From College Dropouts to Bitcoin Business Owners
Jacob Melin and his business partner Enrique Rodriquez don’t have college degrees or any credentials as investment advisors.
Still, the men in their early 20s are gathering a flock, shepherding others in Louisville into the super-new world of bitcoin and other digital currencies.
They may seem young, but they are veterans with three years in the emerging phenomenon. And their ace in the hole: They’ve already scored a combined jackpot of nearly $1 million.
“It’s a rough investment world out there,” Melin said, sitting at a gleaming granite-topped conference table in leased offices of Crypto Consulting Group.
Their goal is to build a business and a community showing others the basic navigation tools.
Bitcoin, the best known of the new currencies, is just 10 years old. But it gained global exposure last year when a single “coin” surged 2,500 percent in value to more than $19,000 last December.
Millions of eager investors chasing riches have opened accounts in virtual wallets and begun riding the markets. Bitcoin was first conceived as a way to buy goods and services without dollars, shekels, Euros and credit cards.
Over time, it and lesser-known brethren — Ether, Ripple, Litecoin, Dash and Zcash — has been held or traded like a unit of gold or a stock with the ups and downs in the market.
Scammers inevitably have jumped in. One Louisville investor filed a federal lawsuit against Bitconnect, a British company and U.S. salesman who guaranteed staggering returns trading in crypto. Lawyers estimate that losses among investors nationwide total totaled $5 million.
Some companies, including Google and Facebook, also have banned advertising in cryptocurrencies, fearing their platforms can be exploited for scams and counterfeiters.
Melin and Rodriquez said that they warn clients that the amazing run-up last year may not be repeated, but it's lit a fire in some curious investors — like the guy recently who turned up with $40,000 after taking a second mortgage on his home.
He made out OK, but there’s no guaranteeing others will do as well, the men said.
“Anybody who guarantees a fixed return, turn around and go the other way,” said Melin, who is 23. "We're very honest about everything. When the market goes down, nobody is surprised."
Crypto technology is complicated, so many people who want to try it need advice, especially about the risks. “It gives us a reason to be here,” Melin said.
The two consult with several dozen of clients, about 98 percent of them men, which they say is typical of space. They sponsor a members-only club and hold meetups at The Park, a co-working space, in the city’s Shelby Park neighborhood to encourage over 200 investors in their networks to mingle and share their experiences. The company is thought to be the first in Louisville to offer such services.
It has two full-time employees and two part-timers beside Melin and Rodriquez, with more seasoned trading and technical advisers to help them get the business established.
“These guys come across as genuinely bent on helping people succeed,” said Butch Johnston, an insurance salesman from South Louisville and new investor in crypto. “And they’ve got all the bragging rights.”
A path to a new life
Melin, a Male High School graduate, was studying economics at Indiana University Southeast when he began to wonder if a degree was his ticket to jobs and financial stability. He worried about the size of the national debt and how it might torpedo opportunity for his generation.
“We’ve got all this debt. Who’s going to pay for it?” he said, adding that he views Social Security as a huge scam.
Seeing his single mom Patty get laid off as a computer programmer at Yum Brands in 2009 was painful and only added to his skepticism.
Melin quit college and was working at the Horseshoe Southern Indiana Casino buffet and driving a junker car to work. Using $7,000 he’d saved, he began investing in stocks. But he as he began to educate himself about bitcoin, he figured he could do even better with more cash.
So he convinced his mom three years ago to turn over $22,000 left in his college fund to him. “I wish someone had saved like that for me,” said Patty Cerqua recalled, but her son pleaded his case so well, she relented.
A son honors his father
Rodriquez, a Jeffersonville, Indiana native, began toying with cryptocurrencies nearly three years ago while working at UPS to pay his way through University of Louisville.
Rising into management gave him a window into how even sophisticated supply chain operations were still badly flawed. Medications and other time-sensitive international packages went missing all the time so "I literally got to see everything that was wrong with" the system, Rodriquez said.
Alas, his attempts to urge supervisors to try the technology underlying cryptocurrency to tighten package tracking didn't gain much traction.
"I wanted to stand out" at UPS, Rodriquez said, reflecting an instinct preached by his self-made father, Josh. He told his restless, ambitious son to work hard for his dreams, and to start by getting a college degree. The elder Rodriquez died unexpectedly of a heart ailment a year ago after winning a seat on the Jeffersonville City Council.
The younger Rodriquez was crushed, but losing his 42-year-old dad left him more determined than ever to seize his chances. When Crypto Consulting started to take off last summer, he dropped out of U of L 40 hours short of a communications degree to go full-throttle with the startup.
“I can’t say we were on board with that,” recalled Stacy Slaughter, Josh Rodriquez's best buddy and friend of the family.
A shower of riches
But how do you convince anybody who's made out as well as these two have?
Rodriquez scored big in February 2017 by taking $3,000 of a $4,000 tax return and investing it in Ether. It ballooned from prices ranging from $8 to $14 to $1,100 when he sold, a $200,000 payday.
Melin struck for even bigger riches. By investing his savings and his college fund, his bitcoin soared to $770,000. With the proceeds, he got a cat, a pickup truck and a three-bedroom house in New Albany.
Paying cash for the crib, he said, was his only option because banks wouldn’t write him a mortgage. "I had no credit," he said, with a huge grin. His mom, now living Florida, got her investment back after Melin helped her delve into the new currency.
Some authorities, including Joe McCann, a former Wall Street trader and founder of the tech company NodeSource, said there's a need for consultants in crypto assets, but they are not licensed or regulated. Any advice should be carefully discussed, McCann said in an email, with a person's financial adviser to manage the risk across an entire portfolio.
Melin and Rodriquez agree. They say they're careful not to offer financial advice, only navigation tools and guidance for safely investing.
"All in all," Rodriquez said, "we're experts compared to everybody else."
Grace Schneider: 502-582-4082; firstname.lastname@example.org; Twitter: @gesinfk. Support strong local journalism by subscribing today: www.courier-journal.com/graces.