Bitcoin investors in Philadelphia positive year after crypto crash

At age 73, Yoav Zohar is an outlier among Millennials and Gen Z who make up the majority the cryptocurrency community.

While many were still in grade school, Zohar learned about the booms and busts of new technology during the dot-com boom of the early 2000s.

So when it comes to crypto — digital money not tied to a central bank — Zohar won’t have more than $5 worth.

“I don’t want to invest in it, because I think my money is more important than doing experiments,” laughed Zohar at DeFi Philly, a meeting for decentralized finance enthusiasts in the Northern Liberties.

If 2022 was any indicator, his caution paid off.

It was a particularly brutal year for Bitcoin, which surged in value last spring before plunging in May. What followed was blow after blow for the highly volatile industry.

Bitcoin’s price fell by over 60%, and about $2 trillion disappeared from the market overall, as wealthy investors pulled out while the little guy was left in the red. Then came high-profile scandals, including the fall of stock exchange FTX and its billionaire-turned-fraudster CEO Sam Bankman-Fried. In a domino-like effect, crypto hedge funds closed, and President Joe Biden’s administration — which had been hesitant to get involved — launched a sweeping effort to regulate the industry.

Crypto’s fall has particularly affected black and brown Americans who, feeling shut out of traditional financial markets, are more likely to invest — and ultimately lose.

Zohar read the headlines. So he comes to DeFi mainly for pizza, drinks and passionate talk about what was perhaps prematurely crowned the future of finance.

Among the 15 or so others participants, this conservative view was rare. While some agreed that Bitcoin has had its day – for now – there was a sense that something bigger and better was on the horizon.

“PolyDoge, that’s the one that popped up for me,” said one member who asked to go by Tom “T-Bytes” so employers don’t know about his investments.

He’s talking about an altcoin – there are thousands of cryptocurrencies besides Bitcoin – which is worth $0.000000008299. It’s an offshoot of Dogecoin, the much-memed crypto periodically resurfaced by its Twitter owner Elon Musk.

T-Bytes claimed he made a profit on the risky investment and is now looking at other coins. But not all of his investments have pumped.

Wearing a tie-dye purple shirt, T-Bytes isn’t the only member to admit defeat after last year’s slump (they’re reluctant to call it a crash).

Kaseem Dodson became crypto-curious early last year, just before prices went south. But Dodson, 33, sees Bitcoin’s hibernation as just another bear market. Rumors of an upcoming upswing keep him firmly in the industry.

Dodson also likes that crypto has so far been resistant to government regulation. But this feature has led to a multitude of hucksters taking advantage of rosy investors with little knowledge of how crypto works.

This month alone, the US Department of Justice has recovered over $112 million in “pig butchering” schemes, where fraudsters contact victims through messaging apps with enticing offers of high-yield investments. Once the Bitcoin is transferred, you can guess what happens next.

And in Philadelphia, it remains to be seen whether victims of VBit Technologies will ever see the $11 million-plus frozen in their virtual accounts after the Washington Avenue-based company folded last summer. After VBit’s lawyers dropped the beleaguered company this month, citing silence from its elusive CEO, the outcome of the mounting federal lawsuits against it is clouded.

It’s the scams. Other initiatives, while on board, have yet to fully transform Philly into a crypto-forward hot spot like Miami or San Francisco.

Shortly after announcing a plan to incorporate crypto into city financing, City Hall rejected the idea. Meanwhile, many collectibles from regional names like Wawa and the 76ers either remain unsold or are driven for ridiculous sums. And while a house in West Philadelphia that advertised a built-in crypto miner initially made a splash, a publicly available ledger shows that it’s currently raking in only about $14 per month.

None of this fascinates 30-year-old Michael Ghen, a computer engineer and DeFi’s leader, although he is frustrated by the public’s perception of crypto as an alley market. Sympathizing with stories of loss to scammers, he created a guide for newcomers outlining the mechanisms behind popular scams.

“It’s buyer beware,” Ghen said.

Minimizing the public’s risk is a Herculean task, exemplified by the nearly 100 Bitcoin ATMs scattered across Philadelphia — ones that law enforcement warns are highly effective vehicles for fraud, often in low-income communities.

Ghen said foreign hackers are giving crypto a bad name. Still, the industry grapples with the recklessness of its former darlings, such as Bankman-Fried, who was arrested and faces multiple charges of mishandling client funds after his Bahamas-based trading company imploded in November.

One group had an idea, printing the shamed 31-year-old’s face over toilet paper at a recent crypto conference.

How major financial institutions – including Pennsylvania billionaire Jeff Yass and his Bala Cynwyd-based Susquehanna International Group – handle their crypto hedges is unclear, although the trend of large players pulling out of the market is on the rise.

Like the statue of Don Quixote towering over Girard Avenue, maybe you just have to believe. It’s a block away where Ghen and DeFi Philly keep the faith.

It’s also near where tech entrepreneur Thomas Jay Rush led a speech called “What Mennonites Can Teach Us About Blockchains,” a reference to the systems that record crypto transactions.

Whether the neo-Luddite cousins ​​of the Amish are invested in Bitcoin was never mentioned. Instead, Rush praised their ability to stick together and quickly raise a barn, a metaphor for how decentralized finance can handle the future.

“All communities are coming together,” Rush said with all the optimism of a Crypto.com Super Bowl commercial circa 2022. “They do things that individuals cannot possibly do.”