NATHANIEL POPPER made his name as an authority on the digital currency bitcoin — but he thinks it is too risky to invest his savings in.
Popper grew up in Pittsburgh, Pennsylvania, and studied history and literature at Harvard. He joined The New York Times as a reporter in 2012 and began to investigate bitcoin. His book, Digital Gold: The Untold Story of Bitcoin, was published in May.
The currency, which allows people to transfer money between “digital wallets” without an intermediary or bank, has a reputation for being popular among those who are keen to keep their transactions below the radar.
Last week it was reported that some clients of the extramarital dating site Ashley Madison, whose details were leaked, have been contacted by blackmailers demanding hush money in bitcoin.
Popper has spent time with the people behind the currency, even shadowing a man in Argentina who traded it in cafes. He also got to know the Winklevoss twins, who are best known for suing the Facebook co-founder Mark Zuckerberg, after claiming they had the original idea for the social network. Cameron and Tyler Winklevoss are now working to obtain regulatory approval for a bitcoin exchange-traded fund.
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Popper, 36, who still works for The New York Times as a finance and banking specialist, lives in New York with his wife, the writer Elissa Strauss, 35, and their son, August, 2.
How much money do you have in your wallet?
About $23 [£15]. I use cash as little as possible.
What credit cards do you use?
The best credit cards here offer 2% cashback. Right now it is offered by Citibank.
Are you a saver or a spender?
I like to think of myself as a saver, but I find a way to spend money without even noticing it sometimes.
How much did you earn last year?
I’m a little hesitant to speak about my exact salary, but it’s less than $1m.
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Have you ever been hard up?
Soon after getting my job with The New York Times, my wife and I bought an apartment, and I don’t think we fully realised the true extent of the cost. We also didn’t realise how much having a baby actually costs. We got to a point where our monthly bills were always higher than our monthly income. There were some moments of panic, trying to figure out how to deal with that.
Do you own a property?
I have a two-bedroom apartment in Brooklyn, New York, with a nice patio. I bought it for $650,000 three years ago.
What was your first job?
When I was about 16, I was a babysitter. Then I went door to door trying to get people to give money to the Sierra Club, an environmental charity.
What has been your most lucrative work?
Writing Digital Gold.
What’s next for bitcoin?
Even I have been amazed at how interested banks are in bitcoin and how much they are investing in it.
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The most advanced work is being done in London. The two banks everybody talks about are UBS, at its London office, and Barclays, which has two office spaces dedicated to experiments on this technology.
The UK government has been the most eager to move ahead.
This year New York developed the first regulatory framework for the currency. [The chancellor George Osborne and the Bank of England have suggested they may develop regulation for digital currency in the UK.]
Why all the interest?
Bitcoin, as we all think about it, is this token you can hold in your digital wallet. But the wallets and the system of addresses are like email for money.
It’s a new universal way to hold and send money — to carry out transactions immediately — without relying on banks. There’s a sense that this technology and network may be the future of how finance works.
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Are you better off than your parents?
I live in a much more expensive place than they did, but I don’t know if I’m making more money in real terms. They live in Pittsburgh, where the cost of living is so much lower. My dad, Lewis, was a lawyer and my mum, Sally, was a psychologist.
Do you invest in shares?
My entire retirement is in target-date funds, which hold a basket of shares and bonds, and adjust the mix as you get older. I’m a big believer that trying to pick stocks is a losing game. You’ll end up better off if you just invest in a nice, passive indexed fund.
Do you own bitcoin?
Very little. I have a few hundred dollars [in the currency] and it goes up and it goes down. I am an incredibly risk-averse person and this is a very risky investment.
What’s better for retirement — property or pension?
The pension would be better, but we don’t have pensions here any more. We have social security, which is somewhat like a state pension, but it’s very little.
It used to be that companies would give you pensions, but those have stopped. Now in the US you just have 401Ks, which are basically savings accounts. You put your own money in and you bear the risk; if the market goes down, you have nothing in there.
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When did you first feel wealthy?
To me, wealth is having more money than you need, and I don’t think I’ve been there.
What’s been your best investment?
My apartment, although I haven’t sold it yet. It went up in value from $650,000 to more than $1m in three years. It is amazing — and terrifying — because it means somebody like me could not afford to buy the apartment I’m living in.
And the worst?
Early on, I invested in a fund that held commodities because I thought I had some ability to pick good investments. It was gold, platinum and other precious metals. It fell by about 50% and it reinforced my sense that I should never try to pick any sort of investment, other than the broad market.
What’s the most extravagant thing you have ever bought?
The apartment in Brooklyn. Other than that, the only thing I’ve spent lots of money on is plane tickets.
Do you fly first class?
No. I’ve never been in a first-class cabin in my life.
What’s your money weakness?
Not fully appreciating how small purchases add up.
What aspect of the tax system would you change?
It strikes me as absurd that there are ways in which rich people in America pay lower tax rates than less wealthy people. It is hard to justify.
What’s your financial priority?
To feel secure — to feel like I have enough of a cushion, if something goes wrong, to keep my life intact.
Do you support any charities?
My wife and I have set up recurring donations to our local YMCAs and the Brooklyn public library, and have recently started donating through GiveDirectly, which allows you to donate money to people in poverty outside the United States. I’ve been fascinated by all the new research on the best ways to give money.
What would you do if you won the lottery jackpot?
I hope I would give away a lot of it, put aside much of the rest and perhaps buy a cosy place in the woods.
What’s the most important lesson you have learnt about money?
The importance of compounding interest — if you don’t put it away and start earning interest, your money becomes worth less over time.
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