While bitcoin lost 85% of its value over 2018, the real tragedy of the bear market has been the human cost. In this series of guest posts, Inferno publishes interviews with former members of the blockchain scene who left the crypto sector for the real world. Names have been changed to protect privacy.
It’s a crisp January morning and I’m waiting outside the Starbucks in the concourse of King’s Cross station, London. It’s 10 am and the commuter traffic has slowed, but King’s Cross is far from quiet. It’s a constant hubbub of action that feels like it will never cease. But cease it will, at 1am, when the station locks its doors for the night. Then there’s a four-hour window of absolute desolation. Silence, like a scene from a post-apocalyptic movie. The analogy is poignant.
‘That’s what happened in the crypto world,’ Lenny tells me when he arrives, punctual to the minute. He’s not at all what I expect. I had been anticipating a skinny kid, maybe just out of college, hoodie and greasy hair, whose naive dreams of getting rich quick had been shattered by a brutal downturn in the cryptocurrency markets. But Lenny is in his mid-thirties, clean-shaven and wearing an M&S shirt and jacket. This is someone who still makes an effort about his appearance. Not because it will help him get a job, I later discover, but because right now these little rituals are the only things holding back the tide. He looks like he works out, something confirmed by his impressive grip when he shakes my hand. He’s strong – at least, physically. Emotionally, it’s a different story.
‘It was like 28 Days Later,’ he explains, when we’ve sat with our lattes inside the doorway. ‘One day everything’s normal, you’re going about your life, you have a fiance, a future, and it’s all good. Then you wake up and…’ He makes a nondescript gesture, but the meaning is clear. ‘It’s all gone. Almost overnight, your hopes and dreams. The wealth is one thing. But it’s the loss of identity that really destroyed me.’
Growing up with a father who turned to gold as a store of value during the high inflation of the 1970s, and a mother who was one of the first women to earn her economics doctorate from Cambridge, Lennie was exposed to the Austrian school of thought at an early stage. ‘It made sense, intuitively,’ he explains. ‘Deflationary monetary policy, gold-backed currencies – and bitcoin as the technological successor to all that. I was hooked.’
For a while, it worked out exactly as planned. Lenny started buying bitcoin mid-way through 2016. As the value began to rise, he increased his position and took out a loan. ‘The idea was to book some of the profits, pay off my debts and buy gold, and weather the storm that we all knew was coming,’ he says – his ‘all’ referencing the echo-chamber of the crypto forums, where talk of impending economic collapse are the bread and butter of daily conversation. ‘But it didn’t work out that way.’
Lennie gave up his job in the autumn of 2017, just as bitcoin began its parabolic rise – and shortly before he opened a significant leveraged position. ‘I walked out of the office one day after yet another argument with my colleagues, who were calling bitcoin a scam. They laughed at me; none of them understood. And for the record, I still don’t think they were right. Not about the scam, not about the technology. I just told them I didn’t need to work again, ever, and to enjoy their lives. And I left.’
Barely six weeks later, the bubble had burst, and Lennie had lost his girlfriend, his flat and his dignity. ‘I was right about one thing,’ he continues ruefully. ‘Kind of. I haven’t worked since.’
Central to the extensive therapy and self-help work Lennie has done to rebuild his shattered confidence in the wake of bitcoin’s crash has been reading landmark works of conventional economics: Keynes, Smith and others, as well as studying the views of central banks on both crypto and the wider economy. ‘I avoided Milton Friedman,’ he admits. ‘I’m not strong enough yet. Maybe I never will be.’
When you look under the surface of the day-to-day ups-and-downs of the economy, he summarises for me, ‘there’s nothing wrong with our monetary system. People have used money for thousands of years and it’s always worked fine. And the economy isn’t broken either – the evidence is in the constant increase in spending and consumption, the growth of debt as consumers borrow against rising asset prices, the way the money moves round and round, facilitated by the banking system. And inflation’ – here, he almost smiles – ‘it actually helps power everything. Look at what happened with the gold standard; it nearly ruined America. Without inflation, none of this would work.’
The heating is turned up high in Starbucks but he hugs his half-empty mug tight to his chest – for comfort, I infer, not simply warmth. A strong man with a hopelessly inadequate security blanket. There is something terribly broken about Lenny, a lost-ness, as if he has come out of a relationship with a woman he truly loved who betrayed him. Perhaps who never was what he thought she was, which paradoxically makes the loss so much harder to bear.
‘So you don’t believe we’re heading for another crash?’ I try gently, pointing out of the door and across the concourse to the huge screens, across which are scrolling the red figures of the stock markets’ year-to-date performance.
This time, he actually does laugh. ‘Remember, I’ve lived through a crypto crash. I’m not scared by normal market cycles. Minus 6% is a good day.’
And, he omits to add, he has already lost everything anyway.
The author is an experienced financial journalist whose opinions and interviews have been featured in The Guardian, Forbes and the Financial Times. He writes here under the pseudonym Marcus Aurelius.
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