If things had gone just a bit differently, James Howells might today be as rich as the Queen of England. The decisive moment, he now thinks, occurred one evening in August, 2013, when he was twenty-eight and at home with his family in Newport, a small city on the Welsh coast. Howells and his partner, Hafina, were raising three children, and family trips—like the one that they had taken to Disneyland Paris—were fun but exhausting. So he had made plans to treat himself to what he called a “lads’ vacation”: a trip with friends to a resort in Cyprus. Howells, an engineer who helped maintain emergency-response systems for various communities in Wales, often worked from home, and that night he decided to neaten up his office. As he recently recalled to me, “The thought process was: I’m going to be drinking every day. I don’t want to be on a hangover and cleaning this mess up when I get back.”
At around 10:30 P.M., Hafina peeked into Howells’s office. “She wanted to have a fag with me,” he remembers. “The office area, with the window open, was the smoking zone.” She chatted with Howells as he chose which items to discard. “I’m chucking this out, putting this back in—bunch of cables, bunch of paperwork, broken mouse.”
In a cluttered desk drawer, he found two small hard drives. One, he knew, was blank. The other held files from an old Dell gaming laptop, including e-mails, music that he’d downloaded, and duplicates of family photographs. He’d removed the drive a few years earlier, after he’d spilled lemonade on the computer’s keyboard. Howells grabbed the unwanted hard drive and threw it into a black garbage bag.
Later, when the couple slid into bed, Howells asked Hafina, who dropped off their kids at day care each morning, if she would mind taking the trash to the dump also. He remembers her declining, saying, “It’s not my fucking job—it’s your job.” Howells conceded the point. As his head hit the pillow, he recalls, he made a mental note to remove the hard drive from the bag. “I’m a systems engineer,” he said. “I’ve never thrown a hard drive in the bin. It’s just a bad idea.”
The next day, Hafina got up early and took the garbage to the landfill after all. Howells remembers waking upon her return, at around nine. “Ah, did you take the bag to the tip?” he asked. He told himself, “Oh, fuck—she’s chucked it,” but he was still groggy, and he soon fell back asleep.
In Cyprus, Howells didn’t have as much fun as he had expected. His mates noticed that he wasn’t drinking his share, and upon returning to Wales, he told me, he was “in a shit mood, and couldn’t figure out why.”
A couple of months later, Howells realized what was bothering him. He came across a BBC news story about a twenty-nine-year-old Norwegian man who had just used profits he’d made as a bitcoin holder to put a down payment on a four-hundred-thousand-dollar apartment in Oslo. When plans for bitcoin were first introduced, in 2008, it was one of a number of new cryptocurrencies being touted as substitutes for government-issued money. Initially, most people had treated bitcoin as a curiosity, but it had since risen significantly in value, and was now starting to find acceptance as something you could actually use for buying and selling things.
Howells had known about bitcoin from the start. Almost five years earlier, shortly after the cryptocurrency was developed, he’d learned about it in an online forum. The Bitcoin system, which operated by linking individual computers together to form a vast, secure network, appealed to him immediately. It reminded him of two applications he’d liked: Napster, the rogue service for sharing music files, and SETI@home, which allowed users to combine the power of their computers to search for extraterrestrial life. Howells downloaded free software that made it possible to acquire bitcoin. He would lend his computer’s processing capabilities to help the Bitcoin system create a permanent record of network transactions, and, in return, the program would let him keep some currency. A private key—a unique chain of sixty-four numbers and letters—granted him exclusive access to his bitcoin stash. He soon set his gaming laptop to spend the overnight hours “mining bitcoin,” as the process came to be called.
The first time he mined, Howells’s computer was one of only five on the network. He told me, “I know this because when you’re in a Bitcoin network it tells you, on the bottom right, ‘You are connected to x amount of nodes,’ or machines.” He mined at night, off and on, for a couple of months. But the mining took a lot of processing power, causing the laptop to overheat. The computer’s whirring fan began to irritate Hafina, and he decided to stop. “It wasn’t worth putting up a fight,” he remembers. The coins had no value at the time, and there was no reason to think that they ever would. “It was just mining for fun,” he said. “It was an experiment.” The electricity required to keep his computer going had cost him about ten pounds.
Howells threw himself into other side projects. The son of a carpenter, he was handy. For his children, he turned an upstairs room into an elaborate replica of Minecraft, the video game. The kids loved it, he told me.
Half a year later, the spilled lemonade destroyed his gaming laptop. He transferred some of the hard drive’s contents to a new iMac, but he did not bother with the bitcoin folder. “There was no Bitcoin version on Apple at the time, so there was no reason,” he recalls. He then extracted the hard drive and put it in the desk drawer.
According to the BBC article, the Oslo man had bought the apartment partly by selling a thousand bitcoins, which were then worth about a hundred and seventy thousand dollars. By the time Howells ended his mining project, he had accumulated eight thousand coins—and in the fall of 2013 that stash was worth about $1.4 million. Howells’s salary at his engineering job was a small fraction of that, and he sometimes had to get up at 3 A.M. and travel long distances to make repairs to a town’s emergency-response system. Panicked, he checked his desk drawer. In it, he found the empty hard drive—not the one with the bitcoin folder.
Bitcoin was first proposed in October, 2008, by Satoshi Nakamoto—a pseudonym, for one person or perhaps several. No central bank or organization would control bitcoin, a purely digital currency. The total amount of money minted would be capped at twenty-one million coins and could not be changed.
Digital currencies had been proposed before, but none had truly taken off: they either had flaws in their technical design or did not find enough early adopters. Nakamoto framed his proposal, with its focus on decentralization and the limit on the total amount of bitcoin, as a shrewd response to the financial crisis of 2008. Central banks had tried to ward off a depression by flooding their economies with money, a move that had spurred business activity but had also created the potential for runaway inflation to decrease the value of people’s savings. Nakamoto declared that bitcoin could correct this flaw. In an early crypto forum, he explained that a fundamental drawback of conventional currencies was that their buying power depended on the whims of the government that backed them: “The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
Howells read Nakamoto’s proposal soon after it was posted. He was already skeptical of power and those who had it. The neoliberal years had not been good for Howells’s generation in Wales: the coal mines had closed, reducing trade at the port, and Newport lacked jobs in other industries. “The elders own all the property,” Howells told me. “People of my generation just leave.” The bailout of big banks after the 2008 crash taught him that “the dollar, the euro, and the pound are scams—the whole system is a sham.” He was an ideal apostle for the techno-utopianism of the Bitcoin system. “Me and Satoshi in 2009 both had the same vision,” Howells said.
Many of the first people who actually used bitcoin as money embraced the concept for a different reason: cryptocurrency transactions were untraceable. If someone paid you in bitcoin, you could evade taxes. If you bought drugs with bitcoin, the money you spent couldn’t be tied to you. Governments shut out of the global banking system could use bitcoin to buy weapons on the black market. George Bernard Shaw once wrote, “Money is not made in the light.” Bitcoin, then, was generated on a moonless night, at the bottom of a deep pit. As Nakamoto speculated in an early post, bitcoin “would be convenient for people who don’t have a credit card or don’t want to use the cards they have, either don’t want the spouse to see it on the bill or don’t trust giving their number to ‘porn guys.’ ”
Illicit activity likely helped bitcoin appreciate in value, but Howells was a libertarian, not a mobster. He liked that the Bitcoin system was borderless and incorporeal, as the rest of his online life was. He had been on the Internet every day since his early teens. During the nineties, when Wales had a brief tech boom, his mother had worked in a computer-chip factory, and she now worked in a betting shop. An appetite for a volatile cybercurrency was in his blood. Though he had no plans to spend the bitcoin he mined, he was pleased that the government couldn’t track how much of it he had. On the Bitcoin network, a central record, called a blockchain, certifies the authenticity of all the coins that have been mined—close to nineteen million to date—but doesn’t reveal who has them. Imagine a list of all the world’s pieces of gold which lacks the names of their owners.
from Hacker News https://ift.tt/31tI4rn
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