Much of what University of Iowa senior Cameron Schorg wanted from a young age was a pampered truck and to prompt a purchased smile on his girlfriend’s face. That’s about the same time in 2013 when a classmate approached Schorg during school about creating an internet exchange for the rather new digital currency and internet fad, Bitcoin.
After hearing this inquiry, Schorg excused himself to the bathroom and began sifting through the top results for Bitcoin. Schorg’s eyes locked with web-articles confirming that Bitcoin was the current technology baddies used to enable their bad behavior. Drugs, guns and pipe bomb-terrorism came up on the short-list of criminal activities fueled by the anonymity of Bitcoin transactions.
The opportunity presented itself both, lucrative and enigmatic.
“No way was I touching that.” Schorg said. “That was until he came back to me weeks later and explained how he doubled his money with Bitcoin.”
Instantly Schorg surmised that he too could make money off of the venture. But what he didn’t realize was that alone in that high school bathroom stall, fingers scrolling and coursing, he was stumbling upon a concept and technology that would directly steer his future and the career path he would one day follow.
Weeks passed since his classmate propositioned him. But the concept of Bitcoin and blockchain technology still rattled around his head. Schorg decided to reopen Google and reexamine. He found a lot of similar information: Bitcoin was for terrorists. Bitcoin was for drug dealers. Bitcoin was for those who evade taxes.
Schorg also found: Bitcoin is technology capable of liberating every citizen in every country in the world and might one day put our money back in our own pockets.
“This is going to be the future of finance, I thought,” Schorg said. “If I can get in on this, I can make it big.”
Against Schorg’s initial judgement, he opened the exchange with his short-lived (unnamed) partner and classmate in May of 2013.
The company was coined BitBrothers LLC and brought barely any start-up costs.
“From day one people were rolling in, no advertisement, there was demand,” Schorg said. “Pure demand.”
Schorg began purchasing the Bitcoin, sending it to his customers and immediately spending his earnings on items that teenagers dreamt about getting their hands on: a new computer and parts for his truck. This success beckoned minimal effort and built confidence for Schorg and his partner.
Making money was easy, and so was swiping their credit cards on needless purchases. “I was naive.” Schorg said.
In August of 2013, the BitBrothers met a philosophical stalemate. Schorg’s partner, with stars in his eyes, wanted to take on more business. He wanted to start accepting riskier and risker clients.
Feeling bulletproof as youth many times do, Schorg’s partner attempted to push a mountain and blew out his back. This is where Schorg drew a line in the sand. Schorg was willing to take minimal risk to make money, but he wanted to make it doing something that aligned with his values.
The BitBrothers broke up that day, but Schorg continued the business under the same pseudonym.
His partner went on to open a different exchange with the questionable tactics that broke them up in the first place.
“From the beginning he was doing a little bit better than me as far as transactions.” Schorg said. “That was partly due to his willingness to work with riskier business; I knew the long play was not to do that.”
Schorg was correct, and within a couple of months, his former partner’s exchange ceased to exist. Bank accounts closed and the tap went dry. But Schorg and the BitBrothers LLC came out of the other end unscathed and battle tested, ready to legitimize itself further.
So with shaky intentions and even shakier money management skills, Schorg processed over 1,500 transactions in the next 18 months. And made over $300,000 worth of sales.
“I don’t know if I want to divulge that, [the exact amount] but let’s say I was making similar amounts as my high school teachers was by the time I graduated,” Schorg admitted.
The website running Schorg’s company had little to no maintenance costs. He was making about as much as many adults he knew with degrees. And he was doing all of this on his personal laptop plugged into an outlet in his childhood bedroom.
He was 16.
Schorg then began a bee-line to fortune and self-dependence on the back of something a huge chunk of the population knew nothing about.
He started studying at the University of South Carolina in 2014. Within the first week he decided he might need more time per day to build his Bitcoin empire.
A degree gave him the opportunity to hopefully get a job one day, but Schorg already had a job. And he was the CEO.
Schorg’s confidence went parabolic until noticing a plethora of business-threatening regulations in 2014. Schorg learned that if he wanted to continue his business venture, he would need to get a money transferring license in every state he operated in. To do that he needed to hire a lawyer to convince each state’s Department of Treasury that it was wise to give him one.
“It started to kind of spook me,” Schorg said. “These regulations were around the U.S. Patriot Act, anti-money laundering, anti-terrorist efforts. As a freshman with green ears, it was a road I didn’t want to go down, so I closed the exchange down in November of 2014.”
After closing down the exchange, plans rerouted for Schorg. Instead of dropping out, he transferred into the University of Iowa in winter of 2015.
During the 18 months the BitBrothers LLC was open Schorg made money, but unfortunately, he also made one pivotal enemy along the way; the Internal Revenue Service (IRS).
One afternoon after the BitBrothers exchange portion of Schorg’s life felt like a distant memory, he received a call from his father. Gary, muddled and perplexed, explained to his son that his prior dealings in Bitcoin with the BitBrothers had been deemed probe-able and that he was going to be audited.
“I didn’t understand,” Gary said. “We didn’t know he was doing anything wrong.”
In a perfect world, Schorg should have asked for client’s license plate numbers, reporting transactions over $2,000, avoiding business from places like Yemen or Iraq. During the case Schorg would need to prove he did all of these types of things.
“These IRS agents were contracted out to do the investigation by the Department of Treasury they weren’t auditing me for taxes, they were auditing me as a bank secrecy compliance audit,” Schorg said. “The same audit that casinos go through.”
This created an issue, an audit issue, that was built from the ground-up. Schorg was not a casino and Bitcoin didn’t operate nearly like one. The technology was new, the IRS at the time didn’t have an audit specifically encompassing cryptocurrency and virtually no one knew how to approach it.
His lawyer and IRS agent knew less about Bitcoin than your grandmother probably knows about using her phone. “I had to teach the IRS how to audit me,” Schorg said. And he also taught his lawyer about Bitcoin so he could properly defend him.
This jumpstarted many separate three-hour long phone conversations about Bitcoin and blockchain technology with his assigned IRS agent. Schorg, who had been teaching his friends and family for years about Bitcoin, his passion, was essentially forced to instruct his legal enemies on how they could construct a case against him.
When Schorg’s living nightmare neared at conclusion, life’s predictable unpredictability threw a kink in the equation. During Schorg’s case, he obtained a letter from his lawyer informing him that his now Bitcoin-educated IRS agent died in a freak ATV accident.
“It was very unfortunate.” Schorg said. “And very unfortunate for me in a business sense.”
This restarted the entire tedious process, and when the case was re-assigned, Schorg again taught the IRS how to audit him.
Currently his case is still open, but Schorg is eager for it to be in his past.
Meanwhile, in under a couple of years Schorg became the Bitcoin king of Iowa City, Iowa. The man, well known among his peers as “the Bitcoin guy” has routinely been asked to present to finance and economics classes with middle-aged professors about the technology and its potential. At the age of 21, he teaches tenured professors and their students about something many consider him an expert at.
“I can almost see what many people are thinking, ‘oh this young punk knows about tech,’” Schorg said.
Schorg to this day, continues to go-all-in on the cryptocurrency landscape, going as far as being paid in Bitcoin by his current employers.
“His advocacy for Bitcoin is strong.” Michael Finlayson, Schorg’s banking mentor said. “I think it’s just natural to think of alternatives in today’s world, and Cameron is no exception to his generation. They don’t see barriers to change like my parents or grandparents, so manifesting change can happen so much quicker with the advent of technology.”
Many whales and tadpoles alike around the world are coming aware of Bitcoin. In 2017, “how to buy Bitcoin” was the fifth most Googled “how to” phrase. But many still are unaware of the technology’s potential and this begs two questions for Schorg on a daily basis: is Bitcoin in a bubble? And is it a good time to get in?
“Currently Bitcoin is in a bubble, no doubt.” Schorg said. “Is it a bubble in a 10-year time frame? That I don’t agree with.”
If the time arises, Schorg is willing to go down with the ship. Big rewards garner the biggest risks. Schorg will relentlessly strive for the technology and the financial revolution that comes along with it.
So, asking Schorg if it’s a good time to get in, will most likely prompt one answer: always.