If you haven’t read For a Lark yet, please go read that first.
I like to think.
Well, actually, I’m not sure I like to think, but I find it really hard to relax and let my brain rest… given a few minutes of idle time, I usually find myself deep in thought about some random nonsense. One topic that I’ve gone back to for years is thinking of vignettes to write in my years-overdue memoir, which started as a pleasant diversion into nostalgia but now haunts me with its incompleteness as I continually fail to translate those thoughts into text. But nevertheless, I still love to write and when I play with the thought experiment “What if I was born a hundred years ago? Or a hundred years from now, what would I do for a living?” I often come up with “I’d write, if I could make a living at it.”
I spend a lot of time thinking about “What if” scenarios, most of which you wouldn’t consider remotely interesting.
Bitcoin, however, is interesting, and I keep coming back to “What if…” questions about it.
My boss at Telerik was almost obsessed with Bitcoin back in 2014 and finally I ended up buying six Bitcoins just so I’d feel slightly invested in the topic and might manage to avoid rolling my eyes when he talked excitedly about it.
I watched Bitcoin’s price float around through 2014 and 2015. A blog post published in January 2016 by one of the early Bitcoin developers persuaded me to sell five of my six Bitcoins at a small profit (I recouped what I paid for the six, effectively keeping the last coin “for free”).
I later decided that perhaps I’d sold prematurely, but not having enough “play money” to buy another Bitcoin in July of 2016, I instead bought twenty Ethereum, a new and more exotic cryptocurrency which had recently started trading on Coinbase.
After watching it grow, I bought Litecoin almost as soon as it became available on Coinbase, buying 20 at just under $20 each.
Over time, I increased my holdings a bit, swapping between the coins and cashing out as they appreciated to recover my initial USD investments. So, at this point, my coin holdings are pure, unrealized profit.
Almost 40 grand worth, assuming that I cash them out before they crash. And crashing seems almost certain, considering the underlying nature of the currencies. Bitcoin is a venture-capital backed ponzi scheme, a legal casino open 24/7/365 and as close as your nearest mobile phone or tablet. It’s also pretty terrible for the environment.
But that doesn’t make Bitcoins any less fun from a “What if” perspective. I recently found myself thinking about what I’d’ve done if I had any inkling of the eventual price of Bitcoins back in 2010. I quickly settled on the idea of giving out small gifts of 100 BTC to everyone I knew. To minimize taxes, I’d have to give out the coins when they were without value, and somehow prevent the recipient from cashing them out too early. 100 BTC seemed like a good amount, where recipients would be ecstatic but not crippled by their sudden wealth.
It’s too easy when playing “What if” to imagine some trivial change (“Aluminum was priced 15% lower in 1935”) spiraling into the root cause of World War III, or whatever, but I think the Bitcoin story is interesting in how little impact it would’ve had globally– a few people would get a bit richer, but beyond their immediate circles, nobody would even necessarily know it had happened.
Eventually, I decided I’d write up the idea as a short story, changing the amount to 1000 BTC to make things more interesting and perhaps somewhat less believable. I wrote it from the point-of-view of a recipient, because the story isn’t very interesting from the perspective of the giver.
- Bitcoin has appreciated 160 million percent since “David” bought or mined his coins in the summer of 2010.
- If the recipient of the gift had sold it as soon as Coinbase started trading in 2013, they’d reap a windfall of $13300 and be overjoyed at receiving such a wonderful gift.
- Sales in the following years would be similarly joyful.
- That joy would likely turn to crippling dismay or horror as the price rose to $11M when the story-teller opened the card last week. Or, $12.5M today.
- Bitcoin profit would be taxed at the long-term capital gains rate, meaning recipients selling today would clear a cool $10 Million after taxes.
- The Bitcoin Pizza account tracks the value of the 10000 bitcoins an early user spent on two pizzas; currently around $120M. An early Bitcoin buyer who forgot he’d bought 5000 coins spent a fifth of his Bitcoin on an apartment in 2013; that Bitcoin has appreciated about 14x since then.
- “David” in my story is an amalgamation of a few engineers I worked with at Microsoft; Dave is a super-smart guy who’s into all sorts of geeky projects, Christine went to Africa to work with the Peace Corps, and Herman left to go do a startup in San Francisco.
- My wife, reading the story, deemed it implausible. “Why?” I asked. “Because in the story you cleaned the garage not once, but twice!” she retorted.
After publishing the story, I got a few kind words about it being a nice story, but it seemed that not everyone recognized it as fiction. I later realized that my blog theme displays a post’s “Tags” but not its “Categories”, so the post didn’t show up with the storytelling category. However, some of the reactions were so interesting that I decided not to explicitly correct anyone. Most reactions were of the form “Wow, congrats” which I deemed ambiguous (maybe they liked the story?).
A few people asked whether it was fact or fiction. An early direct message hit upon one of the themes I was trying to convey with the story:
If that article is real, congrats! Amazing story either way, draws parallels to what planting a small seed or a small act of kindness can flourish into. I think about things like that every time I get to help newer folks learn new tech like git. And seeing what things they do later always makes me proud that I might have had a part in what they’ve accomplished
But overall, there were very few comments, even from people who believed the story was true. Only one person (a Microsoft colleague) asked “which David was the gift giver,” and no one asked about the fate of the other gifts David was handing out. I was amused at the idea that people who know me would think I’d casually announce on Twitter that I was suddenly worth over ten million dollars. Nobody asked for money.
Nobody asked what I’d do with the money. While I’d probably brainstorm a million ideas, I think reality would turn out to be pretty boring. Why? When Telerik acquired Fiddler, my offer came with what seemed like a comically small number of stock options at an absurdly high price. When I asked, no one was willing to tell me how many shares the non-public company had issued, what fraction my stake might represent, or when the company might go public. I then naturally valued the options at zero (which is approximately how much I made from options when hired at Microsoft) and ignored them for years. Then, Telerik got acquired by Progress at the end of 2014 and my options were bought out for a bit over half what I paid for my house. I came home and that night I asked my wife “Hey, remember those worthless options? Well…” and eagerly awaited her reaction and the inevitable brainstorming of what we’d do with the sudden windfall. Ultimately, we bought a case of our favorite wine and put the remainder into savings.
PostScript: It’s 2021 and I’m basically out of the Crypto market entirely.