Last June, a sailing friend (and aerospace engineer) asked if I could look into a family friend’s “bitcoin”. He passed me a photo of a plastic bitcoin wallet held with the private key partially obscured. A family friend received the card as some kind of “gimmick at a conference” and threw it in a drawer.
It was one of those moments where I saw imposter syndrome perched on my shoulder, nodding, lips parted. Two years in business followed by another two monkeys in my personal account didn’t give me nearly enough crypto cred to say, “Oh, yeah, wow. I remember them.” Fine, I’m a noob. I made a no-promises disclaimer and quickly changed the subject.
Returning home, I opened the image and set to work with the fervent determination of Quincy, I AM (although forensic examination is an inappropriate metaphor, given the complete absence of foul play). How do these ancient wallets work? If the private key is printed on the card, how is it secured? I know BIP39, but what is BIP38?
Learning continues. Then, I checked the bitcoin blockchain and noticed that exactly one bitcoin was transferred to this address nine-and-a-half years ago, when one bitcoin fetched just over $325. No activity since then. As for the hidden BIP38 “private” key, you need a passphrase to decrypt it. Uh-oh. Did a family friend save the passphrase for ten years, on a Post-it® that is now worth $100,000?
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This week, we watched a show with a different group of friends. I offered to return our tickets to them using crypto. “Set up a Phantom wallet, copy and safely store the seed phrase, and send me your Ethereum address. I will pay you in ether or USDC, your choice.”
I saw all the faces. Chuckle, eyeroll, you’re serious, wait-a-minute, hmmm, why not, OK! I’m still waiting for that Ethereum address, but I have no doubt it will happen. Another “gimmick,” ten years later.
Why ETH or USDC? Why not bitcoin? By 2025, bitcoin will no longer be a mystery. People get it, and if they’re thinking about buying a digital asset, they’ll find bitcoin on many shelves. It is a store of value. Just a little. As more buyers enter the market over time, its value should increase.
Many people do no take Ethereum, or smart contract platform blockchains. People also don’t get stablecoins, or the fact that they rely on other blockchains, and that includes paying fees in ETH or SOL or a dozen other blockchain coins. For the “5%ers” — those who will eventually spend 5% of their investment energy and resources on crypto — this sounds like the next key intuition to unlock.
There’s no better way to get there than to put some “learning dollars” (ie no “investment dollars”) on-chain and move them around. Hopefully my friends will take their new USDC and dump some in AAVE, bridge some in Solana, and buy something on Uniswap.
This basic research can solidify an investor’s belief in a platform. Or, just the opposite: it could reinforce the belief that picking winners is difficult in what is likely to be a year of explosive growth. XRP, XLM, and HBAR sit atop the CoinDesk 20 Index’s 2024 leaderboard, a result few could have predicted. We feel — in fact, we expect — that investors and advisors will choose diversified market beta over the possibility of choosing alpha.
Plastic-wallet bitcoin holders did not “take” and become active bitcoin enthusiasts (maybe), though, old postthey did the right thing by throwing the wallet in a drawer for 10 years (along with a Post-it® with a passphrase; wow!). These days, I try to take as many opportunities as possible for people to get a wallet and get some experience with the blockchain. (But otherwise, I’d still be good for theater tickets with fiat.)
