASARES WASN’T

looking for Bitcoin to change

his life, but he was still

imagining that Bitcoin would

change the world. His passion

for the project had continued

to win over important new

supporters. Max Levchin, the

cofounder of PayPal, and one

of the skeptics back at the

Allen & Co. conference in

Arizona in 2013, had been

brought around by Wences at

the 2014 version of the

conference and was now

coming on board as an

investor in Xapo. Wences

also knew from his friend

David Marcus that PayPal

was

moving

toward

integrating Bitcoin into all of

its online products, making

the virtual currency available

to a much broader audience.

But the day-to-day work

of moving his own Bitcoin

company forward was going

much more slowly than

Wences had expected, largely

because of the continued

skepticism in the traditional

financial world. In April,

Wences announced that Xapo

would be releasing the first

Bitcoin

debit

card

with

MasterCard, but almost as

soon as the announcement

went out, MasterCard called

and told Wences that the

project

had

not

been

approved at the highest levels

and was now being killed—a

public relations snafu for

Xapo. Wences himself was

constantly flying around to

appease the latest bank to

decide that it was going to

close down the accounts of

Xapo or some other Bitcoin

company that Wences was

helping out.

In the midst of all this, in

June, Wences took one of his

periodic trips to visit Xapo’s

operations in Buenos Aires

and the old friend who

oversaw it all, Fede.

As on every trip home,

Wences had to confront the

frustrations of Argentina’s

broken financial system. This

time around, he wanted to

buy a car so that he could

travel to and from a property

he’d recently purchased in

Patagonia. As with most big-

ticket items in Argentina, the

seller would accept only cash.

Because Wences still didn’t

have an Argentinian bank

account, he had to go to a

specialized money changer

who had a bank account in

the United States and could

accept a transfer of dollars

from Wences’s American

bank account and pay out to

Wences in wads of cash. This

served

as

yet

another

reminder of why he was

working on Bitcoin.

The scale of Wences’s

ambitions was evident inside

the Xapo offices, which were

packed

with

young

programmers.

One

was

working on a Hindi-language

site, which would make

Bitcoin available to people in

India, widely seen as one of

the biggest potential markets

given the Indians’ levels of

computer literacy and the

amount of remittances that

were

sent

from

Indians

abroad. Another programmer

was building an application

that would allow people

anywhere in the world to find

people near them looking to

buy or sell Bitcoins. At this

point Xapo was still primarily

used by big institutional

investors who wanted the best

possible security for their

millions of dollars of coins.

But the Xapo team was trying

to make the service more

accessible to smaller holders,

and many people were eager

for secure storage after the

collapse of Mt. Gox.

On one of the first

mornings Wences was in

Buenos Aires, the team of

programmers

had

a

videoconference

with

the

Xapo staff in Palo Alto. The

team in California had just

moved to much larger offices

above a bank. These staffers

now had a whole floor to

themselves, with windows

wrapping around the entire

office. The Americans, who

generally dealt with the

business side of the operation,

rather than programming, ran

through

all

the

new

agreements

they

were

working

on.

They

were

talking

with

AIG

about

insuring all the coins in the

vault against losses, and with

three different banks about

taking

deposits

from

customers.

“We’re in a really good

position in comparison to a

lot of people in the industry

in

respect

to

banking

relationships. Most people are

just hoping to get one,” one

of

the

employees

in

California said.

They also were working

with a debit card issuer in

Gibraltar after the problem

with MasterCard earlier in the

spring, and were hopeful that

they would be able to

distribute

the

cards

worldwide.

After lunch, Fede got the

keys for the Buenos Aires

staff’s new, larger office,

which was two flights down

and occupied an entire floor,

with big conference rooms

and a Ping-Pong table. While

the staff gleefully ran around

the

empty

offices

like

schoolchildren, Wences sat

down in the glass-enclosed

conference room. He looked

exhausted. He explained that

he had expected some kind of

respite once he sold off

Lemon in the winter. But

before he’d been able to come

up for air, he was back under,

trying to get Xapo running,

and

dealing

with

the

unending series of crises that

seemed to be an endemic

issue for Bitcoin companies.

The problems, though,

seemed to Wences only like

more

evidence

of

why

Bitcoin was necessary. In the

current

system,

financial

institutions were given the

power to determine what

sorts of businesses could live

and die. His vision for what

Bitcoin

could

do

had

remained

steady.

While

others were talking about

micro-payments and smart

contracts, he was still fixated

on the idea of a digital gold

that people anywhere in the

world could hold without

requiring

any

permission

from anyone. This was still

the kid who had grown up in

Argentina,

watching

his

family look for a place that

was more secure and reliable

than the peso to store their

savings.

It might have just been

the exhaustion, but Wences

was sourly dismissive of all

the talk about Bitcoin’s

potential as a new payment

system. He was an investor in

Bitpay but he said that fewer

than one hundred thousand

individuals

had

actually

purchased

anything

using

Bitpay.

“There is no payment

volume,” he scoffed. “It’s a

sideshow.”

The real story, he said,

was the steady viral growth

that

had

already

taken

Bitcoin, by Wences’s count,

from a few people on that

first day back in January 2009

to six million users.

“People buying half a

Bitcoin, storing it, treasuring

it, and talking about it—and

getting more than one person

in,” he said. “That’s all

Bitcoin has been about for

four years—and that’s all we

need to get to where we want

it to be.”

He did believe it would

eventually

be

the

best

payment network the world

had ever seen. But that would

happen only when a billion

people owned some Bitcoin.

He

made

the

familiar

comparison to the Internet in

1993. Back then, he had

crowed to his mother when he

got one of the first ten million

or so e-mail accounts, which

allowed him to exchange

messages with a professor in

North Carolina. His mother

had derided it as a curiosity:

how would it help her

communicate with anyone

she

knew?

But

Wences

believed back then that the

ability

to

freely

send

information

to

anyone,

anywhere in the world, would

eventually matter. And he

ended up being right. Now he

believed that the ability to

send

money

to

anyone,

anywhere in the world, free

would eventually matter.

“I thought I was lucky to

have lived through that once

—and I can’t believe I get to

see it again,” he said. “This is

just the spot. It feels exactly

the same way—it was so hard

to explain.”

In the meantime, he said

there would be setbacks as

governments banned it and

banks made it harder to

transfer dollars and pesos to

Bitcoin companies.

“I’m patient. This takes a

decade, or two decades. I’m

not going to go home because

this takes one more decade.”

From

Buenos

Aires,

Wences flew to Brazil for his

first vacation in what seemed

like years. Belle and the three

children met him and they

stayed at a house near the

beach in Rio and caught all

the World Cup games they

could. But even before the

World Cup was over, Wences

and the family were up in

Utah for the latest exclusive

conference held by Allen &

Co., this one an even higher-

profile event than the one in

the spring, drawing Jeff

Bezos, Bill Gates, and Rupert

Murdoch.

There had been lots of

good news for Bitcoin in the

weeks since he had been in

Argentina. The United States

Marshals

Service

had

auctioned off the 29,655

Bitcoins it had seized from

Ross Ulbricht, and the winner

was

a

major

venture

capitalist, Tim Draper, who

was working with the startup

that employed Nick Szabo.

Once

U.S.

government

officials had sold Bitcoins it

would be hard for them to

treat Bitcoin as an outlaw

currency. The Winklevoss

twins, meanwhile, had made

their latest regulatory filing

for their Bitcoin exchange-

traded fund, which was now

set to trade on the Nasdaq

Stock Exchange under the

ticker symbol COIN. The day

before the Allen & Co.

conference began, Wences

officially announced the $20

million he had raised from

Reid Hoffman, Max Levchin,

and several other investors,

making him the best-funded

Bitcoin company in the

world, according to publicly

released data.

At the Allen & Co.

conference,

Wences

was

given one of the speaking

slots before Jeff Bezos and

Warren Buffett took the

stage. Wences gave what was

becoming a standard talk,

beginning with the history of

money, and going on to

discuss the potential for

Bitcoin to provide financial

services to poor people who

had long been shut out. He

touched on Xapo only briefly,

at the end. After Wences

came down and took a seat

with Belle, Bezos said from

the stage that it was the kind

of talk that kept him coming

to these events.

In the hallway walking to

lunch, after the Bezos-Buffett

conversation, Wences spotted

Bill Gates, who had been

notably

reticent

about

Bitcoin. Wences knew that

Gates’s

multibillion-dollar

foundation had been making

a big push to get people in the

developing world connected

financially,

and

Wences

approached him to explain

why Bitcoin might help his

cause. As soon as Wences

broached the topic, Gates’s

face clouded over, and there

was a note of anger in his

voice as he told Wences that

the foundation would never

use an anonymous money to

further its cause.

Wences was somewhat

taken aback, but this was not

the first time he had been

challenged by a powerful

person. He quickly said that

Bitcoin could indeed be used

anonymously—but so could

cash. And Bitcoin services

could easily be set up so that

users were not anonymous.

He then spoke directly to the

work that Gates was doing,

and noted that the foundation

had been pushing people in

poor countries into expensive

digital services that came

with lots of fees each time

they were used. The famous

M-Pesa

system

allowed

Kenyans to hold and spend

money on their cell phones,

but charged a fee each time.

“You

are

spending

billions to make poor people

poorer,” Wences said.

Gates didn’t just roll over.

He vigorously defended the

work his foundation had

already done, but Gates was

less hostile than he had been

a few moments earlier, and

seemed to evince a certain

respect

for

Wences’s

chutzpah.

Wences saw the crowd

that

was

watching

the

conversation, and knew he

had to be careful about

antagonizing

Bill

Gates,

especially in front of others.

But Wences had another

point he wanted to make. He

knew that back in the early

days of the Internet, Gates

had initially bet against the

open Internet and built a

closed network for Microsoft

that

was

similar

to

Compuserve and Prodigy—it

linked computers to a central

server, with news and other

information, but not to the

broader

Internet,

as

the

TCP/IP protocol allowed.

“To me it feels like you

are trying to get the whole

world

connected

with

something like Compuserve

when everyone already has

access to TCP/IP,” he said,

and then paused anxiously to

see what kind of response he

would get. What he heard

back from Gates was more

than

he

could

have

reasonably hoped for.

“You know what? I told

the foundation not to touch

Bitcoin and that may have

been a mistake,” Gates said,

amicably. “We are going to

call you.”

After Wences got back to

California, he received an e-

mail

from

the

Gates

Foundation, looking to set up

a time to talk. Not long after

that, Gates made his first

public comments praising at

least some of the concepts

behind Bitcoin, if not the

anonymity.

And so Bitcoin and its

believers attracted one more

person who was willing to

give this new technology a

look, and remain open to the

possibility that the whole

thing wasn’t, at least, entirely

crazy.

TECHNICAL

APPENDIX

ADDRESSES AND

SECRET KEYS

Anyone joining the Bitcoin

network can generate his or

her own Bitcoin address

(generally a string of thirty-

four letters and numbers), and

a corresponding private key

(generally a string of sixty-

four characters).

As an example, one actual

Bitcoin address is:

16R5PtokaUnXXXjQe4Hg5jZrfW69fNpAtF

The private key for

this particular address

is:

5JJ5rLKjyMmSxhauoa334cdZNCoVEw6oLfMpfL8H1w9pyDoPMf3

Only the person with this

private key can sign off on

transactions from that address

(the address is empty so don’t

bother trying).

Each Bitcoin address has

one and only one private key.

The relationship between the

private key and the address is

determined by a series of

complex

math

equations,

which makes it essentially

impossible to work backward

from the public Bitcoin

address to find the private

key.

A

Bitcoin

user

can

generate endless numbers of

Bitcoin addresses and private

keys. There is no cost for

doing so. The length of the

addresses and the sheer

number of potential addresses

ensure that it is all but

impossible for the same

address to be generated twice.

INITIATING A

TRANSACTION

With a private key, a user,

let’s call her Alice again, can

send money from her address

without ever sharing the

private key with anyone else.

Rather than sending out her

private key, Alice puts her

private key into software on

her own computer, along with

details of her transaction.

Without

sending

this

information to the network,

the Bitcoin software on

Alice’s computer runs the

information through a series

of

complicated

math

equations that spits out a

special code, often referred to

as a digital signature. This

part of the process can

happen

even

if

Alice’s

computer is offline. It is this

digital signature—a unique

product of her private key and

the transaction taking place—

that Alice sends out to the

network

along

with

her

transaction, much like a

signature on a check.

VERIFYING

TRANSACTIONS

The

computers

that

get

Alice’s digital signature are

unable to work backward to

get

Alice’s

private

key,

thanks to the mathematical

innovations involved. But the

computers can put Alice’s

digital signature and her

public Bitcoin address into

another series of complicated

math equations and verify

that the digital signature was,

indeed, created by the private

key corresponding to the

public address. Again, these

are

very

sophisticated

mathematical manipulations

that happen on both sides of

this, on one side to generate

the signature and on the other

to verify it.

It is necessary for the

computers on the network to

verify

every

transaction

because there is no central

authority to do this work.

Once the computers do verify

that Alice has the right

private key, they then check

that Alice’s Bitcoin address

has the coins she is trying to

send. The computers on the

network do this by scanning

the record of all previous

Bitcoin transactions coming

to and from the address Alice

is using.

CREATING BLOCKS

AND RECORDING

TRANSACTIONS (THE

BITCOIN MINING

PROCESS)

Satoshi saw that it would be

problematic if each computer

on the network recorded

every transaction as it arrived.

A transaction might reach one

computer before it reached

another computer on the

network,

leading

to

disagreements

about

the

balance in each address.

Bitcoin needed to have one

definitive record of when

each transaction occurred,

and Satoshi came up with a

clever way to achieve this

through the use of a kind of

ongoing contest that any

member of the network could

compete in.

To win the contest, all the

computers on the network

would

compile

recent

transactions, as they were

sent around the network, into

long

lists,

which

were

referred to generically as

blocks. After compiling the

transactions into a block, a

computer would then run the

block through yet another

specialized math equation,

known as a hash function,

which can take any data—the

Gettysburg Address or your

name—and turn these data

into a unique sixty-four-

character

digest.

The

computers taking part in the

Bitcoin contest are looking

for a block that can be put

into a hash function known as

SHA 256 and generate a

sixty-four-character

digest

with a specific number of

zeroes at the beginning. If, for

instance the computers are

looking for a digest with five

zeroes at the beginning, either

of these digests would be a

winner:

000006d77563afa1914846b010bd164f395bd34c2102e5e99e0cb9cf173c1d87

Or

000007ac6b77f49380ea90f3544a51ef0bfbfc8304816d1aab73daf77c2099319

Because SHA 256, like

other

hash

functions,

is

essentially

impossible

to

reverse-engineer,

it

is

impossible to tell what sort of

block will lead to a digest

with five zeroes at the

beginning.

Given that SHA 256 and

other hash functions always

generate the same digest from

any particular input, if every

computer

put

the

same

transactions into their block,

every computer would get the

same digest out the other end.

In order to differentiate their

blocks, in the hope of finding

a

winning

block,

each

computer would be tasked

with adding a random number

onto the end of the block.

Because of the sensitive

nature of hash functions,

changing the random number

at the end of the block from

20 to 22 could potentially

change the digest from a

digest with one zero to a

digest with ten zeroes at the

beginning. If one random

number didn’t lead to a digest

with the desired number of

zeroes, the computer would

try the block with another

random number attached to

see if that worked. All the

computers hoping to win

would keep trying out new

random

numbers—and

adding incoming transactions

—until one computer found a

block that led to a digest with

the correct number of zeroes.

Because finding an answer

involved trying out random

numbers, this contest was

more a game of luck than a

game

of

skill—but

the

computer that could run

guesses through the hash

function

fastest

would

increase

its

chances

of

winning, just as a person with

twenty lottery tickets has a

better chance of winning than

a person with only one.

The number of zeroes

required to win the contest

was

somewhat

inconsequential but made it

easy to adjust the difficulty of

the contest and ensure that

new

blocks

arrived

approximately

every

ten

minutes. If computers were

winning more often than

every ten minutes, the Bitcoin

software could adjust and

demand that computers find a

digest with more zeroes at the

beginning. If computers were

not

winning

frequently

enough, the software could

adjust and allow winners to

have less zeroes. As the

contest became harder, it

required more high-powered

computer hardware to win it.

WINNING BLOCKS

When a computer did find a

winning block, it would send

the winning block around the

network, so that the other

computers could verify that

the block did indeed generate

a digest with the desired

number of zeroes at the

beginning. The computers

would then add the winning

block to the blockchain held

on all the computers, thus

recording

the

list

of

transactions included in the

block. That block became the

official

record

of

all

transactions that occurred

since the previous winning

block. If the winning block

left out a few transactions that

were included in the blocks

created by other computers,

those transactions would not

be recorded on the blockchain

and would be left out for the

next round of blocks. In

addition to the transactions

and the random number, the

blocks

also

included

a

reference to the previous

block and data on the state of

the Bitcoin network, so that

all this information would

also be recorded on the

blockchain.

The creative method for

arriving

at

a

single,

communally

agreed

upon

record

of

transactions

provided

a

long-sought

solution to a conundrum

known as the Byzantine

Generals Problem. Before

Bitcoin, computer scientists

struggled with how to build a

reliable network of unrelated

people, if some of the people

could not be trusted. The

method

of

building

a

blockchain, with each block

coming

from

just

one

member of the network, and

disagreements being solved

by majority rule, solved this

problem.

GENERATING NEW

COINS

When a computer generated a

winning block, it also won a

bundle of new coins—50

Bitcoins when the system

first began. These coins were

created in a clever way. In

essence,

when

computers

were generating the list of

transactions in a block, they

included, in their list of

transactions, a transaction

granting one of their own

Bitcoin addresses 50 Bitcoins

out of thin air. When a block

won the lottery, and was

added to the blockchain, this

seemingly

fictional

transaction was turned into a

reality, and the address in

question

had

50

more

Bitcoins attached to it. By

making it onto the blockchain

the transaction was made real.

The transaction that created

new

Bitcoins

would

be

referred to as the coinbase of

each block. If a computer

tried to grant itself more than

50 new Bitcoins, the whole

block would be rejected by

the other computers, even if it

generated a digest with the

correct number of zeroes.

ACKNOWLEDGMENTS

Like Bitcoin, this book was

an act of group invention

made possible by many

wonderful people. Andrew

Ross Sorkin brought me into

the job that allowed me to

start

writing

about

this

fascinating topic. Later on he

saw that there was a bigger

story to be written about

Bitcoin and pushed me to

write it. I can’t thank him

enough. My agent, Andrew

Wylie,

gave

me

the

confidence I needed to take

this idea out into the world

and find it the right home. At

HarperCollins, Tim Duggan

immediately understood what

I was hoping to do with this

book, and Jonathan Jao made

sure I did it. Both of them

were the kind of editor every

young writer dreams of

finding. Emily Cunningham

was my guide and good fairy

through the entire process. I

am also grateful for the help I

was given by Joanna Pinsker,

Stephanie Cooper, and the

rest

of

the

staff

at

HarperCollins.

This book is, at its core,

the story of several people

who opened up their lives to

me. I have to thank, most of

all, Wences Casares, Barry

Silbert, Bobby Lee, Charlie

Shrem, Roger Ver, Martti

Malmi, Gavin Andresen, and

Tyler

and

Cameron

Winklevoss. But the story

wouldn’t have come together

without

the

time

and

cooperation of Fran, Hal, and

Jason Finney; Dan Morehead;

Patrick

Murck;

Erik

Voorhees;

Jesse

Powell;

Mark Karpeles; Mike Hearn;

Naval

Ravikant;

Jed

McCaleb; MiSoon Burzlaff;

Nick Szabo; Reid Hoffman;

Eric

O’Brien;

Federico

Murrone; Charlie Lee; Amir

Taaki; Jamileh Taaki; Alex

Rampell; Emmauel Abiodun;

Nicolas Cary; David Marcus;

Jorge Restrelli; Bill Tanona;

Pete Briger; Jamie Dimon;

Max

Neukirchen;

Andy

Dresner; Paul Walker; Marty

Chavez; Alexander Kuzmin;

Nicole Navas; Lyn Ulbricht;

Josh Dratel; John Collins;

Jennifer

Shasky

Calvery;

Sebastian

Serrano;

Chris

Larsen; Chris Dixon; Balaji

Srinivasan; Marc Andreessen;

Kim

Milosevic;

Brian

Armstrong; Fred Ehrsam;

John O’Brien; Belle Casares;

Patrick Strateman; Yifu Guo;

Marcie Braden; Alex Waters;

Brian Klein; Nejc Kodric;

Paul Chou; Jeff Garzik;

Adam Back; Laszlo Hanecz;

Leon Li; Gil Lauria; Monica

Long; Michael Keferl; Daniel

Kelman; Jack Smith; Tim

Swanson; Rui Ma; Jack

Wang; Ling Kang; Huang

Xiaoyu; Kathleen Lee; Ayaka

Ver;

Alex

Likhtenstein;

Jeremy Allaire; Matt Cohler;

Larry Lenihan; Fred Wilson;

Michael

Goldstein;

Phil

Zimmerman; Yin Shih; Perry

Metzger; Tony Gallipi; Bruce

Wagner; and Justin Myers. I

also was lucky to be writing

about a topic that had already

been

covered

by

smart

journalists, academics, and

filmmakers

like

Nicholas

Mross, Joshua Davis, Kevin

Roose,

Eileen

Ormsby,

Izabella

Kaminska,

Felix

Salmon, Andy Greenberg,

Sergio Demian Lerner, Sarah

Meikeljohn, Nicolas Christin,

Susan

Athey,

Adrianne

Jeffries, and Andrea Chang.

This

book

immensely

benefited

from

my

first

readers, some of whom are

also my best friends: Teddy

Wayne, Peter Eavis, Lev

Moscow,

Mark

Suppes,

David Segal, Benny Gorlick,

Alex

Morcos,

and

Ben

Davenport.

My

friends

Danielle and Alex Mindlin,

and Gal Beckerman and

Deborah Kolben gave me lots

of good advice and listened to

my

griping.

Mirta

Kupferminc and her family

graciously put me up while I

did my work in Argentina.

I’m lucky to work for the

New

York

Times

and

DealBook,

where

the

exceptional staff make it

exciting to go to the office

each day. In my time at the

paper, Arthur Sulzberger Jr.,

Jill Abramson, and Dean

Baquet have kept the paper

dedicated to the ideals that

made it a place I wanted to

work for from the time I

became a journalist. Several

wonderful editors helped me

develop my ideas and put up

with my absence while I

developed them into a book.

They include Jeffrey Cane,

Dean Murphy, Vera Titunik,

David Gillen, and Peter

Lattman, who brought me

into my very first Bitcoin

story. My colleagues Charles

Duhigg, Jim Stewart, Ron

Lieber, Barry Meier, and

David Gelles shared wisdom

that made it a bit easier to

navigate the book-writing

process for the first time. I am

also forever indebted to the

editors and journalists who

gave me a shot at various

points in my career and

helped me grow. The list

begins with J.J. Goldberg and

extends to Ami Eden, Alana

Newhouse, John Palattella,

Geraldine

Baum,

Davan

Maharaj, Tom Petruno, and

Larry

Ingrassia,

among

others.

This book was, in the end,

possible only because of my

family: Lewis, Sally, and

Miriam

Popper;

Juliana,

Robbie,

Florence,

and

Beatrice Dapice; and my

broader family, the Strauss

clan, with special thanks to

Jona, Martin, and Alanna,

who helped care for my

family when I could not. My

son, August, put up with too

little time with his father and

gave me an incentive to

finish. My beloved wife,

Elissa, did everything that no

one else could do for me, and

more,

allowing

me

to

accomplish things that would

be impossible without her.

SOURCES

The bulk of this book is based on over three hundred interviews I conducted with the people involved, in places as far flung as Buenos Aires; Beijing; Shanghai;

Tokyo;

Austin;

San

Francisco;

Palo

Alto;

Reykjavik;

Toronto; Washington, DC; Amsterdam;

and New York. I was often able to confirm the recollections with private emails and other contemporaneous

documents that were shared with me. In

the end only a handful of the people mentioned in this book declined to talk

to me.

Unless I have specified otherwise in

the notes below, readers can assume that every moment described in this book came to me directly from at least one or, when possible, more than one person present at the event described.

Most of the direct quotes come from contemporaneous

documents

or

recordings but some of the quotes are the best recollection of the participants, generally backed up by at least one other person in attendance. I was lucky

enough to be present for some of the events, such as the March 2014

gathering at Dan Morehead’s house on Lake Tahoe.

Most of the material that did not

come from interviews and personal emails sat in the digital treasure trove of public messages and chats that the

Bitcoin community has created over

time, and that various participants had the wisdom to maintain for posterity.

They will be referenced in the notes by

following abbreviations:

CYPH: Cypherpunk mailing list,

http://cypherpunks.venona.com/.

CRYP: The Cryptography and

Cryptography Policy Mailing List,

http://www.mail-

archive.com/cryptography@metzdowd.com/.

DEV-LIST: Core Bitcoin

development discussion,

http://sourceforge.net/p/bitcoin/mailman/bitcoin-development/.

BTCF: Bitcoin Forum,

https://bitcointalk.org.

IRC: #bitcoin-dev Internet Relay

Chat channel,

http://bitcoinstats.com/irc/bitcoin-

dev/logs/2014/01.

On Silk Road, there are two

remarkable online efforts to gather and catalog

all

available

information,

including legal documents and postings

from the now defunct marketplace. One

is available at http://antilop.cc/sr/. The other

is

at

http://www.gwern.net/Silk%20Road.

Many of the details in the book came from the Silk Road’s forums and Ross Ulbricht’s trial, which will be referred to in the notes by the following

abbreviations:

SRF: Silk Road forum archives,

http://antilop.cc/sr/download/stexo_sr_forum.zip.

RUTT: Ross Ulbricht trial

transcripts, United States of

America v. Ross William Ulbricht.

United States District Court

Southern District of New York. 14

CR 68 (KBF).

RUTE: Ross Ulbricht trial exhibits,

United States of America v. Ross

William Ulbricht. United States

District Court Southern District of

New York. 14 CR 68 (KBF).

The notes below will not contain

citations for material from the sources above when it is obvious in the text where the material came from.

All Bitcoin prices are taken from

CoinDesk’s Bitcoin Price Index, which is

available

at

http://www.coindesk.com/price/, unless

I have stated otherwise. The numbers on Bitcoin trading volumes come from www.bitcoinmarkets.

com

and

www.bitcoinity.com/data.

For those looking to learn more

about the topics covered in this book there are several wonderful books. On the history of the Cypherpunks, there is Andy Greenberg’s This Machine Kills Secrets:

How

WikiLeakers,

Cypherpunks, and Hacktivists Aim to Free the World’s Information. For the history of cryptography I learned a great deal from Simon Singh’s The Code Book. For those eager to learn more about the evolution of money,

Felix Martin’s Money: An Authorized Biography and Jack Weatherford’s The History of Money are wonderful reads, and Nigel Dodd’s The Social Life is thought-provoking. Those looking to go

into greater depth can try A History of Money by Glyn Davies. I also benefited from Eileen Ormsby’s book Silk Road, the first of what I’m sure will be many

fascinating volumes about the online bazaar.

The pagination of this electronic edition does not match the edition from which it was created. To locate a specific passage, please use your e-book

reader’s search tool.

INTRODUCTION

xiv

only 15 percent of the basic

Bitcoin computer code: Based on

calculations done for the author by

Gavin Andresen.

CHAPTER 1

4

this particular e-mail came from:

Satoshi Nakamoto to CRYP,

October 31, 2008.

4

the nine-page description: A later

version of the paper would be nine

pages, but the initial version Hal

reviewed was actually eight pages.

5

tied to an Internet provider in

California:

Hal’s

debug

log

showed that the IP addresse of the

other user was reached through a

Tor service that would have

obscured the real IP address. But

Tor generally routes users to

nodes in the same geographic

area, suggesting that the other user

on Bitcoin’s first day was

probably in California.

5

He said he’d been testing it

heavily: I have elected to use the pronoun “he” to refer to Satoshi,

but Satoshi could also be she or

they.

6

now recorded next to one of his

Bitcoin addresses: The address in

question

was

1AiBYt8XbsdyPAELFpcSwRpu45eb2bArMf.

12

Chaum’s effort would rub Hal and

others the wrong way: Hal Finney

to CYPH, August 22, 1993.

12

DigiCash went down with it: Tim

Clark, “DigiCash Files Chapter

11,” CNET, November 4, 1998,

http://news.cnet.com/2100-1001-

217527 .html.

13

Hal would calculate the maximum

bill: This anecdote was recounted

by Hal’s college roommate and

later colleague, Yin Shih.

13

“The work we are doing here,

broadly speaking”: Hal Finney to

CYPH, November 15, 1992.

CHAPTER 2

16

As sociologist Nigel Dodd put it:

Nigel Dodd, The Social Life of

Money (Princeton, NJ: Princeton University Press, 2014).

17

“We could envisage proposals in

the near future”: Alan Greenspan,

Conference on Electric Money

and

Banking,

United

States

Treasury, September 19, 1996,

http://www.federalreserve.gov/boarddocs/speeches/19960919.htm.

17

a British researcher named Adam

Back released his plan: Adam

Back to CYPH, March 28, 1997.

18

a concept called bit gold, was

invented by Nick Szabo: Nick

Szabo,

“Bit

Gold,”

Unenumerated, December 2005,

http://unenumerated.blogspot

.co.uk/2005/12/bit-gold.html.

19

Another, known as b-money,

came from an American named

Wei Dai: Wei Dai to CYPH, 1998.

19

Hal created his own variant, with

a decidedly less sexy name: Hal

Finney to CYPH, August 15,

2004.

20

The nine-page PDF attached to the

e-mail: the current version is

available

at

https://bitcoin.org/bitcoin.pdf.

22

modeled after the contest that

Adam Back: While this process

was modeled on Back’s program,

it also relied on the innovations of

several other cryptographers and

mathematicians, including Ralph

Merkle, Stuart Haber, and W.

Scott Stornetta.

25

usually belonging to Satoshi:

Satoshi’s mining activities were

traced

by

the

Argentinian

researcher Sergio Demian Lerner.

Sergio Demian Lerner, “The Well

Deserved Fortune of Satoshi

Nakamoto,

Bitcoin

Creator,

Visionary and Genius,” Bitslog,

April

17,

2013,

https://bitslog.wordpress

.com/2013/04/17/the-well-

deserved-fortune-of-satoshi-

nakamoto/.

25

the first transaction took place

when Satoshi sent Hal ten coins:

Satoshi’s

address

for

this

transaction

was

12cbQLTFMXRnSzktF

kuoG3eHoMeFtpTu3S; Hal’s was

1Q2TWHE3GMdB6BZKafqwxX

tWAWgFt5Jvm3.

26

Satoshi was using his own

computers to help power the

network: Lerner.

26

When a programmer in Texas

wrote to Satoshi late one night:

The

programmer,

Dustin

Trammel, posted the e-mails on

his

blog

at

http://blog.dustintrammell.com/2013/11/26/i-am-not-satoshi/.

CHAPTER 3

29

Before reaching out to Satoshi,

Martti had written about Bitcoin

on anti-state.org: Martti’s post,

written under the screen name

Trickster,

is

available

at

https://board.freedomainradio.com/topic/17233-p2p-currency-could-make-the-

government-extinct/.

30

“The

root

problem

with

conventional currency”: Satoshi

Nakamoto, “Bitcoin Open Source

Implementation of P2P Currency,”

P2P Foundation forum, February

11,

2009,

http://p2pfoundation.ning.com/forum/topics/bitcoin-open-source.

33

It also meant that Satoshi’s

computers were still: Sergio

Demian

Lerner,

“The

Well

Deserved Fortune of Satoshi

Nakamoto,

Bitcoin

Creator,

Visionary and Genius,” Bitslog,

April

17,

2013,

https://bitslog.wordpress

.com/2013/04/17/the-well-

deserved-fortune-of-satoshi-

nakamoto/.

35

“Be safe from the unstability

caused by fractional reserve”: An

archived version of the page

designed by Martti is available at

http://web.archive

.org/web/20090511173000/http://bitcoin.sourceforge.net/.

35

A few dozen people downloaded

the Bitcoin program: Data on

software downloads available at

http://sourceforge.net/projects/bitcoin/files/stats/timeline.

37

Starting in August, the log of

changes to the software: The

history of changes to the software

is

available

at

https://gitorious.org/bitcoin/bitcoind/activities.

37

When the next version of Bitcoin,

0.2: Satoshi Nakamoto to DEV-

LIST, December 17, 2009.

37

the majority of coins were still:

Lerner.

37

throughout 2009 no one else was

sending or receiving: Data on the

number of transactions per block

available

at

https://blockchain.info/charts/n-

transactions-per-block.

38

In

the

very

first

recorded

transaction of Bitcoin for United

States dollars: Information on the

transaction

is

available

at

https://blockchain

.info/tx/7dff938918f07619abd38e4510890396b1cef4fbeca154fb7aaf ba8843295ea2.

38

NewLibertyStandard

came

up

with his own method: The

shuttered exchange is still online

at

http://newlibertystandard.wikifoundry.com/page/Exchange+Rate.

39

Swap Variety Shop on his

exchange website: The shuttered

shop

is

still

online

at

http://newlibertystandard.wikifoundry.com/page/Specialty+Shop.

CHAPTER 4

44

But on May 22, 2010, a guy in

California offered to call Lazlo’s

local Papa John’s: Information

about the Bitcoin transaction is

available

at

https://blockchain.info/tx/a1075db55d416d3ca199f55b6084e2115b9345e16c5cf302fc80e9d5fbf5d48d.

44

small item on the website of

InfoWorld:

Neil

McAllister,

“Open Source Innovation on the

Cutting Edge,” Info World, May 24,

2010,

http://www.infoworld.com/article/2627013/open-source-software/open-source-

innovation-on-the-cutting-

edge.html.

47

“Slashdot with its millions of

tech-savvy readers”: Martti Malmi

to BTCF, June 22, 2010.

48

“How’s this for a disruptive

technology?”: “Bitcoin Releases

Version 0.3,” Slashdot, July 11, 2010,

http://news-

beta.slashdot.org/story/10/07/11/1747245/bitcoin-releases-version-03.

CHAPTER 5

49

The number of downloads would

jump from around three thousand:

Data on software downloads

available

at

http://sourceforge.net/projects/bitcoin/files/stats/timeline.

49

“Over the last two days of Bitcoin

being”: Gavin Andresen to BTCF,

July 14, 2010.

53

the difficulty of mining new

Bitcoins jumped 300 percent: Data

on mining difficulty available at

https://blockchain.info/charts/difficulty?

timespan=all&showDataPoints=false&daysAverageString=1&show_

header=true&scale=0&address=.

54

In one month, the forum had

gained more new members: Data

on forum usage available at

https://bitcointalk.org/index.php?

action=stats.

57

“Nobody can stop the Bitcoin

system”: Keir Thomas, “Could the

Wikileaks Scandal Lead to New

Virtual Currency?” PC World,

December

10,

2010,

http://www.pcworld.com/article/213230/could_

wikileaks_scandal_lead_to_new_virtual_currency.html.

CHAPTER 6

65

“To tell the truth, I always felt”: Mark’s blog has been taken down,

but an archived version of this

post

is

available

at

http://web.archive

.org/web/20140302234940/http://blog.magicaltux.net/2006/02/12/pensees-nocturnes/.

69

begun in earnest in July 2010

when he had sold a cheap house in

Pennsylvania: RUTE GX 250 and

GX 251.

69

Ross rented a cabin about an hour

from his home in Austin, Texas:

RUTE GX 240A.

70

he knew he wanted to set up a

new kind of online market: RUTE

GX 240A.

70

His curiosity about and penchant

for the outdoors: Ross spoke about

his youth in a recording done for

the StoryCorps project with his

friend Rene Pinnel in 2012.

70

At Penn State, he had the unique

distinction:

Erin

Rowley,

“Caribbean Students Host Cultural

Event,” Daily Collegian, March 24,

2008,

http://www.collegian.psu.edu/archives/article_ef9c02f3-a9c2-5b8f-b1d3-

f0ef82e3dce0.html.

Katharine

Lackey, “Paul to Visit PSU,”

Daily Collegian, March 26, 2008, http://www.collegian.psu.edu/archives/article_239513a3-a577-5732-bab0-

9cc27c5d4610.html.

70

“Everywhere I looked I saw the

State”: Dread Pirate Roberts to

SRF, March 20, 2012.

70

Initially, he called the project

Underground Brokers: RUTE GX

240A.

71

he soon had big black trash bags

full of them: Richard Bates,

RUTT, January 22, 2015.

72

“either don’t want the spouse to

see it on the bill”: Satoshi

Nakamoto to BTCF, September

23, 2010.

73

“I felt ashamed of where my life

was”: RUTE GX 240A.

73

he had, by his own accounting,

gone through $20,000: RUTE GX

250.

73

By the end of February, twenty-

eight transactions: silkroad to

BTCF, March 1, 2011.

CHAPTER 7

75

“i’m so stressed! i gotta”: Richard

Bates, RUTT, January 22, 2015.

75

“Free Talk Live, who was

broadcasting live at the time”:

FreeTalk Live, March 16, 2011,

https://www.freetalklive.com/content/podcast_

2011_03_16.

76

“my site had a 40 minute spot on a

national”: RUTE GX 1002.

77

he was sentenced to ten months in

prison: Information on the case is

available

at

http://www.justice.gov/criminal/cybercrime/pressreleases/2002/verPlea.htm.

80

“Law-abiding citizens can carry

on their affairs”: Jerry Brito,

“Online Cash Bitcoin Could

Challenge Governments, Banks,”

Techland blog, Time, April 16, 2011.

80

“cuts

across

international

boundaries, can be stored”: Andy

Greenberg, “Crypto Currency,”

Forbes,

April

20,

2011,

http://www.forbes

.com/forbes/2011/0509/technology-

psilocybin-bitcoins-gavin-

andresen-crypto-currency.html.

82

“This was—of course—denied”:

Mark Karpeles to BTCF, May 1,

2011.

83

Silk Road now had over a

thousand people registered: Eileen

Ormsby, Silk Road (Sydney: Pan Macmillan Australia, 2014).

83

“Updating a live site to a whole

new version is no easy task”:

RUTE GX 240B.

83

Gawker published an in-depth

story about Silk Road: Adrian

Chen, “The Underground Website

Where You Can Buy Any Drug

Imaginable,” Gawker, June 1,

2011,

http://gawker.com/the-

underground-website-where-you-

can-buy-any-drug-imag-

30818160.

83

over a thousand new people were

registering for Silk Road: Ormsby.

84

“online form of money laundering

used to disguise”: “Schumer

Pushes to Shut Down Online Drug

Marketplace,” June 5, 2011,

http://www

.nbcnewyork.com/news/local/Schumer-

Calls-on-Feds-to-Shut-Down-

Online-Drug-Marketplace-

123187958.html.

85

earning $17,000 from the sale of

his mushrooms, and $14,000 from

commissions: RUTE GX 250.

85

“I was mentally taxed, and now I

felt extremely vulnerable”: RUTE

GX 240B.

86

15,000 new people joined the

forums: Data on forum usage

available

at

https://bitcointalk.org/index.php?

action=stats.

86

He said he had long avoided

determining: Martti Malmi to

BTCF, June 11, 2011.

CHAPTER 8

90

The

selling

continued

until

260,000 Bitcoins were purchased:

IRC, June 19, 2011.

95

appeared briefly, via Skype, on

The Bitcoin Show: Episode 25, June

19,

2011,

https://www.youtube.com/watch?

v=Ye_81RH6wiI.

95

“Ready guys?”: An archived

version of this chat is available at

http://pastebin.com/d7vp06hL.

96

“it’s likely to go the way of

other”: Peter Cohan, “Can Bitcoin

Survive, Is It Legal?” Forbes, June

28,

2011,

http://www.forbes.com/sites/petercohan/2011/06/28/can-bitcoin-survive-is-it-legal/.

CHAPTER 9

97

the founder of a small Polish

Bitcoin

exchange,

Bitomat,

announced: Kyt Dotson, “Third

Largest Bitcoin Exchange Bitomat

Lost Their Wallet, Over 17,000

Bitcoins Missing,” Silicon Angle, August

1,

2011,

http://siliconangle.com/blog/2011/08/01/third-largest-bitcoin-exchange-bitomat-

lost-their-wallet-over-17000-

bitcoins-missing/.

98

The founder of the site, a man

who called himself Tom Williams,

was

unresponsive:

Adrianne

Jeffries, “Search for Owners of

MyBitcoin

Loses

Steam,”

BetaBeat, New York Observer,

August

19,

2011,

http://observer.com/2011/08/search-

for-owners-of-mybitcoin-loses-

steam/.

102 “I know for sure attendees are

flying in”: Bruce Wagner to

BTCF, July 27, 2011.

104 “You can call me an idiot and

yeah”: Gavin’s presentation is

viewable

at

https://www.youtube.com/watch?

v=0ljx4bbJrYE.

104 “be making a HUGE HUGE

HUGE announcement at the

Conference”: Bruce Wagner to

BTCF, August 14, 2011.

104 “If that’s not enough”: Wagner’s presentation

is

viewable

at

https://www.youtube.com/watch?

v=pv0SdUNcBKc.

CHAPTER 10

110 The announcement from the Free

State Project: Erik Voorhees to

BTCF, October 8, 2011.

111 The people who had been

attending the New York Bitcoin

Meetup: Disposition to BTCF,

October 4, 2011.

112 “the sanctity of the individual, the priority”: Mark Lilla, “The Truth

About Our Libertarian Age: Why

the Dogma of Democracy Doesn’t

Always Make the World Better,”

New Republic, June 17, 2014, http://www.newrepublic

.com/article/118043/our-

libertarian-age-dogma-democracy-

dogma-decline.

112 “libertarian, going to replace all other currencies”: Jed McCaleb to

BTCF, May 16, 2011.

114 MyBitcoin users went to the

FBI’s cybercrime unit: Adrianne

Jeffries, “MyBitcoin.com Is Back:

A Week After Vanishing with at

Least $250 K. Worth of BTC, Site

Claims It Was Hacked,” BetaBeat,

New York Observer, August 5, 2011,

http://observer.com/2011/08/mybitcoin-

disappeared-with-bitcoins/.

CHAPTER 11

115 “Have you ever thought about

doing”: Richard Bates, RUTT,

January 22, 2015.

115 “I’m sure the authorities would be

very interested”: Richard Bates,

RUTT, January 22, 2015.

116 He lied to Richard as one part of his effort to cover his tracks:

RUTE GX 226D.

116 the site had generated $30,000 in commissions: RUTE GX 250.

116 in September Ross hired his first staff member: RUTE GX 250 and

GX 240B.

117 he sold his pickup truck and

moved to Sydney, Australia:

David Kushner, “Dead End on

Silk Road: Internet Crime Kingpin

Ross Ulbricht’s Big Fall,” Rolling

Stone,

February

4,

2014,

http://www.rollingstone

.com/culture/news/dead-end-on-

silk-road-internet-crime-kingpin-

ross-ulbrichts-big-fall-20140204.

117 He would fit in his work around trips to Bondi beach: RUTE GX

240C.

118 “the biggest and strongest willed character I had met”: RUTE GX

240B.

118 Variety Jones came up with a

clever idea: RUTE GX 226D.

119 vendors in at least eleven

countries:

Nicolas

Christin,

“Traveling the Silk Road: A

Measurement Analysis of a Large

Anonymous Online Marketplace,”

Working Paper, November 28,

2012.

120 An academic study of Silk Road: Ibid.

120 In March, that amounted to nearly

$90,000: RUTE GX 250.

121 In real life, DigitalInk’s name was

Jacob George: Ian Duncan, “Silk

Road Drug Dealer Pleads Guilty,”

Baltimore Sun, November 5, 2013, http://articles.baltimoresun.com/201311-05/news/bs-md-silk-road-plea-

20131105_1_drug-dealer-ross-

william-ulbricht-jacob-theodore-

george-iv.

CHAPTER 12

130 “He has not broken any rules and

silk road”: Sealed complaint

against Charlie Shrem filed by

IRS Special Agent Gary Alford,

January 24, 2014.

132 Federal Reserve had held a

daylong conference: Information

about the conference is available

at

http://www.kc.frb.org/publications/research/pscp/pscp-2012.cfm.

133 Canadian government announced

the launch: Emily Jackson, “Royal

Canadian Mint to Create Digital

Currency,” Toronto Star, April 11, 2012,

http://www.thestar.com/business/2012/04/11/royal_canadian_

mint_to_create_digital_currency.html.

CHAPTER 13

137 “it funds a decent percentage of the overall”: Sealed complaint

against Charlie Shrem filed by

IRS Special Agent Gary Alford,

January 24, 2014.

141 group agreed that the bylaws for the foundation would be posted on

GitHub: The bylaws are available

at https://github.com/pmlaw/The-

Bitcoin-Foundation-Legal-

Repo/tree/master/Bylaws.

CHAPTER 15

154 the company made $750 million

for its investors: Eric Markowitz,

“The $750 Million ‘Mistake,’”

Inc. ,

December

14,

2011,

http://www

.inc.com/articles/201112/argentine-

entrepreneur-750-million-mistake

.html.

158 the

Argentinian

government

ordered his company, PayPal:

“Paypal

Suspends

Domestic

Transactions in Argentina,” BBC

News,

September

17,

2012,

http://www.bbc.com/news/technology-

19605499.

159 35 percent lower than the rate

available on the street: Historical

data on the two different exchange

rates

available

at

http://dolarblue.net/historico/.

160 the first-ever Bitcoin Meetup in Argentina: Information on the

meetups

is

available

at

http://www.meetup.com/bitcoin-

Argentina/.

CHAPTER 16

167 Some $1.2 million worth of

Bitcoin:

Nicolas

Christin,

“Traveling the Silk Road: A

Measurement Analysis of a Large

Anonymous Online Marketplace,”

Working Paper, November 28,

2012.

167 seventy thousand different topics on Silk Road’s forum: Eileen

Ormsby, Silk Road (Sydney: Pan Macmillan Australia, 2014).

168 His work on Silk Road was done at an Internet café around the

corner: Sealed complaint against

Ross Ulbricht filed by FBI Special

Agent

Christopher

Tarbell,

September 27, 2013.

168 Over the summer, a Silk Road

user had managed to follow a

series of transactions: Ormsby.

169 paying the attacker $25,000:

RUTE GX 250.

169 Ross explained that he was

changing

his

writing

style:

Ormsby.

169 In November, Ross flew to

Dominica: RUTE GX 291.

169 “put yourself in the shoes of a prosecutor”: RUTE GX 225B.

170 Ross decided to help nob sell his kilogram: Superseding indictment

against Ross Ulbricht filed by the

Grand Jury for the District of

Maryland, October 1, 2013.

171 Ross had always been somewhat

skeptical: RUTE GX240B.

171 “beat up, then forced to send the Bitcoins

he

stole

back”:

Superseding indictment against

Ross Ulbricht filed by the Grand

Jury for the District of Maryland,

October 1, 2013. Ross has not yet

been tried on the charges in the

Maryland indictment and has not

been found guilty on any counts

related to murder.

CHAPTER 18

186 “PayPal

will

give

citizens

worldwide more”: Eric Jackson,

PayPal Wars (Washington, DC:

WND Books, 2004).

187 Thiel advocating for floating

structures: “Peter Thiel Offers

$100,000 in Matching Donations

to

TSI,

Makes

Grant

of

$250,000,” Sea-steading Institute,

February

10,

2010,

http://www.seasteading.

org/2010/02/peter-thiel-offers-

100000-matching-donations-tsi-

makes-grant-250000/.

187 aiming for the colonization of

Mars: Adam Mann, “Elon Musk

Wants to Build 80,000-Person

Mars Colony,” Wired, November

26,

2012,

http://www.wired.com/2012/11/elon-

musk-mars-colony/.

CHAPTER 19

190 In June 2012 the founders

announced: BFL (Butterfly Labs)

to BTCF, June 16, 2012.

190 a young Chinese immigrant in

New York, Yifu Guo, announced:

ngzhang to BTCF, September 17,

2012.

191 that power doubled again in just one month after Yifu’s machines:

Historical data on the hashing

power

available

at

https://blockchain.info/charts/hash-

rate.

195 “This is a dark day for Bitcoin”:

“Breaking: The Blockchain Has

Forked,” Bitcoin Trader, March 11,

2013,

http://www.thebitcointrader

.com/2013/03/breaking-

blockchain-has-forked.html.

196 “clarify the applicability of the regulations implementing”: The

FinCen guidance is available at

http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html.

CHAPTER 20

199 Martti Malmi posted an entry on his company’s website: Martti

Malmi, “SC5’er Intro: The Bitcoin

Guy,” SC5 website, February 5,

2013,

http://sc5.io/posts/sc5er-

intro-the-bitcoin-guy.

205 “As a VC, my interest in the

Bitcoin

ecosystem

is

not

ideological”: Jeremy Liew, “Why

VCs Love the Bitcoin Market,”

TechCrunch,

April

5,

2013,

http://techcrunch.com/2013/04/05/why-

do-vcs-care-about-bitcoin/.

206 The

BitInstant

engineers

congregated with their laptops:

The scene in the office was

captured in unreleased footage

from

Nicholas

Mross’s

documentary The Rise and Rise of

Bitcoin (2014), shared with the author.

207 Mark Karpeles assured his users

that the problems were due to the

volume of trade: Vitalik Buterin,

“The

Bitcoin

Crash:

An

Examination,” Bitcoin Magazine, April

13,

2013,

https://bitcoinmagazine.com/4113/the-

bitcoin-crash-an-examination/.

CHAPTER 21

211 “For the time being, Bitcoin is in

many ways”: Felix Salmon, “The

Bitcoin Bubble and the Future of

Currency,”

News

Genius,

http://genius.com/Felix-salmon-

the-bitcoin-bubble-and-the-future-

of-currency-annotated.

211 finally went public in the New York Times: Nathaniel Popper and Peter Lattman, “Never Mind

Facebook;

Winklevoss

Twins

Rule in Digital Money,” New York

Times,

April

11,

2013,

http://dealbook

.nytimes.com/2013/04/11/as-big-

investors-emerge-bitcoin-gets-

ready-for-its-close-up/?_r=0.

211 a national television station in China

broadcast

a

half-hour

segment: The May 3, 2013,

segment

is

available

at

http://jingji.cntv.cn/2013/05/03/VIDE1367596319388137.shtml.

211 $2 million into BitPay: The

announcement is available at

http://www

.marketwatch.com/story/bitpay-

raises-2-million-led-by-founders-

fund-2013-05-16.

212 $5 million into Coinbase: The

announcement is available at

https://www.usv.com/post/coinbase.

213 Mark was sued in a Seattle court by CoinLab: Complaint filed by

Coin-Lab against Mt. Gox on May

2, 2013, in United States District

Court for the Western District of

Washington.

213 money

in

Mt.

Gox’s

two

American bank accounts—some

$5 million—was seized: Romain

Dillet, “Feds Seize Another $2.1

Million from Mt. Gox, Adding Up

to $5 Million,” TechCrunch,

August

23,

2013,

http://techcrunch.com/2013/08/23/feds-

seize-another-2-1-million-from-

mt-gox-adding-up-to-5-million/.

CHAPTER 22

218 federal prosecutors arrested the

operators of Liberty Reserve:

Information on the arrest is

available

at

http://www.justice.gov/usao/nys/press

releases/May13/LibertyReservePR.php.

218 the top financial regulator in

California

sent

the

Bitcoin

Foundation: The letter was posted

by the executive director of the

foundation

at

http://www.forbes.com/sites/jonmatonis/2013/06/23/bitcoin-foundation-receives-cease-and-

desist-order-from-california/.

224 announced a few days after

Charlie shut down BitInstant: Erik

Voorhees to BTCF, July 17, 2013.

225 one-millionth registered account:

Eileen

Ormsby,

Silk

Road

(Sydney:

Pan

Macmillan

Australia, 2014).

225 commissions collected by the site

often approached over $10,000 a

day: RUTE GX 250.

225 Ross agreed to pay $100,000 up

front: RUTE GX 241.

226 “Don’t want to be a pain here”: Sealed complaint against Ross

Ulbricht filed by FBI Special

Agent

Christopher

Tarbell,

September 27, 2013.

226 paid for with 3,000 Bitcoins, or roughly $500,000: Letter opposing

Ross Ulbricht’s release on bail,

filed by Assistant United States

Attorney Serrin Turner, November

20, 2013. These alleged murders

and the chats between Ross and

redandwhite

were

discussed

during Ross Ulbricht’s trial, but

Ross was not charged with any

counts of murder for hire and

Canadian police never found any

evidence of any suspicious deaths

during this time that might be tied

to Ross.

227 He moved out of his friend’s

apartment

in

June:

Sealed

complaint against Ross Ulbricht

filed by FBI Special Agent

Christopher Tarbell, September

27, 2013.

227 “encrypt and backup important

files”:

Letter

opposing

Ross

Ulbricht’s release on bail, filed by

Assistant United States Attorney

Serrin Turner, November 20,

2013.

228 “Without going into details, the stress of being”: Dread Pirate

Roberts to Silk Road forum,

September 20, 2013.

228 Ross assigned Variety Jones:

RUTE GX 241.

228 When agents knocked on the

door: Sealed complaint against

Ross Ulbricht filed by FBI Special

Agent

Christopher

Tarbell,

September 27, 2013.

229 Ross

changed

apartments:

Thomas Kiernan, RUTT, January

22, 2013.

CHAPTER 23

238 opened

350,000

free

Blockchain.info wallets: Data on

wallets

available

at

https://blockchain.info/charts/my-

wallet-n-users.

240 At a Bitcoin Meetup in July 2013,

two hundred: Information on the

meetups

is

available

at

http://www.meetup.com/bitcoin-

Argentina/.

241 “You don’t have to be battling”: Jose Crettaz, “Bitcoin: Fiebre

argentina por la máquina de dinero

digital,” La Nación, June 30, 2013,

http://www.lanacion.com.ar/1596773-

bitcoin-pasion-argentina-por-la-

nueva-maquina-de-hacer-billetes-

digitales.

241 the peso was down some 25

percent: Historical data on the two

different exchange rates available

at http://dolarblue.net/historico/.

CHAPTER 24

245 wobbling out of control in late September: All details in this

paragraph are from RUTE GS

241.

245 “I have poison oak rash”: RUTE

GX 325.

246 The next day he spent the

morning working: Jered Der-

Yeghiayan, RUTT, January 14,

2015.

246 He headed to the far side of the library: RUTE GX 128H.

246 “sure,

someone

could

stand

behind you”: RUTE GX 225B.

247 “dread: im ok, you?”: RUTE GX

129C.

247 There were 25,689 orders in

transit: Numbers are taken from a

screen shot of Ross’s computer on

the day of his arrest; it was

submitted by the government as

evidence before Ross’s trial.

247 This was the signal that cirrus had: Jered Der-Yeghiayan, RUTT,

January 14, 2015.

248 “I’m so sick of you,” the woman shouted: David Kushner, “Dead

End on Silk Road: Internet Crime

Kingpin Ross Ulbricht’s Big Fall,”

Rolling Stone, February 4, 2014, http://www.rollingstone.com/culture/news/dead-end-on-silk-road-internet-crime-

kingpin-ross-ulbrichts-big-fall-

20140204.

248 As Ross turned around to see

what was: Thomas Kiernan,

RUTT, January 22, 2013.

248 did so by searching on Google

through old: Gary Alford, RUTT,

January 26, 2013.

249 Users of Silk Road visiting the hidden site that morning: “FBI

Arrests Silk Road Drug Site

Suspect,” BBC News, October 2,

2013,

http://www.bbc.com/news/technology-

24373759.

251 In court, Ross was in shackles:

“Attorney Denies Charges That

San Francisco Man Operated

Encrypted

Drug

Website,”

Associated Press, October 4, 2013.

CHAPTER 25

257 China’s previous experience with

a successful virtual currency:

Mark Lee, “China Bans Online

Virtual

Money

Dealing

for

Minors,” Bloomberg, June 22,

2010,

http://www.bloomberg.com/news/articles/2010-06-22/tencent-shares-fall-after-

china-announces-virtual-currency-

ban-for-minors.

259 The reporter for Channel 2

tracked: The May 3, 2013,

segment

is

available

at

http://jingji.cntv.cn/2013/05/03/VIDE1367596319388137.shtml.

260 Macao, seven times bigger, in

revenue terms, than Las Vegas:

Charles

Riley,

“Macau’s

Gambling

Industry

Dwarfs

Vegas,” CNNMoney, January 6,

2014,

http://money.cnn.com/2014/01/06/news/macau-casino-gambling/index.html.

261 a division of Baidu, the search engine giant and the fifth-most-visited website in the world,

announced:

Vitalik

Buterin,

“Baidu Jiasule and the Chinese

Bitcoin

Community,”

Bitcoin

Magazine, October 16, 2013,

https://bitcoinmagazine.com/7492/baidu-

jiasule-and-the-chinese-bitcoin-

community/.

262 John

Donahoe,

said

in

an

interview: Andrea Felsted, “Ebay

to Expand the Range of Digital

Currencies It Accepts,” Financial

Times, November 3, 2013.

CHAPTER 26

266 “long-term promise, particularly if

the innovations”: Ben Bernanke

letter to Senate Committee on

Homeland

Security

and

Governmental Affairs, September

6, 2013.

268 A story the previous week in

Xinhua: Xinhua story is available

at

http://news.xinhuanet.com/fortune/2013-

11/15/c_118148623.htm.

269 “I do not want to shut down or stamp out Bitcoin”: Morgan Peck,

“If Senators Really Like Bitcoin

They Should Encourage Banks to

Cooperate,”

IEEE

Spectrum,

November

21,

2014,

http://spectrum.ieee.org/tech-

talk/computing/networks/us-

senate-.

269 Silk Road 2.0 showed up on the dark

web:

Eileen

Ormsby,

“Remember, Remember . . . Silk

Road Redux,” All Things Vice, November

7,

2013,

http://allthingsvice.com/2013/11/07/remember-remember-silk-road-redux/.

270 The number of Blockchain.info

wallets: Data on wallets available

at

https://blockchain.info/charts/my-

wallet-n-users.

271 But the relatively apathetic public

response: David Lauter, “Public

Largely

Tunes

Out

NSA

Surveillance Debate, Poll Finds,”

Los Angeles Times, January 20, 2014.

271 “We see the intrinsic value of

Bitcoin”: Gil Luria, “Bitcoin:

Intrinsic Value as Conduit for

Disruptive

Payment

Network

Technology,” Wed-bush Equity

Research, December 1, 2013.

272 “emerge as a serious competitor”:

David Woo, “Bitcoin: A First

Assessment,” Bank of America

Merrill Lynch FX and Rates

Research, December 5, 2013.

274 The good news was that the

agencies:

The

Chinese

government statement is available

at

http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/20131205153156832222251/20131

205153156832222251_.html.

CHAPTER 27

286 Krugman focused largely on

Bitcoin’s claim: Paul Krugman,

“Bitcoin Is Evil,” New York

Times,

December

28,

2013,

http://krugman.blogs

.nytimes.com/2013/12/28/bitcoin-

is-evil/.

286 Cowen, meanwhile, argued: Tyler

Cowen, “How and Why Bitcoin

Will Plummet in Price,” Marginal

Revolution, December 30, 2013, http://marginalrevolution.com/marginalrevolution/2013/12/how-and-why-bitcoin-will-plummet-in-

price.html.

287 “to an extent that makes a sub-Saharan African kleptocracy”:

Charles Stross, “Why I Want

Bitcoin to Die in a Fire,” Charlie’s Diary,

December

18,

2013,

http://www.antipope.org/charlie/blog-

static/2013/12/why-i-want-

bitcoin-to-die-in-a.html.

289 “It

represents

a

remarkable

conceptual”:

Francois

Velde,

“Bitcoin: A Primer,” Chicago Fed

Letter, December 2013.

289 Overstock announced that it

would begin: The announcement

is

available

at

http://blog.coinbase.com/post/72787431702/coinbase-and-overstock-com-announce-

largest.

290 Overstock processed more than

$100,000 in orders: Sales data

available

at

http://www.prweb.com/releases/bitcoin2014Keynote/PatrickByrne/prweb 11699797.htm.

CHAPTER 28

291 Thiel called him the “firefighter-in-chief”: Evelyn M. Rusli, “A

King of Connections Is Tech’s

Go-To Guy,” New York Times,

November

5,

2011,

http://www.nytimes.com/2011/11/06/business/reid-hoffman-of-linkedin-has-become-

the-go-to-guy-of-tech.html?

pagewanted=all.

291 Hoffman later introduced Thiel to

Mark

Zuckerberg:

David

Kirkpatrick, The Facebook Effect

(New York: Simon & Schuster,

2010).

294 “The gulf between what the press

and many”: Marc Andreessen,

“Why

Bitcoin

Matters,”

DealBook, New York Times,

January

21,

2014,

http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/.

295 He believed that it could help

open the door: A transcript of

Balaji’s talk at Startup School

2013

is

available

at

https://nydwracu.word

press.com/2013/10/28/transcript-

balaji-srinivasan-on-silicon-

valleys-ultimate-exit/.

299 The prosecutors had e-mails in

which: Sealed complaint against

Charlie Shrem filed by IRS

Special

Agent

Gary

Alford,

January 24, 2014.

300 “If you want to develop a virtual currency”: The press release

announcing Charlie’s arrest is

available

at

http://www.justice.gov/usao/nys/pressreleases/January14/SchremFaiellaChargesPR.php.

303 told CNBC in late January: Jamie

Dimon, interviewed on CNBC,

January 23, 2014.

CHAPTER 29

309 In a statement, Mark explained:

While material from the Mt. Gox

web-site has been deleted, the full

statement is still available at

http://pando

.com/2014/02/10/blame-game-

embattled-mt-gox-points-to-flaws-

in-bitcoin-protocol-bitcoin-

community-calls-bs/.

310 He was wearing a short-sleeved

shirt: The confrontation was

recorded and is viewable at

https://www.youtube.com/watch?

v=ob9Ak1t09Ao.

315 “This tragic violation of the trust of users”: The statement is

available

at

http://blog.coinbase.com/post/77766809700/joint-statement-regarding-mtgox.

316 lawyers in Chicago and Denver

filed a lawsuit: Jonathan Stempel

and Emily Flitter, “Mt. Gox Sued

in United States over Bitcoin

Losses,” Reuters, February 28,

2014,

http://www.reuters.com/article/2014/02/28/bitcoin-mtgox-lawsuit-

idUSL1N0LX1QK20140228.

317 An academic study in 2013: Tyler

Moore and Nicolas Christin.

“Beware

the

Middleman:

Empirical Analysis of Bitcoin-

Exchange Risk.” In Ahmad-Reza

Sadeghi,

editor,

Financial

Cryptography, volume 7859 of

Lecture

Notes

in

Computer

Science (New York: Springer,

2013).

317 “The only way to stabilise the

system is”: Izabella Kaminska,

“Magic: The Undercapitalized

Gathering Online,” FT Alphaville, March

3,

2014,

http://ftalphaville.ft.com/2014/03/03/1787992/magic-the-under

capitalised-gathering-

online/.

CHAPTER 30

319 The Newsweek reporter, Leah McGrath Goodman, had: Leah

McGrath Goodman, “The Face

Behind

Bitcoin,”

Newsweek,

March

6,

2014,

http://www.newsweek.com/2014/03/14/face-

behind-bitcoin-247957.html.

321 “Why did you create Bitcoin,

sir?”: The video of Dorian

Nakamoto leaving his house is

viewable

at

http://www.theguardian.com/technology/2014/mar/07/satoshi-nakamoto-denies-inventing-

bitcoin.

323 “simply be an old man saying

ANYTHING”: Gavin’s letter to

McGrath Goodman is available at

http://www.reddit.com/r/bitcoin/comments/1zqjq6/open_letter_to_leah_mcgrath/.

323 In an Amazon review of Danish

butter cookies: The review is

available

at

http://www.amazon.com/review/R3U92F9YRUSF37.

323 The AP’s story and video from its

interview:

The

interview

is

viewable

at

https://www.youtube.com/watch?

x-yt-ts=1422579428&x-yt-cl=

85114404&v=GrrtA6IoR_E.

324 An Argentinian security expert,

Sergio Lerner, had done: Sergio

Demian

Lerner,

“The

Well

Deserved Fortune of Satoshi

Nakamoto,

BitcoinCreator,

Visionary and Genius,” Bitslog,

April

17,

2013,

https://bitslog.wordpress.com/2013/04/17/the-well-deserved-fortune-of-satoshi-

nakamoto/. 333 “Friends, citizens,

Bitcoiners, there is nothing”:

Charlie’s speech is viewable at

https://www.youtube.com/watch?

v=xH7mCO5EnDU.

334 “I think it’s very obvious to all of us”:

Gregory

Ferenstein,

“Google’s

Jared

Cohen:

It’s

‘Obvious’

Bitcoin-Like

Currencies

Are

‘Inevitable,’”

TechCrunch, March 8, 2014,

http://techcrunch.com/2014/03/08/googles-jared-cohen-its-obvious-bitcoin-

like-currencies-are-inevitable/.

335 “You

don’t

get

the

new

technology from”: Andreessen’s

comments are from his speech at

Coinsummit

2014,

which

is

viewable

at

https://www

.youtube.com/watch?

v=iir5J6Z3Z1Q.

CHAPTER 31

339 Nick’s writing: Nick’s writings

are

available

at

http://unenumerated

.blogspot.com/.

339-40 Most bizarrely, Nick altered

the dates: the dates that Nick later

put on the posts are at the top of each post. But the URL addresses

of the posts still show the original

posting date. For instance, his post

on “Bit Gold Markets” says that it

was written on December 27,

2008,

but

the

URL

is

http://unenumerated.blogspot.com/2008/04/bit-gold-markets .html#links.

339 “repeated use of ‘of course’

without isolating commas”: Skye

Grey, “Satoshi Nakamoto Is

(Probably)

Nick

Szabo,”

LikeinaMirror, December 1, 2013, https://likeinamirror.wordpress.com/2013/12/01/satoshi-nakamoto-is-probably-nick-

szabo/.

348 a hacker demanding ransom was

targeting Hal: Robert McMillan,

“An

Extortionist

Has

Been

Making Life Hell for Bitcoin’s

Earliest

Adopters,”

Wired,

December

29,

2014,

http://www.wired.com/2014/12/finney-

swat/.

353 The United States Marshals

Service had auctioned off the

29,655:

Tim

Draper’s

announcement is available at

https://medium.com/mirror-

blog/tim-draper-wins-govt-

auction-partners-with-vaurum-to-

provide-bit

coin-liquidity-in-

emerging-markets-88f04a1d8598.

353 Wences officially announced the

$20

million:

The

Xapo

announcement is available at

https://blog.xapo.com/xapo-raises-

20-million-investment-led-by-

greylock-partne/.

354 Gates had initially bet against the

open Internet and built a closed

network: Kathy Rebello, “Inside

Microsoft: The Untold Story of

How the Internet Forced Bill

Gates

to

Reverse

Course,”

BusinessWeek, July 15, 1996.

INDEX

“The

pagination

of

this

electronic edition does not

match the edition from which

it was created. To locate a

specific passage, please use

your e-book reader’s search

tools.”

Abedier, Osama, 101

Alcor Life Extension Foundation, 7

Alibaba (Chinese Internet company),

261

Alice (hypothetical user), 9, 11, 21–23, 358–359

Alipay (Chinese payment processor),

260–261

Allen & Co., 181, 292, 349, 353

altoid (screen name), 69, 248. See also Ulbricht, Ross

Andreessen Horowitz, 186, 192, 329

Andreessen, Marc, 181, 186–187, 293–

295, 303, 335

Andresen, Gavin

beginnings with Bitcoin, 44–47, 49–

50, 323

as Bitcoin central figure, 59–62

Bitcoin mining, 53, 192–197, 329

Bitcoin promotion, 75–76, 101–106

creation of Bitcoin Foundation, 138,

141–142

dealing with scandals, 99

relationship with Satoshi, 55–56, 80–

86

responding to Mt. Gox collapse, 309

2014 Bitcoin Pacifica (Lake Tahoe),

346–348

Anoncoin (digital currency), 270–271

Anti-state.org (website), 29

Argentina, 153–161, 182, 240–242,

259, 277–280, 286, 349–353

ASIC (computer chip), 189–190, 259,

329–330

Assange, Julian, 56–57

Athey, Susan, 345

Atlantis, 245

Australia, 44–45, 117, 168, 171

Automated Clearing House (ACH), 133

Avalon (ASIC), 190, 206

Back, Adam, 17–22, 339, 348

Baidu (Chinese search engine), 261–

262

bank bailout of 2008, 32, 111

Bank of America, 272

Bates, Richard, 75–77, 115–116

bee-te-bee (Chinese Bitcoin), 255–256

Beijing Summer Olympics (2008), 145

Benchmark Capital, 282, 293, 305

Bernanke, Ben, 266

Bezos, Jeff, 353

Bharara, Preet, 299–300

Bill and Melinda Gates Foundation,

353–355

Bitcoin

arrival of Gavin Andresen, 44–47

arrival of Martti Malmi, 29–30

building trust, 24–25, 33, 48, 61–62,

69, 99–100, 279, 315, 339

buying/selling with, 43–44, 82, 119–

120, 129–130

changing business model, 236–239

characterization as “cryptocurrency,”

36

comparison to gold, 157–158, 165,

182

comparison to paper money, 219,

286–287

creation and operation of original

code, 4–6, 20–24

disappearance of Satoshi Nakamoto,

x–xiii

hacking and scandals, 91–99

increasing price/value, 38, 66–69, 79,

81–85, 89–91, 131, 175, 180, 184,

193–196, 204–206, 210–211, 250–

253, 262–264, 267, 271–275, 284–

285

legality/government regulation, 196–

198, 251

limitations based upon computers, 347

Mt. Gox collapse busts bubble, 308–

317

origin and ideology, vii–xv, 5, 113–

114

as Ponzi scheme, 220

proof-of-work, 18–19

Bitcoin Foundation

candidacy of Bobby Lee, 345

dealing with Bitcoin collapse, 314–

315

Gavin Andresen as member, 192

involvement in Senate hearing, 265–

267, 270, 300–302

Patrick Murck as member, 176

planning and creation of, 138–142

regulatory problems, 217–219, 233–

236

resignation of Charlie Shrem, 302

Bitcoinica, 237

Bitcoin Investment Trust, 314

Bitcoin Meetups. See conferences (Bitcoin and others)

Bitcoin mining

about process vulnerability, 41–42

creating blocks and recording

transactions, 359–361

creation of ASIC chip, 189–192, 259,

329–330

creation of Avalon chip, 190, 206

formation of mining companies, 294–

295, 328–329

formation of mining pools, 192–194

GPU technology, 42, 56, 189–191

growth in China, 259–261, 329

Litecoin mining, 283

more users increased difficulty, 53

role in securing system, 100

Satoshi Nakamoto patterns, 324

specialized computers/computing

power, 105, 170, 190, 233, 324, 330,

347

The Bitcoin Show (TV program), 102, 128

Bitcoin software

about operation, 23, 357–362

beta testing, 25–26, 58

changes to code, 22–24, 35–39, 43–

46, 55–58, 61–62, 141, 309, 346–

347

creating/maintaining protocol, x, 5–6,

32, 99, 215–216

creation and launch, xiv, 30–31, 319,

346

downloads, 49–51, 80, 237, 261

Google interest, 100–102

hard fork, 193, 195

“1 RETURN” bug, 56

role of public-key

cryptography, 9–10, 17–18

running on Macintosh, 41

transaction malleability problem, 309–

314

updates and old versions, 37, 59, 193–

195

version 0.2, 37

version 0.3, 47–48

version 0.319, 59

version 0.7, 194–195

version 0.8, 194–195

The Bitcoin Trader (blog), 195

Bitcoin White Paper, 21, 45, 339

Bitfury, 330

bit gold, 18, 338–339

BitInstant. See also Shrem, Charlie attracting investors, 130–135

creation and function, 128–130

dealing with problems and

competitors, 201–207

hacker penetration, 150

investment by David Azar, 134, 150–

151

investment by Roger Ver, 128

investment by Winklevoss twins, ix,

173–176, 211–215

involvement of Erik Voorhees, 135–

137

management problems, 220–222

regulatory problems, 222–224

trading volume, 201, 205–207

BitLicense, 302, 317

Bitomat (Polish exchange), 97–98

BitPagos (Argentinian payment

service), 278–279

BitPay, 134, 211, 219, 272

Bitstamp (Slovenian exchange)

about founding, 203

attendance at 2014 Bitcoin Pacifica,

252–253, 337

regulation of virtual currencies, 271

response to Mt. Gox collapse, 309–

310, 315

surpassing Mt. Gox volume, 236

trading volume, 262–263, 267

working with banks, 327

blind digital signatures, 12

blockchain

banking interest in the technology,

324–328

Bitcoin transfers, 97–98, 133, 148,

182, 203–204, 235–237

creation and function, 21–26, 43, 55,

61, 340

dealing with hard fork, 193–194

generating new coins, 361–362

increasing file size, 100–101

sidechains, 348

use by mining pools, 191–194

use by money transfer projects, 188–

189, 336

winning acceptance and approval,

269–274, 289–290, 345

winning blocks, 361

Blockchain.info, 237–241, 252, 270,

315, 330–331

Blodget, Henry, 182–184

Bloomberg, Michael, 144, 325

b-money, 339

Branson, Richard, 297

Briger, Pete, 163–165, 201, 236, 252–

253, 281–283, 287–288, 302, 342–

343. See also Fortress Investment Group

Brito, Jerry, 79–80

Bruno, Joe Bel, 322

BTC China, 255–264, 267–269, 275,

284–285, 300, 315, 343–345. See

also China

BTC Guild, 195

BTC King (screen name). See Faiella, Robert

Buffett, Warren, 353

Burges, Kolin, 310–312

Business Insider, 184

BusinessWeek, 197

Byrne, Patrick, 289

Canada, launch of Mint Chip, 133

Carper, Thomas (senator), 235, 267–

268

Cary, Nic, 239, 252, 296–298, 333

Casares, Belle, 154, 162, 243, 352

Casares, Wences. See also Lemon

Digital Wallet and Xapo

background and arrival at Bitcoin,

153–165

Bitcoin as commodity, 274

Bitcoin holdings, 287–288

Bitcoin promotion, 179–180, 185–

187, 197, 209–210

Bitcoin promotion in Argentina, 240–

242

conference attendance, 181–185, 214–

216, 349, 351–355

development of Lemon Digital Wallet,

201–205

sale of Lemon Digital Wallet, 252,

280–283

seeking business investors, 291–296

startup business financing, 305–306

2013 Argentina, Bitcoin meeting, 277

Xapo founding and operations, 349–

351

Casascius coins, 126–127

chronicpain (screen name). See Green, Curtis

cimon (screen name). See Variety Jones

[vj]

cirrus (screen name), 246–248

Chaum, David, 10, 12, 23, 71. See also DigiCash

China, xiii, 128, 183, 190–191, 273–

275, 280, 329. See also BTC China CIA. See U.S. Central Intelligence Agency

Coinapult, 174, 338

Coinbase (Bitcoin service). See also Ehrsam, Fred

about the founding and operation,

203–204, 211–213

investment by Andreessen Horowitz,

293–295

maintaining private keys, 281

regulation of virtual currencies, 271

regulatory compliance, 236–237

response to Mt. Gox collapse, 315

transaction fees, 290

working with banks, 305–306

CoinLab, 138, 144, 200, 213

COIN (Nasdaq ticker symbol), 353

Collins, John, 265–266

conferences (Bitcoin and others)

2011 CIA interest in Bitcoin, 81

2011 NYC Bitcoin World Expo, 102–

106, 135

2011 Thailand, Bitcoin, 104

2012 Amsterdam, Bitcoin, 104, 297–

298

2012 Federal Reserve on money

transfer, 132–133

2012 NYC, Bitcoin, 104

2013 Allen & Co., 181, 349

2013 Argentina, Bitcoin, 277–283

2013 San Jose, Bitcoin, 214–216

2014 Allen & Co., 262, 349, 353–355

2014 Austin, Bitcoin, 331–336

2014 Bitcoin Pacifica (Lake Tahoe),

337–345

2014 SXSW, 334–336

2014 Utrecht technology, 298

The Construction and Operation of

Clandestine Drug Laboratories

(Jack B. Nimble), 69

Costollo, Dick, 181

Cowen, Tyler, 286

CRASH (CRypto caSH), 12

credit cards

Bitcoin as replacement, 23, 158–160,

235, 292

digital wallets and, 101, 154, 209

disputes and chargebacks, 64, 134,

343

lack of privacy, 11

Target Corporation, data breach, 288–

289

transaction fees, xii, 102, 240–241,

272, 277–278, 290, 343

WikiLeaks blockade, 57

Crisis Strategy Draft, 313–315

cryogenics, 7

cryptocurrency, 36

Cryptonomicon (Stephenson), 19, 252

currency debasement, 30–31

Cypherpunk Manifesto, 8–12

Cypherpunks

awareness of privacy and data

vulnerability, 8–9

conceptualizing future of money, 11–

13, 16

facing digital money obstacles, 19–20

philosophical influences, 70

termination of mailing list, 20

Dai, Wei, 19–20

Darkcoin (digital currency), 270–271

Debt: The First 5,000 Years (Graeber), 157, 179

decentralized systems/technology. See also Blockchain

about Bitcoin ideology, 236

Bitcoin comparison to gold, x

building Bitcoin system, 55–56, 141,

292–294

development of payment systems,

129, 133

disadvantages of centralization, 113–

114

Internet as, 182

Occupy Wall Street movement and,

111

open source software and, 45–47

P2P Foundation and, 30

regulatory compliance, 269–270

resolving problems, 195

Silk Road and, 118

trend toward centralization, 99–100,

347

Der-Yeghiayan, Jered, 246–248

DigiCash, 12, 19, 21, 23, 26, 158. See also Chaum, David

digital currency

Anoncoin, 270–271

Chinese potential, 260–261

creation of early systems, 12–13

Darkcoin, 271

Finney experimentation, 5

Greenspan prediction, 17

Liberty Reserve, 218

Mint Chip, 133

Q coin, 257, 260–261, 268

DigitalInk (screen name). See George, Jacob

Dimon, Jamie, 303–306

Dixon, Chris, 181–182, 186, 294

Dodd, Nigel, 16

Donahoe, John, 262

Donald, James, 24

Draper, Tim, 353

Dread Pirate Roberts [DPR] (screen

name), 118, 121, 168–169, 171, 213,

225, 227, 248. See also Ulbricht, Ross

drugs/drug trafficking. See Silk Road eDonkey (file sharing website), 50–51

Ehrsam, Fred, 334–336. See also

Coinbase (Bitcoin service)

Electronic Frontier Foundation, 80, 270

Eleuthria (screen name), 195

encryption technology, 8–12. See also Public-key cryptography

exchange-traded funds (ETF), 222, 250

Extropians, 11

Facebook, 145

Faiella, Robert (aka BTC King), 130,

138, 299

The Far Wilds (online game), 50–51

FBI. See U.S. Federal Bureau of

Investigation

Federal Reserve. See U.S. Federal Reserve

Financial Crimes Enforcement Unit

[FinCen] (Treasury Department),

138, 196–197, 201, 234–235, 266,

325

Financial Times, 262, 317

Finney, Fran, 3

Finney, Hal

defense of Bitcoin system, 24–27

introduction to Bitcoin, 3–8

Lou Gehrig’s disease diagnosis, 27

return to Bitcoin community, 59–60

role in PGP, 10, 13

Finney, Jason, 27

FirstMark Capital, 144, 147–149, 176

Forbes, 80, 96

Fortress Investment Group, 180, 217–

219, 252, 272–273. See also Briger, Pete

Founders Fund, 187, 211

4chan (hacker message board), 75

Freeman, Ian, 75–76

Free State Project, 107–110

Free Talk Live (radio program), 75–78, 108

Freis, James, 325

FriendlyChemist (screen name), 225–

226

Gandalf (computer chip), 329

Garzik, Jeff, 83–84, 92, 99, 190, 196,

348

Gates, Bill, 353–355, 385n

Gawker (website), 83–84

George, Jacob (aka DigitalInk), 121

George Mason University, 80

Georgia, Republic of, 330

GitHub, 141

Goldman Sachs, 324–326

gold standard, x, 15–16, 31–32, 45,

109, 157–158

Gonzague, 312–315

Goodman, Leah McGrath, 319–324

Google, 101–103, 187, 248–249, 283,

304–305, 314–315, 334

Google Wallet, 101

government regulation/investigation

arrest of Roger Ver, 77–78

arrest of Ross Ulbricht, 170–171

BitInstant, 222–224

BTC China, 273–275

Erik Voorhees, 224–225

PGP and Zimmerman, 10

virtual currencies, 66–67, 196–198,

235

Graeber, David, 157

Great Depression, 31

Great Recession, banking crisis of

2008, 32, 111

Green, Curtis (aka chronicpain), 116,

170–171, 225, 249, 332

Greenspan, Alan, 17

hackers/hacking

Bitcoin vulnerability, xiv, 24, 154,

201, 215

BitInstant penetration, 150

message boards, 75

Mt. Gox penetration, 67–69, 82–83,

90–96, 99, 114, 205–207

ransom demands/payments, 82, 150,

169, 347–348

Silk Road penetration, 168–169, 225,

248–251

Target data breach, 288–289

vulnerability of private information,

xii, 19

Hanecz, Laszlo, 41–44, 48, 58, 189,

215

Hashcash, 17–22, 339, 348

hash functions, 22, 25–26, 41–42, 136,

359–362

Hearn, Mike, 80–81, 99–100, 101–103,

320

Hoffman, Reid, 181, 183, 291–293, 353

Horowitz, Ben, 192, 335. See also

Andreessen Horowitz

Huang Xiaoyu, 255–256, 258

Hughes, Eric, 8, 11–12

Huobi (Chinese exchange), 285

Iceland, 330

India, 350

WikiLeaks blockade, 57

Internet relay chat (IRC), 41, 54, 67,

196

Internet terrorism. See hackers/hacking Jack B. Nimble, 69

Jiasule (Chinese security service), 261

Johnston, David, 204

JP Morgan Chase & Co., 202, 218,

303–306, 327

Juno Moneta (Roman god), 17

Kaminska, Izabella, 317

Karpeles, Mark. See also Mt. Gox (Bitcoin exchange)

arrival at Mt. Gox, 65–68

becoming Mt. Gox owner, 68–69

control over Mt. Gox code, 99

lack of management skill, 127–128,

233, 307–309

marginalization in Bitcoin future, 331

NYC Bitcoin Expo 2011, 103–105

struggling with Mt. Gox growth and

problems, 140–141, 200–201

vacating Bitcoin Foundation seat, 345

Kodric, Nejc, 253

Kraken (Bitcoin exchange), 315

Krugman, Paul, 286

Kutscher, Ashton, 335

Kuzmin, Alexander, 135–136

La Nación (newspaper), 241

Larsen, Chris, 325–326

Lawsky, Benjamin, 225, 300–302, 304,

317

Lee, Bobby, 256, 261–265, 267, 273,

300, 343–345

Lee, Charlie, 100, 103, 105, 256, 283

Lemon Digital Wallet, 154, 160–162,

179–180, 242–244, 252, 261, 280–

283, 351. See also Casares, Wences Lenihan, Larry, 144, 176

Lerner, Sergio, 324

Levchin, Max, 185–186, 349, 353

Levine, John, 24–25

Liberty Reserve (online currency), 218

Liew, Jeremy, 300–301

Lilla, Mark, 111

Ling Kang, 268, 274–275

LinkedIn (networking site), 291–292

Litecoin, 256, 283, 286

Luria, Gil, 271–272

MagicalTux (screen name). See

Karpeles, Mark

Magic: The Gathering Online

Exchange. See Mt. Gox (Bitcoin exchange)

Magic: The Gathering (online game), 51, 77

Maguire Ventures, 149

Makan, Divesh, 293

Malka, Micky, 179–180, 201–203,

210–212, 236, 242, 252, 282–283

Malmi, Martti

beginning connection to Bitcoin, 29–

30, 200

entry into Bitcoin operations, 33–39,

44–50

exchange services and forums, 53–54

making Silk Road work, 72, 84

reduced role in Bitcoin, 58–60

return to Bitcoin community, 348

running Bitcoin website, 66, 80–82,

86

Marcus, David, 158–159, 181, 184–

185, 201, 216, 281, 292, 349

Mark Twain Bank, 12

Maxwell, Gregory, 348

McCaleb, Jed

creation of Ripple, 187, 325

exclusion from Bitcoin Foundation,

139

founding of Mt. Gox, 50–53

handling Mt. Gox disputes and

problems, 63–65

Mt. Gox account hacked, 90, 94–95

partnership with Mark Karpeles, 65–

69

2011 NYC Bitcoin Expo, 103–105

2014 Bitcoin Pacifica (Lake Tahoe),

337

views on political ideology, 112–113

meetups. See conferences (Bitcoin and others)

Memory Dealers, 78–79, 93, 126. See

also Ver, Roger

Mercatus Center, 80

Miller, Ira, 137, 174, 176, 201

mining. See Bitcoin mining

Mint Chip (Canadian digital currency),

133

money/monetary systems

about origins and determination of

value, 15–17

basis of market economy, 11

Bitcoin as form of, 82, 286

Bitcoin as replacement for gold, 182

currency debasement, 30–31

evolution of credit, 157

gold standard, x, 15–16, 31–32, 45,

109, 157–158

jokes on nature of, 146

money laundering

Bank Secrecy Act enforcement, 196

Bitcoin as form of, 84, 303

investigation and arrests, ix, 224–225,

249, 266–267, 298

PayPal investigation as, 186, 216

regulatory compliance, 92, 203, 218

Mongolia, 330

Morehead, Dan

gathering for Lake Tahoe poker game,

viii, xii–xiii

investment in Slovenian exchange,

236

invited to work with Fortress, 217

meeting for first Bitcoin Pacifica,

251–253

meeting for second Bitcoin Pacifica,

337–342

relocation out of Fortress offices,

342–343

Morton, Chris, 221–222

MS Haberdasher (screen name), 170

Mt. Gox (Bitcoin exchange)

about the founding and growth, 50–54

arrival of Mark Karpeles, 65–69

contending with competitors, 97–102

federal seizure of assets, 213–214

government regulation, 66–67

hacker vulnerability/penetration, 67–

68, 82–83, 89–96

management problems, 307–309

plans for closure, 312–314

reaction to collapse and bankruptcy,

314–316

shutting down exchange, 193, 205–

207

trading disputes and problems, 63–65,

85–86, 199–207

trading volume, 53, 79, 201, 203, 207,

209–210

transaction malleability problem, 309–

312

Murck, Patrick, 139–142, 176, 233–

236, 265–267, 269, 302

Murdoch, James, 181

Murdoch, Rupert, 353

Murrone, Federico (“Fede”), 159–160,

201, 280–281, 349, 351

Musk, Elon, 187

MyBitcoin (online Bitcoin wallet), 98–

99, 113–114, 237

Napster (music sharing service), 35,

50–51, 347

Nasdaq Stock Exchange, 222, 353

Nas (rapper), 335

National Security Agency (NSA), 8,

271

Nebseny, Val, 329–330

Nelson, Gareth, 129–130

NewLibertyStandard (screen name),

37–39, 41, 48, 69

Newsweek, 319–321, 324–325, 342, 347

New York, State of. See Government regulation/investigation

New York Times, 211, 293, 303, 365

“99 percenters.” See Occupy Wall Street movement

Niven, Larry, 7

Nixon, Richard, 31

nob (screen name), 121, 170–171, 332

Novogratz, Mike, 180

O’Brien, Eric, 210

Occupy Wall Street movement, xi–xii,

111–112, 140, 157, 287, 331, 336

OKCoin, 344

Olympic Summer Games (Beijing,

2008), 145

“1 percenters,” wealth distribution, 287, 336

Overstock (online retailer), 289–290

Ovitz, Michael, 183

Pantera Capital, 217, 343

Patagon, 162

Paul, Ron, 110–111

PayPal

about founding, 185–187, 291–292

acceptance of Bitcoin, xii, 261–262

Bitcoin support from, 129, 158–159,

184–185, 192, 349

buying/selling Bitcoin through, 38,

52–54, 110

ransom demands and criminal use,

347–348

restrictions by Argentina, 159–161

shutting down Mt. Gox account, 64

WikiLeaks blockade, 57

Paysius, 174

PC World, 57

People’s Bank of China, 273–275

Pidgin (chat service), 246

Pirate Party, 35, 333

Ponzi scheme, Bitcoin as, 220

pornography, 72, 112, 117, 126, 234

Powell, Jesse, 94–96, 103, 105, 127–

128, 139, 252, 315, 337

Pretty Good Privacy (PGP), 10, 13

proof-of-work, 18–19

P2P Foundation, 30, 323–324

public-key cryptography, 9–10, 141,

185–186, 238, 248, 281, 320, 330

Q coin (Chinese virtual currency), 257,

260–261, 268

ransom demands/payments, 82, 150,

347–348

Reeves, Ben, 237–239

reusable proofs of work (RPOWs), 18–

19

Reuters, 211

Ribbit Capital. See Malka, Micky Ripple, 187, 325

redandwhite (screen name), 225–226,

245

Russia, 54, 135–136, 197

Sacks, David, 192

Salmon, Felix, 210–211

SatoshiDice (gambling site), viii, 136,

193, 224, 338

Satoshi Ltd., 174

Satoshi Nakamoto

creation and promotion of “e-cash,” 5,

20–22

disappearance/search for, xiv, 60–62,

80–81, 141

participation in forums, 55–56, 58–59

unearthing identity, 319–324, 339–

340

Schumer, Charles, 84, 269

SecondMarket. See Barry Silbert

Shared Coin, 270

Shasky Calvery, Jennifer, 235, 266

Shrem, Charlie. See also BitInstant arrest by federal agents, 298–300

background and founding of

BitInstant, 128–130

lack of management skill, 220–224

marginalization in Bitcoin future,

331–334

vacating Bitcoin Foundation seat, 345

Silbert, Barry, 143–144, 147–149, 217–

218, 300, 303–304, 314, 325–326

Silicon Valley Bank, 203–204, 305–306

Silk Road

additional resources, 368n

BitInstant transactions, 129–130

creation and business concept, 69–73

as fringe group experiment, 335

government investigation, 84–85, 121,

169–171, 213, 227–229, 298–300

growth and success, 115–121, 137–

138, 167–168

growth in membership, 75–77, 82–84

hacker penetration, 169, 225–226

seizure by FBI, 245–253

Silk Road 2.0, 269–270

Sirius-M (screen name). See Malmi, Martti

Slashdot, 47–51, 53, 58

Snoop Dogg (rapper), 297

Snowden, Edward, 271

The Social Network (movie), 145

Songhurst, Charlie, 184, 292

Spain, 330

Spitzer, Elliot, 186

SpongeBob SquarePants stickers, 39,

69

Srinivasan, Balaji, 191–192, 294–295,

329

scout (screen name), 169, 246

silkroad (screen name), 73, 118. See also Ulbricht, Ross

Stephenson, Neal, 19, 252

Summer Olympics (Beijing, 2008), 145

SVBitcoin (email list), 204

Swap Variety Shop, 39

Szabo, Nick, 18–19, 338–341, 351

Taaki, Amir, 57–58

Tanona, Bill, 165, 180

Target Corporation, data breach, 288–

289

taxes/taxation, 13, 126–127, 168, 219–

220, 239–241, 287

Tea Party movement, xi–xii

TechCrunch, 214

Tencent (Chinese Internet company),

261, 284–285

Texas Bitcoin Association, 331–334

Thiel, Peter, 185–187, 192, 211, 291

Tibanne (cat), 66, 140, 200, 312

Tibanne Ltd., 68

Time (magazine), 79–80

Tor (software/network), 71–73, 120,

245, 369n

Transaction malleability, 309–310

Trickster (screen name). See Malmi, Martti

21e6 (mining company), 191–192, 294–

295, 329

Two Bit Idiot (blogger), 315

Ukraine, 329–330

Ulbricht, Lyn, 331–332

Ulbricht, Ross. See also Silk Road about creation of Silk Road, 69–73

arrest by federal agents, 246–251

fundraising for legal defense, 331–332

murder-for-hire accusations, 225–226,

332

plans to go off-the-grid, 226–229

Underground Brokers (renamed Silk

Road), 70. See also Silk Road

U.S. Central Intelligence Agency

(CIA), 78, 81, 86–87

U.S. Department of Homeland Security

(DHS), 121, 247

U.S. Department of Justice (DOJ), 186,

234, 266–267

U.S. Department of the Treasury. See Financial Crimes Enforcement Unit

[FinCen]

U.S. Drug Enforcement Agency (DEA),

298

U.S. Federal Bureau of Investigation

(FBI), 137–138, 227–228, 245, 247–

251

U.S. Federal Deposit Insurance

Corporation (FDIC), 114

U.S. Federal Reserve

about role as U.S. central bank, 17, 23

assessment of Bitcoin, 266–267, 289,

328

function of gold standard, 31

monetary policy, 80, 110–111

technology, adaptation to, 132–133

2008 big bank bailout, 32, 286

U.S. Government. See Government

regulation/investigation

U.S. Internal Revenue Service (IRS),

248. See also Taxes/taxation

U.S. Marshals Service, 353

U.S. National Security Agency (NSA),

271, 342

U.S. Secret Service (USSS), 17, 266–

267

U.S. Securities and Exchange

Commission (SEC), ix, 224, 338

Variety Jones [vj] (screen name), 118–

119, 228

Vaurum (Bitcoin company), 340–341

Vavilov, Val, 330

Ver, Roger. See also Memory Dealers background and intro to Bitcoin, 77–80

as Bitcoin spokesman, 214

dealing with ransom demands, 348

investment in BitInstant, 128–131,

175

investment in Blockchain.info, 237–

239, 252

meeting Erik Voorhees, 107–110

NYC Bitcoin Expo 2011, 103–105

promotion of Bitcoin, 127–128, 294

reaction to Mt. Gox collapse, 311, 314

relocation to Japan, 125–126

renouncing U.S. citizenship, 126, 169,

234, 330, 338

responding to Mt. Gox hack, 92–96,

308

size of Bitcoin holdings, 287

2013 Argentina, Bitcoin meeting, 277

Vessenes, Peter, 138, 144, 200, 213,

233

Virtual money. See Digital currency Voorhees, Erik

introduction to Bitcoin, 107–110

early vision/prediction about value,

vii–ix, xi–xiii

gathering for Lake Tahoe poker game,

vii–viii

joining BitInstant, 130–132, 135–137

sale of SatoshiDice, viii, xv, 224

van Der Laan, Wladimir, 348

Wagner, Bruce, 102–104, 128

Walker, Paul, 325–326

Washington Post, 267

Wells Fargo Bank, 202, 219, 272–273,

287–288, 302

WikiLeaks, xi, 56–58, 66–67, 80

Wikipedia, 4, 45

Williams, Tom (possible pseudonym),

98

Wilson, Fred, 154, 182, 212, 300–301,

305

Winklevoss Capital, 149