Last June, a fellow sailor (and aerospace engineer) asked if I could check a family friend’s “bitcoin”. He forwarded me a picture of a plastic bitcoin wallet held with a private key partially hidden. The family friend had received the card as a kind of “gimmick at a conference” and thrown it in a drawer.
This is one of those moments when I find imposter syndrome perched on my shoulder, head nodding, lips pursed. Two years in the business prior to another two monkeying around in my personal account didn’t give me nearly enough crypto cred to say, “Oh, yeah, wow. I remember these.” Fine, I’m a noob. I made a no-promises disclaimer and quickly changed the subject.
Back home, I opened the picture and set about the solemn determination Quincy, ME (although forensics is an inappropriate metaphor, given the complete absence of foul play). How did these old wallets work? If the private key is printed on the card, how secure is it? I knew BIP39, but what is BIP38?
Learning followed. Then I checked the bitcoin blockchain and noticed that exactly one bitcoin had been moved to this address nine and a half years earlier, when one bitcoin fetched just over $325. No activity since. As for the hidden BIP38 “private” key, you need a passphrase to decrypt it. Oh-oh. Did the family friend save the passphrase for ten years on a Post-it® that is now worth $100,000?
—
This week we went out to see a show with another group of friends. I offered to refund them for our tickets with crypto. “Create a Phantom wallet, copy and store the seed phrase safely, and send me your Ethereum address. I’ll pay you in ether or USDC, your choice.”
I saw all the faces. Hug, eye roll, are you serious, wait a minute, hmmm, why not, OK! I’m still waiting for that Ethereum address, but I have no doubt that this will happen. Another “gimmick”, ten years later.
Why ETH or USDC? Why not bitcoin? By 2025, bitcoin is no longer a mystery. People understand that and if they are thinking about buying a digital asset, they will find bitcoin on many shelves. It is a store of value. It’s hardly. As more buyers enter the market over time, its value should increase.
Many people do not get Ethereum or smart contract platforms blockchains. People also don’t get stablecoins, nor the fact that they rely on other blockchains, and involve paying fees in ETH or SOL or a dozen other blockchain coins. For the “5%ers” – those who will ultimately spend 5% of their investment of energy and resources on crypto – this feels like the next key intuition lock.
There’s no better way to get there than to put in a few “learning dollars” (ie. not “investment dollars”) on the chain and move them around. I hope my friends take their new USDC and dump some on AAVE, some bridge to Solana and buy some on Uniswap.
This primary research can strengthen an investor’s conviction in a single platform. Or just the opposite: it could reinforce the belief that it is difficult to pick winners in what is likely to be a year of explosive growth. XRP, XLM and HBAR sat atop the 2024 leaderboard of the CoinDesk 20 Index, a result that few would have predicted. We feel – in fact, we expect – that investors and advisors will choose diversified market beta over option alpha.
The holders of the plastic bitcoin wallet did not “take the bait” and became active bitcoin enthusiasts (presumably), although, ex postdid they do the right thing by throwing the wallet in a drawer for 10 years (along with a Post-it® with the passphrase; phew!). These days I try to take as many opportunities as possible to get people to fire up a wallet and get some blockchain experience. (But if not, I’ll still be good for fiat theater tickets.)
