IN SEARCH OF THE ELUSIVE BITCOIN BILLIONAIRE: BITCOIN IS BOOMING. LIBERTARIANS WERE THERE FIRST. SO WHERE ARE ALL THE CRYPTOCURRENCY TYCOONS?

• Author: Doherty, Brian

I AM NOT A bitcoin multimillionaire.

I could have been: I was aware of the cryptocurrency's existence in July 2010.

I should have been: Dozens of smart people with sympatico worldviews to my own eagerly explained to me how the creation of an online "blockchain"--a reliable yet anonymous ledger of transactions--had the potential to change the world.

And I would have been: Had I shelled out, say, $2,000 on this innovative, anti-inflationary currency even a lazy six weeks after I was introduced to it, today I would be sitting on 28,571 bitcoins, the equivalent at press time of over $212 million in cash.

But I didn't.

Libertarians have long contemplated the potential power of a currency free of government interference, control, or devaluation. Unsurprisingly, I found early bitcoin fanatics galore at Ron Paul campaign rallies and meetups. Free State Project get-togethers, and seasteader soirees.

Back in 2011, finding someone to sell you bitcoins was difficult for U.S. citizens. Many of the enthusiasts I talked to then were excited about blockchain "mining" operations--essentially a way to anonymously use electricity and computer processing power to solve cryptographic problems and receive a certain set amount of bitcoin as a reward. This was a marvelous technological leap, an internet-enabled delivery on the promise libertarians had been buzzing about ever since F.A. Hayek's 1976 monograph Denationalization of Money.

"The question we have to consider," the Nobel Prize-winning economist had written, "is whether competition between the issuers of clearly distinguishable kinds of currency consisting of different units would not give us a better kind of money than we have ever had."

There are a number of qualities people might seek in a currency--such as relative stability in value--that bitcoin definitely lacks. But if you measure "better" by an ability to acquire more in goods and services, bitcoin so far has proven far superior to the U.S. dollar and other countries' government-issued "fiat" currencies. Less than a decade into its life, the digital token has enjoyed what is likely the largest, quickest rise in asset value in the history of the human race. From a starting point of $0.003, a single bitcoin is now worth $7,432-an increase in dollar terms of 2.4 millionfold in less than eight years.

Yet those early adopters weren't focused primarily on wealth magnification. "No one thought of it as an investment vehicle" in those first couple of years, says Isaac Morehouse, a libertarian who runs a startup apprentice program called Praxis. "It felt more like fun, and like a charity, even. Like, if you are a libertarian you should buy it and use it, bear this cost and inconvenience, to support it." The concept of having stateless money alone was enough. "It was like Christians saying, 'Go support this movie' because it has a Christian message, not necessarily because it's a great movie. Holding bitcoin felt like being part of history, like holding a piece of the Berlin Wall."

Bitcoin always had its bulls, of course. Rick Falkvinge, founder of Sweden's Pirate Party, a political party dedicated to informational freedom and privacy, announced on his website in May 2011 that he was going all-in on bitcoin with everything he had. Why? Because he foresaw a thousandfold increase in the cryptocoin's value within four years.

Falkvinge was brutally savaged on Reddit's"r/bitcoin" online message board for such hubris. The top-voted comment on his post (reflecting mass opinion of bitcoin enthusiasts) declared that "I can't even begin to comprehend the depths of the stupidity of that kind of reasoning."

Well, Falkvinge was wrong. It took six years, not four, for bitcoin's value to first hit $3,000, a thousand times the $3 it was worth when he made the announcement. Then again, it took just another four months for it to break $6,000.

THE $74 MILLION PIZZAS

MY FIRST TRACEABLE record of seeing the word bitcoin was in a pitch email from then-Reason intern Jesse Kline on July 1, 2010, less than 18 months after the first token was sent from its inventor, the pseudonymous "Satoshi Nakamoto," to cryptographer Hal Finney. I know this because after the currency's value first jumped above $1,000, in November 2013, I went back and searched my Gmail to see just how badly I'd missed the boat.

Kline's pitch received serious consideration, but we decided it was too complicated to explain in the tight 165 words of the section it was intended for. So Reason did not publish in our October 2010 issue a brief squib explaining bitcoin (sorry, everyone). Our first mention of the free market cryptocurrency came several months later in an April blog post by Jesse Walker. If you were savvy enough to have dropped two grand on bitcoin that week? Your holdings would earn you $6.1 million today.

I failed to identify bitcoin as a burningly important story in July 2010 not because I didn't grok how amazingly promising the concept was, but because I knew perhaps too much for my own good about the world of experimental internet currencies that libertarians were wont to hype. I remembered e-gold, an earlier attempt to create digital money backed by precious metals. In 2007, as I reported at the time, the operators were shut down by the Department of Justice "on charges of money laundering, conspiracy, and operating an unlicensed money transmitting business." Bitcoin's decentralized nature at least makes that bad end impossible.

After bitcoin broke S1,000. a widely circulated anecdote from three years prior helped fire imaginations about the opportunities one could hit--and miss--using the currency. It seems that in May 2010, a first-mover named Laszlo Hanecz, who'd had the amazing foresight to accumulate many thousands of early bitcoins, made the catastrophically short-sighted mistake of spending 10,000 of the things on all of two pizzas. The valuation of that pair of pies today? Around $74 million. (May 22 was thereafter known as "Pizza Day" in crypto circles.)

But surely Hanecz wasn't the only one to accumulate that many, or even more, bitcoins early on. Surely some of the early miners and the folks who bought them for pennies (one token traded for under a dime until early October 2010) didn't blow their stash all on junk food. If even half of the libertarians I'd met in 2011 who were so jazzed about bitcoin had put, say, a month's salary into it within the currency's first year, shouldn't the Free State Project now command a combined wealth exceeding that of some small nations?

One of the bitcoin-wealthiest libertarians I spoke to for this story, who asked to be identified as "Jason," says he took what he admits was a crazy risk by sinking around $100,000-about half of what he'd made flipping Southern California real estate after starting with a small inheritance--into bitcoin in 2011. Its price rise has allowed him to live a very interesting life of travel and to give generously to liberty-oriented causes (as well as more traditional philanthropy, such as ending tropical diseases). His burn rate is $20,000-530,000 a month.

Yet if many libertarians managed to go from rags to riches by being early adopters of bitcoin. the holders of this new wealth have been stubbornly elusive. An oft-derided radical edge of the American political spectrum may have finally notched a win with an absurdly huge potential financial upside--but the specific winners are, by and large, anonymous.

I managed to find and communicate with around two dozen people whose libertarianism made them aware early of bitcoin's awesome...