“Money as a social network. Well, it’s certainly an interesting take.”
Tyler propped himself up on one elbow, his body stretched out awkwardly on an eggshell-white daybed. He was decked out in a crisp, white linen shirt, a brightly colored Vilebrequin swimsuit, and a woven straw fedora. Cameron was on a similar lounger to his left, shirtless, wearing equally brightly colored swim trunks. A canopy offered some respite from the sun beating down, while a Mediterranean breeze cooled the scalding beach as it rolled off the sea.
“You know a thing or two about social networks—and I know money. Money connects people. It’s a form of communication. And it’s about time that it truly went virtual.”
The muscled guy they’d met at Pacha the night before—David Azar, an entrepreneur from Brooklyn who, it turned out, owned a chain of check-cashing businesses—was directly across from them, white shirt open past his sternum, squatting cross-legged on a piece of furniture that was somewhere between a beanbag chair and an ottoman. Right beside the daybed a wooden, sun-streaked table supported a metropolis of rosé bottles, glass champagne flutes, and trays piled high with fruit.
The three were smack dead in the middle of Blue Marlin Ibiza, arguably the most famous VIP beach club in the world, a mixed-use slice of paradise that was part high-end restaurant and part European day party. A daybed ran four hundred euros, just for the afternoon, and the ones behind the DJ went for three times that. Nobody hit the Blue Marlin on a Sunday afternoon to talk shop; this place was all about sun, top-shelf alcohol, pulsing music, and some of the best people watching and celebrity spotting in the Eastern Hemisphere.
The crowd, whether splayed out on matching daybeds, dining at the attached five-star restaurant, or undulating in sarongs and espadrilles on the roped-off dance floor, was mostly European and almost universally stunning. The women glimmered in tiny bikinis, tops sometimes missing. The men, shirtless or draped in white muslin or linen, were almost universally chiseled and tan. There were models everywhere, some with names and faces the monozygotes recognized. One girl, two beds over, had been featured in the inflight magazine tucked into the airplane seat magazine holders of the Iberia Airlines flight they’d hopped from Barcelona to the Spanish island. Maybe she’d arrived at Blue Marlin by way of the long, fashion runway–like wooden path that led directly from the center of the beach club to the sea, where the tenders and Jet Skis shuttled guests back and forth between the hotspot and the megayachts parked farther out in the protected bay. Each new arrival warranted whispers, but nobody reached for cell phones. At Blue Marlin, even the most famous people in the world were simply part of the scenery.
“If whatever you’re selling can help our deposit make its way over the Atlantic to our villa’s landlord, I’m all ears,” Tyler said, shifting his attention from the wooden runway, where a pair of Italian Instagram stars strolled by on impossibly high Louboutins.
In fact, the trouble with their villa deposit, which still hadn’t arrived two days into their trip, underscored just how money worked—or didn’t work—in the year 2012. You could connect with anyone anywhere in the world using Facebook; you could speak with anyone anywhere in the world using Skype; you could communicate with anyone anywhere in the world using email, and all for next to no cost. But good luck if you wanted to send them money—it wasn’t much easier to send money around the world in 2012 than it was when Pacha first opened its doors in 1973. You still had to use the Balkanized, legacy banking system, which was built before the internet even existed, littered with middlemen and rent-seekers all along the way. And only if the central authorities of this network allowed it to happen, would your money move at a snail’s pace from point A to point B. The truth was, even in 2012, if you wanted to get money from New York to Ibiza, the fastest and surest way was to hop a plane from JFK with a bag full of cash.
Instead the twins had arrived in Ibiza well before the deposit on their rented villa; thankfully, their landlord—an always smiling Italian transplant, who apparently would also be acting as their chauffeur, picking them up at the airport in a tricked-out SUV, smartphones in each hand, and a Bluetooth headset lodged in his hair—understood how the international economy worked, and just as often didn’t.
“What I’m talking about,” Azar said, sipping his wine, “is something completely new. Truly digital money, decentralized, that’s exchanged like email. There’s no middlemen. There’s no authority. Money that moves at the speed of electricity, over the internet. A system that does for money what Napster did for music.”
Tyler glanced back toward the DJ booth, where a young Frenchman was bouncing up and down behind his computer system. The crowd on the dance floor moved with him, lithe bodies so close together it was hard to see where one limb ended and another began.
Less than a decade ago, a DJ would have had to lug hundreds of vinyl records in heavy metal cases around with him to every gig. Today the same DJ could carry his entire set on a USB stick or thumb drive in his pocket. If music could transcend the physical world into the digital world then why couldn’t money?
In fact, in many ways, money had already gone digital. When you deposited money—say, a hundred dollars—into a bank, that bank didn’t store your money in some vault somewhere, waiting for you to retrieve it. That hundred dollars immediately went digital; in fact, banks hardly stored any actual money at all. By federal banking law, banks in the United States only needed to keep 10 percent of the money deposited in actual, liquid reserve. Which meant if you deposited a hundred dollars into a bank, you only actually had ten real dollars on hold in some vault. The other ninety dollars? Digital, ones and zeros on some computer hard drive, or off in the cloud.
The only physical money anyone really had was what was in his or her wallet. The rest had already been turned into data, by the middlemen, who took a fee.
The new form of money Azar was talking about skipped that step. It was already data.
Digital, decentralized, no authority. It was a sales pitch—and there was no doubt, Azar came on like a compelling salesman. In fact, the way he talked, his enthusiasm—he seemed like he’d just walked off the lot of an auto dealership back in Brooklyn. But, like the French DJ, he was hitting all the right notes.
Money, as it currently stood, ran through a system controlled by powerful arbiters: Visa, MasterCard, Western Union, governments near and far. It was a system that could seem arbitrary, with obvious flaws—lag times, unexplained fees, bureaucratic logjams.
Tyler and his brother had just fled to Ibiza after facing off against other types of arbitrary systems; first the California federal courts, where the central authority was a judge named James Ware, who had decreed that the twins couldn’t reopen their case against Facebook. (Never mind that for years, Ware had lied about having a younger brother who was the victim of a racially charged murder during the civil rights movement—an untruth that had led to a judicial reprimand.) And then their case had shifted to the Ninth Circuit Court of Appeals, where the central authority was Chief Justice Alex Kozinski, who had upheld Judge Ware’s ruling. (Never mind that for years, Kozinski had been accused of sexually harassing his female clerks—pulling up pornographic photos in front of them on his computer while they were in his chambers, and previously, allegedly, maintaining a server that contained sexually explicit images, including one of naked women on all fours painted to look like cows.)
Digital, decentralized, no arbitrary authority.
Whether it was the setting, or the timing—Tyler felt drawn to the Brooklyn salesman’s pitch.
“Like Napster,” Azar continued, “it’s peer-to-peer. And it’s all out in the open. There’s no inside baseball, no insider information, it’s all open-source and democratic. And this new system of money is based on math, not humans.”
Azar refilled his glass from one of the bottles on the table between them.
“It’s called Bitcoin,” he finished, holding his glass up to the sun. “It’s a form of cryptocurrency.”
“Cryptocurrency,” Cameron repeated, from his daybed. “It sounds criminal. Is it legal?”
“I don’t think the word applies. That’s part of Bitcoin’s brilliance. It functions without government approval. There’s no headquarters to raid, and it can’t be stopped without stopping the internet itself.”
Stopping the internet? Tyler could tell the muscled salesman was spinning dialogue at them; he didn’t seem to be technically minded, or really have a deep knowledge of what he was selling, beyond his pitch. But, as he’d said, he knew money. Not Wall Street money—but the sort of money you come across from owning a chain of check-cashing businesses extending outward from the Syrian Orthodox Jewish section of Brooklyn. He understood the emotional connection of currency, the desperation of those trying to cash checks who were unable to access the traditional banking system. He knew all about velocity and liquidity.
“Traditional cash is all about trust,” Azar continued. “You have to have faith in the machinery of the system, and you have to trust the middlemen. With Bitcoin, you don’t have to trust a-n-y-b-o-d-y. Because, like I said, it’s all based on math.”
Tyler glanced at his brother, who seemed as focused on the salesman and his pitch as he was. This was something that neither of them had ever heard of before; not in any of the startup pitch decks they’d been sent, not during any of those Silicon Valley meetings. Not at the Oasis, not anywhere on Sand Hill Road. It wasn’t clear, yet, how this … cryptocurrency worked—or how math was involved. But a system that didn’t rely on trust, that didn’t involve an authority—it seemed too good to be true.
“Tyler! Over here! I thought I saw you guys at Pacha last night! Come join us for a drink!”
Tyler looked past Azar, in the direction of where the voice was coming from, and recognized a group of Americans waving at him from four daybeds down. He recognized at least two of them from back in New York: a tall art fiend named Josh, or Jason, who Tyler believed ran a gallery downtown, dedicated to early 1970s graffiti masters, and a brunette in what looked to be a macramé bikini. The rest of the group looked similarly hip, none of them over the age of twenty-five, none of them strangers to this party island, halfway around the world from where they’d grown up. Wealthy millennials with big bank accounts and a dozen credit cards between them; no doubt, this crew of “influencers” had helped build Facebook with their bare thumbs. Tyler was certain that none of these people had ever heard of Bitcoin. The money they knew best was the type that was passed down from generation to generation, worn around their fingers, necks, maybe even toes.
“Be there in a minute,” Tyler called back. Cameron was already getting up from his chair, hooking one of the bottles of rosé with his fingers. Come to think of it, maybe his brother had dated the brunette back in the city? Tyler couldn’t be sure, but he was willing to bet that Cameron wasn’t going to try to explain cryptocurrency before he poured the pretty girl a drink.
“Friends of yours?” Azar asked. “I get it, you’re on vacation. But I’d love to pick this up when you’re back in New York.”
Tyler pointed to the bottle in his brother’s hand.
“How many Bitcoin would that go for?”
“Right now? Not sure. Would have to check my phone. This morning, Bitcoin was trading at around seven dollars a coin. At the moment, it’s really volatile, because not enough people know about it yet, and you can’t really buy anything with it. It’s Facebook before anyone was really on Facebook.”
No doubt Azar was hoping for an emotional connection by throwing in the Facebook reference. And, of course, it had worked. Tyler’s mind did go back to Facebook, to the situation that had led them to Ibiza in the first place. Tyler and his brother had put their trust in the judicial system, only to be beaten. A system that had relied on trust in humans had failed them.
There was something about a system that relied on math, not trust, that was intensely appealing. Math was built on rules that no one, not even Zuckerberg, could break.
Although Tyler knew they were just scraping the surface—he didn’t yet know anything about this new currency beyond Azar’s pitch, nothing about what this technology really was, or what it might represent—he had come to a conclusion: either this Bitcoin was complete bullshit, or it was a really big deal. A new currency, seemingly invented out of thin air. Bitcoin was either worth nothing, or it was going to one day be insanely valuable.
“Say we do want to get involved,” Tyler said as he rose from the daybed, feeling the pulse from the DJ booth through bare feet. “What do we do? Buy up some of this Bitcoin?”
“You could. Or you could go one step deeper. As I said, at the moment, Bitcoin is volatile. Buying Bitcoin is like gambling. And everyone knows, you don’t get really rich by being a gambler.
“You get really rich,” he continued, with a Brooklyn car salesman’s grin, “by being the house.”