- 19-year-old Erik Finman became a bitcoin millionaire last year, and now holds multiple millions worth of cryptocurrency.
- He’s grown disappointed with the current state of cryptocurrency, saying that there are too many scams and too much politics for bitcoin or other current currencies to replace traditional money.
- That’s why Finman has gathered a bunch of other bitcoin millionaires to kickstart a new cryptocurrency that aims to fix the biggest problems with current cryptocurrencies.
19-year-old Erik Finman made headlines last year when the value of his bitcoin holdings hit the $US1 million mark – meaning he won a bet with his parents and didn’t have to go to college.
Now, thanks to the recent surge in the cryptocurrency markets, Finman’s personal bitcoin hoard is worth about $US4 million, even after the slump of the last few weeks. And he’s diversified into other cryptocurrencies, as well as more traditional investment vehicles – he’s even started a 401(k) retirement account.
And yet, Finman is disappointed with the state of cryptocurrency, he tells Business Insider. The cryptocurrency boom has brought with it an upswing in scams and dirty dealings. And the bitcoin community, in particular, is too caught up in its own self-interests to modernise the underlying technology so that it can deal with the increasing crush of users, he says.
He refers to the larger cryptocurrency market as “corrupt,” and says that it’s led to most cryptocurrencies serving more as an asset, like gold, rather than a politics-free replacement for money, which was the original idea. He suggests that the first wave of digital tokens might be about to buckle under its own weight – paving the way for something new.
“You’re seeing the first generation [of cryptocurrency] live and probably die,” says Finman.
Here come the ‘crypto whales’
Finman’s next project is bringing on that next generation. He tells us that he’s been flying around the world, recruiting a “consortium” of fellow bitcoin millionaires around the world (he says that they call themselves ‘”bitcoin whales”), from Dubai to San Francisco. And within the next few months, Finman says, they’re going to debut their master plan for a new cryptocurrency.
The technical details will be revealed down the line, says Finman. The big idea, though, is that Finman says this new cryptocurrency will be everything bitcoin currently is not:
- Bitcoin’s price volatility makes it too unpredictable to be a reasonable a way to pay for goods, so Finman says his project will be designed to increase in value on a gentler, kinder slope that makes it a more predictable store of value.
- Bitcoin carries transaction fees of as high as $US37 for sending or receiving bitcoin, caused by congestion on the network from the huge swell of interest in the currency. So the consortium has conceived a way to keep fees small, even as the currency (ideally) gathers users and gets bigger. Plus, Finman promises shorter turnaround times than the days it can currently take to close a bitcoin transaction.
- It takes massive amounts of electricity to “mine,” or generate, bitcoin, and more besides to send or receive it. By some estimations, it’s enough to accelerate climate change. Finman says that his consortium has some promising ideas on cutting down the electricity usage of cryptocurrency.
- Bitcoin is difficult to use, requiring users to download often-complicated wallet software just to make it possible to send currency to stores or other users. This new project will be more user-friendly from the get-go, Finman says.
These solutions are easier said than done, according to cryptocurrency experts. These problems are well-recognised in the cryptocurrency world, but many view them as inherent limitations of blockchain, the technology underpinning bitcoin and other cryptocurrencies.
The problems are solvable, but require middlemen like banks to centralize pieces of the underlying infrastructure, streamlining the process. That, in turn, undercuts what Finman sees as the “beauty of cryptocurrency”: It’s decentralized, not under the control of banks or governments, theoretically freeing it from political interference.
There have been efforts to thread that needle. Notably, bitcoin cash, a cryptocurrency that split from the main bitcoin community late last year, has hyped itself as offering low-cost, high-speed transactions. But Finman is sceptical of their approach, fearing that the currency is too beholden to the past (and past grudges) to make a real difference.
“I just don’t know they’re the people to do it,” says Finman.
And yet, Finman says, “cryptocurrency is here to stay.” Which is why Finman’s consortium of whales wants to step back and rethink the whole thing.
Don’t sell those bitcoins yet
They were early adopters to bitcoin – Finman met many of them on message boards after buying his first bitcoin at age 12, when it was $US12 a coin and they were very much alone in their faith in cryptocurrency. Finman says that those other investors prefer to maintain their privacy; his high profile in the press made him the natural face of the project, he says.
That long experience gives the consortium both an acute sense of the shortcomings of bitcoin, as well as lots of ideas for how it can improve, Finman says. Similarly, Finman says that he has a certain degree of credibility as an early believer in cryptocurrency.
Finman is maintaining his considerable investments in existing cryptocurrency, out of his belief in the concept, if not the execution. But he predicts that amid all the drama, there will be a better cryptocurrency out there, built either by his consortium or someone else. And he says that the benefits of that new cryptocurrency will be so obvious, it won’t even require consideration.
“As soon as there’s something better, I’ll move over,” says Finman.