After spending a year in prison, Bitcoin pioneer Charlie Shrem has a new job and a new mission: Strengthening the ecosystem of blockchain assets—and, just maybe, helping build the future of the Internet.
“My word is gold,” says Charlie Shrem, glass of absinthe in hand, light winking off a pinkie ring he wears that is embossed with a Bitcoin symbol. “And I make sure everyone gets paid.”
Bitcoin’s first felon is in his favorite mode: full-on bluster. We’re in Sarasota, where he lives, perched on stools at Pangea Alchemy Lab, a faux-speakeasy tucked behind a curtain in the back of a sandwich shop. The bartender is a bearded anarchist who, after making our drinks—he drips water from a sort of four-armed decanter onto sugar cubes suspended on slotted spoons above glasses of French absinthe—asks if I’ve read Debt: The First 5,000 Years, by the anthropologist David Graeber. Shrem has been offering plenty for the bartender to eavesdrop on, a discourse that features words like Bitcoin, blockchain, digital currency.
Before his fall from grace, Shrem was living the high life as a Bitcoin millionaire. Now, at 27, he once again has something to prove. Ten months after his release from federal custody, he has a new job, and he’s looking to mount a comeback.
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It’s happening just as digital currencies are in the midst of an epic explosion. Bitcoin and its ilk are now worth $107 billion, six times their value at the beginning of the year. It’s either the beginning of a global financial realignment—or a bubble of historic proportions. These days as much as $6.6 billion in digital tokens changes hands every day, and even mainstream players such as Goldman Sachs (GS, +0.96%), Visa (V, +0.35%), Capital One, Nasdaq, and the New York Stock Exchange have invested in the underlying technology.
Shrem saw value back when Bitcoins were worth only a few dollars each—they now trade above $2,600—and there was hardly anything to spend them on. In 2011 he cofounded a startup, BitInstant, that became one of the biggest early cryptocurrency companies. At one point, it was processing about a third of all Bitcoin transactions, before flaming out in 2013. “You talk to 10 people,” says Shrem, “I guarantee you at least seven of them will say they got their first bitcoin from BitInstant.”
Shrem is a natural-born impresario, a promoter’s promoter, and he was one of the first public faces of the cryptocurrency phenomenon. In 2013, when GQ needed a “spirit guide” to the shadow realm of digital currency, it relied on Charlie Shrem. He was featured in the documentary The Rise and Rise of Bitcoin. He was a speaker and proselytizer at industry conferences. And he cofounded the Bitcoin Foundation, the first nonprofit advocacy group for digital currency.
But Shrem crashed as fast as he rose. In March 2015 he went to federal prison after pleading guilty to helping a customer acquire Bitcoins to resell on the underground marketplace Silk Road, where Bitcoin was used to buy drugs.
Today Shrem is a free man again, and his world has dramatically changed. Bitcoin was the only digital currency when he was first in the game. Now it’s less important—not because it has imploded, as critics long predicted it would, but because it has given rise to hundreds of new digital assets.
He is embracing the transformation. There won’t be one supreme digital currency, he and others agree. A kind of crypto-pluralism is taking hold. In early March, when I first catch up with Shrem, Bitcoin’s share of the total market cap of all cryptocurrencies is about 85%. By June 12 it is 41%, an all-time low. To be clear, Bitcoin’s price hasn’t fallen; in fact, it has soared (see chart below). But many leading rivals have soared even faster.
Shrem is a connector, not a coder, and he’s positioning himself to play a key role in this newly diverse ecosystem. He has already stumbled once in his comeback, with one venture crashing almost instantly, before landing a job at Jaxx, a startup that allows users to hold separate balances of different virtual coins in digital wallets.
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Shrem embodied the chaotic, legally questionable early days of cryptocurrency. But he says he’s different now. He claims he’s no longer operating mainly for himself and instead wants to use his talents to strengthen the crypto-community.
Charlie Shrem is nobody’s image of a traditional financier, but that’s precisely the point with alternative currencies: Their early leaders were the sorts of people who would never pass muster at, say, Morgan Stanley. That may just make Shrem the perfect messenger, as digital currencies transition from an off-the-grid form of exchange favored by people who reviled any established system into something that is fast becoming an established system of its own.
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