Bitcoin's All-Time High Made This Guy a Millionaire, Then He Lost It All
"There was this insanity."
At the end of 2016, you could buy a bitcoin for the price of an iPod, and yet, it wasn’t exactly new, either. People were starting to come around on the decentralization revolution, including a former ad man named Peter McCormack. Sick of the advertising game, he folded his agency and poured what remained — about $32,000 — into bitcoin and Ethereum’s ether. By that summer, he was a wealthy man. And when bitcoin hit its all-time high one year later on December 17, 2017, he was a millionaire.
“There was this insanity,” the trader turned podcast host tells Inverse. “It was like, ‘shit this is big and it’s going to move quickly.’”
Since that all-time high, which was one year ago tomorrow, McCormack watched his holdings shrink in value from $1.2 million to almost nothing, after accounting for taxes. To recoup some of the losses, he set up a mining operation in January, which is still burning cash. It’s the kind of story that gives you whatever the opposite of FOMO is, and yet, for all that, he’s surprisingly upbeat about how the whole escapade turned out.
“Of course I wish I’d sold at the peak, of course I regret that,” he says. “But it’s been such a wild ride for two years: I was out of work and then I suddenly went to traveling the world… It’s not like I lost money I earned.”
What It’s Like to Be a Bitcoin Millionaire
McCormack’s story could obviously be a lot worse. He didn’t borrow any money, for one, so it’s not like he’s under water. And he earnestly seems to like his new job, hosting an industry-focused podcast called What Bitcoin Did, a venture he almost certainly wouldn’t have been able to launch if he hadn’t spent a year trotting the globe to attend crypto conferences. He’s a good example of how bubbles, for all the havoc they cause, may be a price we pay for groundbreaking innovations.
“When there’s an opportunity to make money, all the people with money go make something. Bubbles do accelerate innovation,” McCormack says. “The only downside is how much money people lose.”
McCormack isn’t wrong. A 2018 analysis from researchers at Texas A&M University, Texas Tech University, and the Vlerick Business School in The Hague, Netherlands found that innovation, along with speculation, is the main driver of stock market bubbles. More interestingly, they find that the more radical the innovation, the bigger the bubble, a finding that contrasts with the conventional wisdom that “bubbles are detrimental” and have “few, if any, positive effects,” according to a statement by Alina Sorescu, one of the paper’s authors.
Was the Bitcoin Bubble Worth It?
So does that mean that the bitcoin bubble is the price we’re paying for some revolutionary innovation? It’s hard to quantify bubbles, but the bitcoin bubble was definitely up there (some reputable economists like NYU’s Nouriel Roubini have suggested it’s among the biggest).
After all, even if the $20,000 price was short-lived — at the time of writing, bitcoin was trading for about $3,000 per coin — there’s little arguing that the mania didn’t last long enough to accomplish at least some good. Particularly in countries like Zimbabwe and Venezuela, where hyperinflation makes fiat currencies even more volatile than crypto, this technology is already making people’s lives better.
“People are gonna try and find ways to make this work,” McCormack says. “There’s opportunity and innovation, they’re going to be able to try things.”
Where Do We Go From Here
The technology that’s developed around bitcoin and crypto is also being implemented in functioning economies, though the progress is a little more subtle. Reliable stats are hard to come by, but based on the number of job postings on LinkedIn, it’s safe to say that thousands of people are directly working on blockchain related projects around the world, if not more.
Real world applications of the technology besides sending and receiving digital currency are also starting to take shape. It’s mostly in the very sexy field of supply chain management, at the moment. But hey, once we finally start eating romaine lettuce again, we’ll have the blockchain to thank for making sure our leafy greens are E. coli-free.
It’s wild, still, that McCormack is able to maintain this kind of outlook about a technology that cost him so dearly.
“A lot of the stuff is nonsense, but I’m really into bitcoin, the net good that bitcoin can do for the world,” he says. “Especially for people living under bad regimes or poorly run regimes like Venezuela, bitcoin is a real lifeline. The government does not have a monopoly on money creation anymore. That’s amazing.”