The $7 billion businessman

Greetings,

Rizzo, the Bitcoin Historian here, back to celebrate one of Bitcoin’s early legends: Erik Voorhees.

A controversial choice for some, to me, it’s hard to imagine the Bitcoin history without Erik – he’s the person who brought libertarianism and voluntaryism into the mainstream Bitcoin conversation, and he’s continued to champion the technology from this ideological lens for almost a decade.

If Erik’s no longer in the mainstream Bitcoin conversation, it’s because the conversation around Bitcoin has changed. Certainly, as our exploration shows, his views and values have been consistent for over a decade.

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A business worth 126,315 BTC

Like many others, Erik Tristan Voorhees thought he was late to Bitcoin. 

His first ever post on the BitcoinTalk forum was to buy $25 worth of Bitcoin. The price per coin was $5, and he rode the wave all the way up to $30 and then down to $2 as the first bubble blew up and popped in June 2011.

Early on, Erik would prove to be a staunch advocate of free market economics, at a time when many were simply looking at Bitcoin as a way to get rich.

Here’s Erik praising the early adopters who took risks to accumulate Bitcoin, arguing why capitalism dictates that they should get rich. It’s a classic Voorhees quote. (Besides, it’s just ironic to see Erik talking about others as “early adopters.”)

Originally from Connecticut, the fifth of the original 13 states that would lay the foundation for the U.S., Erik was a die-hard libertarian from the get-go. His father, Jacques Voorhees, is a libertarian businessman and writer.

If you scroll back through his Bitcoin Talk posts, there some funny anecdotes of his family’s reaction to Bitcoin. (His dad, he said, immediately understood why it would eliminate central banks.)

Erik discovered the system in 2011 while living in New Hampshire and working as a member of the Free State Project, an experiment in radical politics by a group of libertarians. (He was previously in the real estate business in Dubai).

He would buy bitcoin on the infamous Bitcoinica exchange, one of the first implosions our industry felt, courtesy of a young coder named Zhao Tong.

Later in 2011, Erik started a blog where he christened Bitcoin “the separation of money and state,” an enduring tagline for the technology today.

It was a masterclass on the group of Austrian economists that have been reviled by the pervading undercurrent of our times, Keynesianism. Sadly, the blog is now only available on the Wayback Machine, but it contains some really fantastic reads.

By 2012, Erik joined another Bitcoin OG, Charlie Shrem, and built BitInstant –one of the first mainstream Bitcoin exchanges. It was bootstrapped for years without any investment, until Roger Ver came along. Here’s the pair selling coins at $5 at NY Tech Day when nobody else believed them.

The company was so popular it would later catch the attention of VCs, including Cameron and Tyler Winklevoss. The company closed $1.5 million in funding at the end of 2012, though the decision would prove disastrous. See “Bitcoin Billionaires” and “Digital Gold” for thorough reconstructions of the ideological clash that would follow.

With Erik steering the wheel, business boomed. He is personally responsible for selling thousands of BTC for under $10, and charting a course by which the company would seek to focus on international remittances.

“Money without borders,” he would tout, as he traveled the world spreading the Bitcoin gospel, a green yet highly committed 25-year old. 

Soon, Charlie and Erik were looking to take aim at the biggest financial companies in the world, including PayPal.

BitInstant took in money by the bucketloads.

At its peak, it was responsible for 30% of all the USD exchange volume. It also laid the land for the Bitcoin startup scene of 2013, which saw late night CEO-only poker games. The stakes were high, as pots topped 100 BTC.

Imagine bluffing your way to a $5.6 million bet while holding 7/2 off suit. I’m sure it has happened more than once.

But Erik was–and continues to be–a serial entrepreneur. His first side gig from BitInstant was FeedZeBirds, an app that gave away Bitcoin for tweeting. The idea was to take in money from advertisers and give it away as BTC.

His biggest success, however, was SatoshiDice. During its heyday, the platform was processing 50% of all Bitcoin volume. 

It was a provably fair dice game that allowed players to bet BTC. While in the trenches of a state-backed clampdown on online gambling, SatoshiDice offered users the opportunity to make bets online.

Once again, Erik fighting the cause of freedom. It also came with a handsome reward. Thanks to SatoshiDice, his net worth skyrocketed.

He ended up selling SatoshiDice for the whopping sum of 126,315 Bitcoin or $11 million at the time. Today, his creation is worth $7.2 billion.

FeedZeeBirds and SatoshiDice turned the tables on traditional finance. Both companies went public on Bitcoin stock markets, allowing investors the option to buy a piece of the underlying firms. Even dividends were paid out in Bitcoin–in 2012!

As expected, Uncle Sam woke from his slumber, and tried to take Erik down. He wasn’t about to allow a young idealist to allow investors the option to make some money without him taking his share. 

The SEC sued Erik for offering unregistered securities offerings and shut down his companies. Sound familiar?

Authorities were adamant in making a case against this new form of finance. They threw the book at Erik and his partner Charlie for all they were worth. Charlie ended up in jail, and Erik settled.

Undeterred by his encounter with law enforcement, Erik continued innovating. 

By 2014, under a secret identity, he launched a crypto exchange that didn’t require KYC. It was called ShapeShift.

At the center of the companies ethos was to protect its users privacy. So, while the platform grew at an unprecedented 1,000% annual rate, Uncle Sam came knocking down the door again.

“ShapeShift, like SatoshiDice before it, demonstrated how an old business could operate in a brand new way because of the properties of cryptocurrencies,” Erik proclaimed.

Erik was sued by the SEC in 2023, but this time he had an ace up his sleeve. 

By the time authorities had caught up with the company, ShapeShift had undergone significant surgery under the hood and was now totally distributed, with no central authority to behead. (You can argue whether it’s decentralized, but the network seems to be holding its own).

Here’s the leader of the Anti-Crypto Army, Senator Elizabeth Warren fuming over Erik’s master move.

Thus has begun Erik’s twilight period in the industry. While not an everyday player, he still shows up to exert his influence.

Take when crypto criminal Sam Bankman-Fried began lobbying in favor of his failed FTX exchange, Erik rekt him on a livestream.

He got the frizzy-haired felon to agree that banning sending emails because it allowed the exchange of information would be the equivalent of banning freedom of speech, only to watch SBF squirm when it came to applying the same logic to money.

Checkmate. 

Today, Erik continues to champion Bitcoin, open source software, and the free enterprise in all its formats. He believes that Satoshi’s invention continues to be the best chance for a sound money and for freedom in the world.

We truly stand on the shoulders of giants, and Erik is one.

As with every Friday, I’d like to end on a quote: “Freedom is but a chance to be better” – Albert Camus.

Until Monday, 

Rizzo