Early bitcoin investors count winnings after volatile decade

Market participants said Bitcoin’s technology has not always been an efficient means of processing payments. (AFP)
Updated 31 October 2018

Early bitcoin investors count winnings after volatile decade

  • Bitcoin relies on so-called “mining” computers that validate blocks of transactions by competing to solve mathematical puzzles every 10 minutes
  • Some investors, however, have become disillusioned, arguing that bitcoin has been held back and not reached its expected potential by taking off in the real world

NEW YORK/LONDON: Seven years ago, Marshall Hayner gave his grandfather one bitcoin, worth about $30. On the paper wallet he fashioned to commemorate the gift, the US entrepreneur and software developer wrote: “Do not open until $100,000.”
It made Hayner’s grandparents laugh, and indeed bitcoin has not come anywhere near that level. But it is worth more than 200 times what it was in 2011 when Hayner made the gift.
Investors who took a chance on the fledgling currency and stuck with it have been on a rollercoaster ride — but are optimistic that they are still onto a winner.
“I have seen these run-ups and drops in bitcoin and I did not even flinch,” said 34-year old Hayner, who started mining bitcoins in 2009 when the granddaddy of all cryptocurrencies was worth nothing. He also founded payments company Metal Pay.
“I believe in this technology. I really believe that bitcoin is the next digital gold,” he said in an interview this week.
Bitcoin on Wednesday celebrates ten years since Satoshi Nakamoto, bitcoin’s mysterious founder, released a whitepaper outlining the need for an Internet currency that could be used as payment without going through a third party like a bank.
One bitcoin is now worth around $6,200. That is a steep 70 percent fall from its all-time high of near $20,000 in December last year, hurt by a more intense regulatory scrutiny around the world, as well as the rise of cryptocurrency crime including hacking, but a substantial boost for any early investors who bet on it.
“If the price goes down, I am happy because I was able to sell some,” said Israeli entrepreneur Daniel Peled, who has bought since late 2013 and believes another record peak is a few years away. “And if it goes up, I am happy too because I am still holding some.”
Peled’s optimism is partly based on his waiting for bitcoin’s next “halving,” which has constrained its supply and has caused its spike as demand increased.
Bitcoin relies on so-called “mining” computers that validate blocks of transactions by competing to solve mathematical puzzles every 10 minutes. In return, the first to solve the puzzle and clear the transaction is rewarded new bitcoins. Bitcoin technology was designed in such a way that it cut the reward for miners in half every four years, a move that was meant to keep a lid on inflation.
The next halving is scheduled in 2020 and the following year should be a good year for bitcoin, Peled said.
The same optimism has prompted London-based investor Nicholas Gregory to keep his bitcoins, which he bought heavily in early 2014.
Distrustful of exchanges, Gregory, currently chief executive of blockchain firm CommerceBlock, made his first purchase through a website that matched him to a man selling bitcoins on a memory stick in a New York cafe.
Since then, he has not sold any bitcoins, citing the potential of the digital currency to safely store value and transfer money across the Internet.
Lost potential?
Some investors, however, have become disillusioned, arguing that bitcoin has been held back and not reached its expected potential by taking off in the real world.
Vaughn Blake, a Los Angeles-based portfolio manager at private equity firm Echo Tree Capital, liquidated his cryptocurrency quantitative fund in January this year when bitcoin was at $13,000. He started investing in bitcoin in 2013 when it was around $120 but said he has been a victim of hacks and phishing attempts.
Bitcoin’s technology has also not always been an efficient means of processing payments. It can be slow, sometimes incurring higher fees than regular transactions, market participants said.
London-based entrepreneur Jez San, CEO of blockchain firm Funfair Technologies, started buying bitcoin in 2013, at around $50, but sold most of it well before the peak in December 2017. He invested in Ethereum, the second-largest cryptocurrency that runs on another public blockchain network, instead.
“We all expected people would be buying coffees with it and they would use it instead of PayPal,” said San. “Bitcoin is way too hard to use — it’s so user unfriendly that the man in the street just can’t use it.”


INTERVIEW: The greatest Arab show on earth — and its legacy

Updated 38 min 36 sec ago

INTERVIEW: The greatest Arab show on earth — and its legacy

  • Marjan Faraidooni explains key role Expo 2020 Dubai will play for the UAE — and Saudi Arabia’s crucial participation

DUBAI: Any skeptics about Expo 2020 Dubai — and there are a few who still have reservations about the extravaganza that will open to exuberant fanfare next year in the UAE — should spend an hour or two with Marjan Faraidooni.

She is the executive in charge of the pavilions and exhibitions on the huge site in south Dubai, and crucially, she has responsibility for “legacy” — what will remain after the show packs up in April 2021. She is calmly confident that the event will be a big success.

“It’s a challenge, but we have the mechanisms in place to make sure we meet that challenge,” she said amid the bustle of the Expo headquarters. It was August, and the holiday season, but there was no sign of any slackening in activity in the administrative hub, nor on the site itself. The clock is ticking down to the opening on Oct. 20 next year.

The scale of the event is mind-boggling. Over six months, the site will be visited some 25 million times, triple the population of the UAE. A previous Expo executive described it as the biggest ever gathering of people in the Arab world. It is expected to give a significant boost to the regional economy, and leave a permanent new city on the southern borders of Dubai.

But the doubters have been nagging away ever since Dubai won the right to stage the world fair in 2013. Would it be ready on time? Would it justify the financial outlay by boosting the UAE economy? Would it leave a lasting legacy or risk becoming a multibillion-dollar white elephant in the desert?

Faraidooni is convinced on all counts. On delivery, she said: “Yes, we are on track and although it’s not my direct remit, as part of the senior management team we are all responsible for doing whatever it takes to get this Expo delivered on time.”

Construction is progressing well. Earlier this year, Expo announced that the three “thematic districts” — reflecting its key themes of sustainability, mobility and opportunity — were complete, with more than 100 million working hours clocked on the site.

Faraidooni said that many of the 192 individual units built by the participating countries or organizations had already broken ground — including the big pavilion housing the Saudi presence — and that key infrastructure and transport around the site was well under way. An extension to the Dubai metro system and new roadways are under construction, as is apparent from the hectic construction activity around the site.


BIO

BORN: Dubai

EDUCATION: Bachelor’s in human physiology and master’s in public health, University of Boston, US

CAREER

• Instructor, Sharjah Women’s College

• Special projects analyst, executive office of Dubai ruler

• Senior manager, Dubai Healthcare City

• Portfolio strategy director, Dubai Holding

• Chief pavilions and exhibitions officer, Expo 2020 Dubai


On the economic benefits of the project, Faraidooni pointed to a recent study by consultants EY which projected a big boost to the Dubai economy and a permanent increase in jobs.

“This Expo is happening in a location that is critical to the development of Dubai as a city and close to a new airport. A lot of infrastructure has been developed not only to service the Expo but for this whole area of Dubai,” she said.

Some economists have talked about the “Expo effect” as a factor that will boost the economy, especially the real estate market, which has been in the doldrums for several years.

That economic development is part of the legacy Faraidooni believes Expo will deliver. “The future is something we think about on a daily basis,” she said. The site will become a new addition to the Dubai urban scene, a mixed-use development called District 2020: A mixture of a business park, an exhibition center and a residential area with retail, leisure and cultural features, based around the Al-Wasl centerpiece.

Two big international corporations — Siemens, the German engineer, and Accenture, the international consulting firm — have already said they will base significant operations on the Expo site once the event ends, and Faraidooni hinted that other big global businesses are interested.

“We think of it as the place that happened to hold the Expo for six months. It will hold all the cultural and educational assets that played a fundamental role in the project,” she said.

We will have thousands of people coming through the doors on a daily basis.

Her infectious enthusiasm for the Expo project — she has been involved in it since the very beginning — is most obvious when it comes to discussing the actual content of the thematic pavilions that form the core of the experience.

She admitted the three key themes of sustainability, mobility and opportunity are “heavy themes, traditionally discussed in the UN and other political environments,” so the challenge has been how to make those accessible and enjoyable as well as informative.

“We will have thousands of people coming through the doors on a daily basis, so how do we quickly send them the Expo message in a way that inspires them and educates them? That’s what I do on a daily basis. It’s one of the best parts of my job,” she said.

As Faraidooni describes it, the sustainability pavilion, called Terra, will be quite an attraction in its own right. Designed by the renowned British firm Grimshaw Architects, the pavilion has a diameter of 130 meters and its roof consists of solar panels that will make it self-sustaining in energy use. “You won’t miss the sustainability pavilion — it’s like a spaceship has landed on the site,” she said.

The “theatrical approach” Faraidooni had adopted in the pavilions involves simulating different experiences that hammer home the sustainability message in Terra. “When you come through the entrance of the building you’ll be given two choices: Do you want to go through the forest, or under the ocean? We take you through chapters of experience that inspire you about the world you live in,” she explained, mentioning an encounter with a “giant fish with stacks of plastic in its belly” to highlight environmental threats.

An aerial view of the Expo 2020 site in Dubai. (Courtesy of Expo2020Dubai.com)

The two other thematic pavilions involve a similar mixture of entertainment and experience, but with a serious message and a flavor of Emirati and Arabic heritage.

In the mobility pavilion, visitors encounter famous Arabic navigators and travelers who led the way in exploration techniques, as well as modern examples from the ports company DP World and Dubai Smart City.

In the opportunity pavilion, visitors will view the world through the lens of the UN sustainable development goals, and what the implementation of those targets can mean for everyday experiences.

No detail is too small. Expo recently announced an international competition to design water fountains for the site — the Sabeel fountain project — which will invite designs for 40 locations around the site, highlighting the role that the communal provision of water has played in Arab and Islamic culture.

Saudi Arabia will be a key participant at Expo. The Kingdom’s pavilion — the second biggest on the site after the UAE’s — is themed on a gigantic mirror rising into the sky, but firmly attached to the ground, “reflecting a society deeply rooted in its culture but with unlimited ambitions,” according to the official statement.

“It’s very advanced, like something out of a sci-fi movie, and very interesting. The Saudi pavilion looks like it’s going to be one of the main attractions on the whole site. We’re very excited about it,” Faraidooni added. Expo rates Saudi Arabia as the second-largest source market for visitors next year, after India, accounting for a significant number of the 11 million anticipated foreign visitors.

Foreigners will make up 70 percent of the visitors to Expo, but the majority are expected from the UAE, who are being encouraged to come more than once, with a program to Emirati and regional schools to ensure youthful participation.

A big role will be played by Emirates Airline, one of the official partners of Expo, which is working on plans to persuade transit passengers to visit the site, as well as tourists on holiday in the UAE. So the goal of 25 million visits, labeled as overly ambitious by some critics, is eminently achievable. “Of course it’s feasible. Everything is feasible,” Faraidooni said.

She is acutely aware that the deadline is approaching. “We’re doing a lot, but there is so much more we could do, but we’re constrained by time. We know we have to open our doors and there is no question about that date whatsoever,” she said.

Faraidooni faces a personal challenge too: What to do once the Expo closes its doors on the last visitor in spring 2021? “This is a once-in-a-lifetime job. Anything I do after this is going to be boring,” she said.