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An Expensive Reminder

Sometimes you have to pay for a good education

NOTE: This is not an excerpt, but a transcript of a clip of Duncan talking about a part of the 'story'

This is Part 2 of a 2 part post. Here is Part 1

Excerpt by: Duncan Stroud - Sep 10, 2015

Since HSBC closed my corporate account, because of ‘suspicious activity’, and I no longer had any valid form ID, it was impossible for me to engage in any form of financial exchange other than cash; getting money in and out of Argentina was sometimes comically complex.

In order to receive money I was owed from my clients in NYC I had to have them write a check to my now non-existent corporation. The checks were then delivered to a trusted contact, who brought them to an Italian Restaurant in Little Italy. The owner of that restaurant would then bring the checks to a his ‘guy’ in New Jersey who would cash them ( I have no idea how). The owner then returned to the restaurant with the cash, and my contact would pick it up. He then would convert that cash into Bitcoins and deposit them into my numbered Bitcoin account. I would then sell those Bitcoins here in Argentina by posting a notice that I had some for sale and then spend the next week meeting these people in coffee shops exchanging my Bitcoins for their pesos. The only real downside to this process, besides having to coordinate the global effort and the time it consumed, was that the ‘guy’ in New Jersey was taking a 50% cut! This was slightly offset by my selling the bitcoins here on the black market at US dollar rates, but even with that I was still losing almost half my money.

I had learned about Bitcoins some time before when I was trying to come up with ways to move money across borders anonymously. The currency looked pretty interesting to me, and I saw the growth. So, I moved what little money I had into Bitcoins whenever I had the opportunity. When I started buying them they were $4 each. I quickly accumulated thousands of Bitcoins, and they were starting to become a popular form of exchange. With the money I was accruing, I invested in other forms of cryptocurrencies. I was highly diversified, and I even wrote an arbitrage trading program that would buy and sell 24 hours a day in various currencies.

But when the value of Bitcoins started to climb into the hundreds of dollars per coin, governments and hackers started to interfere. The governments of Germany and Poland confiscated some of my coins, hackers took down a few of the exchanges I had coins in, and even my own computers at home were getting attacked by hackers in China and Eastern Europe. It seemed like there was a race between governments and hackers as to who could steal the most Bitcoins!

For safety reasons, I moved all of my Bitcoins to the largest Bitcoin exchange in the world (at the time) a Japanese company called MtGox.

When Bitcoins hit $1,200 per coin, I was ecstatic! I had enough money to pay off all my debt in the States and probably enough left over to buy a small house in Argentina.

Meanwhile, back in the non-virtual world, I had to move. I was house sitting for some tango friends who were on tour and they were no coming back to Buenos Aires. “No Problem” I thought … I have lots of money … finding a new apartment will be easy, because even though I had no papers, I had cash. But I had to move soon in order to find a nice place.

I had become friends with an eccentric old man from my old neighborhood in the East Village in NYC who had made a fortune once upon a time and purchased an incredibly beautiful historical mansion in Buenos Aires. It was empty most of the time as he spent a large part of the year in New Jersey, Haiti or Syria. These were his preferred ‘vacation spots' – just to give you an idea of how different this guy was.

He happened to be in town the week I needed to move. These days he was penniless, but that didn’t seem to matter at all to him. He wanted to buy a little weed and had no money. I had about 4000 pesos ($400) to my name in cash, but with millions in Bitcoins I thought nothing about giving him all my pesos in exchange for him letting me crash in his gorgeous mansion for the summer while I looked for a new place. I would move in in a few days; a day later he returned to New Jersey.

I arrived at the mansion, and I was greeted by a young English gentleman and his adorable girlfriend.

Joff: “Who are you?”

Me: “Who are YOU?”

Joff: “I manage this mansion.”

Me: “Since when?”

Joff: “Since yesterday.”

Me: “Well I am moving in for the summer!”

Joff: “No you’re not. I have rented this house for the summer to tourists.”

The Q&A session went back and forth for some time. It seemed that my eccentric old friend either forgot to, or chose not to, tell me that he had hired a couple to manage and rent out the house, and they were instantly successful in doing so. Well, I let it be known I was not leaving, mainly as I had nowhere to go. I was on the sidewalk with two suitcases and all my money, which currently amounted to about $20, and I was prepared to take this misunderstanding to whatever level was necessary to secure a bed for the night. The Englishman was, however, quite polite and amenable. He told me I could stay in the garage next door for as long as I wanted.

A garage? Okay, well, not exactly the Ritz but better than the street, I thought. At least until I ‘moved in’ and realized I was sharing the garage with another homeless man and his son, whom I would have to kick out some days later under very uncomfortable circumstances.

Still, I was as happy as a jaybird because I was still rich.

I managed to hijack an internet connection from the mansion so I could get online. It was unpleasant having no heat or hot water, but no Internet? That was unthinkable.

I decided it would be a good time cash in my Bitcoins. I had planned to do this a couple of days earlier when I was online and donating money to a social cause I supported, but I figured I would do it when I settled into my new place.

I logged into MtGox and transfered all my Bitcoins to my laptop. But instead of getting a ‘transfer successful’ message, I got an ‘account suspended’ message. “WHAT?! Okay, don’t panic,” I told myself … this is clearly an administrative error. I immediately contacted the exchange and demanded they fix this problem. They told they would be glad to if I just sent them a valid ID and a utility bill – neither of which was possible. I went around and around with them for days, but the bottom line was, they had my money and they were not going to give it to me; there was nothing I could do. I was now penniless and living in a garage. And, I realized I would be living there for a very long time.

After a few months I did manage to get MtGox the paperwork, which they admitted was a new requirement imposed on them by the US Government – as was the requirement to lie to their depositors (which I was told in an IRC chat by the owner himself, Mark Karpelès, ... but I don’t even want to get into that because it makes my blood boil). But, as soon as I got them the paperwork, the US government put a lien on my account. And in the middle of battling with them, MtGox was hacked and ALL their bitcoins disappeared. That’s it. I was now officially broke with no hope of ever regaining any of my fortune.

What really got me mad was that money was going to go to my kids and the same government that wanted to jail me for being poor just guaranteed I would stay that way. Because of all their bureaucracy, a million dollars literally disappeared into digital space – poof!

It took a few weeks to get over the loss (emotionally), and when the anger finally subsided a little, I realized something that was really quite profound: when I had millions I was very happy (that’s not the profound part) and now that I didn’t and I was upset. The only real difference between rich and poor were some numbers in a Japanese computer. I felt rich when I had only $20 in my pocket. Why? Because I had faith in Bitcoins, MtGox, the Japanese, the ‘system’, etc. I had faith that my fortune was within reach anytime I wanted it. But in ‘reality’ my life did not change. I still did the same thing, dressed the same way, ate the same food. I lived no differently when I was ‘rich’ or when I was 'poor' (except for living in a garage ... ) but I was quite secure in the knowledge I had a fortune at my disposal. It was clear that it was not my faith that betrayed me, it was what I had faith IN that betrayed me. I was reminded at the moment of that ‘knowing’ I had when I came to Argentina six years earlier, a ‘knowing’ I had let slowly slip away. I laughed at myself for having shifted my faith from the ‘Universe’, from ‘Life’, to Virtual Money. I had been seduced and distracted.

It was an expensive lesson, but maybe I am so dense I needed to lose millions to ‘get it’.

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This was the intro video for the (now closed) crowd funding project.

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