Erik Finman will be the first person in his nuclear family not to go to college, and he says he’s proud of it.
That’s thanks to the recent, rapid appreciation of the value of bitcoin — which Finman says he began acquiring in May 2011 at age 12, when the price was just $12 a coin. Now he’s claiming victory in a bet with his Stanford Ph.D.-holding parents, who agreed he could skip college if he made $1 million out of a seed fund of just $1,000 in cash his grandmother had given him for college.
Instead of enrolling this fall, the teen says he will focus on other projects, like helping to developing a satellite in NASA’s ELaNa program and raising cash for a startup involving cryptocurrency, further details about which he declined to share in a phone interview with Mic.
“Traditional education is not for me,” Finman said. “So I’m happy to be learning in the way I want to learn.”
The bulk of Finman’s fortune, he said, originally came from using the $1,000 fund to trade bitcoin; plus a lesser share comes from investing in other cryptocurrencies, including Ethereum-traded ether. At present, Finman owns a little more than 400 bitcoins, worth — at the current price of nearly $2,600 per coin — a bit over $1 million.
How did Finman get to a million from the $1,000? In 2014, after a few years of trading bitcoin using the initial seed money, he said, Finman used his earnings to launch a video-tutoring startup, Botangle. Then that netted him 300 bitcoins in 2015, when an investor paid Finman for the rights to use parts of Botangle’s technology.
At the time, bitcoin was trading at about $200 per coin — meaning the payment was worth about $60,000. Today those same 300 coins are worth more than $700,000.
Finman says he owns a total of more than 400 bitcoins, worth — at the current price — a bit over $1 million.
Though different versions of Finman’s story have been widely reported — by CBS, New York Magazine, and CNBC, among others — the teen declined, through a publicist, to share screenshots with Mic to help confirm attesting to the size of his past and present bitcoin stake. In past interviews, he has said media attention has made him “paranoid” about getting hacked and so he keeps his bitcoin fortune spread out across different wallets and devices.
In an email to Mic, Finman’s mother Lorna confirmed that she and Erik’s father agreed to let the teen skip college since he ostensibly has been able to launch a career without it: “Erik took a very unique path that suited him and he turned out better for it... It’s so important that everyone find the right educational system that matches their learning style. For some that’s traditional school and college. For others it’s not.”
Indeed, the support of Finman’s family seems to have been instrumental to his success: The teen told Mic he discovered bitcoin at such an early age in part because his parents and brother were always interested in cutting-edge information and technology.
His parents met while pursuing science Ph.D.s at Stanford, and his two older brothers, Scott and Ross, are both science buffs who started pursuing higher education at the early age of 16. “I come from a huge family of engineers and all that,” Finman said. “I like technology, but I think that’s where my passion for it came. I owe my brother credit. He really sold me on it.”
“Traditional education is not for me. So I’m happy to be learning in the way I want to learn.”
Finman’s brother Scott first introduced him to bitcoin and blockchain technology back in 2011; Erik then convinced his brother to help him use that college fund from his grandmother to acquire bitcoin — which was when the obsession really began to kick off.
“I was on it every day,” Finman said of the coin exchanges. “Even if it was just a penny difference, I would try and get that penny more of bitcoin.” Finman’s brother would acquire bitcoin through various exchanges like Coinbase and then transfer it to Finman’s bitcoin wallet, which at the start was an open-source cryptocurrency wallet he downloaded from bitcoin.org.
Advice for aspiring bitcoin millionaires: Would Finman suggest other young people try to emulate his methods? After all, trading bitcoin and other cryptocurrency is not for the lighthearted, and the price has swung wildly over the years. On June 15, prices for bitcoin and another popular cryptocurrency, ether, traded over the Ethereum platform, fell as much as 25% in a single day after Coinbase, a popular exchange, crashed.
What’s right for you will depend on your risk tolerance. “A lot of it is just belief, it’s just faith,” Finman said, like with other assets that have more variable, imputed value. That’s why, as Mic has previously suggested, people getting in on the crypto-craze should be betting only that money they could potentially afford to lose.
“A lot of it is just belief, it’s just faith.”
What about Ethereum? Though lots of other cryptocurrencies have come onto the scene, Finman is still predominantly concentrated on bitcoin. While he buys ethereum tokens — aka ether — which many proponents say they think will soon surpass bitcoin in value, Finman says he is not convinced.
“I go short on Ethereum,” Finman said. “I think there’s a lot of money to be made in the short-term. But I know a lot of ... the hardcore bitcoin veterans call it Ponzi-coin.” Finman said he thinks a lot of newer cryptocurrencies are susceptible to so-called “pump-and-dump” schemes, wherein early investors hype up the price without really being invested in the underlying technology.
He said does generally believe in blockchain technology, around which Finman is currently fundraising for a project: “There’s just so much to come in the blockchain,” Finman said. “Blockchain technology is where the internet was in the ’80s.” Finman pointed to early experiments with decentralized email and social media platforms as areas of early promise.
Though he concedes that some of these early efforts contain some of the “ugliest software” you’re likely to see, the early days of the internet were rough around the edges as well, and it was years before the internet gained the perception of being practical.
Predictions for the future of bitcoin: Despite the rise in bitcoin values — and thus the pressure to take gains and quit while he’s ahead — Finman said he isn’t giving up on the current run-up in bitcoin prices just yet.
He said he believes prices will surpass $100,000 per coin, a price that’s been floated by other analysts, including one who was interviewed by CNBC after correctly anticipating that bitcoin would cross the $2,000-per-coin threshold. Other prognosticators are slightly more measured, predicting the coin could grow to be worth as much as $55,000 in the next five years.
Goldman Sachs has an even more moderate price target for bitcoin: CoinDesk recently reported a letter the company’s head technician wrote to clients which projected that bitcoin prices would hit about $3,900, though he also writes that the process of getting there will be likely be “messy/complex.”
Finman said he believes bitcoin prices will surpass $100,000 per coin.
No matter how the cryptocurrency story continues to unfold, Finman has already opened up opportunities for himself in the tech industry: Though he is young even by Silicon Valley standards, Finman has already amassed several connections. At age 15, he worked on startups at Stanford’s tech incubator, and he also used some of his early bitcoin profits to buy a meeting with with Reddit founder Alexis Ohanian, whom Finman says he counts among his role models. Ohanian confirmed in an email to Mic that he has met with Finman in the past.
Still, Finman said, he’s hedging his bets by holding onto the bitcoin he has for the foreseeable future: “I go pretty long on bitcoin. Sometimes I do sell, but I make sure the profits [are] put back in when it goes lower.”
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