How I Discovered Bitcoin
“Bitcoin really enters your life when you deserve it, and I was not deserving or ready for it at that point.” — Me for most of my life since learning about Bitcoin.
I originally heard about Bitcoin (but unfortunately wasn’t listening) in 2012, as a college student during a politics meetup focused on free markets. One of the other attendees, a military veteran who had served overseas brought up Bitcoin, and I was extremely dismissive of it. During the group chat, in front of around 20 people, I openly dismissed it to him and the group as something the government would most likely shut down. If I would have had an open mind and listened to him, while scrounging for a few extra dollars in my piggy bank, perhaps I would have been a Bitcoin millionaire writing this instead of your average HODLer. As I like to say, Bitcoin really enters your life when you deserve it, and I was not deserving or ready for it at that point.
Learning by Failure
Flash forward to 2014, I was out of school and had moved to the SF Bay Area the previous year. I heard about Bitcoin again, this time on Twitter/Youtube from Balaji Srinivasan, a well-known founder, engineer, and technologist. His talk at Startup School connected the dots between my personal freedom and liberty focused ideologies, and their pragmatic application in the technologies of now and the future.
While I still didn’t fully get it, I was wise enough to realize there were a lot of smart people working on it so decided I wanted to invest even though I had practically no money. I was early in my career making less than $50k year living in the high-cost Bay Area and in debt, but managed to to put $10–20 bucks a month into Bitcoin which was all I had left over at the end of the month. Given the price was in the mid-hundreds, at this point and I had very little to invest, it was interesting, but not life changing for me as I was focused elsewhere.
In 2015 made a dumb decision to dump the small amount of satoshis I had when the market crashed. Bad decision!!! I was the epitome of dumb money, and still didn’t deserve Bitcoin. While my interest continued, I was more focused on building the VC backed tech startup I was at, and stayed interested from afar. I did continue to invest very small amounts from time to time when I could and as my salary increased at my job. Over the next few years I dabbled in investing in some alternative cryptocurrencies as well because they looked shiny, understanding them even less. Another poor decision on my part.
With the major bull run in 2017, the interest in Bitcoin and cryptocurrency hit fever pitch. In 2017 and 2018 I got deeper into planning out my future and and developing theses for the world I wanted to live in and the technologies that would power that world. I made the decision if I wanted to investing any amount, however small, I needed to gain at least some understanding of what was happening in the underlying technology, ecosystem, and industry. At this point, I began to follow the Twitter accounts of people like Jameson Lopp and Nick Szabo so I could learn the foundations.
During this period though, there was a major problem emerging in Bitcoin around cult-like leader figures like Roger Ver, who were called things such as Bitcoin Jesus, and the centralizing power trying to be exerted over the users and owners of Bitcoin in the name of making it better. My experience being raised in a religious cult with leadership that fucked (literally and figuratively) their followers led me to be very skeptical of many of the figures such as Bitcoin Jesus, and later Craig Wright.
Despite the market peak then crash in 2017–2018, the combination of excitement plus skepticism led me to learn what I could about it conceptually and practically. This included truly reading, not just glossing over, the Bitcoin white paper, reading the The Sovereign Individual, and diving into more long-form blog posts and content such as those on both Nick’s and Jameson’s blogs/sites. While the combination of economic, political, and technological concepts intertwined beautifully, I wanted to really understand the need for it since I’ve lived in the US for most of my life. I did understand conceptually how Bitcoin could have been used as a potential hedge to authoritarian regimes, such as helping enable Jews and persecuted groups from Nazi Germany, or helping individuals hedge against Zimbabwian like inflation, but also wanted to determine based actual experience, was it really needed in today’s modern world?
The Venezuela Experience
Having developed close friendships with a few people from Venezuela, I traveled there in 2018 to see what living in hyperinflation and top-down-driven centralized economic planning was really like, what were the ways people coped with it using the current economic apparatus available, and to help with their nonprofit organizations which distributed food to Caracas hungry. My friends there were middle-class, so they had most of their wealth wiped about, knew little about cryptocurrency and were not technologists. This gave me the opportunity to truly see how the current alternatives worked, and stack them against what a potential system could look like with Bitcoin.
The experience living in Venezuela, especially given it was during the elections, was the most eye opening time of my life. This post is about money, not politics, but when you let politics touch money, as every country does, you realize that eventually the power that corrupts politics can extend to money and across every aspect of citizens life. Since we all depend on the technology of money (math, accounting, transactions) to be the layer connecting so many of our daily interactions, from paying rent to saving for a trip. When money is corrupted, at it has become globally from Venezuela to US Wall Street bailouts, every aspect of your life is negatively affected, from not being able to purchase food to your savings wiped out.
During my time there, I had to work around the US and Venezuelan banking systems. To get money in the country, I’d send money from my US account into a friend of a friend who was Venezuelan but held US accounts, who would then transfer bolivars from his Venezuelan bank account, into my friends bank account, whose debit card I would use to make payments. This is what tens of thousands of “lucky” Venezuelans who have access to these services do each year. The “unlucky” ones spend their money as fast as possible, or worse, starve.
All of this has to be done, because if you hold your money in a currency with hyperinflation, it loses its purchasing power. In Venezuela, specifically, although it happens in other countries as well, when inflation rates skyrocket as they have there to the tune of 300,000%+, the fabric of a society begins to unwind because money, which is a tool, begins to no longer function. Due to the rising prices, the value of the currency and purchasing power plummets. In April 2009, the government mandated exchange rate was roughly 1 US Dollar for 2 Venezuelan Bolivars, today it’s 1 US Dollar for 10 Venezuelan Bolivars. This is a mandated exchange rate, held fixed by the government there.
In May 2018, I purchased a breakfast that cost me B$1,800,488.00 (1.8M bolivars). 10 years prior, it would have cost a fraction of that in Bolivars. But, even last year there was no way I nor anyone would pay$180,000+ US Dollars for a coffee. The real cost I paid for a full breakfast in a nice hotel was $3/dollars. The price is distorted because everyone uses the black market rates when you convert money with a broker as mentioned.
Whether Venezuelan exchange rates and hyperinflation, or US banks collapsing due to over-leverage based on predatory lending practices enabled by horrible legislation, you’d think that the politicians in countries would want to change the systems. What I found there and in the US, is that the politicians and crony capitalists actually benefit from these things happening. In Venezuela the broken exchange rate allows crony capitalists backed by the government to leverage the official and unofficial rates to siphon huge sums of money from the economy. In the US, this more often takes the form of large financial service institution bailouts.
While it has been reported that the Venezuelan food program, known as CLAP, has been used to launder money, if you talk to locals on the ground the news reports don’t even scratch the surface. Monthly, the Venezuelan government, via the military, distributes a box of food to the populace. This food is predominantly if not completely sourced from other countries.To illustrate this concept, I’m going to use simple math, and including 100,000 cans of tuna, the DolarToday historical exchange rate which is what people actually use there from May 1st, 2018 (during my time in the country) which was approximately 600,000 Bolivar (VEF):1 US Dollar (USD) exchange rate, and the official Venezuelan exchange rate which is 10 VEF:1 USD.
The process starts with the government asking businesses, the corrupt ones known as “enfuchados”, to purchase 100,000 cans of tuna from Brazil or another country to distribute to the population. The enfuchado gets the foreign price, let’s assume $1 USD per can of tuna, and tells the Venezuelan government they’ll give them 1,000,000 VEF for 100,000 USD (at the 10:1 VEF-USD exchange rate) so they can buy the tuna on the international market. The enfuchados, who are in cahoots with the crony capitalists, then go on the black market, and can trade up to 100,000 USD into 60,000,000,000 VEF (at the 600,000:1 VEF-USD rate). They can then retrade those 60,000,000,000 VEF back with the government bankers at the official exchange rate, turning $100,000 USD into $6,000,000,000 (at the 10:1 VEF-USD rate). They can then take the $100,000 needed for tuna, and net a handsome profit of up to $5,999,900,000. While in practice the numbers are not as round, and dealing with large amounts of money limits some of this given liquidity, it’s a very real and practical example of how inflation is leveraged by corrupt governments to place money in their own pockets. Making the situation even worse, the food is distributed by members of the military, often corrupt, who instead of providing it as a service end up charging people for it or withholding food from those not sympathetic with government regime. But all of this could not have been done without rampant inflation caused by bad money and monetary policy.
Inflation not only destroyed the savings of the Venezuelan people, but has been used to systematically rob the country of its wealth for many years. The irony of the situation, is that while it has gotten so bad there, that for the government of the country and other political actors propping it up to maintain power, the current regime has confiscated many people’s last hope, mining Bitcoin using cheap electricity. The regime has confiscated its citizens miners and equipment to mine Bitcoin themselves, and is considering its use on their balance sheet as a way to prop up the failing state.
While there is a lot of concepts from finance, politics, and economics here, at the end of the day, the most impactful experience was working with a friends food distribution program, where we handed out meals to children and grown adults scavenging through the trash cans in Caracas. Having worked in homeless shelters in Hawaii, lived in the communities (aka favelas) Brazil, and visited India on multiple occasions, I’ve never seen a worse environment up close and personal, with gangs of kids picking at trash to find anything they could eat. Having talked with many Venezuelas who’ve left the country, many either had their wealth completely destroyed or left with next to nothing. While the political prisoners within the country are not as large in numbers or are visceral as the scenes we see from 1940s Germany, I couldn’t help but to think what would have been had people been able to pack up and leave with their wealth stored in a non-sovereign currency that could be transported across borders and outside of the controls of the monetary influence of a failing state.
Non-sovereign money doesn’t necessarily solve an immigration crisis or movement (yet) of large blocks of people, but it enables individuals, families, and those most at risk (in addition to wealthy people) to prevent state actors from confiscating or destroying their wealth through seizure, censorship, and capital controls. The one thing that struck me in Venezuela was the people I spent time with, and almost everyone I was talking to on a daily basis, weren’t really using Bitcoin because I was with a more normal crowd, although it was definitely being used as a SoV and international transfer mechanism. This was pre-Lightning Network, and the 2018 cryptocurrency market even in Venezuela was still mostly people far ahead of the adoption curve globally (as you are if you’re reading this). For many there, it was too late to save their wealth, and Bitcoin may not save Venezuela, but it was evident it could help curb some of the problems there, and would most definitely help mitigate something happening on that scale again.
The Final Straw(s)
As to not only single out Venezuela, when I returned back to the United States later in 2018, I began to really dive back into some of the basics of finance and economics, which I had studied in school. Having entered school as a Political Science major during the last global recession, I had moved over to finance because I became very interested in what was happening by the banking failures in Europe, and of course the US housing crisis that led to the full economic recession. The one thing that struck me, was that the US government and banks in the US, via the Cantillon effect, were extracting similar wealth from the US population, albeit at a much slower rate. This doesn’t have a huge immediate effect on us fortunate to live in developed countries, but it puts more money in the hands of politically connected and “close” bankers and big companies.
This re-ignited a flame in me that many others felt after the US bailout of the major banks…why are the politicians and bureaucrats helping bad actors get rich and propping up big business, allowing them to not pay for their mistakes, all under the guise of helping the people. While I thought Occupy Wall Street in general was a toothless movement, the reality is that when fringe groups from them to the Tea Party and Libertarians all agree on something, there is usually a larger trend going on.
I dove deeper into the economics behind Bitcoin and money, and finally got my hands on a copy of Saifadean Ammous’s book The Bitcoin Standard. Funnily enough, I read this on a plane flight in early 2019, a trip that had an incident leading to the straw that finally broke the camel’s back.
This February (2019), while in India for a friend’s wedding, another friend in the US needed help on a security deposit for a new house. I attempted to send back $4,000 from my Chase account, and the request was blocked. They risked losing the house. I stayed up all night, calling them once their customer service opened in Delhi time, at 6:00am, and they told me I’d need to visit a location in-person in the US to unlock the account. Despite the bank knowing where I was located and that I was traveling beforehand, me having access to my account, and not being in the US at the time, the only option to unfreeze the money was to visit a branch in the US with 3 forms of ID and verification.
The friend was not a Bitcoiner at this point so I had to scrape together a few transfers from other accounts to get them the money, I finally realized for the first time that the money I thought was mine was indeed not. In addition, having talked with many people, merchants, and street vendors during the trip, it was evident the monetary confiscation of large bills by the government, carried out by the banks, hurt many people. The first thing I did when I got back to the U.S. was to walk into the Chase bank branch I opened that account with, and closed it on the spot.
While I have gotten REKT doing some stuff, specifically not HODLing or thinking I’m smarter than the market, things have progressed. Once you’ve seen the application of the technology in your personal life and it’s use on a global scale, it’s hard not to have rationally optimistic belief and conviction, and once you’ve taken the time to understand how it works and how to use it properly, you’ll make less and less dumb mistakes, like buying shitcoins and trading.
Later in the year, I cleaned out any leftover altcoin holdings, moved every sat off of exchanges including closing my Coinbase account after a phishing attempt, and ensured that HODLing was done on secure hardware wallets using distributed multi-signature technologies.
I also set up a full node this year using CasaHODL, because it’s imperative that each person run a full node to verify transactions (especially if you’re sending larger amounts) and to enforce the monetary policy of the protocol.
Whether helping friends in need abroad, or simply getting an interested technologist setup running a full node, I was actually doing this Bitcoin thing right. After years of fucking up, much research, real life experience, and a desire to help other people using the hardest money created, I finally deserved to be a Bitcoiner.
Note: In 2019, I had a boating accident and officially hold no more Bitcoin. If you want to help fix that situation, hit me with Bottle Pay. Please and thank you!
