In 2010, a Chinese teenager named Zhao Tong purchased Bitcoin for $10. At the age of 16, Zhao became interested in the global digital currency and immersed himself in the emerging world of cryptocurrency.
However, acquiring BTC in 2011 was not without difficulties. The largest exchange at the time, Mt. Gox, frequently experienced interruptions and even suffered a sudden crash that briefly brought down the price of the leading cryptocurrency to $0.01 shortly after Zhao’s purchase.
Self-taught programmer Jao Tong developed Bitcoinica in just four days. Unlike other exchanges, Bitcoinica introduced margin trading, allowing users to speculate on the future price of Bitcoin. Traders and miners were able to immediately use leverage up to 50 BTC. Bitcoinica quickly gained popularity, trading up to $40 million per month and becoming the second-largest exchange after Mt. Gox. In the first two weeks, Tong earned $10,000, equivalent to about 2,000 BTC.
Despite its rapid growth, Bitcoinica faced skepticism. Critics questioned his age and experience and expressed concerns about the exchange’s security measures. Nevertheless, the platform continued to process hundreds of thousands of BTC transactions per month.
In late 2011, Tong sold Bitcoinica to the Wendon Group. The new owners aimed to conduct an audit of the exchange, enlisting the help of veteran developers, including ethical hacker Amir Taaki. Wendon Group made significant investments in Bitcoinica, even purchasing the domain Bitcoin.com for $1 million.
However, in March 2012, Bitcoinica was hacked, resulting in the loss of 43,000 BTC. The situation worsened with two additional attacks later that month, resulting in the theft of another 48,000 BTC. This period preceded the emergence of hardware wallets and multisig security, making the exchange vulnerable to password resets.
The hacker attacks caused turmoil among users, including significant losses for well-known figures like Roger Ver. The specifics of the incidents remain unclear, but Tong’s reputation was seriously tarnished. The term “Zhao Tonged” emerged as a meme in the BTC community, describing investors who had been robbed and deceived.
His final venture in the world of cryptocurrencies was investing 1,000 BTC in a rare gold coin called Casascius, one of only three in existence, which is now valued at over $60 million. After that, Zhao Tong left the industry.