Confessions of a Crypto Millionaire

by Dan Conway

  Thankfully, ETH kept rising. It kept rising all the way to the agreed-upon time for our first sale. I hadn’t talked to Sean in a while. I planned to lay low. Then, as I pulled into the school parking lot for family lunch day, my phone buzzed. I picked it up, and there was that chirpy voice I’d learned to love/hate.

  “Congratulations! You’ve hit your sell target.”

  Thanks, Sean. Damn. On May 19, I relented, and we sold 4,130 ETH at approximately $125 per coin for $513,000. This was the total needed to recover our initial investment and pay the taxes on our gain. We’d unloaded a big chunk of our ETH a week before Consensus 2017 in Times Square on May 22-24, a.k.a. Blockchain Homecoming for nerds like me.

  Ultimately, I felt good about this sale. Eileen was still mad at me, which was sobering. Now I knew we at least couldn’t lose everything if ETH crashed. I’d still need to go back to work, though. That was an odious proposition that I didn’t care to contemplate.

  Chapter Twenty-Four

  HODL on for Dear Life

  I was attending Consensus on my own dime. I didn’t have any professional networking requirements, so I mainly hung out by myself, monitoring the whole thing and avoiding BitGo people. I was successful other than one uncomfortable escalator interaction with Mike Belshe, who was polite yet exited the escalator quickly enough to suggest he no longer enjoyed my company. The way I left them high and dry, I didn’t blame him.

  I did see some fellow r/EthTraders and some eccentric crypto YouTube personalities. It was like meeting cartoon characters in the flesh. The context I associated them with was so virtual, I’d forgotten that they existed in real life.

  My area of operation made me feel even more like I was in a dream land. Consensus was happening at the Marriott Marquis. Right next door was Hamilton, which represented the first purchase we’d made with our new funds and portended a potential new life of not worrying about money. A few buildings over, available by passage through a grungy door that looked more like a hole in the wall, was the 46th Street Recovery House, which was open from 10:30 a.m. to 11:30 p.m. and hosted meetings every hour. I’d have to stay sober, literally and figuratively, if I was going to translate this crypto windfall into something transformative in the real world. With ETH-mania running through me and the recovery support I was getting from the twelve-step meetings I still regularly attended, I hadn’t craved drugs or alcohol for a long time. Flip Side was perfectly satisfied for now with being rich and right about ETH.

  Consensus was glitzy. It had just the right touch of mainstream energy with crypto-credible content. The Tapscotts were there and said some polished shit, bless their hearts. Some crypto titans had debates on Bitcoin scaling, the never-ending civil war plaguing that community. But Ethereum had the most buzz. In his keynote, Coinbase CEO Brian Armstrong unveiled a new Ethereum-based messaging app called Toshi (later renamed Coinbase Wallet). It was similar to WeChat, a messaging and payment app ubiquitous in China. The popular teen messaging app, Kik, announced they were launching their own token on the Ethereum blockchain.

  The Enterprise Ethereum Alliance (EEA) announced eighty-six new members, including Bancor, Deloitte, Mitsubishi, and Broadridge. A Forbes article on May 22 by the crypto journalist Laura Shin included what I considered the understatement of the year: “The EEA new members include both financial services incumbents and blockchain startups, and span industries, including state government, health, and entertainment. The diversity of the members in terms of industry and age suggests the possibility for disruptive innovation.” (Emphasis mine)

  Crypto suddenly wasn’t so weird anymore. The old-timers couldn’t believe how quickly things had changed. Even Bitcoin veterans who’d been through the explosion of interest in Bitcoin in 2013 were shocked.

  ETH’s sweet smile kept lighting me up. On a break, I took a cab downtown to the Freedom Tower. As I waited in line, ETH crossed $200. We were up $4.5 million.

  Everything that I thought would happen after Consensus occurred, but more so. Over the next few weeks, ETH just exploded upwards. I’m searching for words to get the point across because I’ve already had to describe how our investment had risen 1,500 percent in three months. That just doesn’t happen. But now we went to fairyland, a place where men like me get suited up in leotards and dance around with butterflies in their hair (or lack thereof), spreading love, eating ice cream sundaes, and yes, driving Lambos.

  Between the last day of Consensus on May 24 and June 12, I kid you not, ETH doubled again, hitting $400. We were up $9 million. I hadn’t yet agreed to our next exit plan with Sean and Eileen. Sean sent me a note, which I ignored. It didn’t matter, because I was a god.

  Not only was I a god, but with this historic ETH boom, I was also Nostradamus. I’d never exhibited an ability to prognosticate before. Previously, I’d always been trying to catch up to new trends just as they petered out. At Safeway, I had tried to become an expert in healthcare policy too late, just as Obamacare made the real experts highly valuable. In the 1990s, I signed up for swing dance lessons after watching Swingers, right before the fad disappeared.

  But now, like a character out of the Bible who does something insane because God told him to, I’d ended up being right about ETH. I was right in the middle of one of the most profound disruptions the world would ever see.

  It felt like I’d taken a driver out of my bag on a par five and, rather than hitting a shank, I drove it four hundred yards down the middle of the fairway. Every moment during this period, I had the same feeling as watching that shot as it soared farther than anyone thought possible, while my playing partners looked on in admiration. The feeling rang in my hands, head, soul.

  I knew I’d reminisce about this time for the rest of my life. The feeling was so different than anything I had ever experienced. I was suddenly the man I always wanted to be—a fucking legend with a huge set of balls.

  ***

  ETH’s price was rising at an unprecedented pace over a period of days and weeks rather than the expected months and years. Anecdotally, from comments on r/EthTrader, it seemed like a lot of large investors had a sell target of $400.

  People who’d invested in the crowdsale and other whales who’d gotten in under five dollars suddenly had life-changing money. They started running for the doors.

  On June 24, ETH took a dive. From an all-time high of $400, it spat up, then puked up its gains. It was like a sick animal that might very well die.

  Those selling their ETH disgusted me. For months, I’d seen these same people claiming, “I wish I’d heard about this a year ago. I would have bought a big stash!” Bullshit. Now that ETH was headed back down, their FOMO had turned to FUD. These run-of-the-mill conventional thinkers and cowards were bleeding us dry. Now more than ever, true believers needed to HODL. Anything else would cause a tragedy of the commons, when each individual’s supposedly rational action leads directly to total destruction for everyone, including them.

  By June 27, it was at $272, a forty percent decrease in five days.

  Sean sent me an email.

  ETH may go below $200 for a year or longer. I’m only saying this so that you and Eileen can make the best decision

  When I didn’t respond, he sent me another email asking if we could get together for a walk to tell each other about our recent family vacations. Nice try. I blew him off. I didn’t care to spend time with Chicken Littles. I wasn’t going to sell.

  Then it all came tumbling down.

  CNBC blared, “Ethereum is crashing by 20 percent right now after confidence in Bitcoin rival shaken.”

  Of course, there was no new reason why confidence would be shaken other than the drop in price, but that didn’t matter. And it was actually crashing 20 percent every few days.

  On July 11, 2017, ETH declined to $211.

  The glory of being a whale had turned into a nightmare. We were losing hundreds of thousands of dollars every time I checked the price. More than a million dollars a week. We were down five million from our all-
time high. We’d only taken out our original investment.

  ***

  On July 2, we started our second fabulous agreed-to family vacation, a seven-day trip to Cinque Terre on the Italian Riviera. Eileen and I had honeymooned there fourteen years before. We both loved the cold Mediterranean water, gelato, and hikes through each of those five ancient villages which were connected by mountain trails.

  I hoped the rustic setting and spotty Internet would allow me to unplug. I also knew that pulling a “geographic,” a well-known concept in recovery circles, wouldn’t save me from the demons I was running from in the crypto markets. As they say, “Wherever you go, there you are.” I knew this bear market could get much uglier, no matter where I was.

  We checked into our private apartment in the middle of our home-base village, Riomaggiore. Our neighborhood was lovely and filled with people selling flowers and focaccia, good-looking Italians drinking espresso in impossibly small cups, and herds of overweight American couples bickering as they trudged up the steep hill to the train station. I painted a smile on my face and took it all in.

  As we prepared to go to the beach, it was time to slather suntan lotion on the kids. We’d be out in the sun all day, so I wanted them to have a good base layer. It’d be hard to corral them later. Annie was first, and she was the one who hated it the most. She was ten years old and very focused on her appearance.

  Now I blocked out her complaints as I started in. The sun was bright, but I’d probably remember this as a dark period of my life, I thought. I flashed back to when I first bought crypto and agreed to these trips. I was trying to remember what that felt like. Suddenly, I was interrupted by a scene right in front of me, literally in the palms of my hands. Annie had looked in the mirror and was shrieking like she’d seen a ghost. Her face was completely white, as if she’d been painted with a brush. Eileen looked over and said, “Oh no,” and covered her mouth. Annie believed I had permanently disfigured her.

  I started crying myself because I was laughing so hard. “I’m sorry, Annie, I was daydreaming! Don’t worry, we’ll take care of it.”

  Eileen cleaned her up, but a weight had lifted. I was brought back to the present. The terror of our volatile investment was still with me, but I could hold it at bay for a few more days.

  I was proud of myself. Halfway into the trip, and I still hadn’t checked the price. But on our fourth morning, I was in a cafe next door, waiting for everyone else to wake up. They had WiFi. So I looked. And we were down another $500,000.

  When crypto crashes, no one has any idea when or if it will stop dropping. It doesn’t matter what we had on paper because it was all falling through our fingers. Crypto can rise like a bottle rocket or tank like an ocean liner. The price moves way past what is considered polite. And when it was falling before my eyes in June and July 2017, with still-low liquidity, it would have been difficult to get out even if I had wanted to without causing a bigger bloodbath in the market. Selling on the way down, as I had attempted to do a year earlier after the DAO fiasco, was the trap that every bear wanted you to step in. It was out of the question.

  As I sat in a cafe, looking out over the Mediterranean and getting ready to gobble up some delicious, salty focaccia, I felt like a defiant don of the Old World. I didn’t care if it was the smart thing to do. I wasn’t going to sell on a drop. This wasn’t an investment. It was a belief system, a lifestyle.

  ***

  We met a nice Italian couple. They owned a restaurant that we went to almost daily. Ennio hosted, and Martina waited tables. He told us how he had lived in America years before, then made the decision to come back to open his own cafe. We said Cinque Terre was a great place. He shrugged and said it was just ok, that it was hard to get ahead here. He said that back in America, he’d been able to do the same thing and make a lot more money.

  We met them at the beach on our last day. They looked fashionable as hell, of course. But there was a sadness in Ennio’s eyes that apparently involved money. I wondered if money would solve his problems.

  During this period, I always found an opening to talk about crypto with the people we met. While everyone else was swimming, Ennio and I sipped San Pellegrinos. He told me that the 2008 great recession had screwed them. This was clearly my opening, but I didn’t say a word. I didn’t have the heart to even imply that we had a lot of money, considering his situation. I also hadn’t checked the price for several days. I didn’t know if we were still among the fortunate.

  That night, as everyone else was sleeping, I stayed awake and let myself think through what we’d experienced. I hoped to God (who certainly had more important matters to deal with) that I wouldn’t end up like Ennio, neutered and defeated due to lack of funds. I couldn’t deny that we would have had millions in our pockets if we had sold earlier.

  It’s hard selling into a big rise. Following Consensus in May 2017, when ETH was spiraling up, talk on r/EthTrader was that ETH would hit $2,000 or higher in the coming months. Even at that high price, the entire Ethereum blockchain, with hundreds of dApps still in production and preparing to be sprung on the world in the coming years, wouldn’t be valued as much as Facebook, Amazon, or Apple. For a technology that might very well be the next World Wide Web, it seemed to me it could, and should, go a lot higher.

  I continued thinking about these things during my least favorite part of our Italy trip, driving out of Cinque Terre on a mountain road designed to generate the headline, American Family Smashed on Rocks, Father’s Head Found Floating in Ocean. We’d gotten to know our driver on the long drive from Milan to the Riviera a week before. He was macho and friendly and generous. He’d warned us that Sicily was too dangerous to visit, but he wasn’t as concerned about driving safely. I asked if these roads freaked him out, a question that any sane person would answer with, “Yeah!” But he didn’t take the hint. He accelerated. I realized his own self-worth was tied up in navigating these roads at a high rate of speed, damn the consequences.

  I was aware that approaching the Italian psyche in a ham-fisted way could be dangerous. I might make a cultural blunder and profoundly insult him. But I could see our lives flashing before my eyes on each turn as we peered over the abyss. I was already at my capacity for tolerating danger.

  Matteo started humming. I peered over a jagged cliff and saw nothing but sky and ocean. “Matteo! I’m sorry, but for my sake, can you please slow down?”

  He did, but the car fell silent for the rest of the ride to Milan, where we spent our final night in a swanky hotel before flying home the next morning.

  ***

  As we prepared to reenter the real world with its ubiquitous Internet connections, I thought of our exit points and asked myself if I should have sold earlier. The timing of when to buy and sell crypto is an excruciating decision. My trouble illustrates the obvious difficulties of selling at the right time, but the buy and hold decision is just as daunting. Sometimes a person’s enthusiasm for a decentralized world isn’t wed to a conviction to invest (or gamble, depending on your perspective).

  Thanks to my experience with technologies that went viral, determination to get out of the rat race, addictive personality, ability to handle risk, plus the availability of funds at just the right time and a wife who let me spend them, I was destined to go big once I got the crypto bug. Many others, including a good number of crypto veterans, had not done so, even though they’d been a part of the movement way before me, when bitcoin and ETH prices were dirt cheap and it was possible to pick up a thousand bitcoin for a thousand dollars.

  One person in this boat was particularly shocking. In late 2017, Bitcoin evangelist and icon Andreas Antonopoulos announced that he was struggling financially. It was inconceivable to me that he hadn’t bought and held bitcoin when it was under twenty dollars. I had assumed he had the equivalent of at least twenty to thirty million by this time, considering how early he was to the game. He was one of the smartest people in crypto, a genius at communicating the enormity of Satoshi Nakamoto’s
invention and what it meant for society. He flew all over the globe, spreading the word.

  But he wasn’t able to hold a stash due to other financial pressures, even though only a few thousand dollars invested and held at those low prices would have been worth at least a million dollars a few years later. He had been left out of the get-rich-quick part of the revolution he helped to create. He was way over on the polar opposite side from the ICO charlatans on the greed/idealist spectrum. For that, I respected him immensely, although I shuddered to think of being in his shoes. Eventually, he ended up raising approximately one hundred bitcoins from crypto millionaires.

  On a smaller scale, I recognized this strange caution from friends in my life. They’d get excited about the possibility of gains, then hem and haw about investing a thousand dollars. Seriously? These people would never have had the guts to find a drug dealer. For better or worse, I was just built differently. While I’d never be a professional leader of the movement, you could count on me to go on a suicide mission like some drunken patriot on behalf of my own glory and Vitalik Buterin. I loved that man, but I hoped I wasn’t on one right now.

  I checked my phone at the airport. ETH had fallen another 20 percent. We’d lost an additional $1.2 million since the start of our trip.

  ***

  Even amidst the crash, the stupid ICOs kept coming, wanting our help. In total, we received more than a hundred requests from projects all over the globe, sometimes in broken English or what appeared to be Russian or Mandarin. They were causing too much confusion in the market. I’d already stopped answering new business emails and changed my LinkedIn profile to show Zealot was no longer active. But they still found us. So I shut down the Zealot Communications website entirely, hoping they’d leave us alone.