Bitcoin Billionaires by Ben Mezrich review – the tale of the Winklevoss twins
Coders, cocktails and a bank heist in reverse – the brothers who sued Mark Zuckerberg and hit bitcoin boom time
Double vision … Cameron and Tyler Winklevoss. Photograph: Charles Krupa/AP
Double vision … Cameron and Tyler Winklevoss. Photograph: Charles Krupa/AP
I f you have seen The Social Network, you will remember the Winklevoss twins: tall, preppy Harvard students (both played by Armie Hammer) who also happened to be Olympic oarsmen and who ended up suing Mark Zuckerberg for allegedly stealing their idea to make Facebook. (Zuckerberg eventually settled for $65m.) In that film they were portrayed as faintly ridiculous comic relief, personifying the establishment against which the geeks triumphed. No doubt, then, they were eager to be interviewed for this book, in which they are the heroes.
Ben Mezrich wrote the non-fiction account on which The Social Network was based, The Accidental Billionaires, and since it seems that the word “billionaires” works well in a book title, he is back to tell the story of how the Winklevi – as they are commonly known, though for some reason he insists here on spelling it Winklevii – made an early big bet on bitcoin, the digital cryptocurrency, and won big.
So far that doesn’t seem like much of a story – wealthy speculators speculate and accumulate – but what Mezrich does with it is more interesting than that. It ends up being a kind of anthropology of the bitcoin craze. On one side there are the libertarian anarchists who hate government and despise its “fiat money”, and also think people ought to be free to buy drugs on dark-web supermarkets such as Silk Road, which ran entirely on bitcoin until it was shut down. (The twentysomething geek who controlled the site was eventually sentenced to two life sentences plus 40 years, with no possibility of parole.) On the other side there are – well, the Winklevi, who think bitcoin ought to be respectable and integrated into the regulated banking system.
Armie Hammer as Cameron Winklevoss, left, and Max Minghella as Divya Narendra in The Social Network (2010). Photograph: Allstar/Columbia Pictures/Sportsphoto Ltd
The problem that Tyler and Cameron Winklevoss face at the beginning of the book is that they are looking for somewhere to invest their Facebook settlement money, but no one in Silicon Valley wants to take their cash: Zuckerberg still hates them, and most startups dream of being acquired by Facebook, so it’s not worth the risk to deal with the twins. In New York, however, they meet a guy called Charlie Shrem, who runs an outfit called BitInstant, which enables people to buy bitcoin easily. They invest in his company and begin buying bitcoin. Shrem starts to enjoy the nightclubs-and-cocktails life a little too well, but the Winklevi know when to keep business and pleasure separate. When they first invest, bitcoin is trading at $120 per coin; in 2017 it hits $10,000 per coin and makes them billionaires. (At the time of writing, however, the notoriously volatile currency is back at $7,000 or so.) The win is all the sweeter because Zuckerberg never saw it coming.
As an introduction to the rise of cryptocurrencies this book is as painless and novelistic as could be imagined
The book is written with a slick beauty. It is structured as a sequence of dramatic scenes that often begin with movie-style datelines (“San Francisco. October 1, 2013”), and careful attention is paid to outfits: Tyler “was decked out in a crisp, white linen shirt, a brightly colored Vilebrequin swimsuit, and a woven straw fedora”. There is an especially brilliant and cinematic chapter about “a bank heist in reverse”, which details how the Winklevi split their private key (the long alphanumeric code that represented their bitcoin holdings) into three parts and stashed printouts in various safe deposit boxes all over the US, having erased all digital copies. The book even has a truly heartwarming ending, at which the reader gives a little cheer. As an introduction to the rise of cryptocurrencies and the modern tech world generally, it is as painless and novelistic as could be imagined.
Mezrich ends Bitcoin Billionaires on the fence about whether bitcoin in particular really is the future of money, or whether its underlying “blockchain” architecture might just be the future of automated contracts, or of privacy. (Its crypto element, he suggests, might free us “from the siloed monopolies of Facebook, Google, Amazon, etc”.) Perhaps the most persuasive argument comes from a character who points out that: “With bitcoin, you don’t have to trust anybody. Because … it’s all based on math.” That seemed an astute point after the global financial crash. But Mezrich doesn’t ever really discuss the significant downsides.
The problem with bitcoin is that, by design, validating transactions and “mining” new currency use enormous amounts of energy pumped into supercomputing centres to solve very difficult but totally meaningless maths problems. Currently the maintenance of bitcoin worldwide has a bigger carbon footprint than the whole of Switzerland. As presently constituted, it thus has a hard thermodynamic limit to its usefulness, as well as being a significant contributor to global warming.
And who knows what might be discovered if the bitcoin network – the most powerful computing cluster the world has ever seen – were instead devoted to solving problems in physics or protein biology? To successful gamblers, bitcoin has been a gravy train; to many others, it is looking more and more like a spectacular misallocation of global resources.
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Spend Some Time With the Winklevii
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BITCOIN BILLIONAIRES
A True Story of Genius, Betrayal, and Redemption
By Ben Mezrich
At the end of 2017, Bitcoin mania was in full swing. Prices of the digital currency had reached a record high of about $20,000 a pop. Wall Street banks were rushing to get in on the frenzy. Egged on by hyperbolic cheerleaders, small-time investors socked their savings in the so-called cryptocurrency.
And then, just as you would expect of an asset whose value had increased exponentially in the blink of an eye, the bubble burst. The price of Bitcoins fell by about 80 percent (though it has rebounded some lately). Mainstream financial institutions scurried away, jittery about the currency’s susceptibility to manipulation and money laundering. Many individuals who put their faith in the digital currency saw their fortunes erased.
In “Bitcoin Billionaires,” Ben Mezrich chronicles the dizzying rise of the digital currency, through the eyes of two of its biggest boosters: the celebrity twins Cameron and Tyler Winklevoss. He doesn’t get around to detailing the nausea-inducing fall.
The Winklevoss brothers are best known for their public brawl with the Facebook founder Mark Zuckerberg. They all attended Harvard together, and the twins later claimed in a lawsuit that Zuckerberg stole their idea for his social network. That story is well known thanks in part to Mezrich’s previous book, “The Accidental Billionaires.” (It was adapted by Aaron Sorkin into the award-winning film “The Social Network.”)
“Bitcoin Billionaires” is essentially a sequel to Mezrich’s breezy, best-selling Facebook book. It picks up with the Winklevoss brothers prying a lucrative settlement — cash and Facebook shares that will be worth more than $200 million — out of Zuckerberg. They soon plow a chunk of that into the Bitcoin circus, where they encounter shameless hucksters, hapless computer geeks and shadowy criminals.
In “The Accidental Billionaires,” the identical twins — hulking, 6-foot-5-inch Olympic rowers — came across as well-intentioned overachievers who fall victim to the ruthless, brilliant Zuckerberg. In “Bitcoin Billionaires,” Mezrich goes in a slightly different direction, caricaturing the Winklevii — as the brothers are collectively nicknamed — as grumpy geniuses and sympathetic underdogs.
We are supposed to feel their pain as they are ostracized from Facebook-dominated Silicon Valley and as they struggle to find worthwhile companies in which to invest their nine-figure windfalls.
Of course, it’s hard to muster much pity for two privileged young men — raised in Greenwich, Conn., their father a wealthy consultant — who pocketed hundreds of millions of dollars for, in essence, spending a few months in college hatching and then failing to execute on a half-baked internet idea.
In any case, the Winklevii soon confront a series of challenges. The first is what to do with their newfound fortunes. The twins know they are destined to create important things, but they’re initially not sure what those things should be. As Mezrich explains: “Tyler and Cameron were builders. As kids they built LEGOs. As teenagers — they built webpages.” A couple of paragraphs later, Mezrich adds, “Tyler and Cameron didn’t believe they were on the earth to exist; they were here to create, to build.”
After months of fruitless searching for things to build, the dejected twins head to Ibiza for a break — the first “real vacation in their entire lives,” Mezrich notes, implausibly. They mope to a dance party, and that is where they bump into a Brooklyn entrepreneur who is touting Bitcoin as the Next Big Thing.
The twins get excited, do some research, talk to Dad, and invest in an online company that makes it easier for people to acquire the digital currency. Then they use some of their Facebook winnings to buy about 1 percent of the world’s total outstanding Bitcoins. Their timing is great — Bitcoin is dirt cheap in 2013 — and as its value rockets higher, the Winklevoss brothers get richer and richer. They go to really great parties. And some of their Silicon Valley haters eventually embrace them, old wounds salved by new wealth.
Mezrich treats the brothers’ Bitcoin binge as something profound, as if they are the visionaries who created the cryptocurrency rather than the rich gamblers who wagered on it. He hails their subsequent Bitcoin proselytizing as crucial to the mainstreaming of a once-obscure currency, without acknowledging that their pitch might be self-serving, intended to drive up the price of their prized asset.
Mezrich is a talented storyteller, and portions of “Bitcoin Billionaires” offer memorable glimpses inside the messy world of a start-up currency.
As the value of their Bitcoin hoard soars, for example, the twins go to elaborate (paranoid?) lengths to safeguard it, locking scraps of printed computer code in safe deposit boxes in random banks all over the country.
And we encounter a genuine underdog — one who is much more textured than the worshipfully portrayed Winklevii — in the twins’ business partner, Charlie Shrem. Raised in a Syrian Orthodox Jewish neighborhood in Brooklyn, Shrem is propelled by his burning ambition to escape his parents’ basement. He might be a genius, and he is certainly loyal, but he is also undisciplined, gets carried away with his fledgling fame and demonstrates remarkably poor judgment in his fellow humans.
Even here, though, Mezrich’s tale is hampered by his reliance on the Winklevoss brothers as his main sources. (Mezrich writes in an author’s note that the book is based on “hundreds of sources,” but the twins’ very large fingerprints are basically the only ones visible.) The Winklevii apparently came to loathe Shrem, and the story jolts back and forth between Mezrich’s attempts to capture the character’s true essence and uncritical parroting of the twins’ harsh judgments.
Throughout, the narrative is polluted by clichés — “the battle for Bitcoin had just begun,” we’re told — and stilted attempts at recreating dialogue. At one point, a recent Stanford grad simply named “Jake” tells the Winklevoss brothers — then still radioactive from their war with the mighty Zuckerberg — that he won’t accept their tainted money in his virtual-reality start-up. “It might be optics, but optics are important in a land of dreamers,” Jake lectures. “Your dollars might be green, but they’re marked.” Come on.
And then there is Mezrich’s jarring disclosure at the outset that some details and settings described in the book are “imagined.” It is hard to overcome the impression that large swaths of the book fall into that fictional zone. That includes a bizarre final scene, inside Mark Zuckerberg’s office.
“The Accidental Billionaires” also suffered from Mezrich’s flippant writing and thin sourcing. But that book worked because its topic — the creation of a social network that fundamentally changed the world, for better and for worse — was freighted with importance.
That isn’t the case in “Bitcoin Billionaires.” The supposedly revolutionary powers of digital currencies have yet to be unleashed. And while Bitcoin’s rise seemed to make its enduring relevance self-evident, Mezrich doesn’t bother with the consequences of its subsequent plunge — including the inconvenient fact that the Winklevoss twins’ Bitcoin fortunes no longer appear to be measured in billions.
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Bitcoin Billionaires by Ben Mezrich
I never believed the hate-hype about the Winklevoss twins, because like them I bear the burden of being beautiful. Of course people hated them, because they were also tall, from a proper family, and obscenely rich. But I hadn’t realized how bad they had it, relatively speaking.
For example, they were shut out of Silicon Valley as pariahs because Facebook was the It Kid. To contextualize how bad the twins had it, imagine what would happen to even a mainstream Silicon Valley player who came out pro-Trump. (Peter Thiel had to leave town.)
Who are the Winklevoss twins, you might ask? All I remembered about the Winklevoss twins was that the media wanted me to hate them. Two modern day American Psychos with slicked back hair and form-fitting suits. Several years ago they were in the news for a lawsuit involving Facebook. Either they co-founded the company, or hired Mark Zuckerberg to build it for them, and then Zuck betrayed them.
Bitcoin Billionaires is a redemption story of sorts, which is an unusual take to me because the twins had already won at life. They were rich, tall, and great-looking. Who cares if some dorks in SV don’t want to play with them?
They cared, and it’s clear throughout they took the slight personally.
Quotes from The Count of Monte Cristo are spread throughout Bitcoin Billionaires, which suggests the Winklevoss twins wanted revenge against Mark Zuckerberg. If so, they succeeded, as “Living well is the best revenge,” second only to making billions on Bitcoin.
A few quibbles from me of course. There are far too many party scenes of Ibiza and descriptions of how hunky the twins are. (Remember, I’m pro-beauty. But we didn’t need to be remind over and over how tall and muscular they are.)
One would get the impression from Bitcoin Billionaires that the Winklevoss twins have done no wrong, ever. No one is that vanilla, even two WASPs from Connecticut. (As the Kennedy family has shown, its often those types who have the most “interesting” back stories.)
Bitcoin Billionaires also gives the Winklevoss twins too much credit in driving Bitcoin into the mainstream. The twins didn’t code or do any Bitcoin tech, and their company Gemini is a much smaller player than Coinbase. It’s best to understand the Winklevoss twins as savvy investors rather than blockchain innovation drivers.
All of the above feels like nit-picks, which you’ll have to forgive as I know the crypto space better than most and thus am able to see some misunderstandings in the book, such as the part describing Ross Ulbricht’s case. Charlie Shrem is also treated unduly harshly, although the book is from the Winklevoss twin’s perspective, and it appears they all had some falling out.
Bitcoin Billionaires is a fun read with interesting details throughout, and I recommend it.
Be sure to also watch Banking on Bitcoin, a documentary that focuses on some of the more central players who were moved to the periphery fore the Winklevoss twins biopic.
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