On a cold Friday morning in February 2011, my 15-year-old son announced at breakfast that "Bitcoin was the future". I had no idea what he was talking about but then my son is a bit of a geek (sorry Adam!), and like all fifteen-year-old boys loved computers and the internet. He was like many of his contemporaries very attracted to the Dark Web, which made promises -- of cannabis and other drugs, but more importantly pirated music.
One of my jobs at work was to look at new (and old) financial products and the risks and opportunities they presented we started with the first derivative greeks (risk of volatility, interest rate, time risks), the hedging potential, and also transaction costs. Basic stuff for our brokers and traders. It gave a benchmark to everyone about the products our brokers and traders needed to buy for our clients.
My son was basically challenging me on a "new" financial product, and as such I had to inform myself. In 2011 very little information was available, I was able via my contacts to get some data and also the initial article that was at the basic foundation of cryptocurrency. Some of the stuff made a lot of sense, like the ledger structure that they had invented. Cutting-edge stuff that I thought would be of great use to exchanges.
To justify all my research and to provide some levity to a rather dry document, I would usually include some kind of financial joke in my weekly newsletter to our brokers and traders, just to add a bit of fun on a Monday morning, as so I wrote in my letter that cryptocurrencies would be attractive to three types of investors because its most attractive feature was its anonymity: organized crime, corrupted officials hiding bribes and geeks. I then related how I discovered bitcoins and wrote, as a joke, that I had purchased 1,000 bitcoins to look cool for my son!
The following morning I had a visit from Compliance asking where I had put the bitcoins I had bought since my brokerage report did not show any purchase, and that if I had an undisclosed account I was in breach of policy, I said that it was a joke and that I never bought the bitcoins! Compliance said that because my newsletter was public (and that our brokers had a tendency to share it with our bigger clients), the FSA would not see kindly the fact that I had included false information (e.g. the non-purchase of shares).
So 30 minutes later I instructed my broker to "buy some bitcoins" he came back 20 minutes later and told me that the smallest job lot was 1,000 bitcoins and that it would cost, brokerage fees included, ₤743.14. I got an email from my broker and promptly forgot about the whole thing. My son never raised the issue again, and in those days that amount was lost in the fog of my overall bills! The next time I noticed the Bitcoin wallet was my last week at work, as I was cleaning my old files I found the long-forgotten coin wallet. I just moved the wallet to my external drive and left it at that. I was very busy in those days with my resignation and the fact that we were moving to Norfolk a few days later.
It was only on the Christmas of 2020 that the issue of bitcoin was raised again. It was obviously a hot topic of conversation around the world, that something so insignificant had taken such importance. I mentioned during dinner that it was Adam who first brought Bitcoins to my attention that I had done some research on the topic years earlier, and that my view of the "asset" remained unchanged. It was a mode of exchange used mostly for criminal activities.
It was a few months later, when we were all home for easter that Adam again raised the issue of Bitcoins. I told the family that I had a Bitcoin wallet somewhere on one of my hard drives but didn't know where. It was not a topic I followed because I was very busy with the farm as the pandemic shutdown modified our business model. Adam said that it would be fun to find the wallet since it was possibly worth a little money. I had no memory of how many coins I purchased or even if they were bitcoins or other cryptos. So over the space of two hours, Adam and I found the drive, but it took me a day to find the password to the wallet since I had written it in my work notes that were stored somewhere in the attic.
Adam and I thought it would be funny to make a big production of the reveal as to the amount. I assumed I had bought a few coins, having no memory of the transaction. it may sound stupid but I only reconstructed the events from cryptic notes in my work diary (that you are obliged to keep when you work in the City). So Easter Sunday evening we retired to the TV room where Adam had hooked up my hard drive and we started the process, first me entering a 15-digit alphanumerical password. It took a few seconds and the wallet took a certain amount of time to load, but within 30 seconds the figure was there. At first, everyone thought that it was a single bitcoin, still worth nearly ₤66,000 hardly a fortune, but then my son noticed that there was a second page that showed the value of each bitcoin on the last closing date of April 2, 2021, and the value of bitcoin was US$ 78,809.11. What was even more astounding was the total value of the wallet which was US$ 78 million or about ₤ 66 million.
Let's be clear, I didn't invest in Bitcoin, I was forced to purchase 1,000 Bitcoins by my compliance department after my not-very-funny newsletter joke. Promptly forgot about it, and 10 years later found myself with the single largest profit of any "investment" I have ever made. Turns out I was right it was a lottery! Now, this is important and shows the limits of bitcoins. Volatility and transaction costs can be a real killer here It took a few weeks but we eventually liquidated the entire bitcoin position. Firstly we didn't sell the bitcoins for $78,809 each. We sold them for $62,000 each (price moved over a 20-day period), gross of fees that were 5% in 2021. So the net was about US$ 58 million before taxes and $47 million after taxes. Still a lot of money
How wacky was that! The money is now mostly gone, the children got a good chunk, and we cleared all our farm debts, which while not huge were still several million pounds. We created several Trusts for eventual grandchildren and charitable donations to various organizations and universities.
Adam looks at me differently now...Im cool!
P.S. I got comments that it was impossible that I forgot I had bitcoins...what people don't understand is that in 2011 Bitcoins were not tradable in the sense of going via an exchange (as you could now). It was a private purchase with a crypto-wallet that was the only proof that you had acquired the coins. The only thing I did was to send a message to our compliance department that I had acquired the said crypto coins as per our conversation and copied my broker's email...I have no idea where he bought the coins I didn't care I only cared that I had met my compliance requirement.
P.P.S When you work in an investment management firm you must disclose all your position to compliance and they must be notified of all trades. Once you leave, after about six months you can do as you please. I left at the end of 2018, seven years after I had bought the coins. I had traded (bought and sold) many many instruments for my portfolio. A small acquisition that I thought was a joke purchase that had little value would be forgotten, especially since in those days it didn't matter, and I should note that I am far from the only one who has acquired cryptos and has forgotten about them, you hear stories all the time about people who suddenly find a crypto wallet...
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