’Twas the night before Christmas, when all thro’ the house not a creature was stirring — except for me, sitting in bed, frantically checking the price of bitcoin.
A couple of weeks earlier, I had had the bright idea of buying my family cryptocurrency for Christmas. With hours to go, my gift was looking rather less generous than I had hoped.
It all started, as these things often do, at a dinner party. A couple of friends, both of whom work in the tech industry, had said they were sitting on tens of thousands of dollars’ worth of bitcoin gains after investing only a few months ago.
At this point in mid-December, the price of a single bitcoin was hovering around $17,000. Having increased many times over in the previous months, there seemed little reason to doubt that the bubble would keep inflating.
I have never previously dabbled in buying cryptocurrency, which I still struggle to see having many practical uses, and I am usually rather more risk-averse in my investments. But I thought giving my parents and parents-in-law their first taste of bitcoin might spark some conversation around the Christmas dinner table, while also providing a modest fallback in the event of the total collapse of the traditional financial system and descent into crypto-anarchy.
So I downloaded Coinbase, the cryptocurrency wallet app, and set about buying some bitcoin. (At the time, I felt reassured by the fact that Coinbase was at the top of the iPhone’s App Store rankings; perhaps I should have realised it was a sign a market top was approaching.)
Setting up a Coinbase account was straightforward, but I was limited initially to a $400 purchase using my credit card, so I settled on buying $100 per parental unit — too little to worry about if it disappeared in a flash, but enough to pay for a nice dinner or two if it continued doubling on a regular basis.
All too soon, I was glued to the bitcoin price chart. Within days, it had leapt again to within a few bucks of $20,000 apiece. My plan was to wrap a bag of chocolate coins to present on Christmas Day, before nabbing my family’s phones to help them set up wallets into which I could deposit their virtual riches.
The bitcoin price began to fall to earth before I had even made it home for the holidays. The topic came up over the breakfast table by December 23, when my father waved a copy of the FT Weekend’s front page, unhelpfully splashed with news of its abrupt “30 per cent drop”.
Still, the Redditors cried “hodl!” (a bitcoiner meme that has become a maxim) — so hold on I did.
By Christmas morning, my $100 of bitcoin had been transformed into an $80 gift. Yet I still felt it had value as a glimpse into the techno-future. The Queen in her annual televised speech may have marvelled at video being beamed to mobile phones, but soon my parents would be slinging Satoshis!
Instead, the slow and painful gifting process merely exposed me as a crypto newbie.
Initially, my parents seemed amused, if also a little bemused, by the investment opportunity I had created for them. But when it came to transferring the bitcoin to their account — the part that is supposed to be so disruptively simple — it was me who felt disintermediated.
First, the Coinbase sign-up process seemed more complicated than it had been for me. Text messages sent to verify phone numbers never arrived. The app demanded an array of legal documents to prove the new users’ identity. “This is a funny sort of Christmas present,” my father-in-law said as he handed me his credit card and driving licence to scan into the app.
Once the accounts were finally active, I scanned the QR code on my father’s Coinbase app to transfer the bitcoin from my wallet to his. A message informed me there was a “mining fee”, priced in some minute fraction of a bitcoin. “This fee is paid to the digital currency miners, who process the transactions and secure the respective network,” Coinbase’s help page explained. This seemed odd for such a small, peer-to-peer transaction, but I agreed.
The minute fraction of a bitcoin, it turned out, was worth about $30 — more than a third of the value I was transferring. I later learned that, had I transferred to his Coinbase username instead of scanning the QR code, there would have been no fee — but there was nothing to warn me of that before it was too late.
At least, I thought, there would be none of the traditional banking nonsense about waiting for the cheque to clear.
Not so fast.
Hours went by, and the transaction was still listed as “pending”. I turned to Coinbase’s in-app customer support. “Ada the Coinbase Support Bot” was unable to explain where my digital currency was, so I tried again by email. “Thank you for submitting your request. Due to increased volume, it may take several days to receive a response,” came the reply. My Christmas present, apparently delayed by some sort of blockchain blockage, seemed in danger of slipping into the new year.
Coinbase’s online explainer was no more encouraging. “Usually the delay is under an hour,” it read. “Occasionally, transactions are not accepted by the rest of the network and therefore are never considered to be ‘confirmed’.” Moving money around, the phrase “never considered to be confirmed” was not the reassurance I had hoped for.
By Boxing Day, my father’s bit-pittance had finally landed — by which time, their value had increased slightly. “I’ve got $90 worth of bitcoins according to my app. So — wealthy,” my dad texted me to say. He was so excited, he went for a nap.
Two weeks later, bitcoin is still stubbornly refusing to return to the $17,000 price at which I had started. If they ever do make money, I hope my family continues to hodl — if only so I do not have to figure out how to convert the bitcoin back into simple, familiar fiat currency.