Photo illustration by The Globe and Mail (source: iStockphoto)
Ethan Lou is the author of Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West, which will be published on Tuesday.
Growing up in the 1990s, I watched a lot of this cartoon called Lucky Luke. The show, about a carefree cowboy who draws his gun faster than his own shadow, sparked in me an enduring fascination with the old frontier. When I invested in bitcoin in 2013, it was, perhaps, only natural, for that world felt like a new Wild West. Many observers have, of course, said the same. But where our conclusions differ is that I have never considered the comparison an insult.
Over the years, I’ve met many who have a hard time grasping cryptocurrency and blockchain, and I don’t mean they can’t understand how everything works on an intellectual level. Even those who learn the technical details often remain unmoved and befuddled. They do not get the surge of the industry or the vivacity of the community. Often older, they do not get the fervor of the traditionally young-adult devotees. I think they’ve looked in the wrong place.
All that talk of computer science, monetary policy and regulation is important, but there’s also something else about bitcoin and specific to it, something fundamental and visceral, deep in the human condition.
That’s what fuels the fever running through it all. It’s what lies at the heart of the West, at least as it exists in our imagination.
While bitcoin is new, its siren song is old. People compare this domain’s expansion to the 2000s dot-com boom, but it’s better framed in an idealized image of the past.
It is the modern realization of an old idea, what the scholar Richard Slotkin describes as a luring invitation to “a wide-open land of unlimited opportunity.” Bitcoin evokes that longstanding phenomenon we know as the “frontier myth.”
To view bitcoin through such a lens might not make immediate sense. It will not explain everything. It certainly will not turn a skeptic into a devotee. But it will aid in understanding the devotee — for it points to a passion that all of us have known, perhaps even acted on, even if unknowingly.
And that drive is particularly present in young adults like me, who experience more restrictive, structured upbringings than prior generations, as scholars say, and then are maturing into economies wrecked by the 2008 financial crisis.
It’s not just that bitcoin was released in the aftermath of that calamity. Crypto’s appeal goes back much farther — to that frontier myth, which has a pull stronger and more enduring than it might appear.
Frontier commerce, then and now: At top, Cree chief Mistahimaskwa (Big Bear) trades with settlers at Fort Pitt, Rupert’s Land, in 1884; at bottom, an employee checks a cryptocurrency farm in Caracas in 2021. In early centuries of American colonization, trade meant bartering physical goods like furs and guns; now, many cryptocurrency advocates evoke frontier myths to make a cashless society seem freer.O.B. Buell / Library and Archives Canada; FEDERICO PARRA/AFP via Getty Images
The frontier myth is a fable. It romanticizes a time of colonialism, injustice and brutality. But a deception that elevates us is dearer than a host of low truths. Over the years, through literature and art, the frontier myth has not just divorced itself from reality, but also entirely eclipsed it. When people now say “frontier,” they are rarely talking about actual history, even if they think they are.
The draw is simple escapism: In this conception of the frontier, it is spacious and welcoming. There is room for everyone, and it is full of excitement and riches and free from the usual societal hierarchies.
In “The Psychological Appeal of the Hollywood Western,” the scholar Frederick Elkin wrote in 1950 about the state of the West: “No one is superior because he has more heads of cattle, speaks better English, or because his ancestors were old Massachusetts or Virginia settlers. … Characters are judged only by their personalities and their abilities.”
And that appeal is universal, because of and not in spite of its U.S. origin, for it is the foundation of the idealized North America to which so many have flocked. It is, as well, about more than cowboys. Hollywood made its bones in that genre, and its influence permeates everything.
All stories based on the Hero’s Journey structure, like that of the Matrix or Spider-Man franchises, evoke the earlier genre. As Mr. Elkin puts it, “Westerns are similar to hero stories of all peoples and all times.” The genre is all around us; the academic Robert Thompson compares it to The Iliad or The Odyssey.
So, it says something that the old genre became more prominent in recent years, through everything from the likes of the John Wick franchise and Breaking Bad, which can be considered modern Westerns, to Quentin Tarantino’s latest films. Deep within, it seems, audiences are pining for that genre’s escapism. Art is, after all, to the collective what dreams are to the individual: a projection of the unconscious. And bitcoin, for all its intangibleness, gives form to those fables.
At top, a 'Bitcoin accepted here' sign hangs at a street stall in San Salvador this past September. President Nayib Bukele recently made Bitcoin legal tender in El Salvador, whose regular currency is the U.S. dollar. Mr. Bukele argued this would help the diaspora send money home more easily, but many Salvadorans, like the protesters at bottom, fear it's a recipe for economic crisis.Jose Cabezas/Reuters
When I say “bitcoin,” of course, I am not talking just about the first and most valuable cryptocurrency. Bitcoin has inspired thousands of other coins and myriad applications of its blockchain technology. While various camps would certainly loathe to be lumped together like that, the fact remains they have collectively formed something discrete and of their own.
The truly formative years for me began in 2017. That year, bitcoin’s price crossed the five figures and shot to US$20,000, up from US$1,000. Lots of people became gloriously rich, and they built and hired. Doing anything blockchain meant big bucks, because investors had intense FOMO, making their participation necessary and urgent.
Every day there was a new cryptocurrency popping up – often, at least one of them had a name you could not pronounce – a new project raising money and some fancy party with an open bar.
One of my strangest experiences in that world was in 2018. A group of friends and I had gotten to know some young Chinese cryptocurrency miners who had been spending their money on “houses, cars and women.”
They wanted to sell hundreds of millions in bitcoin, an amount large enough that it becomes hard to move. They sought contacts beyond China’s strict capital controls. If we successfully matched them to a buyer, in the most optimistic scenario, we could get up to 1 per cent of the deal as commission.
That idea in itself is not unusual. In mainstream finance, people do that all the time, in what are called OTC (over-the-counter) deals to move large volumes of financial instruments. But there are long-established rules and procedures for that, reputable players, credentials and institutions. In crypto there were only the faint flickers of that. In an industry not even a decade old at the time, my friends and I would soon find that everyone and their dog claimed to “know” someone who was buying.
Of course, my friends and I were kind of like that, too. There was a geologist among us, an entrepreneur or two, a clinic administrator and me, a journalist. We’d considered ourselves professionals, but everyone was just making it up as they – we – went along. I remember running into some guy at a wedding, a friend of a family friend, and he said, “Oh, yes, my son does bitcoin OTC.” My friends and I ultimately gave up. I would go on to hear similar stories from others.
In crypto there was no expectation of a blockchain degree, and people cared little about who you were before, because there was no before. Everyone was new in some way, even the most established players, and thus everyone could equally claim to be capable of facilitating a major deal. While this is changing now, parts of this domain are still like that in many ways.
People in this world come from everywhere, and it’s not just the restless, seeking adventure, or idealists plotting revolution. There are also those running from something far more tangible and darker.
I once met an entrepreneur who had been bankrupted and convicted of fraud. I encountered another who had been sued multiple times and left a trail of debt and thought people “always underestimated” him. In crypto, those men sought a new world where they could bury their names and be born anew.
Not everyone in this world is millennial or Gen Z, but they are all driven by what drives the young. Those entrepreneurs, my friends and me and our Chinese contacts — we were all searching for something: as Mr. Elkin would describe, a place that has “few restrictions imposed on the individual,” where chances for success are not tainted by the past, but instead dependent solely on one’s own “struggle and merit.” Such was bitcoin, even if that statement might defy all traditional meaning.
Hungarians, including one in a Guy Fawkes mask, turned out to Budapest's Graphisoft Park this past September for the unveiling of a statue of Satoshi Nakamoto, the mysterious creator of Bitcoin. Riffing on the idea that Satoshi could be anyone, and may not be a single person, sculptors Reka Gergely and Tamas Gilly made the face a mirrored surface. On the plinth are the words 'We are all Satoshi.'Bela Szandelszky/AP; Janos Kummer/Getty Images
On a technical level, bitcoin’s attractiveness stems from the ironclad immutability of its inbuilt rules, practically unchangeable by any one party. At the same time, there aren’t really any coins. Everything is just records on a distributed ledger. You simply hold the key to a unit of value, a secret code to unlock specific ones and zeros. For a product made with so much certainty, there is an inherent abstractness to bitcoin.
The creator, a person or group known only as Satoshi Nakamoto, meant for bitcoin to be a medium of exchange. Some advocates call bitcoin a store of value, an inflation hedge like gold, but one that cannot be confiscated. To others, the point isn’t bitcoin itself but its blockchain technology, which can facilitate purely user-to-user interactions and thereby democratize the Big Tech-dominated internet, among other use cases. In crypto-blockchain, everyone sees something different. I have always seen it as an ecosystem.
That basic idea is not new. Industries can sprout their own subcultures and vice versa. But what is spawned is always something lesser. Finance bros may all look alike in their fleece vests, but talk to a few, and you’d be hard pressed to find two who are driven by the same thing. People obsessed with Dungeons & Dragons as teens sideline it as adults because not everyone can be a professional dungeon master. Primarily, a domain represents either an industry or a subculture, never both. Uniquely, bitcoin has not just ideology to bind its adherents, but also money constantly streaming in to keep that passion burning. Thus it becomes something greater than an industry and subculture put together: a world.
Say “Vignesh Sundaresan” to a crypto enthusiast, and you might draw a blank. But mention the man’s crypto nom de guerre, “MetaKovan,” and you might get instant recognition. That is the entrepreneur who bought a record US$69-million digital artwork. In his circles, he had felt “it was too weird to, you know, have a real-world name.” It was as if the man had been baptized, not unlike the Andolini boy in The Godfather franchise, when he becomes “Vito Corleone” after leaving Italy and landing in the New World. Big crypto companies such as Binance and Coinbase say they are decentralized and have no headquarters. Many list not a single physical address. They simply exist in a land of their own.
I could work a crypto job, consume only crypto media, spend only crypto and socialize with only crypto friends. Instead of a ring, I could propose with an NFT (nonfungible token) blockchain artifact like the one MetaKovan bought. The likes of Binance could have employees spanning scores of cities, from Seychelles to San Francisco to Singapore — but those people are not really there.
Once, on a Thai island that housed a crypto startup incubator, my friends and I were surprised to find that nobody was selling booze and the streets were empty. The locals were having their first election since a military coup, a pivotal moment for 70 million people in Southeast Asia’s second-largest economy, and we had no idea, since it was not important to us.
Crypto has its own institutions. This domain has even sprouted what observers have called its own quasi-religions and sacraments. Devotees may occupy the same physical space as their non-crypto neighbours, but they have moved entirely elsewhere. For a young adult, especially, that idea is intensely intoxicating.
Cryptocurrency's two faces in China: At top, a Hong Kong exhibit shows HOLD ONTO YOUR BITCOIN by Gustav Szabo on Sept. 30, before its conversion into an NFT for auction at Sotheby's; at bottom, visitors at a Sept. 5 trade fair in Beijing look at the e-CNY, a digital version of the yuan. China's central bank made cryptocurrencies illegal this fall so e-commerce is easier to trace by the Communist state.Ng Han Guan/AP; Tyrone Siu/Reuters
In Maclean’s, the writer Scott Gilmore ponders, “Why are my kids so dull?” The researcher Danah Boyd might say that the answer lies in the fact of diminished childhood freedom owing to “parental fear, lack of transportation options, and heavily structured lives.” Compared with 1965, parents’ time spent with their children is now double for mothers and quadruple for fathers. “Many teens know few youth their own age who live in walking distance,” Dr. Boyd writes in her book, It’s Complicated, and their elders “have restricted their children’s mobility more than their parents restricted theirs” — a trend that began in the 1980s.
Perhaps that is why young adults increasingly live free from friction — “ ‘readable books’; ‘listenable music’; ‘vibes’; ‘ambience,’ etc.,” as the magazine editor Rob Horning notes. Four out of five millennials and Generation-Z experience anxiety when talking on the phone. A young cousin of mine used to watch streams of people playing video games instead of partaking himself. Current generations even have less sex than previous ones. The writer Dean Kissick recounts a young woman with the following relationship desire: “doesn’t want to hang out much, but wants to talk and text every day around the clock.” We pursue and are sustained by minor positive experiences, avoiding the more extreme ones and the relative risk that comes with them.
At the same time, these millennials and Gen Zs have increasingly worse material circumstances. Statistics abound of how current generations are less likely to own a home or get out of debt than previous ones. In Britain, millennials are on track to be the first generation to have worse health than their parents did, thanks to these economic factors.
In his Hollywood Western essay, Mr. Elkin was writing of the growing child in an era when the male pronoun was still the unquestioned default, but he might as well be talking about any modern young adult, “restricted and hemmed in by the conditions of his actual life — by the smallness of his apartment, the constant demands of the school and the family, and his own weakness.” On the frontier, however, Mr. Elkin writes, a person is reborn, “free to roam amidst the wide-open spaces of the West, to choose his own direction.” Hence the genre’s recent comeback. Even if most of us do not think deeply or often about cowboys or the Old West, that frontier myth has become ever sweeter now that its taste has become scarcer.
Alas, there are no new worlds to which to escape. Travel has become commodified, and the globe has been thoroughly mapped out. Cultures have become homogenized, and information flows freer than ever. The beer everywhere is the same, and so is the Instagram. Even Mount Everest now has 5G coverage. Heading into another land now grants only a fleeting satisfaction, little different than the risk-free mini dopamine hits that keep us going — and with all the pandemic travel restrictions, it’s not even that satisfying. There is this overused saying that young adults now were born too late to explore the world and too early for the stars.
But we are just in time for bitcoin.
A visual guide to blockchain
Blockchain technology allows people to transfer information and assets over the Internet without any intermediaries such as banks or brokerage firms. The following graphic illustrates how a blockchain transaction works.
A transaction is requested
(for example, a digital currency transfer)
Transaction
The request is sent to a peer-to-peer network made up of computers, which are called nodes
Nodes
The network of nodes validates the transaction
Verification
The transaction is then combined with other transactions to create a new block of data that is stored in a digital ledger using cryptography
New
data
block
Digital
ledger
The new block is added to the existing blockchain. Each block references the block before it, creating a permanent and unalterable record
Secure
ledger
OK
The transaction is complete
IAN McGUGAN, Alexandra Posadzki and
john sopinski / THE GLOBE AND MAIL
SOURCE: pricewaterhousecoopers
Bitcoin runs on what is called a blockchain – a type of public ledger, distributed across many computers. These computers work together to verify transactions on the ledger and prevent fraud. They produce a chain of time-stamped transactions that cannot be altered (at least, not without a nearly inconceivable amount of effort). Each new transaction becomes part of a new block on the chain.
A transaction is requested (for example,
a digital currency transfer)
Transaction
The request is sent to a peer-to-peer network made up of computers, which are called nodes
Nodes
The network of nodes validates the transaction
Verification
The transaction is then combined with other transactions to create a new block of data that is stored in a digital ledger using cryptography
New
data
block
Digital
ledger
The new block is added to the existing blockchain. Each block references the block before it, creating a permanent and unalterable record
Secure
ledger
OK
The transaction is complete
IAN McGUGAN, Alexandra Posadzki and
john sopinski / THE GLOBE AND MAIL
SOURCE: pricewaterhousecoopers
Bitcoin runs on what is called a blockchain – a type of public ledger, distributed across many computers. These computers work together to verify transactions on the ledger and prevent fraud. They produce a chain of time-stamped transactions that cannot be altered (at least, not without a nearly inconceivable amount of effort). Each new transaction becomes part of a new block on the chain.
Transaction
A transaction is requested (for example, a digital currency transfer)
Nodes
Verification
The request is sent to a peer-to-peer network made up of computers, which are called nodes
The network of nodes validates the transaction
Digital
ledger
New
data
block
The transaction is then combined with other transactions to create a new block of data that is stored in a digital ledger using cryptography
Secure ledger
The new block is added to the existing blockchain. Each block references the block before it, creating a permanent and unalterable record
IAN McGUGAN, Alexandra Posadzki and
john sopinski / THE GLOBE AND MAIL
SOURCE: pricewaterhousecoopers
The transaction is complete
The Decibel: Ethan Lou on the lure of Bitcoin
Ethan Lou speaks on The Globe and Mail’s news podcast about his adventure in Calgary’s cryptocurrency culture of the late 2010s. Subscribe for more episodes.