Paper Belt on Fire: The Vitalik Story

Part memoir, part guide for the next generation of innovators

Editor’s Note: Michael Gibson is a polymath. His combination of writer, philosopher, and hedge fund manager is rare and wonderful. In this excerpt from Gibson’s new book, Paper Belt on Fire, you can see how moving against the herd and betting on young subversive innovators drops a match on the “paper belt,” that shriveling corridor of influence from Boston, MA, to Washington, DC.

On July 23, 2014, I made what turned out to be the absolute worst financial decision of my life. Much to my eternal embarrassment. Worse, I could have rectified that mistake over the following year or two with some course-correcting prudence, but I did not. I have no excuse. All told, this infernal lapse has probably meant losing out on tens of millions of dollars. The final number is hard to calculate, but it is colossal. 

What happened was that across a handful of meetings and phone calls in the winter and spring of 2014, I’d been advising Vitalik Buterin, the inventor of the Ethereum blockchain. In the early days, there were tensions between members of the Ethereum leadership team, and I was a sounding board for Vitalik to talk through the issues and help him work the kinks out. We’d recruited Vitalik into the Thiel Fellowship earlier that year, not long after he had written his white paper first describing the Ethereum network. Then in July, the Ethereum organization launched the initial sale of its first coins. As an advisor, I marketed the sale to everyone I could. This included a now immortal Facebook post, which I’ve printed out to remind myself of my foolishness. “Get ’em fresh off the crypto printing press,” I wrote all over social media, with a link to the website where visitors could buy some. “Ether, a new currency for the distributed application platform from Thiel Fellow Vitalik Buterin and others at Ethereum.” The embarrassing mistake I made was that, despite being involved at the moment of creation—the let-there-be-light moment of a blockchain—I did not buy a single Ether. Seeing my Facebook post, one of my best friends bought one Bitcoin worth of Ether, which was exchanged for 2000 of the new coins (about $1000 at the time). As of December 2021, his holdings are worth about $4 million. 

Truth be told, at the time I didn’t have a lot of personal savings to place in risky endeavors. My savings when I started working for Peter were zero. I was an out-of-work poet-philosopher. On top of that, the IRS doesn’t look too fondly on non-profit officers making money off their grantees. Nevertheless, we’d been at the forefront long before most knew what a blockchain was. That was exciting. One of our Thiel Fellows, Chris Olah, had sent an email to Danielle [Strachman] on November 9, 2013: “Vitalik Buterin is one of my friends from high school. He was an applicant to the [Thiel] fellowship last year. He’s spent the last year or so traveling around the world doing Bitcoin stuff. I haven’t seen him since, but it’s been super interesting to follow his adventures. And now he’s visiting the Bay Area!”

It’s surprising in retrospect, given his genius, but we’d rejected Vitalik’s application the previous year because he pitched us some ideas about improving education with technology. EdTech as a trend always turned us off for a variety of reasons, but mainly because it didn’t improve outcomes in learning. But in the year after he first applied, Vitalik had discovered another ace up his sleeve. He’d been quite productive hatching some new ideas for repurposing the blockchain technology that underlies Bitcoin. He told us all about it on December 2, during lunch in the Letterman cafeteria, which we shared with the animators and special effects wizards from Lucas Films. The classical rotunda of the Palace of Fine Arts, with its radiant sandy and copper patina, glowed as always in the sun outside the window as we ate. Vitalik sketched out for us what a “distributed application” might look like, what it might do, what it might replace. He called them “Dapps” for short. His rough draft of the concept was an extension of the decentralizing aspect of Bitcoin’s mysterious, but infallible ledger. 

Vitalik was only nineteen years old in 2013, but he spoke to us as an authority on mathematics, computer programming, and game theory. His IQ could very well be 200. I have no idea. But at a later meeting over dinner, I saw him texting on his phone in Mandarin with Ethereum developers in China. I asked him how he knew Mandarin and he told me he taught himself. His Russian accent and the cadences of his sentences lend his voice a Stephen Hawking-like, robo-synth quality, though Vitalik speaks quickly and has a slight lisp. But where Hawking was grave and donnish, Vitalik is ironic and playful. He often wears t-shirts colored with defiant go-to-hell pastel gradients, from fawn lust pink to Malibu Barbi teal. The shirts are usually cluttered with graphics pulled from Internet memes, like kittens riding on llamacorns. (That’s a llama with a unicorn horn.) He wears t-shirts to the most formal conferences anywhere in the world. His is an affectionate, but self-satirical view of the Internet and its carnival of garish and childish humor. If you saw him on the street, you would think he was a throwback teen who’d fit right in at a 1980s arcade blasting British new wave pop. Skinny kid, gaunt face, black jeans, Vaporwave tee, an Eastern European vibe grounded by homespun Canadian kindness. You would never guess for a moment that this nineteen-year-old would become the architect of a multi-billion dollar international project to overthrow the money-gods of Wall Street, Silicon Valley, and all of its big tech companies that exploit their users like feudal lords and their digital serfs. 

But at lunch that day, the vision began much more modestly. I asked him what possible uses a distributed application on Ethereum might have. He mentioned a string of concepts I had heard of but did not fully grasp. Unique digital assets. Smart contracts. Digital registries of personal identity. All of these things, while confusing in detail, were going to open a new frontier in the way people could coordinate and interact on the Internet. Vitalik had flown around the world that year—he listed his home as Cathay Pacific Airlines—to meet with Bitcoin developers in different ecosystems. He found there were pockets in the different places where people were starting to think about how crypto could be used for single-purpose applications beyond money. One prominent one, Namecoin, positioned itself as a domain name system built on Bitcoin’s code. But that was all it could do. None of these efforts were thinking in broader, more ambitious terms. During his travels, Vitalik began to conceive of a decentralized system that was general and flexible enough to handle any new use case, not just one application. The functionality of Bitcoin’s code could be extended, made more versatile, like moving from a phone to the iPhone. Nevertheless, it all depended on the technological discovery that Bitcoin made possible. Vitalik wrote up his ideas in a research paper that he first sent to a trusted group of fifteen people on November 27, only five days before sitting down for lunch with us. Not too soon after that, we awarded Vitalik a Thiel Fellowship without him even having filled out an application. I ran point on the Fellowship team for helping him out, an experience that converted me entirely over to an unusual, experimental philosophy that I began to sketch out.

Though it offered an analytical framework, which I borrowed from Ethereum’s and Bitcoin’s designs, it was less a set of principles than an ethos and sensibility. I called it the Nakamoto Consensus. It addressed a general problem of which decadent universities were but one specific instance. Vitalik’s expansion of the Bitcoin protocol was the inspiration at the heart of my framework for thinking about institutions and their repertoire of dysfunctional behaviors. Once I had understood Vitalik’s and Nakamoto’s insights into institutions, I became a bomb fizzing at the fuse.

Stay tuned for the next installment. You can buy Paper Belt on Fire here.