Why I Wrote $hitcoin: The First Novel to Fully Capture the Insanity of Cryptocurrency’s Gold Rush
I bought my first 0.05 bitcoins at a third-floor crypto center on an Itaewon backstreet in Seoul, South Korea. Soon, I was bringing them half each month’s salary.
The transaction was simple. I installed a crypto wallet app on my phone. Each time I visited the crypto center, I handed the European twentysomethings running the place Korean currency. They would check the current exchange rate, scan the QR code on my phone, and make a transfer. But if you wanted something other than Bitcoin, that meant setting up an account on a cryptocurrency exchange.
There were scores of cryptocurrency exchanges to choose from. The big players like Binance and Bittrex had become huge overnight success stories, going from humble start-ups in cramped offices to multi-billion dollar international concerns within months. Others were handling tens or even hundreds of millions of dollars in cryptocurrency while being run as bedroom operations by a single individual. Smaller exchanges frequently lost huge amounts of users’ funds due to incompetent security set-ups. Sometimes whoever was running the exchange would simply disappear with their digital treasure.
2017 was a wild year for cryptocurrency. At the start of the year, Bitcoin was still a niche bit of tech and one bitcoin was worth less than $1000. By late December, Bitcoin was hitting an all-time high of around $20,000 and every major news organization on the planet was covering its volatile upward thrusts and snap crashes.
I was teaching English at a university in a smaller Korean city south of Seoul at the time of the 2017 bull run. As the bull run gathered steam, I heard more and more crypto talk from students in the classroom. It was a common topic of conversation in bars and restaurants. On Christmas Eve, I saw a drunk man stumble through Seoul’s party district Hongdae staring at the cryptocurrency prices flickering wildly on his phone, screaming the Korean mantra for willing one’s coins to increase in value: “GAUZA!!”
In addition to my duties as an English teacher, I found work writing articles for some of the many budding crypto news sites. The world was full of people eager to learn more about this new phenomenon and make a fortune. By early 2018, I was making more from writing crypto news articles than I was earning as a university English teacher.
Go Fast, Crash Hard
I spent hours each day scanning Reddit and crypto news sites for the latest tips on which coin was going to rocket next. My greatest success during the crypto bull run came with a coin I picked up at $0.65 a piece and sold all the way up to $30. The coin was called RaiBlocks, which crypto geeks will know was later rebranded to Nano. RaiBlocks was part of a wave of next generation DAG coins. Many thousands of words have been written on what that means, but the most important thing to know is DAG coins were an investment that couldn’t possibly go tits up. Another DAG coin called IOTA exploded in value just before RaiBlocks took off. In the space of one week between November and December 2017, IOTA went from 70 cents per coin to over $5. It’s market cap went from under $2 billion to $14.3 billion. To put that number in perspective, Facebook paid $19.3 billion to acquire WhatsApp, a messaging app which at the time had 450 million monthly users. IOTA’s $14.3 billion market cap was purely based on speculation about what might be achieved in the future.
I’d missed the IOTA pump but RaiBlocks was surely the next big thing. The only problem was that RaiBlocks wasn’t available on any of the big cryptocurrency exchanges. This meant risking my hard-earned cryptocurrency on one of the two small exchanges on which trading RaiBlocks was possible: Mercatox or Bitgrail.
I opted for Mercatox. Perhaps due to the rush of similarly-informed crypto pump chasers, I would regularly run into difficulties using the Mercatox website. Trading and withdrawals would frequently be suspended with little or no explanation. With rumours circulating that the newly-branded Nano was soon moving to the big time and getting listed on the far larger and more trusted Binance exchange, I moved my coins off the site.
Choosing Mercatox over BitGrail turned out to be an incredibly lucky decision. At some point during RaiBlocks/Nano’s insanely rapid rise, BitGrail lost 17 million tokens. With Nano at $10 at the time the hack was revealed, BitGrail’s losses were somewhere in the region of $170 million. Nano would soon rise above $30, which would have put the loss at over $510 million.
BitGrail was run by a single individual, Francesco Firano. Most blame the losses on the type of poor security implementation you might expect from an exchange run by a sole trader who once tweeted ‘Either you die as a programmer, or you live long enough to see yourself become a scammer.’
Firano’s mini crypto empire crumbled in the aftermath of the hack. A class action lawsuit from BitGrail investors was resolved in January 2019 when an Italian court ordered the seizure of all Firano’s assets. Despite handling hundreds of millions of dollars worth of cryptocurrency, BitGrail had never been registered as a limited company. Firano was held personally responsible for all its losses.
The crypto gold rush is full of similarly insane stories. QuadrigaCX was Canada’s largest cryptocurrency exchange and a far more trusted trading platform than BitGrail. When it’s founder died while on holiday in India, nobody at the company had access to the private keys which would unlock the $215 million of investors’ money held by the exchange. Rumours continue to circulate that the deceased QuadrigaCX founder may have been on vacation in an area of India where one can easily obtain a fake death certificate. Fuel was added to these rumours by the revelation that the founder had used investors’ sums at will and used future deposits to cover the shortfall.
Exchange collapse was hardly a new risk when Bitcoin soared in 2017. Bitcoin started 2017 at close to $1000 but it had taken almost four years for it to reach this price after the first big Bitcoin crash back in 2013. At the time, around 70% of global Bitcoin transactions involved a single cryptocurrency exchange. In February 2014, the Mt. Gox exchange filed for bankruptcy protection after losing track of around 850,000 bitcoins. At the time of the loss, their value was estimated at $450 million.
I.C.O. = I.O.U. Nothing
At the time of the Mt. Gox hack, Bitcoin was the alpha and omega of cryptocurrency. Perennial second largest crypto Ethereum didn’t launch until 2015. Ethereum introduced new layers of possibilities on top of the blockchain technology pioneered by Bitcoin. Explaining this in depth would add several paragraphs to an article that’s already on the long side so I won’t go into much detail about this. What’s most important for the purposes of my novel $hitcoin is that Ethereum allowed for the creation of crypto’s next big thing: the Initial Coin Offering.
The term ‘Initial Coin Offering’ plays on the concept of an ‘Initial Public Offering,’ where a company goes public and shares in the company can be purchased for the first time. With an Initial Coin Offering, investors exchange another cryptocurrency, usually Ethereum, for newly-issued cryptocurrency tokens. The key difference between an IPO and an ICO is that an IPO lets you purchase a meaningful stake in a company. With an ICO, you receive coins that — to avoid strict government regulation on such things — very much do not represent a share in the company.
In 2017, a very large number of ICOs proved fantastic investments. As soon as the tokens bought during the ICO could be traded on cryptocurrency exchanges, the price was almost certain to rise. DeepBrainChain was one of the craziest examples of this I saw play out. DeepBrainChain was supposed to build a global network of AI supercomputers, or something like that. What it was supposed to do wasn’t really important. What was important was that DeepBrainChain was trading at 7 cents per coin when it was first listed on the KuCoin cryptocurrency exchange. Between December 29 and January 10, the price rose from 7 cents to more than 50 cents.
DeepBrainChain hit exchanges at the exact right moment to ride the last crazy pump of the crypto gold rush. While Bitcoin hit its all-time high of around $20,000 in late December 2017, most alt-coins hit their peak in mid-January 2018 and then slid back into total obscurity. By March, DeepBrainChain had sunk to around 3.5 cents per coin — half of its original listing price on crypto exchanges. Today, one DeepBrainChain coin will cost you .07 cents — 100 times less than on December 29, 2017 and something like 714 times less than January 10, 2018.
The vast majority of cryptocurrencies lost upwards of 99% of their value as the speculative euphoria of 2017 subsided in 2018. Like an idiot, I rode the wave to the bottom. Luckily I’d hopped on the crypto hype train early enough to not post a total overall loss. Others weren’t so lucky. As I said at the start, crypto mania was particularly pronounced in South Korea and I saw a few people there move from complete distrust of the whole concept to overwhelming Fear of Missing Out as the price soared. Plenty bought at the top and only got to enjoy the freefall portion of the cryptomania rollercoaster ride.
Cryptomania was Decadent & Depraved
The insanity of the 2017 crypto gold rush produced enough material to spawn a whole genre of books, movies, and TV shows. It was recently announced that the first movie steeped in the reality of crypto insanity is entering production. The movie is based on Ben Mezrich’s hagiographic chronicling of the Bitcoin-based redemption of the Winklevoss Twins, Bitcoin Billionaires. The rich Harvard row team jocks becoming even richer Bitcoin evangelists is an interesting enough tale but cryptomania is rich with far crazier and more dramatic stories than that.
$hitcoin is my attempt to capture as much of the insanity as possible. It focuses on a trio of students at the University of Groningen in the Netherlands who haphazardly launch an ICO at the exact moment most likely to catapult them to billionaire status. The three students — one Dutch, one Frisian, one Vietnamese — succumb to the trappings of success and then some as their coin explodes in value. The excess of rock stars pales in comparison to the excess possible to guys in their early 20s who earn billions from the sale of a token which promises investors nothing.
Along with these three students and their cryptocurrency, I’ve tried to show the depths of cryptomania in South Korea through the tale of a blackmailed office worker and his crypto-trading teenage son. Much work was done on the novel during a few months I spent in 2019 living across the street from the Gangnam offices of one of South Korea’s largest cryptocurrency exchanges. Looking out the window at it while writing was a constant reminder of just how big this thing got.
I’ve also included a big subplot set in the Chinese city of Chengdu. China was initially at the epicenter of the crypto boom. One of the crypto market’s many sudden downturns during 2017’s overall rise was prompted by the Chinese Communist Party’s decision to clampdown on crypto exchanges and outlaw ICOs. The China-set portions of the novel involve a Bitcoin mining operation and a wily Chinese-Malaysian bar girl who manages to snag some of its profits from one of her clients.
Another of the novel’s central characters is a freelance journalist from Liverpool who, like myself, finds a profitable sideline writing articles on the latest hot cryptocurrencies. The book also takes in crypto-accepting Eritrean drug dealers, crypto-thieving American teenagers, and drug-crazed Silicon Valley tech billionaires. It’s packed with overblown conference speeches, star-studded yacht parties, trashed hotel suites, and a lot of human drama and betrayal.
The novel is big, noisy, and chaotic, just like the movement which inspired it. I don’t have a firm stance on whether or not cryptocurrency is here to stay. I do think that the original vision behind Bitcoin is tantamount to genius and that Ethereum figurehead Vitalik Buterin is a genius under any definition of the term. But the whole crypto scene that emerged around these inventions is incredibly ripe for satire. $hitcoin is my effort to extract some last value out of the ICO boom that went bust.
Buy $hitcoin!
This novel took me the best part of two and a half years to write. I was fully immersed in all the crazy goings on in the cryptocurrency scene for much of this time. $hitcoin captures an insane moment in history where making unimaginable sums of money was as easy as coding an Ethereum-based token and launching a website. The moment of maximum cryptomania may have passed but $hitcoin tells the story of that moment like no book you’ve ever read.
$hitcoin has just been released and is now available for purchase in ebook and physical form. You can find out more about $hitcoin and read a free sample at the website of Dead Bird Press. Or head to Goodreads to see what readers have thought of the book so far. The book is on sale now at Amazon.com, Amazon.co.uk, Smashwords, and other retailers. (As per Medium guidelines, I’ll point out that these are Amazon affiliate links.)
More from $hitcoin:
$hitcoin: How to make millions with an ICO cooked up in a frat house
$hitcoin: How to get your $hitcoin token listed on a cryptocurrency exchange
