Early investors in Bitcoin got rich. Now they are the cryptocurrency’s most powerful gatekeepers.
Every time you spend bitcoins to buy a drink at Evr, a swanky bar in midtown Manhattan that accepts the digital currency, you make its co-owner, Charlie Shrem, just a little bit richer.
And that’s not only because a chamomile sour costs $17 (or 0.16 bitcoins). It’s because whenever someone new uses bitcoins, the electronic currency’s value tends to increase. Shrem has bought thousands of bitcoins for about $20 each, starting in 2011. Since then, the digital coins have soared in value to $109.
That’s turned the 23-year-old into a millionaire and into one of a handful of early bitcoin investors who’ve decided to sink their windfalls back into the bitcoin economy, starting their own companies and investing in others.
“Infrastructure is what we need,” says Shrem. “We’ve gotta build, build, build–financial software, exchanges, and different payment products.” In addition to his investment in the bar, Shrem founded Bitinstant, a company that makes it possible to buy bitcoins at Kmart and 7-Eleven, and is a member of BitAngels, an investment group created this year to help Bitcoin startups evolve from garage operations into real companies.