Topic: [2015-10-19] FT: Extracts from the 2015 shortlist (Read 237 times)

Extracts from the 2015 shortlist

FT & McKinsey Business Book of the Year Award

Digital Gold

It was after midnight and many of the guests had already gone to bed, leaving behind their amber-tailed tumblers of high-end whiskey. The poker dealer who had been hired for the occasion from a local casino had left a half hour earlier, but the remaining players had convinced her to leave the table and cards so that they could keep playing. The group still hovering over the felt and chips was dwarfed by the vaulted, wood-timbered ceiling, three stories up. The large wall of windows on the far side of the table looked out onto a long dock, bobbing on the shimmering surface of Lake Tahoe.

Sitting at one end of the table, with his back to the lake, twenty-nine-year-old Erik Voorhees didn’t look like someone who three years earlier had been unemployed, mired in credit card debt, and doing odd jobs to pay for an apartment in New Hampshire. Tonight Erik fitted right in with his suede oxfords and tailored jeans and he bantered easily with the hedge fund manager sitting next to him. His hairline was already receding, but he still had a distinct, fresh-faced youthfulness to him. Showing his boyish dimples, Erik joked about his poor performance at their poker game the night before, and called it a part of his “long game.”

“I was setting myself up for tonight,” he said with a broad toothy smile, before pushing a pile of chips into the middle of the table.

Erik could afford to sustain the losses. He’d recently sold a gambling website that was powered by the enigmatic digital money and payment network known as Bitcoin. He’d purchased the gambling site back in 2012 for about $225, rebranded it as SatoshiDice, and sold it a year later for some $11 million. He was also sitting on a stash of Bitcoins that he’d begun acquiring a few years earlier when each Bitcoin was valued at just a few dollars. A Bitcoin was now worth around $500, sending his holdings into the millions. Initially snubbed by investors and serious business folk, Erik was now attracting a lot of high-powered interest. He had been invited to Lake Tahoe by the hedge fund manager sitting next to him at the poker table, Dan Morehead, who had wanted to pick the brains of those who had already struck it rich in the Bitcoin gold rush.

For Voorhees, like many of the other men at Morehead’s house, the impulse that had propelled him into this gold rush had both everything and nothing to do with getting rich. Soon after he first learned about the technology from a Facebook post, Erik predicted that the value of every Bitcoin would grow astronomically. But this growth, he had long believed, would be a consequence of the multilayered Bitcoin computer code remaking many of the prevailing power structures of the world, including Wall Street banks and national governments—doing to money what the Internet had done to the postal service and the media industry. As Erik saw it, Bitcoin’s growth wouldn’t just make him wealthy. It would also lead to a more just and peaceful world in which governments wouldn’t be able to pay for wars and individuals would have control over their own money and their own destiny.

It was not surprising that Erik, with ambitions like these, had a turbulent journey since his days of unemployment in New Hampshire. After moving to New York, he had helped convince the Winklevoss twins, Tyler and Cameron, of Facebook fame, to put almost a million dollars into a startup he helped create, called BitInstant. But that relationship ended with a knock-down, drag-out fight, after which Erik resigned from the company and moved to Panama with his girlfriend.

More recently, Erik had been spending many of his days in his office in Panama, dealing with investigators from the US Securities and Exchange Commission—one of the top financial regulatory agencies—who were questioning a deal in which he’d sold stock in one of his startups for Bitcoins. The stock had ended up providing his investors with big returns. And the regulators, by Erik’s assessment, didn’t seem to even understand the technology. But they were right that he had not registered his shares with regulators. The investigation, in any case, was better than the situation facing one of Erik’s former partners from BitInstant, who had been arrested two months earlier, in January 2014, on charges related to money laundering.

Erik, by now, was not easily rattled. It helped that, unlike many passionate partisans, he had a sense of humor about himself and the quixotic movement he had found himself at the middle of.

“I try to remind myself that Bitcoin will probably collapse,” he said. “As bullish as I am on it, I try to check myself and remind myself that new innovative things usually fail. Just as a sanity check.”

But he kept going, and not just because of the money that had piled up in his bank account. It was also because of the new money that he and the other men in Lake Tahoe were helping to bring into existence — a new kind of money that he believed would change the world.

http://www.ft.com/intl/cms/s/2/797fb592-7648-11e5-933d-efcdc3c11c89.html