Vitalik Buterin is a crypto-celebrity. If you are into Bitcoin, there's a good chance that you know who he is. In 2011, after his dad told him about Bitcoin, Buterin, then 17 years old, decided to immerse himself in the new technology. He found he could easily parse Bitcoin's underlying code, even if the concept of Bitcoin itself was difficult to explain to non-geeks. Hoping to spread the word, he started blogging about the crypto-currency and was soon being invited to speak at Bitcoin conferences around the world. He gradually evolved from a Bitcoin commentator to an crypto-preneur. More than a year ago, at 20, he co-founded Ethereum, a not-yet-launched project that was lauded by Wired as a platform that "lets you build practically anything in the image of bitcoin," including financial trading markets, contract systems, and cloud-based storage systems like Dropbox.
"It doesn’t provide any barriers to people," he told me. "It doesn’t restrict you at all."
It's been a rough year for crypto-currency fans like Buterin. The price of a single Bitcoin has fallen to around $270, roughly 80 percent down from its 2013 high. The credibility-building efforts of previous years have been undermined by an alleged Ponzi scheme and the conviction of Silk Road mastermind Ross Ulbricht. And although sites like Overstock.com and Zappos have begun accepting Bitcoin in lieu of credit card payments, the currency hasn't exactly caught on. Venture capitalists and aficionados who bought thousands of bitcoins near their peak have seen millions of dollars go up in smoke; Bitcoin mines are sitting dormant, their super-computers no longer worth running.
But amid the chaos, a small, determined group of young crypto-entrepreneurs in Silicon Valley is still plugging away. This winter, I started on a quest to understand who these devout Bitcoiners were, and what kept them going. I wanted to find out why smart kids were dropping out of school, leaving cushy jobs at respected financial services firms, and foregoing high-paying jobs at more established tech companies to wager their youth on an industry that could implode at any moment.
I decided to start my search at the "Crypto Castle"—the nickname for a group residence in San Francisco that houses many of the city's top young Bitcoin entrepreneurs. The three-story, five-bedroom home, located in the Potrero Hill neighborhood, is inhabited entirely by teens and twenty-somethings who are working on cryptocurrency start-ups. As many as eight people stay here at one time; all have a bed, or at least a bunk bed.
From the outside, the Crypto Castle looks like just another blue-and-white rowhouse. But inside, a Bitcoin revolution is brewing. After being buzzed in on a recent afternoon, I climbed two staircases—past bare walls and messy rooms with unmade beds—up to the common room on the top floor. Here's who I found inside:
The coin artist
The common room of the Crypto Castle is huge, with a fireplace and floor-to-ceiling windows with a pristine view of the bay. It must have been breathtaking once. But the Bitcoiners' dorm-room decor has muted the effect. When I arrived, two roommates sat silently on couches with laptops on their thighs, coding away. There was a whiteboard with illegible scribbles and wall shelves lined with technical books and bottles of tequila and whiskey.
Buterin, a lanky 21-year-old, walked in. He was wearing a t-shirt that said: “You read my t-shirt. That’s enough social interaction for one day.” (Buterin lives in Canada full-time, but crashes in San Francisco frequently, often in the Crypto Castle.)
Although Ethereum has secured $18 million in funding, Buterin says he isn't simply a get-rich-quick schemer like many of Silicon Valley's crypto-dabblers. He's an idealist, on a mission to redirect the energy around Bitcoin toward more productive efforts. In particular, he wants to disrupt commerce on the Internet and usher in a true peer-to-peer economy, using Bitcoin-based technology to eliminate platform middlemen like Uber and Airbnb that currently take generous cuts of the transactions they enable.
“The idea is creating platforms that do things like Uber and Airbnb but without the Uber and Airbnb,” he told me, as we chatted next to the Crypto Castle's kitchen counter.
Buterin explained how this could work. Today, he says, we rely on Uber and Airbnb to run one-to-five-star rating systems for customers and suppliers, so that we don't accidentally get into a car with a psycho or rent our apartment to a kleptomaniac. Buterin thinks that these functions could be replaced with a Bitcoin-based rating system that would work by making all of these systems fully transparent, and available for everyone to see.
Like many Bitcoin developers, Buterin is putting his hopes on the blockchain—the protocol that powers Bitcoin. (Think of it like this: if Bitcoin is e-mail, the blockchain is the SMTP protocol that makes e-mail work.) The defining feature of the blockchain is that it acts as a ledger—every Bitcoin transaction is recorded on it, and available for anyone to see. Since it leaves an indelible, public record of a person's Bitcoin-based activity, the blockchain has been described as "a mechanism for us to collectively confer legitimacy on one another."
Ethereum, which sits on top of a blockchain-like code base, could take advantage of that distributed-trust capability. But its success would rest on people around the globe downloading new software to their computers, figuring out the esoteric details of attaching ratings to a blockchain, and adjusting to a world in which their transactions are made public by default. That's not likely to happen, of course. Skeptics of Buterin's plan include Bitcoin's lead developer Gavin Andresen, who wrote, “I suspect they’re trying to do too much … and will end up either radically reducing the scope of what they’re trying to do or will get tired of playing whack-a-mole with security and DoS [denial-of-service] vulnerabilities.”
Buterin's stance on extreme transparency has put him into conflict with other Bitcoin entrepreneurs, who want to keep the protocol anonymous and ensure users' privacy. Hence, his constant trips to San Francisco and other cities around the globe trying to jump-start his crypto-network. “Even if just one of these platforms succeeds, that will be the equivalent of the whole industry succeeding," he says.
If they work, projects like Ethereum could provide a glimpse of the commercial Internet's future. But first, young Bitcoiners like Buterin will have to change a lot of minds—including some in their own community.
As we wrapped up our chat and Buterin left for another meeting, another Crypto Castle roommate, Jeremy Gardner, came in. Gardner is the co-founder of Augur, a Bitcoin-based prediction market that allows users to bet on elections, sports games, and other events using blockchain authentication. A boyish 22-year-old wearing a white button-down shirt, tie and slacks, he stuck out like a sore preppy thumb among the unkempt coders. Gardner moved into the Crypto Castle at the beginning of January. He won’t divulge how much the rent is, or whether his roommates pay in Bitcoin or cash. All he’ll say is that he and the other housemates pay something to live there.
Before dropping out to focus on Bitcoin full-time, Gardner studied political strategy at the University of Michigan. He used to be a crypto-skeptic who equated Bitcoin with drug money, but friends encouraged him to buy some when they thought the price might soar. He did, and within a month, he says, the price quintupled, from $200 to $1,000, netting him some serious gains.
Then, he met Kinnard Hockenhull, a crypto-evangelist and undergrad at the University of Michigan, who kept telling him that Bitcoin was going to change the world. Hockenhull encouraged him to join the university's Bitcoin club, through which he learned of other Bitcoin clubs. He decided to link them all together by co-founding the College Cryptocurrency Network in March 2014.
“The only way this technology will succeed is if there’s a grassroots undertaking to really spread the word about this,” said Gardner, speaking on the Crypto Castle's deck with a beer in his hand. “It can’t start at the top. It has to start at the bottom…If you don’t have young people talking about this with their families, who’s going to tell them about it besides the news?”
And the news, he says, usually gets it wrong. It’s partly an age thing. Adults in the developed world have lived most of their lives in stable economies, he says. They have decades of experience telling them that the status quo works well enough. But Bitcoin, he says, is radically different. It’s digital. It transcends borders. It’s never been backed by gold or a government.
Like Buterin, Gardner tends to get vague and grandiose when he talks about the blockchain's potential. Right now, he says, its utility is mostly limited to payments, but in the future it could be used for other types of transactions: contracts, voting, banking, peer-to-peer insurance, medical records, sharing-economy type businesses, and predictions markets. In a blockchain world, he says, trust would be ubiquitous. We would harken back to a pre-Internet time when we lived in small hyperlocal communities where everyone knew each other and where the prosperity of the group hinged on its collective success, and a bad reputation was something you couldn't fix by re-installing an app.
That’s what’s interesting, and odd, about the crypto movement. It’s trying to take a tool that, so far, most people associate with anti-social behavior—buying drugs, sowing fraud, enabling tax evasion—and turn it into a catalyst for community-building.
“To me, it says so much. It just shows how much this technology transcends culture, socioeconomic class, background, race," says Gardner. (Although it clearly has a ways to go: one survey showed that 95 percent of Bitcoin users are men.)
“The blockchain is here to stay," Gardner says. "It’s here to change the world. It really can’t not. People who get that really get excited.”
The media maven
Toni Casserly is one of the people who, by Gardner's definition, "gets it." I met her at the Crypto Castle, after Jeremy and I moved from the deck to the living room, and quickly noticed her piercing eyes and mellifluous voice. The 24-year-old actress-turned-Bitcoiner moved in about two months ago to help Augur with its marketing. The rest of the time she runs CoinTelegraph, an online magazine for the crypto-world.
Casserly, a charismatic artist with a theatrical flare, is the Crypto Castle's only female resident. She says the environment in the Crypto Castle is markedly less sexist than what she's experienced elsewhere in the tech industry, in part because it's free of age-based judgment. "I’ve experienced that it’s easier for people to write you off if you’re a woman and you’re young,” she said. “If you’re a man and you’re young, you’re ambitious." As a woman, she says, you're labeled aggressive or naive.
Casserly first heard of Bitcoin while studying political theory at the University of Texas, Austin. Like others her age, she was fed up with what she saw as corrupt financial and political systems. Then someone told her about Bitcoin and the blockchain in 2011. As she saw Bitcoin gain traction in 2013, she decided to move out to San Francisco and pursue it. Soon after, the CoinTelegraph gig came along.
She sees her job as an opportunity to dispel misinformation about Bitcoin by publishing and seeding pro-Bitcoin articles. She's trying to build CoinTelegraph into a place that brings the already existing Bitcoin community together, while selling the unconvinced on the power of the blockchain.
“The people who will actually have the most to gain from Bitcoin are people living in environments where they’re disempowered,” says Casserly, who’s also involved with AUTONetwork, a micro-funding organization that uses Bitcoin to help small businesses in Africa. “It’s actually [about] the value of human capital. The success of their economic life is the success of all of our economic lives. We’re all in the economy together. This is why this is the Internet of finance.”
As I sat talking with Toni and Jeremy in their living room, I asked them if there were other Bitcoin-themed houses like theirs. They mentioned Joel Dietz, a Bitcoiner who had his own crypto-home in Palo Alto. Jeremy made the introduction over e-mail, and days later, I headed south.
The corporate reformer
It's around 8:30 a.m. on a sleepy, slightly cloudy Sunday. I'm standing on a tree-lined residential street with beautiful, well-groomed multi-million dollar homes all around. There's a welcome sign near the door of the house I'm visiting, and a bunch of grey feathers scattered on the lawn, with no sign of the bird to which they once belonged.
I ring the doorbell. A twenty-something, slightly groggy girl opens the door and lets me in. Maybe ten feet into the property—across an inner sunlit courtyard—I see Dietz, who is wrapped in a blanket, wearing a green t-shirt and blue boxer-briefs. He’s standing behind a sign that reads ‘Welcome to the Love Nest.’ Above him is a spherical ceiling light with a Guy Fawkes mask attached. Identical masks are all over the house.
Like the Crypto Castle, the Love Nest is both a home and a co-working space for young crypto enthusiasts. Among the tenants are Swarm, Dietz's crypto-crowdfunding startup, and several Ethereum engineers.
Among the house's bonding rituals: getting body-painted. Two of Dietz's roommates pop into the kitchen and start discussing who's getting painted when. Some friends are running late, so Dietz decides he'll volunteer to go first. He takes off his t-shirt. As he’s getting a black pattern painted on his chest and face, his housemates set breakfast on the kitchen table: mini-bagels, cream cheese, jam, coffee, tea. Dietz and I start talking about how he got interested in Bitcoin.
Before moving to Silicon Valley, Dietz, who is 32, spent some time in Europe studying classical poetry and ancient mythology. He got into the start-up scene there, and soon realized that there was a disconnect between the incentives of users, founders and investors. When people don’t have a stake in the success of a company or product, he says, they’re more likely to rip people off.
The blockchain, Dietz says, can fix that. “Distributed networks,” he tells me, “create an awesome way of creating trust where trust was previously difficult.” Like Casserly, Dietz thinks the blockchain's importance lies in its ability to record social capital, rather than merely financial transactions. But he also thinks Bitcoin could be a way of upending institutions like the Federal Reserve and large Wall Street banks. In this context, the Guy Fawkes masks sprinkled throughout the house—a symbol of Occupy and Anonymous—are an obvious symbolic touch.
In Dietz's utopia, “people get something back for participating and helping, and that’s going to help your system to grow faster and be more resilient." That’s what he’s trying to do with Swarm, a start-up that wants to be the crowdfunding platform through which other Bitcoin start-ups get funded. (Swarm hasn't actually funded any companies yet; Dietz blames government regulations, which treat Bitcoin and other cryptocurrencies differently for tax and legal purposes.)
To get around regulatory obstacles, Dietz—together with some lawyers and researchers from MIT and Harvard—recently devised a clever legal hack they’re calling a distributed collaborative organization. It's a way to structure a company so that stakeholders get "tokens," which appreciate or depreciate in value in much the same way as normal stock, without having to list on a stock exchange, elect a board, share financial information, or do any of the other things required of a public corporation.
“You actually give people control,” said Dietz. “The actual users who participate get a share, and they can use that share to vote."
The Love Nesters
As we chatted, Dietz and others in the Love Nest were setting up for a Star Wars-themed party they were throwing that night. Among the preparations they made were drinks, markings on the walls with the Star Wars opening crawl, and Star Wars-themed karaoke videos (which they were hoping would eventually become the basis of a galactic dance-off).
As they party-prepped, I struck up a conversation with Anthony “Texture” D’Onofrio, a bearded Ethereum programmer and Love Nest resident. D’Onofrio was making coffee for himself and two friends, Jessalyn Ballerano and Frank Sowokinos, who had walked in with a poodle mix a few minutes before. They'd gotten into a discussion about the pitfalls of traditional currencies, as Ballerano got ready to be transformed into Chewbacca.
“The reason that it sucks is that it’s a shitty technology," D’Onofrio said. "It’s like asking, ‘Why does this horse and buggy suck?’ Well, it’s because we have cars. It was totally fucking awesome at the time, and so was this. What we’re doing now is, like, living the future."
(Of course, traditional money isn’t all bad. In the U.S., for example, if you’re the victim of fraud, the Federal Deposit Insurance Corporation will reimburse you, up to $250,000. If your bitcoins go missing—as millions have in high-profile bitcoin-exchange implosions—it’s next to impossible to get them back. Nobody in the Love Nest seemed all that concerned about this scenario.)
Around 5:30 p.m., party guests started trickling in. One had a white box cut to look like a stormtrooper’s helmet. Someone in an Obi-Wan Kenobi outfit showed up later. (See more photos from the party here.)
As the party-goers greeted each other, I got a flash of what Silicon Valley’s personal-computer revolution must have been like in the 1970s. Back then, hobbyists were hacking together circuit boards and cameras to build computers and futuristic gadgets, egging each other on to create technologies that could change the world. They met in garages and parking lots to trade parts and ideas on how to build the future. They didn’t have a clear leader. Everyone could contribute their skills and knowledge during meetings and in their newsletters. It was mostly male. Many were in their late teens or early twenties. And although they were convinced of their competence, their dream of the future hinged largely on variables beyond their control.
So far, Bitcoin hasn't displayed the PC's promise. Many of the newer, more promising Bitcoin projects are still works in progress. Even Ethereum, which some think of as the community’s best bet at realizing the promise of the blockchain, isn’t live, though it’s supposed to launch this month. But these start-ups are all learning from each other, each a crucible to find mistakes that later projects can learn from and avoid.
In the early days of PCs, no one in the hobbyist clique knew which particular computer would make it big. But they were very much aware of the values they wanted their inventions to represent: open access and free speech, primarily. The crypto-currency community is struggling to define its own values, as the world waits to see whether Bitcoin will get an Apple or a Microsoft of its own.
“Unless we have insights into the type of world that we want to build, we’re just introducing a generic technology," D’Onofrio said.
The residents of the Crypto Castle and the Love Nest all agree that Bitcoin-like technologies will play a significant role in the future. But they disagree about how to build that future, or what it will look like once completed. The Augur crew is betting on the financial and social promise of Bitcoin-powered predictions markets. Casserly is a crypto-community builder. Buterin wants to build the tools that’ll help tear down the Ubers, Dropboxes, Googles and Facebooks of the world.
But, no matter the approach, the Bitcoin battle will not be won overnight. And so, as the night winds on, the crypto-idealists mingle in their Star Wars costumes, their drinks raised, dreaming of empires to come.
Daniela Hernandez is a senior writer at Fusion. She likes science, robots, pugs, and coffee.