From curiosity to viable investment: We're all cryptocurrency people now

Bitcoin Frankie, a cryptocurrency influencer, on a laptop in Austin, Texas. Photo / Ilana Panich-Linsman, The New York Times

On Monday evening (US time), a few days after a large cryptocurrency exchange listed its shares on the stock market, several hundred women gathered in a virtual conference room to talk about Bitcoin. Claire Wasserman, a co-founder of Ladies Get Paid, the company that co-hosted the event, marvelled at the turnout, noting it showed "how committed you all are to getting wealthy." She described a sweeping change in the way we live, work and transact — all driven by crypto. "I don't want you to miss out on the future," she said.

Attendees lit up the comments section to talk digital currency. One woman said she started investing after posing as a man in online forums for pickup artists.

"It was very YUCK," she wrote, "but I learned a lot."

Another said she'd been funneling her shopping budget into crypto during the pandemic, doubling her money since November.

A panel of talking heads encouraged the women to buy and hold bitcoins as an investment — even just US$5 or $25. They offered advice on security, privacy, taxes and digital wallets. And they pitched crypto startups as places to find promising career opportunities that could, frankly, use more women.

"And ladies, if you're single, I promise you this is a great place to be," joked Bitcoin Frankie, a cryptocurrency influencer. The event ended with cries of "dismantle the financial patriarchy!" and a plug for an upcoming Ladies Get Paid session on nonfungible tokens, or NFTs, a form of crypto-fied digital art.

It was the kind of conversation happening in group texts, Twitter threads, Zoom rooms and Clubhouse panels across the country as the once-niche world of digital currencies has invaded the mainstream via art, sports, entertainment and media. In the process, Bitcoin and other cryptocurrencies have gone from curiosity to punchline to viable investment. They have made a lot of people very rich — making the entire category harder than ever to ignore.

The result? Dogecoin, a joke currency based on a meme about a Shiba Inu, is a hot topic on CNBC. Coinbase, a crypto exchange, is now a publicly listed company worth $58 billion. WeWork plans to accept crypto for rent. Wall Street banks are offering digital currency funds to their high net worth clients. There is a blockchain class for children. The following items can be bought and sold as NFTs: an album by Kings of Leon; some pictures of Rob Gronkowski playing football; digital horses for breeding and racing; virtual sneakers; a recording of farts; a tattoo on the arm of Croatian tennis player Oleksandra Oliynykova; that meme of a photobombing seal; the world's most colorful color; the scientist George Church's genome; U.S. Patent No. 10,025,797; the word "porn"; and somehow, a house. And Lindsay Lohan keeps tweeting about Bitcoin.

Everyone seems to be getting rich or selling a token or predicting a revolution. Digital currencies are volatile, risky and prone to bubbles; countless fortunes have already been made and lost. In some cases, many people are already using blockchains — the underlying technology of cryptocurrencies — without realising it or understanding how, exactly, they work.

"Bitcoin mania is not a fad," Daniel Ives, an equities analyst at Wedbush Securities, wrote in a recent note to clients, "but rather the start of a new age on the digital currency front."

Short of that, cryptocurrency is, at the very least, now seen as a good place to park some cash. Everyone has read the stories of teenage crypto millionaires — or the pizza bought with bitcoins that would now be worth millions. To not get involved is, in crypto-speak, to "have fun staying poor." In other words: We are all crypto people now. Gulp.

'Is this a bad dream?'

It's hard to sit by, watching our index funds and 401(k)s passively, predictably, responsibly tick upward, while an art-world outsider named Beeple sells an NFT of a digital collage for $69 million. For many, news of this transaction raised a simple question: Why not me?

Mark Greenberg, a photographer, had that thought in March when he auctioned off an NFT of a previously unpublished portrait he'd taken of Andy Warhol in 1985. Watching the bids climb to $100,000, he was elated. He hadn't been able to work much in the pandemic, and this money could help with his daughter's upcoming wedding and the house he'd just bought. But then he started to worry.

His sale's bounty was stored in a digital account that only he had access to. What would happen to it if he, a 69-year-old with some health issues, suddenly died?

Bitcoin Frankie, a cryptocurrency influencer, in Austin, Texas. Photo / Ilana Panich-Linsman, The New York Times

As a precaution, he added his goddaughter's thumbprint to his phone's security. That turned out to be a "painful mistake," he said, because it triggered security measures and permanently disabled his cryptocurrency accounts. (Greenberg, a crypto newbie, had not saved the crucial "seed phrase" that could get him back in.)

His joy from the sale quickly turned to horror. "My head started to get vibrate-y," he said. "I thought, 'Is this a bad dream?'"

Lost cryptocurrency, he learned, is gone for good. Adding insult to injury, Greenberg's inaccessible account receives a royalty payment every time his NFT is resold.

Despite the heartburn from his disappearing windfall, Greenberg remains enthusiastic about NFTs. He made plans to auction off several more images and has set up a new account — greenielostkey.

On April 14, Coinbase listed its shares on the stock market, ushering cryptocurrency into the mainstream. Early believers basked in the validation.

Marc P. Bernegger bought some bitcoin at $7 in 2012 and handed out many of the coins to friends. He had tried to explain that the technology's potential went far beyond the currency, but "most of them didn't really care," he said. Few of them can access the coins. Neither can he. Not viewing it as an investment at the time, he spent it on issues of Bitcoin magazine and a betting game called Satoshi Dice, selling the rest at $30.

Earlier this month, the price of a single bitcoin topped $63,000.

Now Bernegger is an investor at Crypto Finance Group, a brokerage and asset manager in Switzerland, and friends seek out his advice on crypto investments. He tells them to buy and hold for the long term and to ignore volatility along the way.

"I always tell my friends, 'If you really believe in it, buy it for your kids,'" he said.

Since last week, the price of a bitcoin has fallen by more than 20% as of Friday. There's an industry term for white-knuckling it through crypto's wild volatility without selling: "hodl."

But even those with the stomach for holding must avoid an even bigger issue — hacking. Many crypto thieves use SIM swapping — a technique to gain access to a phone number by switching service to a different SIM card — to take over accounts and empty them.

As Coinbase went public, some customers whose accounts have been hacked or otherwise locked complained that the company had ignored their pleas for help. (Coinbase said it had added more customer support workers in recent months.) Pervasive hacking, the volume of lost crypto and the lack of customer service paint a picture of an industry that is not yet ready for mainstream users.

People are piling in anyway. Goldman Sachs and Morgan Stanley have announced plans to offer access to crypto funds to assuage wealthy customers that have been clamouring to buy in. PayPal and Venmo added crypto trading and shopping features, while the brokerage app Robinhood put out an announcement to remind people it had crypto trading, too.

Still a believer

Jered Kenna was a true believer. When he got into Bitcoin in 2009, he became excited about its potential for sending money cheaply around the world and expanding access to banking services.

In 2012 he opened 20Mission, a 40-room Bitcoin "hacker hotel" in an vacant SRO in San Francisco's Mission district with the goal of collaborating on and fostering new crypto projects. The early days included a crypto store, a coworking space and parties on an AstroTurf roof. In the basement, Kenna's friend, Onder Keskin, runs a leather goods business that is popular with San Francisco's fetish community.

"No one was talking about how to get rich off of this," Kenna said.

Kenna said he regretted not trying to make money on 20Mission over the years. It could have given his other businesses, a brewery and a Spanish-language school in Colombia, a cushion in the pandemic.

That will soon change. In early May, Kenna plans to auction off digital tokens that represent ownership in each of his hacker house's unoccupied rooms. The buyers of the tokens will get 75-year leases with rent of $1 a month. It will be, as far as he knows, the first NFT for housing.

He sees the plan as a way to give more people access to homeownership, still believing — deep down, despite all the hype and money — that cryptocurrency can have a positive impact on the world.

He also thinks the auction could have a positive impact on day-to-day life at 20Mission, mitigating some of the messiness that comes with communal living. If the hacker hostel's residents are financially invested in the future of the community, they might be more likely to do the dishes.

Written by: Erin Griffith
Photographs by: Ilana Panich-Linsman
© 2020 THE NEW YORK TIMES