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Journalistic ethics prevented me from being a bitcoin millionaire

In 2012 I was pretty sure bitcoin was going to be big.
Journalistic ethics prevented me from being a bitcoin millionaire

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This image shows a collection of "paper wallets" that held my bitcoins in 2013. If I'd held onto the bitcoins, each of these pieces of paper would be worth around $280,000 today. I had a total of 56 bitcoins, so at today's price of $35,000, my May 2013 bitcoin holdings would be worth almost $2 million today.

Unfortunately, that's the month I took a new job at the Washington Post. Since I was planning to write about bitcoin, the Post's rules required me to liquidate my bitcoin holdings.

I would have preferred to hold on to my bitcoins because I thought they would go up in value. But I didn't realize how much.

From bitcoin skeptic to bitcoin bull

The story starts in 2011, when I started writing about bitcoin for my blog and Ars Technica. Initially, I was a bitcoin skeptic. I felt vindicated when bitcoin's price peaked around $30 in June 2011 and then plunged—reaching $2 before the end of the year.

But then bitcoin's price started to rise again, and I started to reconsider my bitcoin skepticism. By the time bitcoin reached $6 in January 2012, I was pretty sure it would be a big deal. I thought the fact that bitcoin had rallied after a 93 percent plunge demonstrated that it would have staying power. And it seemed clear that a decentralized, Internet-native payment network could be useful to a lot of people. And bitcoin's price would have to go up a lot for the network to be a viable global payment system.

So in January and February 2012, I spent $700 to buy 108 bitcoins at an average price around $6.50.

Buying bitcoin wasn't easy in 2012

Coinbase didn't exist yet in 2012. I had to use a series of money-transfer services to get cash to a shady exchange called Mt. Gox. I bought in increments of $100 to $200 to limit my downside in case I got scammed.

To maintain their security, I transferred my bitcoins onto paper wallets—eight bitcoins per page. They included the private key that let me transfer the bitcoins when I was ready to sell them. I generated and printed them out with my wifi turned off to protect against malware.

I didn't take any particular measures to protect the security of the pages—I just stuck them in a folder in my filing cabinet. I figured the average burglar in 2012 wouldn't know to look for bitcoin keys and wouldn't know what to do with them if he found them.

I did print off two copies and give the extras to a relative for safekeeping in case our apartment burned down. If I had held them long enough for them to be worth hundreds of thousands of dollars, I would have taken stronger measures like putting them into a bank safe deposit box.

The Washington Post made me sell my bitcoins

Bitcoin's price soared in early 2013, reaching a high of more than $200 in April. During the boom and subsequent crash, I sold 53 bitcoins for a total of $4,700—a nice return on my initial $700 investment.

When the dust cleared, I still had 56 bitcoins. I was planning to hold them for the longer term. I'd watched bitcoin's price recover from its 2011 crash, and I thought the same thing would likely  happen after 2013.

But then I got some exciting news that turned out to be bad for my net worth: I was offered a job by the Washington Post.

Until 2013, I'd been a freelancer writing mainly for Ars Technica and Forbes. I'd talked to both publications and they'd allowed me to hold bitcoins as long as I disclosed the holdings to readers. But the Post had a stricter ethics policy. So in May 2013 I sold my remaining 56 bitcoins for an average price of $112. Ultimately I turned an initial $700 investment into more than $11,000.

So did the Washington Post prevent me from becoming a bitcoin millionaire? Obviously there's no guarantee that I would have actually held all 56 bitcoin until the present day. Probably I would have sold some. But I think I would have held unto a fair number of them. One proof of this is that I bought bitcoins again in 2014 when I left the Washington Post with several other Post alums to start the explanatory news site Vox.com.

A few months after we launched, I asked my editor if I was allowed to hold bitcoins. I was told I could buy bitcoins as long as I was transparent about it. So I bought 6.6 bitcoins for an average price of $550. Then I wrote an article about it. That prompted a major online backlash, and I sold my bitcoins again a few days later at a small loss.

But I wrote in December 2014 that I was still optimistic about bitcoin's price. And that optimism proved well founded. Bitcoin's price soared above $19,000 in 2017, crashed again, and then soared above $60,000 earlier this year. Today one bitcoin is worth around $35,000. The 6.6 bitcoins I bought in 2014 would be worth $230,000 today.

The ethics of holding bitcoins as a reporter

I've told many people this story over the years, and some of them—especially people in the cryptocurrency world—thought the Washington Post's rule was ridiculous. After all, they pointed out, nobody thinks it's unethical for someone who covers the US economy to hold dollars.

I personally think there are good arguments on both sides.

The most clear-cut conflicts of interest occur when a reporter has a direct financial relationship with a company he covers. For example, no reputable news organization would let me do consulting work for Google while writing about the technology sector, since I'd have to worry that negative coverage of Google would cause them to stop paying me.

Owning an asset creates a more subtle conflict of interest. If I owned a lot of Google stock, I wouldn't have to worry about Google taking it away from me. But readers could still reasonably worry that wishful thinking about my stock might color my judgment—or even that I might deliberately shade my coverage to boost the value of my stock holdings. Someone who owns Google stock is literally invested in Google's success, and the financial investment might give rise to a psychological investment as well.

Human beings aren't perfectly rational creators. As any real estate agent will tell you, people are constantly over-estimating the value of their homes.

So too with bitcoin. It might have been hard for me to be objective about bitcoin if it grew to account for a majority of my net worth.

Ultimately, I think it's a good practice for reporters to abide by professional norms whether or not they personally think they make sense. If reporters pick and choose which ethical rules to follow, it's too easy for them to delude themselves into thinking their particular unethical behavior was actually fine. So I think the Post and Vox made the right call in having me sell my bitcoins, even though those decisions may have cost me hundreds of thousands of dollars.

I'm not planning to buy more bitcoins. It's ethically dicey, but also it doesn't seem like a great deal any more. Bitcoin's price might go up more, but I don't think there's room for the big gains we saw over the last decade.

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