One couple thought they held the secret to building a new decentralized utopia. On the way, they plunged into a new kind of hell. A crypto-tragedy in three acts.
Breitman was not typically one to overextend himself socially, but he made a “beeline” for McCaffrey, she recalls, when she walked in the door. The luncheon, it turned out, was actually for anarcho-capitalists—people who believe that an absolutely free, self-regulating market will allow individuals, bound to one another by contract alone, to flourish in radical harmony. But by the time McCaffrey discovered she’d been misled, they’d already hit it off. She told Breitman she admired Milton Friedman. Breitman was pleased to report that he was friends with Friedman’s grandson, Patri, and offered to lend her a book about freedom by Patri’s father.
To keep McCaffrey nearby, Breitman threw an impromptu party at his disorderly financial-district apartment after lunch. The next morning he texted her to say he’d reserved a table for two for that evening. Everything from that point forward felt like a fait accompli.
The match, despite their vast differences in temperament and background, was an inspired one. Kathleen is relentlessly animated and quick-witted, with thick tangerine hair, steely eyes, and an endearing personal idiolect that suggests both an autodidactic reading in philosophy and economics and the gusty crudity of the merchant marine. Arthur is by turns retiring and pointed, with a soft, cublike appearance and a tight, parsimonious grin. Kathleen had grown up in northern New Jersey, the daughter of a Bronx-raised contractor and an Irish elementary-school teacher; she read The Wall Street Journal and played on the golf team at her all-girls Catholic high school. Arthur had been raised just outside Paris by a well-known playwright/television impresario and a civil servant; at 18 he’d won France’s first-ever medal, a bronze, in the International Olympiad in Informatics, and he’d gone on to take his degree in applied math and computer science at the extremely selective École Polytechnique. Now, at 28, he worked as a quant in Goldman Sachs’ high-frequency trading shop.
Arthur only discovered that Kathleen was eight years his junior sometime later, when he remarked that her academic work, in epistemology and mathematics, frankly seemed pretty easy for a grad student. Kathleen was insulted, but she got over it. Arthur was unfazed by her youth; what mattered was that Kassleen had a mind that could keep pace with his own. They admired in each other a brusque self-assurance and artless candor that others often perceived as arrogant.
When Kathleen transferred to Cornell University that autumn, she optimized her schedule to spend time in the city with Arthur, who was infinitely more interesting than her classes. If in the middle of the night Arthur read about a rare kind of suspension-bridge support, he’d immediately want to try his hand at the application of its principles. The two of them once passed two very happy weekends of courtship in attempts to reconstruct an ancient catapult called an onager. He expected precision and rigor in her thinking, but remained blunderingly sentimental in his attachment to Kathleen, who had reserves of strength and conviviality that far exceeded his own.
The weekend Kathleen graduated from college, she and Arthur traveled to France for a wedding. Following a drink at the storied Harry’s Bar, he brought her to a bench in the Place de la Concorde and produced a box. Kathleen opened it to discover the ring was upside-down. “It was,” as she remembers it, “the most Arthur thing ever. So much effort to go through, and such a small detail to screw up in the end.”
Given his background in mathematics, computer science, and economics, it was natural that alongside bridge supports and primitive catapults Arthur was bound to fixate on Bitcoin. He bought his first bitcoins at a time when few people had even heard of them, and he badgered Kathleen about cryptocurrency until she could parry to his satisfaction. Arthur spent countless hours poring over Bitcoin’s documentation. It clearly offered a terrific way to hold value, and to move value from one place to another, without paying for the services of a trusted intermediary. But it was clunky and limited, and it eventually became apparent to Arthur and Kathleen—“pedants by hobby,” Kathleen likes to say—that Bitcoin’s underlying technology, the blockchain, was capable of doing a lot more.
There is great confusion and debate about what a blockchain even is—some people argue it’s become a meaningless buzzword—but the standard definition describes a shared, decentralized, cryptographically secure, immutable digital ledger. In the broadest terms, a blockchain allows a group of strangers to agree on a state of affairs and to proceed together on the basis of that covenant. Bitcoin’s blockchain is meant to supplant the powerful middlemen called banks, but in theory a blockchain could replace any kind of institution—a credit agency, a social media service—that exists to safeguard a changing set of historical records. We pay these centralized entities handsomely for their custodial services, not only in the form of the rents they charge but in the control they exert over our lives. The blockchain, in theory, affords us new opportunities to solve complex coordination problems without letting the incumbent coordinators extract so much value in the process.
This had, of course, been the initial premise of the internet itself. Its great collaborative potential, however, had been funneled into the leviathans of Amazon, Facebook, and Google—a new and massively powerful set of trusted third parties. The blockchain pointed the way to the sunlit uplands of a genuinely decentralized world. A loose culture of entrepreneurs and cypherpunks came together in what felt like a special moment of experimental ferment, and the Breitmans looked on with interest. Most of these early blockchain innovators just took the original cryptocurrency’s source code, made their preferred changes, and launched their alternative versions as distinct cryptocurrencies; it was as if they’d modified the DNA of an existing species to create a new, reproductively isolated branch of the family tree. To Arthur and Kathleen, this “Cambrian explosion” of disparate currencies was a tremendous waste. Far preferable would be to have some machinery to organize and streamline this evolutionary process, to integrate its most successful adaptations into one grand, unified project. But this was never going to happen with Bitcoin. Its pseudonymous inventor, Satoshi Nakamoto, was a god in whose absence Bitcoin evangelists could only argue and dither. Bitcoin could only move forward by schism rather than reformation.
While Arthur and Kathleen continued to discuss what the blockchain augured—taking a break to marry, in a ceremony in France in the late summer of 2013—Bitcoin’s first major competitor appeared on the horizon. In January 2014, a 19-year-old Canadian-Russian prodigy named Vitalik Buterin released a white paper that outlined his vision for something he called Ethereum. It would be not merely a decentralized bank but a decentralized world computer; Ethereum allowed for the automatic execution of programs called “smart contracts,” which went beyond the simple movement of money from one place to another. A group of people could run their own insurance company, say, which would accept premiums, automate the actuaries, and pay out claims without skimming a house take off the top.
Arthur printed out the entire Ethereum codebase to bring along on their honeymoon that spring. He inhaled it on safari in Botswana’s Okavango Delta, turning to it when he’d seen his fill of elephants. Ethereum was, Arthur saw, an awful lot like what he’d been imagining. But there remained a need for some system of participatory governance. Ethereum was more pliable than Bitcoin, but its updates were disseminated by a core development team overseen by Buterin. As with Bitcoin, if you didn’t like those updates you only really had two choices: accept the revisions or “fork” the code and go your separate way. Arthur resolved to create a rival, one with formal provisions for genuinely decentralized administration—a community in which the entrenchments of power and control could at last give way to a new order that rewarded competence and merit. Kathleen was alternately skeptical and encouraging, but came around to rally him on. “The early bird might get the worm,” she said, “but the second mouse gets the cheese.”
Source/More: Inside the Crypto World’s Biggest Scandal | WIRED