Meet the new kids on the blockchain

A surge of young people has taken a headfirst dive into cryptocurrency. High school day traders have made hundred percent multiples on cash earned from summer jobs. College freshmen have exchanged doctoral dreams for computer science. Students have dropped out of school altogether. Some have embraced cryptocurrencies out of curiosity, others out of conviction, but all are banking that Bitcoin is the technology of the future. It’s early 1990s dot-com boom deja-vu.

As financial icons warn of high risk and little regulation, young people have invested money and time in cryptocurrency like no other generation. With Bitcoin, money can be sent peer to peer anywhere around the world without interference from bankers, currency markets or middlemen. That’s what makes bitcoin particularly appealing to this generation. Twice as many millennials own Bitcoin as the rest of the population. Almost a third say they are likely to buy Bitcoin in the next five years.  

These kids aren’t just making money, they’re radically changing the financial world by shepherding the digital currency movement in the mainstream. They’re launching crypto hedge funds and work on apps to trade the coins. This potential financial revolution was born in the bedrooms of bored teenagers.

Jack Mallers, 25

As a kid, Jack Mallers traveled the U.S. playing in chess tournaments, He consistently ranked among the top 100 youth players in the nation. When his friends began experimenting with drugs and alcohol, he’d be playing chess along Chicago’s waterfront.

Mallers’ family began buying bitcoins in August 2013, when he was 19. The price for a single bitcoin was less than $100. His family believed Bitcoin was a financial revolution. Like many others who invested early, they watched the financial crisis unfold and were frustrated by the systemic mismanagement of money by banks and governments.

Mallers now spends most days in his living room developing Zap, a Venmo-like app that lets people send Bitcoin to one another, or say, a coffee shop, almost instantly. An unhung painting in Mallers’ apartment shows the Bitcoin logo merged with the face of Dorian Nakamoto, the man Newsweek incorrectly identified as the creator of the cryptocurrency.

“There’s a generation of people much more comfortable with Bitcoin because it’s natively digital in how they interact with it,” Mallers said. “I’ve never written a check in my life. I don’t go to my bank and talk to them. I’m talking about a currency that’s native to my phone. It’s native to my computer. I relate to it more and I speak that language.”

Mallers wants to make sending Bitcoin from one person to another easier than a handshake. His app Zap got attention after he posted a video taken at his parents’ house to YouTube. His stepmother Brooke, better known by her handle @bitcoinmom, successfully paid him $.10 via Zap to do the youthful chore of taking out the trash. It was the beginning of something big: A faster bitcoin transaction that could be used in everyday commerce.

Groups have approached Mallers about acquiring Zap, and hiring him at rates most executives would only dream of. Mallers has turned everyone down. He’s hired three people to help him continue to develop Zap, and manage his growing entrepreneurial profile in the digital currency space. Mallers remains committed to his projection that a Bitcoin will be worth $100,000 by 2022. “There are nights my friends are partying and I’m like ‘I would love to but I don’t think I have time,’” Mallers said. “People need this thing and I guess I’m one of the people they’re waiting on.”

Trey Brunson, 23

Trey Brunson graduated from the University of Delaware in May, where he lived with five buddies in an apartment above a Jimmy John’s sandwich shop. He moved to Delaware to pursue a medical career and used his savings to join the the university’s prestigious and exclusive Investment Club. Instead of buying traditional equities, he bought $4,500 worth of Bitcoin.

Brunson’s investment plan worked. His portfolio grew and was worth more than $100,000. Those gains made him think philosophically about a long term plan. “It’s true that many young people think of a Bitcoin-like a share of Berkshire Hathaway in the 1980s,” Brunson says, referring to investor Warren Buffett’s legendary company. A bitcoin’s value, he believes, has a long way to go.

Buffett is one of those financiers who believe that Bitcoin is bound to implode, and that kids like Brunson, who have bet hard on the currency, are bound to risk it all. In the first quarter of 2018, the price of one bitcoin dropped from a high of $20,000 to below $10,000. Now, it’s plummeted to the lowest prices of the year. More than half of the cryptocurrency market capitalization vanished. Some called it a crash. Others called it a correction. Either way, portfolios lost value.

Brunson is committed to stomaching the ups and downs. He recently turned down an offer to go work at an accounting firm. Instead, he scoured cryptocurrency related job postings and landed at Blockchain, a company best known for providing users with digital wallets. Brunson helps clients use the company’s product, an ideal fit for someone optimistic about the contribution of digital currencies. “It’s stoked a new fire of ‘you can do whatever you want do go do,’” he said of Bitcoin. “Put value into the world instead of going to work.”

Blake Hekmatpour, 20

By the time he got the keys to his first car, Blake Hekmatpour also ran a successful hedge fund. He and a friend, both top students at St. John’s Preparatory School outside of Boston, convinced students and family to invest more than $100,000 with B&B Capital (the young men’s names conveniently started with the same letter).

Hekmatpour’s eye had turned to cryptocurrency a few years earlier. At 16, he was making some money off his trades and also worked at a neighborhood pool. While poolside, he invested about $10,000, his entire savings, into the big three coins. “I get consumed into the ecosystem of cryptocurrencies pretty quick,” he said.

”My parents were like, ‘what the hell is he doing? He is literally gambling his money away.’” But Hekmatpour’s money doubled, and the summer between his junior and senior year of high school, his parents — a doctor and an entrepreneur — decided to risk it with him.

Hekmatpour started NYU’s Stern School of Business in 2017 with hopes of becoming an investment banker, but he knew mainstream finance had not warmed to cryptocurrency. And he was in deep. He’d closed his B&B Capital hedge fund and was now trading a $250,000 portfolio made exclusively of cryptocurrencies. When he met a recruiter from a big Wall Street bank, he once again realized the Wall Street life wasn’t for him.

Last summer, Hekmatpour traveled to Korea and Hong Kong to build relationships with companies and investors aligned with the cryptocurrency space. He considered taking a gap year to fully focus on the digital money market, but has continued classes while contributing to a fund focused on hedged algorithmic cryptocurrency trading. In his spare time, he has met with lawyers, potential investors and other cryptocurrency enthusiasts. “They look at me like ‘Why am I going to give you money?’ There’s that pressure to bring the expertise to the table and prove to them I’m not just some joe schmoe kid.” While he’s enjoyed the meeting, Hekmatpour has focused primarily on building his personal portfolio in the cryptocurrency space.

Roshaan Khan, 22

Roshaan Khan’s heard about Bitcoin from his father, a Pakistani native who owns a group of gas stations in the suburb of Springfield, Virginia. “Someone came into one of the businesses and asked if he could set up a Bitcoin ATM,” Khan recalled. The ATM lets people use cash to buy Bitcoin and vice versa. The one in Khan’s store was set up in the spring of 2017, before Bitcoin were worth more than $10,000 per coin.

Khan began to learn more but did not have any money of his own to invest. A paid summer internship working in IT allowed him to save and buy 1 Ethereum coin for around $200. He dumped his original plan of becoming a doctor. Khan has kept an IT day job to pay the bills, but he has his sights set on a pivot. He helped start a cryptocurrency hedge fund this year. He landed the job online and worked with his business partner for six months before meeting him in person. He also helped found KoinStreet, a social media like interface that lets the Bitcoin dabbler mimic the trades of some of the most tenured cryptocurrency professionals.

Nico Price, 21

Niko Price learned about Bitcoin in his 8th grade classroom, when a friend asked him to help build a gaming computer. The gaming computer turned into a bitcoin-mining computer, but the coins were lost when Price’s friend threw the computer away, thinking the coins would never amount to being worth very much. “My parents hated it,” Price said. “Everyone was like ‘It’s the dark web and illegal activity.’ I’m trying to explain to them how revolutionary this technology is.”   

In the summer of 2015,  Price paid about $800 for a metallic box the size of a loaf of bread. Filled with computer chips, connecting cords and a cooling fan on one end, the box is called an Antminer S7 and its computer hardware components were optimized to mine Bitcoin.

Mining is the process by which a computer is rewarded with Bitcoin for successfully solving a cryptographic code on the blockchain. The energy costs to run the machine often make mining not a profitable endeavor but Price was bullish and his circumstances were favorable. “I was at boarding school. I didn’t have to pay for the electricity. That was the only way for my mining machine to be profitable. I was betting on the underlying value of Bitcoin to increase in the long run and go over $10,000.”

Now, a college sophomore, Price considers Bitcoin mining a hobby. “It spits out 150 degrees of hot air and it’s so loud. Watch a YouTube video of a miner and you’ll see it’s not something you want in your house,” he said. He won’t turn the machine back on until the Bitcoin price is up to $20,000.

Trading cryptocurrencies, he believes, is a better use of his effort. He’s adding to his investment by buying coins like XRP and ether. In fact, he has narrowed his position in Bitcoin to 10 percent of his total portfolio, believing the technologies solve different problems and more than one could come out on top. “Every penny I make, I’m just trying to accumulate coins. I don’t know which way they’re going, I just want my hands on all of them,” he said.