{"id":89,"date":"2018-01-26T16:03:48","date_gmt":"2018-01-26T21:03:48","guid":{"rendered":"http:\/\/projects.nyujournalism.org\/tellingstories\/?page_id=89"},"modified":"2019-07-18T14:07:24","modified_gmt":"2019-07-18T18:07:24","slug":"profile-alex","status":"publish","type":"page","link":"http:\/\/projects.nyujournalism.org\/tellingstories\/profile-alex\/","title":{"rendered":"Profile: Alex"},"content":{"rendered":"<h3>By Phoebe Tuite<\/h3>\n<h6>December 4, 2017<\/h6>\n<p><iframe loading=\"lazy\" title=\"Profile - Alex By Phoebe Tuite\" width=\"660\" height=\"371\" src=\"https:\/\/www.youtube.com\/embed\/3Nh78T9mZ7k?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe><\/p>\n<p>Alex is an early investor in the blockchain space, and one of the participants in the Ethereum crowdsale. He\u2019s only 29 years old, but he\u2019s had more luck with the cryptocurrency space than most of the rest of the world combined. Here\u2019s what happened:<\/p>\n<p>In 2014 I was working as a financial journalist for a now defunct website called Minyanville. I was looking for cool new stories and started writing about what was then called Bitcoin 2.0. Bitcoin had made a big splash and was now $500, and people were like \u201cWhat the fuck is this?\u201d While writing an article, I had an email interview with Vitalik Buterin, a 19 year old \u00a0supergenius who was doing the first ever crowd-token sale, where people could send Bitcoin to an address and then they would get Ether in return. Ethereum is a decentralized worldwide computer where every node on the network has something called an Ethereum virtual machine \u00a0\u00a0that can process smart contracts. These contracts are just little computer codes that send \u2018if this then that\u2019 statements. I didn\u2019t understand any of this at the time, I just thought he seemed really smart. So I took a shot.<\/p>\n<p>I took two Bitcoin, $1,000 total, submitted it to the Ethereum crowdsale, and promptly forgot about it. A few years later I started working with a company called Forecast, and we were starting to talk about we could use blockchain technology to solve our scaling costs. By this time I had lost track of the \u201cprivate key\u201d that gave me access to my Ethereum account. One Saturday \u00a0I\u2019m in the office by myself and thought, \u201cI\u2019ll look through an old google drive account, maybe it&#8217;s in a folder.\u201d And I find my private key. So I go to the Ethereum website, plug it in, and I see that I have 4,000 Ethereum. It was trading at $350, so I\u2019m looking at $1.4 million.<\/p>\n<p>So my brain explodes. I\u2019m curled up on the floor, it doesn\u2019t feel like reality. I come back home and tell my dad the news, \u201cYou found the lottery ticket!\u201d he tells me. We spend the rest of Labor Day weekend figuring out what the fuck to do. I was afraid my Ethereum could crash to zero tomorrow. We\u2019re trying to get on all these exchanges where we could sell it, but you need to have your identity verified first and it\u2019s Labor Day weekend and it\u2019s not processing.<\/p>\n<p>On Monday China announced it was banning initial coin offerings and the price of ethereum drops from $350 to $270. I\u2019m finally able to get on one exchange called Bitrex, and I spend the day selling off 3,000 coins at an average strike price of $300. I sold $900,000 worth of Ether. It just gets more insane because I realize that I haven\u2019t been trading Ethereum for US dollars, I\u2019ve been trading them for Tether, another cryptocurrency, which happens to be tethered to the US dollar. Using Tether in New York state isn\u2019t allowed, so now I have $900,000 pegged in another fucking token. I\u2019ve gone in a circle. I finally figured out how the fuck to cash out of Tether and spend the next 2 weeks trading. And now I\u2019m just sitting on this windfall.<\/p>\n<p>I think Ethereum is going to change the world. From a business perspective, you can solve a lot of problems with it, and it\u2019s pretty phenomenal. It\u2019s cool, it&#8217;s frontier frontier stuff. No one knows. It\u2019s been a life changing event in the most incredible way, because I know this technology can be used to do a lot of good and help a lot of people. People who accumulate it need to give back and help other people grow. I didn\u2019t go out and buy a lamborghini, because I\u2019m not that kinda guy. I bought this new laptop, I hired a \u00a0pretty great masseuse who comes once a week for me and my Dad. The most insane year of my life is about to conclude.<\/p>\n<p>After talking to Alex, I wanted to talk to an expert to get a better idea of the potential that cryptocurrency has for the future. David Yermack is a professor and chairman of the finance department at NYU Stern School. He teaches a class called \u201cBitcoin, Blockchains, and Digital Currency\u201d and is a leader in the field of cryptocurrency. Professor Yermack was born in Princeton and studied economics at Harvard, before working as a management consultant for two years. He returned to Harvard for his JD, MBA and PHD, which put him to do much more interdisciplinary research than his colleagues. He came to NYU in 1994, and has been here ever since.<\/p>\n<p>I\u2019ve been here now for 24 years, and for most of that time I was in the mainstream studying problems of corporate finance, corporate governance, executive compensation. These things have nothing at all to do with Bitcoin and digital currency, which I kind of stumbled upon by reading the newspaper. It began to hit people&#8217;s radar screens in 2012, when Bitcoin was about three years old. A few shops accepted it and it had enough enthusiasts that it caught the attention of the mainstream media.<\/p>\n<p>My interest in the ideas that underlie Bitcoin goes back to a high school course in protest literature where we read <i>The Crying of Lot 49<\/i> by Thomas Pynchon. This was about a group of people who start an alternative post office. This post office has secret signs and is operating in parallel to the regular post office, but it attracts a band of adherents protesting the government from a very libertarian point of view.<\/p>\n<p>That\u2019s the context for how I saw Bitcoin. It\u2019s people, not with a post office, but with a banking system, who\u2019ve gone off the grid and created a parallel economy to avoid the government. And it actually works! Even today it\u2019s hard to live on Bitcoin, it\u2019s possible, and I think this is in itself remarkable. But what really caught my interest, was the existence of a whole tribe of people who were able to construct an alternative financial system that could sustain itself, that there were enough of these people and the technology was creative enough to do this. So I began to study it.<\/p>\n<p>In the fall of 2013 it began to attract the attention of regulators and politicians. The US Senate held hearings for two days, asking what it was and if we needed to worry about it. Federal \u00a0Chairman, Ben Bernanke, gave testimony that was favorable. He said \u201cThis has a role to play.\u201d I was shocked that the head of the Fed would actually endorse this. Now, Bitcoin gives you a universal ledger of everybody\u2019s spending and transactions, which means that every transaction is traceable. I thought, \u201cThis is what they like about it, that if you\u2019re trying to catch people who avoid taxes or launder money, Bitcoin is great technology.\u201d<\/p>\n<p>I gave a talk about Bitcoin in November of 2013, and the topic just lit up the dining room. Every hand was in the air, and it went on for hours afterwards over beers and so forth. People were fascinated by this. So, I summarized my remarks in a short memo, and it became very popular on the internet. Within six months I was invited to meetings with the central bankers. They knew all about this thing, and they were afraid of it.<\/p>\n<p>In 2014 I consulted with Jeffrey Miller, a colleague at NYU Law School who teaches banking regulation and had a minor amount of Bitcoin in his class. I told him, \u201cWe should offer a course in this. We can be the agenda setters. There&#8217;s huge demand out on the street for students who can help with these compliance problems. We can train these students, and get some equity for the university.\u201d It was only approved because we had a lot of credibility as senior faculty. We basically rammed this through the committee, and people thought this would be funny to offer.<\/p>\n<p>We began teaching \u201cBitcoin, Blockchains, and Digital Currency\u201d in the fall of 2014. The course was very interesting, and the guest speakers were provocative. They really took you back to problems from 18th and 19th century economics that had never been fully resolved. We had 35 students the first time, 100 students with a waiting list the second time, and this spring we will probably have 200-300. Basically, this thing is doubling and tripling every year and we\u2019re now offering many more courses in this fintech (financial technology) area.<\/p>\n<p>I can\u2019t make a good case for wanting to own Bitcoin or the other crypto assets, given the amount of risk. It\u2019s volatile and difficult to hedge it with other assets. We can look backward and say we should&#8217;ve bought it because it\u2019s more than doubled, but I go by the book and own passive index funds. Some of the index funds will be making money off of Bitcoin, but only indirectly. I have, however, invested my human capital by spending years learning all the details. It has been a successful investment because I\u2019m getting better speaking invitations than at any point in my career. Bitcoin has taken me from being a well known professor to a leader in an important new field, and that\u2019s a high return professionally.<\/p>\n<p>Up until this year, Bitcoin had 85-90% of the value of all cryptocurrencies, but in the last six months, a couple of other cryptocurrencies have broken out of the pack. It\u2019s possible that Ethereum may pass Bitcoin&#8211;something that came kind of close to happening over the summer. \u00a0Ethereum is better managed, is a more versatile blockchain, and has more potential for things like smart contracts. We\u2019re just starting to see the possibilities in each area. Things may look completely different over the next 5-10 years. The blockchain is such a significant innovation that anyone at the university level not learning about this is missing something historic.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Phoebe Tuite December 4, 2017 Alex is an early investor in the blockchain space, and one of the participants in the Ethereum crowdsale. He\u2019s only 29 years old, but he\u2019s had more luck with the cryptocurrency space than most of the rest of the world combined. Here\u2019s what happened: In 2014 I was working &hellip; <a href=\"http:\/\/projects.nyujournalism.org\/tellingstories\/profile-alex\/\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">Profile: Alex<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":1,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Profile: Alex - Telling Stories<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/projects.nyujournalism.org\/tellingstories\/profile-alex\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Profile: Alex - Telling Stories\" \/>\n<meta property=\"og:description\" content=\"By Phoebe Tuite December 4, 2017 Alex is an early investor in the blockchain space, and one of the participants in the Ethereum crowdsale. 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