Strip Clubs, Lambos and Hackers: A Tale of Two Bitcoins
When one imagines a networking event for a professional conference, the most well-known and over-the-top strip club in Miami probably isn’t the venue that comes to mind.
Yet that’s exactly where The North American Bitcoin Conference decided to host it. “Join us at E11even for some networking and R&R. Or dancing,” the description read.
There was a lot of dancing.
Not your nerdy friend’s crypto
Over the course of 2017, cryptocurrency experienced an unprecedented explosion.
After years of quietly languishing below $1,000, the price of a bitcoin began to increase rapidly and public attention along with it. But it wasn’t alone. At the same time, bitcoin’s so-called dominance index, the size of the bitcoin market cap relative to all other cryptocurrencies, shrunk.
The cause? Other established cryptocurrencies like ethereum and litecoin were making their own explosive gains, while scores of entirely new and tokens were created out of thin air en masse with shocking overnight valuations.
An influx of new investors wanted in on this digital gold rush, buying into these new initial coin offerings or “ICOs” as fast as they could be created. Suddenly, everyone was making it big. Self-professed expert blockchain investors and traders were springing up everywhere overnight.
Cryptocurrency was no longer the domain of just cypherpunks, anarchists and radical libertarians. In fact those early groups all but quickly disappeared from the public spotlight in favor of this newer, shinier, get-rich-quick crypto culture.
Fortunes were being made after all, and tales of overnight success are much better media stories than the ongoing and abstruse technical debates about the real use cases, limitations and challenges facing blockchain technology.
Delicately balancing network throughput and decentralization? That’s boring. Making outrageous money fast, and showing it off with Lamborghinis (“Lambos” for short) and extravagant strip club parties? Now that’s exciting.
As the spotlight grew so did the influx of buyers, creating a self reinforcing cycle of irrational exuberance and the ultimate bull run. The problem? No one had any actual idea what exactly it was that they were buying.
Blockchain was simply the newest and coolest buzzword. The biggest takeaway seemed to be that anything it was attached to could make you rich, even if that thing was iced tea.
But there was one problematic fact: In cryptocurrency you are far more likely to buy into an effective scam than “the next bitcoin.”
Anyone can create and market a generic blockchain-based token with little or no added unique functionality. The barrier to entry for creating a new coin is nearly non-existent, and new investors suffering from FOMO (fear of missing out) don’t have the expertise to vet them.
By leveraging pseudo-scientific buzzwords and exploiting these new low-information investors, projects with unsound fundamentals and total scams alike can quickly reach dizzying heights.
A notable example is tron, which at its peak sported a valuation higher than that of Twitter, placing it within the top 10 cryptocurrencies by market cap. What is tron? A standard ethereum-powered token with no special functionality, and a white paper with more questions than answers. Not only is there zero deployed infrastructure or uniquely developed technology behind tron, but the white paper as it turns out was largely unoriginal at best, or totally plagiarized at worst.
Even more alarming than a simple lack of education or due diligence, however, is the fact that perhaps many new cryptocurrency investors don’t actually care.
Take Ponzicoin, the self-proclaimed scam jokingly launched as an outright ponzi-scheme. It raised over $25,000 on the ethereum platform in eight hours before its developer pulled the plug as best he could given the irreversible nature of blockchain smart contracts. Similar openly advertised Ponzi scheme PoWH coin sold $1 million-worth of coins in three days before later being hacked, perfectly encapsulating everything sour about ethereum smart contracts.
These events shows us many new crypto investors seem to be perfectly happy to invest in outright fraud and vapor, so long as they think they believe they won’t be the ones left holding the bag.
Because in the end, who cares? Fortunes were being made, which was in turn attracting even greater amounts of new money to keep the party going. It’s no surprise then that the North American Bitcoin Conference featured so many ICOs and new coins that it could easily be considered a “bitcoin conference” for marketing purposes only.
As it turns out Miami was the perfect outlet for the this newer, flashier and carefree type of crypto.
The signal in the noise
While the cypherpunk and hacker ethos of bitcoin and cryptocurrency have received palpably less attention during the late last year, it’s hardly because it has disappeared.
It’s actually this group that has proven to be the most consistent aspect of the cryptocurrency communities in general and bitcoin’s in particular. Regardless of media attention or short-term market performance their mantra remains the same: cypherpunks write code.
Douglas Oscar and Drew Carey are the founders of Bitstop, a Bitcoin ATM provider based in South Florida. The same week as the North American Bitcoin Conference they hosted their annual Miami Bitcoin Hackathon.
“All the change and progress is going to come from the developers, not the Lambos and marketing fluff. … All of that stuff that happens at the conference is only possible because of the kind of work people do here,” said Douglas.
You’re unlikely to find a “Lambo” at the hackathon, and for the Douglas that’s a good thing.
But beyond the presence of Lambos, there were other differences noted by attendees of both events.
Software developer and co-founder of development shop Bushido Labs Sam Abassi remarked on his impression of the various ICOs and projects on display at The North American Bitcoin Conference:
“There’s a lot of nonsense, too much hype and no one is deliberating whether or not what they’re doing makes a lot of sense. In the next six months, many of these companies are going to fail when they figure out they can’t deliver. … I felt like the smartest person at the conference. Here I was the dumbest.”
The shared disdain of attendees for the wild speculation in the larger cryptocurrency ecosystem was clearly reflected in the second place winner of the Hackathon: an app called Pump and Dump.
By using the Binance API, Pump and Dump allows you to choose whether to diversify into a large basket of alternative cryptocurrencies, or reconsolidate it back into bitcoin with a simple interface that cuts through all the rhetoric.
Team member Nathan Milian explained it simply: “You press one button ‘Pump’ if you want to just buy a bunch of shitcoins, and ‘Dump’ to sell it all back for bitcoin.”
So, if attendees were in agreement regarding the pervasive nature of distractions in the space, were they in agreement on where research and development efforts were best focused? Not quite.
For their part Abassi and Bushido Labs are dipping their toe into cryptocurrency development for the first time with Kim-Jung Coin, an ethereum-based token in the vein of the popular game CryptoKitties.
“Bitcoin is the OG, but ethereum is just very developer friendly. We just jumped right in and started looking at these other contracts out there and were able to start writing our own,” he said.
Unlike The North American Bitcoin Conference however, the rules of the Bitcoin Hackathon itself strictly limits participation to bitcoin-related projects. “Anything you can do on ethereum you can do with bitcoin,” explained Bitstop co-founder Drew Carey.
Indeed, several developers took this literally, with multiple teams experimenting with the ethereum virtual machine, the component that compiles smart contracts, on top of bitcoin using the the Rootstock and Counterparty platforms. These technologies allow developers to write smart contract functionality using Solidity, while leveraging the network and enhanced security of bitcoin.
Others like SetOcean developer Bernie Garcia decided to take the plunge into the still-nascent layer two technology, the Lightning Network.
“I wasn’t able to get very far since I had problems with setup. … I had issues with the package documentation but the LND (Lightning Network Daemon) documentation itself is really good,” he explained.
“It’s obviously still very early, there’s still a lot of setup you need to do manually. But it’s looking good and I’m excited to get deeper into it. Next step will be just getting more familiar with the software on testnet, and creating a small network of payment channels with coworkers and family,” he said.
A general consensus
If there was one thing Hackathon participants agreed on besides their ire for the speculative frenzy represented by the nearby conference, it’s the need for sound education to counter it.
“Speculation is killing education,” vented Jesus Najera of SetOcean, a sentiment echoed by Bushido’s Abassi. “Were hitting a bottleneck, there’s all this interest but just not enough people doing actual development,” he explained. “Education is key.”
It’s little surprise then that the first place prize for the Hackathon went to Evan Martinez and his online learning portal, Bitcoin Institute of Technology.
Created from scratch, the homepage promotes learning courses for everyday use, finance and development categories. Due to the Hackathon’s limited time, Martinez chose to focus on the development category, an area of exploding demand in the space. It featured a code editor in the browser where students could write code to pass tests that are integral to learning about how blockchain functions on the software level.
Giving his thoughts on the wider cryptocurrency ecosystem and why he chooses to focus his efforts on bitcoin, Evan explained:
“Bitcoin I think is the purest coin in terms of technology. It aligns the best with my ideals as an open source programmer. It’s simple, and decentralized. It does one thing and it does one thing really well. … I want to help people learn about and understand that.”
While the opinions of developers in the space differ as to how the future may look, there is consensus on one thing. Ignore prices, and don’t succumb to the fear of missing out.
“It’s still incredibly early,” says Douglas. “People just need to take the time to stop and actually learn.”
Car image courtesy of Chris Tsiolis/Twitter