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At the height of the Silicon Valley tech boom in the late 1990’s, which minted 64 new millionaires a day, my colleague Joan DiFuria and I coined the term "Sudden Wealth Syndrome.'" Once again, the disruptive creativity of tech has produced a new magic bullet: Cryptocurrency. While Bitcoin is the best known, the new mint in the crypto market includes a plethora of other cryptocurrencies, such as Ethereum, Stellar, Dogecoin, and Cardano. Wildly volatile, they are gaining acceptance in the conventional marketplace, and fantasies about the future are running wild:
“Bitcoin is not going to be a payment currency — it’s going to be just like gold,” Michael Novogratz, head of cryptocurrency merchant bank Galaxy Digital and a former Fortress hedge-fund manager, told CNBC.
There are now as many as 100,000 people who have $1 million or more stashed in bitcoin, according to the cryptocurrency data-tracking firm bitinfocharts. That's up from just 25,000 bitcoin millionaires from three months ago.
While we have been seeing people with SWS since well before the internet bubble of the late 1990’s, today’s crypto-currency core investors have a unique mission. Unlike past generations of people looking to make the next great widget, these entrepreneurs are trying to shift the way that we think about and manage money.
It is a crusade against conventional financial service organizations, a virtual counter-culture movement which is proving to have staying power. They want to change the operational culture of finance. And those who’ve succeeded are gathering to support others, which is giving these crypto investors power as a group, and a power base from which they can impact policy.
While the larger mission is exciting, at the level of each individual, Sudden Wealth Syndrome has found new hosts to infect. Listen to Jim’s story:
A 35-year-old, single software engineer, Jim works for a San Francisco Bay Area cybersecurity company. Jim was raised in a blue-collar family in the Midwest. He worked hard to get his engineering degree, got a good job right out of college, and was planning on a “conventional” career in the tech space.
Nine years ago, Jim decided to ‘gamble’ in the crypto market, investing his hard earned $10,000 in Bitcoin. He knew that he might lose his original investment, but he was single, had little debt, and was excited about taking a risk. He liked the “anti-establishment” concept of crypto-currency, and thought it could be fun to invest in something that is an alternative to traditional banking—he had been poorly treated by a large bank when he applied for a car loan. He and his tech friends liked the idea of a new currency that was non-inflationary, with a fixed supply, and that could eliminate the possibility of centralized manipulation. He thought that this model was efficient as it is a mathematically engineered money system with hard rules-- because the rules of bitcoin are code. He enjoyed and was proud that the cryptocurrency system was run by people like himself—young techies.
Today his investment is worth $30 million—and counting!
He is happy, shocked, and anxious. He is still working, in part because he is not really sure what to do with his life. Should he quit and just manage his investments? Like the cryptocurrency marketplace, his emotions fluctuate radically, a roller coaster of highs and lows. He is actively dating, but is now sure that every woman is more interested in his “money story” than in him. His friends treat him differently; you can almost taste their envy. He feels different than most people, but he is not sure why, and doesn’t like it.
Jim wondered. “Do I continue to do what I’ve always done, or do I stop long enough to consider how I want to spend my time? I really like my work, but I now have choices I never had before. I’m young and I never have to work again one day in my life!”
Jim was excited about the prospect of looking at new opportunities but became aware that his family, friends, and colleagues were privy to this person who just a few years ago, was the one who wouldn’t buy candy at the movie theater because he thought it was a rip-off.
These kinds of questions “kept him up at night”: How can he best manage the impact of sudden wealth? What will give him a renewed sense of purpose and productivity?
Sudden Wealth Syndrome marks a turning point in a person’s life. It is an opportunity to re-define one’s life mission and lifestyle choices: to make a difference in your own life, and in the larger community. It means removing psychological obstacles to change. It means re-evaluating your values, dreams, and aspirations in light of your current resources, not the picture you had of yourself before achieving success or wealth.
Remember: Your financial worth is not equal to your self-worth. Engage in a learning journey to drive the real meaning and purpose of wealth.
