The Cryptopians book review, really? You may have already gathered that ‘crypto’ is not a word regularly used at FastBitcoins. Due to it being a catch-all term for Bitcoin and alt-coins whereas they are two very different things. You can read our ‘Why Bitcoin only?’ blog to find out more about that.
So, why are we reading a book about Ethereum, the ‘crypto’ that launched tens of thousands of alt coins? And brought the Initial Coin Offering (ICO) scams, followed by the ‘Decentralised’ Finance (DEFI) rug pulls and Non Fungible Token (NFT) monkey jpegs and numerous ‘smart’ contract hacks.
The Cryptopians by Laura Shin answers it on the front cover with the headline: “Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze“.
We know that Ethereum is not decentralised and learning the origins of its genesis in detail only reinforces that. Shin is clearly knowledgeable about what she is writing and has seemingly been able to access almost everyone involved with Ethereum’s creation. I suspect the book will become a great future reference guide for anyone interested. It’s a page-turner as well, I struggled to put it down!
What did we learn from The Cryptopians?
That Vitalik Buterin first learned of Bitcoin from his father at the age of 17 in 2011. Firstly ignoring it, then as often happens, when the price kept going up a couple of months later he figured he should research it more.
He then paused his college studies to travel and meet Bitcoiners around the world, writing for Bitcoin Magazine and freelancing as a cryptocurrency developer.
In 2013 whilst staying with Kraken Exchanges Co-founder and CEO, Jesse Powell, Vitalik decided that he wanted to create one blockchain, app-store style to form a ‘decentralised’ computer. It would support many kinds of applications and solve all problems. Unlike Bitcoin which only solves one, the problem of FIAT money.
Bitcoin Developers rejected his ideas, so he wrote and sent a white paper to 13 friends. One of those being a Bitcoin millionaire who offered to fund Vitalik with $150,000 in bitcoin to create Ethereum. So in 2014 with the help of other developers and financial supporters the crowd sale was launched. Selling 2000 ETH/bitcoin and ratcheting down over time to increase FOMO.
They delayed the crowd sale so that they could flesh out the business plan and the terms for legal reasons. This is all very different from how Bitcoin started. It even involved the creation of a Swiss based non-profit called the Ethereum Foundation.
The intrigue begins
In-fighting and disagreements happen from the beginning. Vitalik and other founders were angry that Joe Lubin of ConsenSys (who now controls most of Ethereum’s infrastructure) wouldn’t sell the Bitcoin sent in for the crowd sale. Ultimately netting the Ethereum Foundation only $9m instead of the $18m they could have raised. Some of the founders expected massive Ethereum Foundation salaries and Vitalik was peeved about this.
The Ethereum network going live in July 2015 and The Ethereum Foundation introduced a new character into the mix. New Executive Director, Ming Chan, Vitalik’s preferred applicant for the position.
Soon interpersonal dramas began. Just three days later she accused a board member of bullying and abusing her in a sexual manner on a Skype call. Followed by Ming accidentally sending and then deleting messages where she described a scenario of her gaining control as President of the Foundation and Vitalik as Chairman.
There were then three years of in-fighting and conflict amongst Ming and the most prominent people involved in Ethereum. Finally ending with Vitalik having the casting vote to fire Ming in 2018 after avoiding doing so for too long.
Things take another weird turn when they have issues with that Bitcoin millionaire who initially funded Vitalik, Anthony Di Iorio. He briefly took one of the laptops home that contained a key for the Ethereum Foundations remaining bitcoin in a multisig set-up. This really soured trust in him. So, the Ethereum Foundation began distancing itself from the man who saw himself as Ethereum’s main VC.
Everyone can do it better
Learning about the make-up of the Ethereum Foundation and its founders, which also included Charles Hoskinson as its CEO is very telling. Two of them went on to launch their own altcoins. Charles with his ‘better’ Ethereum: Cardano, and Gavin Woods with his ‘better’ Ethereum: PolkaDot.
Charles was ousted from his role alongside another Founder on what is called Ethereum’s Day of Thrones. Half of the team turned on him for his perceived lies and Vitalik, with his extra votes at the Foundation decided his fate. These Founders still received their founder’s share of ETH.
From the start… hackers like Ethereum’s ‘smart’ contracts
We’ve often heard about The DAO hack and how it was the cause of forking Ethereum to rescue hacked funds. That created Ethereum Classic (ETC) but it’s fascinating to read all about the mechanics of what was going on behind the scenes. The Cryptopians author Shin really knows her stuff and explains this all really well.
Launched in 2016, The DAO was an early decentralised autonomous organisation. It was intended to act as a VC firm and raised $150m of ETH. It was one of the earliest crowdfunding efforts and high-profile projects built on Ethereum, which at the time was only one year old.
Less than three months after launching The DAO was hacked. $60m of ETH was stolen. At the time The DAO contained 14% of all ETH in circulation. Despite online polls showing 80-90% support from the Ethereum ‘community’ to fork ETH to rescue stuck funds. Ultimately only 5% of all ETH voted for the fork to take place.
After the block that indicated a successful hard fork of Ethereum had happened, Vitalik popped a champagne bottle to celebrate. A strange reaction to proof that your blockchain is not immutable or censorship resistant under the right circumstances.
Shin notes that as the price of ETC rose post fork threatening to flip ETH. Vitalik had decided that if it overtook ETH and became the dominant and ‘real’ Ethereum, he would leave the project and start a new blockchain.
The Ethereum Shadow Government?
Another interesting fact in The Cryptopians is that one ETH whale British businessman by the name of Chris Harborne. Who needed 38,383 ETH (about $600,000) to be rescued from The DAO, after mistakenly sending it there after the hard fork. He funded the Ethereum Developer Vlad Zamfir to work on a proof-of-stake algorithm which would be a more ‘environmentally friendly’ way to run Ethereum.
Thai based Harborne is one of the biggest UK Conservative party donors. He contributed the bulk of total donations to the Brexit Party. He is also now the 3rd biggest shareholder in QinetiQ, a major UK defence contractor that came from the privatisation of Britain’s top-secret defence laboratories. Harborne is also an active ‘crypto’ lobbyist.
Ethereum really did attract some very interesting characters. Many of them having an influence, particularly those without official roles who surrounded Vitalik closely. People in the Ethereum Foundation called them the Shadow Government.
Should you read The Cryptopians?
If you like a bit of intrigue and want some extra knowledge about Ethereum. There is so much more to unpack in this book. It doesn’t go into any real technical aspects of Ethereum and its tokenomics etc. so you won’t learn much about that. But it’s a well written and all encompassing record of who was involved and what was happening around the creation of Ethereum.
It reinforces our opinion that Ethereum is a science project. ETH is the reserve currency of the network and heading towards more and more centralisation. Bitcoin is trying to be the reserve currency of the world and only becoming more decentralised than ever before.
We know which makes us feel more secure. Which is why you can start your Bitcoin savings journey today at FastBitcoins.
If you enjoyed our book review of The Cryptopians please see more of our book reviews in the FastBitcoins library.
