Most successful companies have a foundational story—a chance idea while climbing a mountain, a fortuitous meeting, a Eureka! moment. But, in truth, they all begin life in the same way: incorporation documents are filed in an airless company registrar. The birth of a cryptocurrency, by contrast, starts when the blockchain creates its first set of coins, known as the “genesis block.”
When he created Bitcoin, Satoshi invented a whole new way to record information. He did this using some simple but brilliant mathematics that tied every Bitcoin transaction together in a single unbreakable chain. The Bitcoin genesis block contained a record of any coins that were sent between users, plus a few other technical details. Satoshi programmed an algorithm to reduce its entire contents into a unique 256-digit string—a car crusher for numbers. That unique 256-digit string became the first line of the second block of transactions. Block 2—which included the 256-digit string of block 1—was in turn crunched to form the opening line of block 3. Every ten minutes or so, another block of transaction records is crunched into 256 digits, and opens a new block. That’s why it’s called a blockchain: it is a chain of interlinked blocks of transaction records. By weaving all the blocks into the entries around them, previous entries can’t be deleted or tampered with. Bitcoin now has over 700,000 blocks in its chain, each of which represents ten minutes’ worth of activity and has a reference to the preceding block. All except genesis—the first block of all.
Satoshi understood the theater of the genesis block. He slipped a secret message in there, a headline from that day’s newspaper: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks. Every single Bitcoin contains a homeopathic trace of that headline. Banks—always too big to fail. Governments—always bailing them out.
Hong Kong’s 1,026-room high-rise Panda Hotel was a perfect location for OneCoin to launch its blockchain. It was close to the airport, which was handy, given all the investors and promoters jetting in, and its events room—popular for large, expensive Chinese weddings—could accommodate the 500 plus guests expected. “An unforgettable night,” read one official flier. Sofia was the more obvious choice, but, ever since Ruja and Sebastian’s November tour, growth in South Asia had been supersonic. OneCoin even opened a new “hub” office at the Admiralty Centre on Hong Kong Island in December. It wasn’t cheap to rent the Panda Hotel’s Grand Ballroom, and Ruja also offered free tickets and subsidized flights for top promoters, but money was no longer an issue. There had been a sales frenzy in the preceding weeks: at least €15 million was invested in January 2015 alone.1 Momentum was a powerful force.
Sebastian Greenwood and Juha Parhiala were in attendance, of course, as were OneCoin’s president Nigel Allan and COO Momchil Nikov. The industrious Finns and Swedes made the list and Ruja’s best friend from Sofia—the “ice queen,” Asdis Ran—flew in to co-host. Everyone was excited to witness the moment OneCoin would be transformed from salesman’s promise to mathematically clad reality. Ruja, wearing a long blue satin dress, meeted-and-greeted nervously in front of the raised stage. Demand for tickets had been enormous: It seemed like half of mainland China had turned up and some attendees were forced to watch from an overflow room. There was an electric thrill in the air, a sense that something momentous was about to happen.
“Nǐhǎo,” shouted Sebastian, wearing a black tuxedo and bow tie. He only knew two Mandarin words and used them whenever he could. (The other was xièxiè—thank you.) “This is an amazing opportunity!” he declared, in front of the 500 attendees and their raised camera phones. “There is no limit to how many people we can put into the system!”2 Fernando Rhys, the newly appointed Hong Kong office manager, translated enthusiastically, even adding his own flourishes. Ruja watched and chuckled at her excitable co-founder; Sebastian was nearly 40 years old but had the energy and face of a 25 year old. “Everybody in this room will become very rich!” he shouted. Unlike in Helsinki, four months earlier, it no longer seemed impossible.
As Ruja took to the stage the crowd stood and cheered. She placed her hand on a large translucent ball, which looked like a Van der Graaf machine. Five, four, three, two… when the number hit zero, the ball spun and whirled and burst into color. Gold confetti fell from the ceiling and the room erupted with cheers, champagne corks and photographs as Ruja was almost crushed by enthusiastic selfie hunters.
The genesis block was now launched and the first set of new coins was being “mined.” People in the room must have wondered what that phrase actually meant. Oh, they all repeated the words—genesis block, mining, algorithms—but few had any idea about the technology behind it all. What exactly was happening? Bitcoin’s mining was transparent and distributed—anyone could join, and thousands did. But OneCoin’s mining process was mysterious and secretive. Some in the crowd had heard rumors that two “supercomputers” at hidden locations were cracking puzzles and getting the newly generated coins, which would then be sent to investor accounts, depending on how many packages they’d bought. Most people didn’t care about the finer details though. They’d just heard it was the next Bitcoin.
It took 11 minutes for the genesis block to appear on the OneCoin blockchain. “The longest eleven minutes of my life,” Ruja said a few weeks later. But, at last, OneCoin were being generated and hit investor accounts within a day or two. Even better, the “OneExchange” was ready to start trading too. Each coin was priced at €0.5, just as Sebastian had promised back in November in Malaysia, and could now be exchanged for real money. Fearing an immediate run on the coin, Ruja wisely placed a temporary limit on how much people could withdraw each week, but, even so, some started selling immediately. “I know two people who have no reason at all to lie who told me they have taken money out already,” wrote one early Swedish investor.3 But most preferred to sit and wait. Remember that Norwegian guy who invested $27 in Bitcoin in 2009 and…
Until this point, Ruja had said she wanted OneCoin to be one of the “top three” cryptocurrencies in the world. After the successful launch in Hong Kong, she set her sights on becoming number one. Juha, Pehr and Petri were good sellers—they’d generated the momentum that got the coin this far. But there were others who were even better. And Ruja was determined to get them.