Bitcoin Billionaires by Ben Mezrich

Reviewed by Norrie Sanders

The cover says it all. Two strapping young men striding forward, wearing suits and confident expressions. The image, viewed through a matrix of dots, suggests technology and a multitude of stars – or are they coins? Despite the blurring, both men are so similar that they could be clones. Clearly, these are our bitcoin billionaires and the world is at their feet.

The reader is quickly disabused of this fantasy when the opening chapter sees the two men pitted against another dotcom winner – but this one is in another league. To Facebook “founder”, Mark Zuckerberg, a billion dollars is small change and yet he is being sued by these two upstarts who are claiming a piece of Facebook for themselves.   Are they the noble David’s battling this nasty Goliath, or are they entitled rich boys who weren’t smart or quick enough to beat Zuckerberg to the punch?

A brief explanation would help here. Our two young men are 196cm twins Tyler and Cameron Winklevoss. Born into a wealthy family, they represented the USA in Olympic rowing and graduated from Harvard University in 2004. While studying, they found time to work on a software system designed to connect students electronically, so that users could exchange information about themselves with their friends and fellow students.  

When their team’s programmer became unavailable, they invited a skinny, short, nerdy guy to help them. He had been working on something similar – so he listened to the twins, allegedly stole their ideas and the first prototype of Facebook was born.  He was, of course, Mark Zuckerberg and he was destined for fame and fortune. The twins were left with little more than a few good ideas.

The court case was settled for $65 million – part Facebook shares and part cash. Not much compared to Facebook’s current value at around $140 billion, but enough to give them a start as venture capitalists.

This early episode is more than just an explanation of how they started to accumulate wealth. The very public stoush with Zuckerberg caused them to be personae non gratae in Silicon Valley and engendered a strong desire to demonstrate that they could be successful guys in their own right.

Effectively exiled from funding Silicon Valley start-ups, they eventually found a niche in which to make serious money – Bitcoin. They came across a small company that helps people to buy this cryptocurrency – BitInstant and its effervescent CEO, Charlie Shrem.  Their due diligence research tells them a lot about the mechanics of Bitcoin and the crazy world of Bitcoin devotees. In a way, Charlie is an allegory of Bitcoin – where does reality finish and hype begin? A shameless attention seeker who struggles to grow out of the teenage boy into an effective CEO:

“He’d spent most of the two-day e-commerce conference hitting the “coffee shops” that dotted [Amsterdam’s]..historic Red Light district, taking advantage of the Netherland’s progressive marijuana laws. Even so, he’d knocked his speech out of the park; he could still hear the applause that had come from the audience of hundreds of European Bitcoin enthusiasts.”

As it turns out, their investment in Charlie’s company is a rollercoaster ride to nowhere, but their calculated risk to amass bitcoins is inspired. With many ups and downs, they watch as “coins” worth less than $10 turn into $10,000 in less than five years – catapulting them from millionaires to billionaires in the process.

Ben Mezrich graduated from Harvard a decade before the Winklevii and Mark Zuckerberg arrived. He has written several non-fiction works, including The Accidental Billionaires, about Mark Zuckerberg and his Harvard colleagues, which was adapted into the movie The Social Network.

Bitcoin Billionaires is a reconstruction of events, replete with imagined dialogue and insights into the minds of the various players. It is largely written from the twins’ viewpoint – being sympathetic to the Winklevii (as they have been dubbed) and less charitable to Mark Zuckerberg. How accurate the other portrayals are is hard to gauge, because the author’s information sources, other than the twins, are not clear from the brief acknowledgements and bibliography.

In Charlie’s case, it is clear from the text that he is subject to fibbing or memory lapses. Regardless, the secondary characters portrayed in the book are extraordinary (though not always in a good way) and offer a pointed contrast to the more measured personalities of the twins. Charlie is all over the place as the CEO who loves to party hard and would rather risk prosecution than conduct a risk audit. Other characters see Bitcoin as an instrument to subvert evil government controls or to provide gambling avenues for the masses.

It is this rich array of flawed people which gives the book its tension and keep the interest alive. Ultimately, Cameron and Tyler are of limited interest and the fact that they are born well and go on to become fabulously rich is hardly a fairy tale. In many ways, it is their failures that mark them more than their successes.

The real substance of the book is the insights it gives into modern trends. Bitcoin itself is front and centre and the narrative uses the twins’ own investigations to help the reader to understand how cryptocurrencies work; and, in particular, how the design of the Bitcoin ecosystem is both fiendishly complicated and deceptively simple.  In popular media about Bitcoin, we frequently hear terms like “blockchain”, “Silk Road” and “mining”, accompanied by some sort of definition. Bitcoin Billionaires brings them together in a way that helps the reader to understand the bigger picture, and explains why so many intelligent and cautious people are passionate advocates.

“These two opposing statements perfectly illustrated the divide in the Bitcoin community. The libertarians and anarchists saw Bitcoin as a weapon in their war against regulated society. The entrepreneurs and VCs [venture capitalists] increasingly gravitating toward cryptocurrency wanted Bitcoin to be part of that society, a new, programmable money for the modern world.”

With a few exceptions, the book is written chronologically, but each chapter is more like a vignette or self-contained episode, illustrating salient points and advancing the temporal flow. Third person narrative is less in evidence than allowing the actions and dialogue of the characters to further the various themes. All of which makes for a more entertaining read, even at the expense of some licence with dialogue.

The books cover tells us that this is “a true story of genius, betrayal and redemption”.  Despite the last word, one can’t help feeling that the Winklevii will always live with the trappings of wealth, but they are still searching for the thing that will make them more than a footnote in the histories of other people.

Just one month after this book was published, Zuckerberg announced that Facebook is launching its own cryptocurrency, Libra, complete with, no prizes for guessing, blockchain architecture. Pure coincidence or is this another way that Zuckerberg has taken someone else’s idea in the hope of wealth creation? 

I “liked” the twins (in a Facebook kind of way) and I liked that they saw a sense of order where others did not. But they too have problems with reality, as illustrated when Tyler says to Cameron:

“A million dollars isn’t cool. You know what’s cool? A billion dollars..in bitcoin”

Knowing about Bitcoin is not a pre-requisite for enjoying the book – in fact, it is highly educational. It allows us to glimpse some of the oddball people who are making huge money or are subverting established social and economic systems. The young nerds and jocks making these decisions live in a brave new world. They would probably disagree with me that a planet where one of the most powerful people is a Silicon Valley CEO, is truly unnerving.

Bitcoin Billionaires

(May 2019)

by Ben Mezrich

Hachette Australia

ISBN: 9781408711897

384pp; $32.99 (paperback)

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