Harry Hindsight jabs me for missing the crypto boat
A startup guy agonizes over his 2013 bitcoin opportunity
Bitcoin just comes out of your computer like this? (Photo by Kevin Sanders for Modern Consensus.)
Harry Hindsight loves to tease me about the fall of 2013. Everyone knows Harry, and Harry has been super busy these days, especially with the year cryptocurrencies had in 2017. For every crypto-evangelist, there are 10 lamenters who are kicking themselves for not listening. Given all the media frenzy these days, it’s easy to forget that bitcoin had another 10-fold increase back in late 2013. That was the first one I missed, and the one Harry won’t let me forget.
This miss wasn’t simply not buying when seemingly smart friends were advising me to. Back then, barely anyone knew what bitcoin was. No. My miss was colossally worse because the people around me were hyping it every day, and we had a golden opportunity to not just buy, but to mine for bitcoin.
In the fall of 2013, I was about two years into a software startup. We were developing software that would eventually pave the way for streaming devices and the Internet of Things. Both groundbreaking, both now patented. But that does not stop Harry from reminding me that we could easily have been mining along the way.
The team I assembled was a group of recent MIT grads. The age group and skillset were a perfect fit for the burgeoning world of cryptocurrency. It started coming up at team lunches in our mess hall area. We had exactly the kind of MIT startup office one might imagine: a big open area in a warehouse type space in Inman Square, furnished with a bunch of desks we had bought at an auction for 38 Studios, Curt Schilling’s failed software startup.
There we were, a bunch of MIT geeks eating bad pizza and talking about cryptocurrency. I was the dinosaur who would curmudgeonly poo-poo the supposed greatest thing to happen to technology since the Internet. They laughed at my national computer programming championship, which in Pascal might as well have been on a slide rule. And I certainly couldn’t possibly understand the market dynamics. Ran a highly quantitative fixed income arb hedge fund? Ha, that was so pre-2008.
After all, what was “mining”? Either no one could explain it right, or I really was too far over the hill to comprehend. They told me about solving computer problems. That’s it. You set up your computer, it solves problems, and you get bitcoin—at just over a hundred bucks a pop! That just didn’t make sense to me. No talk of a distributed ledger. The word “blockchain” wasn’t even mentioned. Set up a computer, run it all the time, get bitcoin in your account. It seemed almost ludicrous. And there were two constraints: electricity, and computer power.
Harry is laughing, because we happened to have both of those in abundance. Because our office was in a chopped-up warehouse-type building, electricity was included in the rent. The team figured that, for at least a while, we could mine with impunity. And we had plenty of computer power. Because this was 2013, and our software was well beyond what hardware had been developed for our purposes, we started building powerful media servers as a vessel to sell our software. Around November, as bitcoin made its way from just over $100 to over $1000, we had over 50 servers sitting idle. Harry tells me they were begging to mine for cryptocurrency.
But alas, I had more important things to worry about. All the big boys, who could actually build the hardware, were waking up to the future of streaming and IoT, and muscling onto the path we were trailblazing. How could I be distracted by something I couldn’t understand and was so clearly just a fantasy of a bunch of kids who should just bury their heads in their keyboards and code? We were running out of cash, the lifeblood of any startup. I needed to raise it, not just flip a switch and have it magically appear in our account.
Harry didn’t visit me for some time after that. The startup faded, and there was never a thought that the classic startup pivot should have been to mining. After all, no one really talked about bitcoin in 2014, or 2015, or 2016. But then they started talking about blockchain, and new cryptocurrencies, and the greatest technology since the Internet. And then bitcoin went up ten-fold yet again. And Harry and I just kick back and laugh at all the suckers who think they missed the boat. They missed a ferry ride to Staten Island. I missed the yacht.
Recently, a good friend, and a seed investor in that software startup, convinced me to open a cryptocurrency account, and even deposited some XRP for me to get started. It was fun for a few hours. That was until Harry stopped by and asked to reminisce.