Covering bitcoin while owning bitcoin

“The web of undisclosed conflicts in the bitcoin world is almost impossible to disentangle, especially since one of the celebrated features of cryptocurrencies is that they can be held secretly.”

2018 will be the year of inadequate bitcoin disclosures.

In April 2013, Farhad Manjoo (then at Slate, now at The New York Times) bought 7.23883 bitcoins for $1,000, explaining that he “wanted to buy bitcoins as pure, shameless speculation.” The speculation didn’t last long: He ended up selling the coins within a month, for a profit of $152. Now, of course, he can make mordant jokes about not holding on to them: as I write this post, those coins would be worth more than $118,000.

Lots of journalists were playing around with buying bitcoin at the time. Kevin Roose (then at New York, now also at the Times) bought one bitcoin (“I thought it might make me a few easy dollars”) and then sold it for a $5 loss. He, too, is mordant on Twitter, as is Kashmir Hill (then of Forbes, now at Gizmodo Media Group), who spent 10.354 bitcoin on a blowout sushi dinner in May 2013. Those coins are worth some $169,000 today.

As all those journalists know, however, it’s really just as well that they didn’t hold on to their coins. Writing first-person articles about using bitcoin for smallish transactions is one thing; being personally invested in bitcoin to the tune of $100,000 or more is something else entirely. In 2018, as bitcoin futures start being traded on established exchanges, the cryptocurrency is undeniably going to be a multi-billion-dollar asset class, and that’s going to raise some pointed questions in the world of journalism.

Most importantly, the days of bitcoin stunt journalism are over. Today, if you write about bitcoin, you can’t ethically own it, any more than you can own shares directly in companies you write about. Journalists covering this beat should not be directly financially invested in bitcoin going up rather than down, especially not when potential bitcoin profits can end up dwarfing their dollar salaries.

Similarly, when journalists talk to and quote any of the thousands of blockchain experts out there, they should make absolutely clear the degree to which those experts are talking their own book and are getting extremely rich off the current cryptocurrency bubble. If it’s hard for a journalist to be objective about something she’s personally invested in, it’s even harder for an expert to talk about bitcoin’s rise without being affected by the fact that it has made her millions of dollars in profit.

These facts need to be spelled out because they’re not obvious. In most journalism, there has been a workable distinction between principals and analysts; you talk to the latter about the former, for instance by phoning up a university professor to ask about the founder of a unicorn company. In that situation, it’s generally assumed that the founder has become rich, while the academic has no financial stake in the company’s success.

With bitcoin, by contrast, no one really has a clue who owns what. A handful of individuals like to talk very loudly about how they bought bitcoin cheap and then made millions, but a lot of people, more sensibly, like to keep such things relatively private. When those people are interviewed, it’s often impossible to know how invested they are, quite literally, in bitcoin’s ongoing price rise.

And let’s not kid ourselves that all the journalists covering bitcoin have refrained, in a high-minded manner, from acquiring any coins themselves. Quite the opposite: Many of the publications covering the blockchain space are quite deliberately staffed by journalists who have long believed that bitcoin, blockchain, and cryptocurrency will transform the world. Insofar as those journalists have now become wealthy through their cryptocurrency holdings, they are going to be more invested in their thesis than ever.

The job of journalism is to enlighten; no one should want to muddy the bitcoin waters even more than they are already. But the web of undisclosed conflicts in the bitcoin world is almost impossible to disentangle, especially since one of the celebrated features of cryptocurrencies is that they can be held secretly. We’ll see more disclosure in 2018 than we have until now. But it won’t be nearly enough.

Felix Salmon is host and editor of Cause & Effect.

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