Bitcoin's Jewish Whiz Kid

Charlie Shrem Went From Flatbush Yeshiva to Global Marts

Instant Rise, Instant Fall: Charlie Shrem became quickly wealthy through Bitcoin, but it might also prove his downfall.
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Instant Rise, Instant Fall: Charlie Shrem became quickly wealthy through Bitcoin, but it might also prove his downfall.

By Michael Kaminer

Published February 23, 2014, issue of February 28, 2014.
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Before the late-January arrest of Charlie Shrem, the yeshiva-educated mastermind behind the online commerce site BitInstant, I hadn’t made a Jewish connection with Bitcoin. A digital currency that’s not regulated or backed by any government or central bank, and whose value depends on demand, Bitcoin has been all over the business and technology pages, but has barely been seen in Jewish media.

Its most public faces have been promoters like Cameron and Tyler Winklevoss, the uber-goyish twins played by Armie Hammer in the 2010 film “The Social Network.” The pair invested $1.5 million in Shrem’s business last year, and got more press than he did.

But after money-laundering charges made Shrem front-page news, the lid came off the insular, little-understood Bitcoin world. And it turns out that like many speculative financial enterprises throughout history, some of its major players are Jewish.

In fact, Israel has emerged as a center of the Bitcoin universe — a development that didn’t generate much attention until Shrem’s arraignment. The potential of a peer-to-peer currency such as Bitcoin (rather than state-run currencies) has prompted dozens of startups to try to make interfaces to “allow the currency to be used in almost any kind of transaction — from buying shoes to sending remittances or issuing company stock,” Reuters reported in January.

At the Bitcoin Embassy in Tel Aviv, which is an open-source community, “developers are looking to build a new trading system based on the digital currency,” reported the International Business Times, which heralded Israel as “the next Bitcoin hotspot.”

On the list of Bitcoin hopefuls in the “startup nation” are GetReal Platforms, which is developing bitcoin mining equipment and was founded by alums of Israel’s military cyber-intelligence unit; mathematician Meni Rosenfeld, who also chairs the Israeli Bitcoin Association, is behind “colored coins,” which would allow bitcoins to bear a secondary value, such as equity in a company, IBTimes said; another Israeli firm, AppCoin, will soon roll out a global Bitcoin bazaar called Satoshi Marketplace.

“Satoshi” is Satoshi Nakamoto, the Japanese mathematician who supposedly founded Bitcoin in 2008. Many suspect that Nakamoto’s identity is an alias; even Bitcoin insiders don’t know where Nakamoto lives, or if he even exists.


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