Miracle Or Mirage? The Plan For A Blockchain City In The Desert

November 5, 2018

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In a room backstage, Jeffrey Berns is still buzzing. After three years of working in secret and keeping his lips sealed, the class-action lawyer turned cryptocurrency millionaire has just spent half an hour baring his soul to hundreds of people—and tonight his soul is the size of 67,000 acres. That’s how much of the Nevada desert his company, Blockchains LLC, has purchased to fulfill its enormous ambitions. On this mostly undeveloped land, which dwarfs neighboring plots owned by Google and Tesla, Berns plans to build a 1,000-acre tech campus, the world’s first esports stadium, a nuclear-hardened bunker to safeguard digital assets, and, most ambitious of all, a fully functioning “smart city” powered by blockchain technology, where real people will live.
These almost impossibly grand proposals, on which Berns says he has already spent between $250 million and $300 million of his own money—to buy the land, acquire a 25,000-square-foot office building on the property, and hire a staff of 70—raise the prospect of spectacular failure. Aren’t you afraid, I ask Berns, that you’re trying to do too much?
No, he says. “I’m somebody who always dives headfirst into everything. You go big or you go home. I’ve filed class actions against 60 of the largest banks in the world. That’s just how I do things. If we’re going to do this, we have to do it right and do it big.”
Big as it is—about the size of Reno, Nevada’s third-largest city, and half the size of Prague, where Berns made his announcement—the Nevada land isn’t his company’s only real estate. No, that tally includes the company’s two existing underground bunkers, one in Wyoming and one in Georgia, along with a 100,000-square-foot Swiss mountain hideaway—literally inside a mountain—that boasts six-foot-thick steel doors and is, according to Berns, “more secure than Fort Knox.” The underground lair’s most recent owner, he says, was the cryptocurrency company Xapo, which used it for the same purpose he has in mind: as an un-breachable vault for digital assets.
Blockchains owns a similar fortress in Sweden. By storing customers’ private keys on devices held in multiple vaults around the world, Blockchains will be able to “provide security that is unmatched—that no bank, no single government will be able to offer,” Berns told the crowd on Thursday night.
Sharing the stage with Blockchains’ CEO, and engaging in a scripted call-and-response with him throughout his presentation, was the hologram of a 12-year-old girl. So good was the likeness that at first, from way back in the press pen, I didn’t realize it wasn’t the girl herself, in the flesh. But I recognized her. If you were in Prague this week, you may have seen her around. On billboards in the city center and outside of Václav Havel Airport, on a massive display covering the facade of the Congress Centre, where the annual Ethereum conference Devcon is being held, she has been unmissable. Against a desert background, in Mad Max mufti, she declares that she is done waiting for the future to arrive. By Thursday night, frankly, so was I—ready for Blockchains to drop the secrecy act and come out already with the big news it had been staying mum about for months.
At times, the advance hype verged on brainwashing. The company had arranged for private buses to ferry people to the venue from the Corinthia Hotel, where I and many other Devcon attendees were staying. For the entire ride, a television in the front of my bus played, on repeat, a 60-second video that talked in vague, grandiose terms about what Blockchains was going to do—a trailer for the main event. It was the girl again, in voiceover, coaxing us to recall the joys of playing in a sandbox as a kid (over footage of happy children frolicking at the beach) and enlightening us as to our good fortune to be playing, as grownups, in “a new kind of sandbox,” in which we build things “with ones and zeroes” (cue footage of a kid flipping on a trampoline, a handsome older gentleman riding a bicycle indoors).
It was all too much of a muchness. Eventually I put in my earbuds and, as the bus lurched forward into the future, past a Mercedes-Benz dealership, drowned out the girl’s siren song with Radiohead, a band that built its career on paranoid androids and other symbols of a world driven mad by advanced technology.
Onstage, the girl’s cajoling wasn’t any better for issuing from a digital likeness. “Hey, everybody. Are you ready to change the world?” she asked. “I can’t hear you. Are you ready to change the world? How about you, Jeff and David?” (David is Berns’s brother, the president of Blockchains, and was Jeffrey’s warm-up act on Thursday night.)
What followed, in Berns’s talk, was one big idea and impressive-sounding applause line after another: Blockchains will support public, open-source blockchain infrastructure against the private, permissioned versions being built by banks and other big corporations. The company’s tech campus will incubate “four life-changing technologies together,” these being artificial intelligence, nanotechnology, 3-D printing, and blockchain. Blockchains will build a stadium and “an entirely new ecosystem” for esports, which Berns believes “will one day overtake professional sports.” Investors will get sweet tax breaks, thanks to something called an opportunity zone. Berns has personally bought a bank to serve the crypto industry.
“I vow to you—some of my children are in the audience tonight,” said Berns at the end—”my heart is in the right place.”
Which brings us to why the Blockchains CEO is buzzing in a room backstage, clearly still high on adrenaline after his performance. He is dressed incongruously in relaxed-fit jeans and a shiny tuxedo jacket. His eyes are wide, his gaze set for far horizons. No fewer than three minders are posted discreetly around the room. Why all the secrecy, I ask?
“If you think about what we’re attempting to do, we have a lot of targets on our back,” he says. “We could disrupt virtually every industry. And I felt it was important to acquire the assets, the property—the fortresses and the vaults, all of that stuff—before anyone knew anything.” Berns says he bought the land in Nevada through 15 separate corporate entities just to throw people off the scent—paying the nine-figure sum in cash—only for the sales agent to leak it to the press.
Berns made his fortune by investing some of his legal fees in cryptocurrencies and blockchain startups, principally ether, the native coin of the Ethereum network, which he plans to make the foundation of his company’s projects. Having made a fortune, he professes to have little interest in adding to it. Ninety percent of Blockchains’ profits will be spread among six groups of stakeholders, including employees and investors, in a model he calls a “distributed collaborative entity.” Eventually, he hopes, each group will develop its own governance model, with votes taking place on the blockchain.
All of these projects will take years. Berns hopes to break ground on the Blockchains campus in the fourth quarter of 2019, with the residential community to come the following year. The relative priority of various projects will depend largely on which ones attract the most investment, he says. For now, he has no idea what the eventual population of his hoped-for smart city might be.
One thing he is sure of is that none of his projects will be built on private, proprietary blockchains. “If we did that we would be limiting the power of blockchain,” he tells me. “The true power of blockchain is the public being in control of it—not us, not anybody else.”
Shortly before our talk, as Berns’s onstage presentation reached its crescendo, he went so far as to say that Blockchains “isn’t even really a company” but in fact a movement. “We wrapped a company inside it in order to monetize and perpetuate this movement that I hope we’ll all share in,” he said.
It’s a heady vision. When I reenter the ballroom—some sort of audiovisual tone-poem representation of the Ethereum blockchain is playing at the front of the room—I’m surprised to see the size of the crowd. Hardly anybody has left. And why should they? Drinks are still flowing, buffet dishes are still brimming with pike perch, Prague ham, potato pancakes, duck rillettes, and assorted desserts. The noise level is high. Attendees stand around talking in groups or lounge on leather banquettes with glasses in their hands, as though already savoring the first fruits of the promised future that is to be theirs.
On the ride back to the hotel, there is time for sober reflection. One row behind me, a student with a German accent and glasses is talking to his seat-mate about the announcement. “It’s a very utopian vision and project,” he says. “But I feel they have a chance because they incorporated this future-positive vision, and that’s so rare in our time, to find people who are really optimistic about the future.”
“It’s a bit more than a vision,” says the other guy. “And maybe, maybe it’s a good project. Sometimes it’s better to be a lawyer than a developer, I think.”
The student gives a blunt summary of what he takes to be Berns’s curriculum vitae: “He was just an average lawyer who got lucky and made a fortune on crypto. He could have gone and lived in luxury, but instead he decided to do this, and I really have to respect that.”
“Yeah. He sounded very down-to-earth to me.”
At this point I swivel around to look at them, because I want to see whether they are talking about the same earth with which I am familiar or perhaps some parallel earth where we got flying cars instead of 140 characters.
People in the crypto industry “are spending money on a lot more stupid things than this,” argues the student’s seat-mate. Ultimately, he says, “I found it pretty convincing.”
“Convincing is a strong word,” says the student doubtfully.
“There weren’t a lot of specifics,” a guy from the other side of the bus chimes in.
True, the student concedes, but blockchain startups all tend to be crazier than the average in other industries.
So it goes for the rest of the mercifully propaganda-free ride. As we pull up to the hotel, the bonds of camaraderie loosen; the conversation dies away. The student shares his parting thought on Berns’s ambitions: “He made a lot of money, and he wants to change the world. Kudos.”