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Paul Vigna Discusses the Technology Behind Cryptocurrency · Masters in Business

0:02
Speaker 1: This is Masters in Business with Barry Ridholts on Boomberg Radio.
0:09
Speaker 1: This week on the podcast, I have a special guest,
0:12
Speaker 1: my friend Paul Vigna has been a reporter with The
0:14
Speaker 1: Wall Street Journal for a hundred and twenty years. He
0:18
Speaker 1: is the author of multiple books on blockchain cryptocurrency bitcoin.
0:23
Speaker 1: This is an area that is quite fascinating and a
0:26
Speaker 1: little bit wonky, and if you are at all interested
0:29
Speaker 1: in a crash course, I heartily recommend both of his books,
0:34
Speaker 1: or you could spend the next ninety minutes listening to
0:37
Speaker 1: us chat about all sorts of things involving bitcoin. And
0:41
Speaker 1: to be honest, it's really me asking Poul questions and
0:45
Speaker 1: him taking me to school about, uh, some of the
0:48
Speaker 1: details history minutia about bitcoin. I am really intrigued at
0:54
Speaker 1: how he breaks the entire blockchain slash bitcoin discussion into
1:00
Speaker 1: three distinct groups. The first is the underlying software, the
1:05
Speaker 1: technology of the distributed ledger a k A blockchain. Uh,
1:09
Speaker 1: that's one. The second is really the fascinating group of
1:14
Speaker 1: um cyberpunks and libertarians and and just generally kind of
1:19
Speaker 1: wacky dudes. And it's mostly dudes who um become enamorative
1:24
Speaker 1: bitcoin in the early days and help take it viral
1:28
Speaker 1: from this open source software program to really a a
1:34
Speaker 1: full blown phenomena and now arguably a bubble in in
1:38
Speaker 1: the actual coins itself. And that's the third part. The
1:41
Speaker 1: bit coins, the transactions, the mania surrounding the trading. That's
1:46
Speaker 1: a different issue than either the people behind it or
1:51
Speaker 1: or the technology underlying it. I found the conversation fascinating.
1:56
Speaker 1: I think you will also, with no further ado, my
1:59
Speaker 1: conversation Nation with Paul Vinya. This is Master's in Business
2:05
Speaker 1: with Barry rid Holts on Bloomberg Radio. I'm Barry Ridhults.
2:12
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
2:15
Speaker 1: guest today is Paul Viena. For the past twenty years
2:19
Speaker 1: he has been a journalist covering markets in the economy
2:23
Speaker 1: for such August outfits as Dow Jones and The Wall
2:26
Speaker 1: Street Journal. He is the co author, with Michael Casey,
2:31
Speaker 1: of two fascinating books on blockchain and bitcoin. His first
2:36
Speaker 1: book was The Age of Cryptocurrency, How Bitcoin Is Challenging
2:41
Speaker 1: the Global Economy, and his latest book, The Truth Machine,
2:46
Speaker 1: Blockchain and the Future of Everything, was just released to
2:50
Speaker 1: excellent reviews. Paul Viena. Welcome to Bloomberg, Barry Hults, how
2:54
Speaker 1: are you very very well, let's let's jump right into
2:58
Speaker 1: the bitcoin conversation. And you know more about this than
3:02
Speaker 1: just about anybody I know. That's a totally untrue statement.
3:06
Speaker 1: Well you don't, I know, I know something, I know
3:08
Speaker 1: some about it. Well you don't know the people I know,
3:11
Speaker 1: and apparently everybody else knows less than you. So it's
3:14
Speaker 1: a flawa running. That's right. But let me ask you
3:19
Speaker 1: this question. What was the initial idea behind the entire
3:24
Speaker 1: concept of bitcoin? The initial idea that So this comes
3:29
Speaker 1: out in October two thousand and eight, some guy names
3:32
Speaker 1: to Toshi Nakamoto. Nobody knows who he is? Is that
3:34
Speaker 1: a real name? Is that us? Nobody knows what his
3:38
Speaker 1: real name is? Who he is? If it's a team
3:39
Speaker 1: of people, you know, it's it's a whole mystery. So
3:42
Speaker 1: this white paper comes out to Toshy Nakamoto, uh bitcoin A.
3:47
Speaker 1: I forget the exact title, but basically the point is
3:49
Speaker 1: what he is creating is a digital version of cash. So,
3:54
Speaker 1: in other words, if you're a shopkeeper and I come
3:56
Speaker 1: in for a cup of coffee or whatever, I hand
3:57
Speaker 1: you a five dollar bill. That is the transaction. What
4:00
Speaker 1: Knakamoto was trying to do was replicate that transaction digitally
4:04
Speaker 1: on the internet, meaning no paper, no credit card, no
4:08
Speaker 1: no paper, no credit card, and also an immediate transaction
4:12
Speaker 1: between just you and I that nobody else sees another
4:16
Speaker 1: word party, government, no banks, no credit card, nobody exactly,
4:20
Speaker 1: just buyer and seller, right, just buyer and seller, peer
4:22
Speaker 1: to peer electronic money. That was the original idea. It
4:26
Speaker 1: sounds like a good idea. It sounds like a good idea,
4:28
Speaker 1: sounds like a simple idea, right. And and remember this
4:30
Speaker 1: is two thousand and eight, right in the middle of
4:32
Speaker 1: the financial crisis, where confidence in banks and governments or
4:37
Speaker 1: record lows. So alright, so he comes up publishes this
4:41
Speaker 1: white paper. How do you get from and where was
4:44
Speaker 1: the white paper published? We just released it online just
4:47
Speaker 1: to Originally it was to this uh, I think it
4:49
Speaker 1: was on an email list, sir, you know, one of
4:52
Speaker 1: those distributions. So, so, how do you get from a
4:55
Speaker 1: white paper to an actual blockchain technology g and a
5:00
Speaker 1: coin that starts to appreciate in value almost immedia. So
5:04
Speaker 1: what the white paper was describing was a computer program,
5:08
Speaker 1: and the goal of the computer program was to create
5:12
Speaker 1: this digital money, this peer to peer electronic version of cash.
5:15
Speaker 1: So he releases the white paper in October two thousand
5:18
Speaker 1: and eight and puts the program online. So he set
5:24
Speaker 1: up the program. Was more than a white paper, It
5:27
Speaker 1: was a paper describing what he's doing. He wrote the
5:29
Speaker 1: program too, puts the program online in January of two
5:32
Speaker 1: thousand and nine as an open source project where and
5:35
Speaker 1: anyone is open to participate in building it. So let's
5:38
Speaker 1: describe that. So building the software or building the coins themselves. Well,
5:43
Speaker 1: the software, So you know, he releases version zero point
5:47
Speaker 1: zero of bitcoin, and what he is looking for our collaborators.
5:51
Speaker 1: He's looking for people to come on and help develop
5:53
Speaker 1: the program. In other words, again, you know a company
5:56
Speaker 1: like Microsoft, like Apple, whatever, they have teams of developer
5:59
Speaker 1: building a thousand. This is a a different kind of
6:03
Speaker 1: version of that. You're talking about developing a software program,
6:07
Speaker 1: but you're looking for collaborators like Linux is a great
6:11
Speaker 1: example of it of an open source program. So that's
6:14
Speaker 1: what he releases. And again it's it's very key I
6:17
Speaker 1: think that you mentioned this is all happening during the
6:19
Speaker 1: financial crisis. This is a time where the the existing
6:24
Speaker 1: financial infrastructure has shown that it is just hopelessly conflicted,
6:30
Speaker 1: hopelessly corrupted. In this Philip Right, we could do a
6:34
Speaker 1: whole radio show on just that. I could write a
6:37
Speaker 1: book on it. You could write a book on some
6:39
Speaker 1: of us have right bailout nation. People are interested in
6:43
Speaker 1: alternatives the existing the warts of the existing system have
6:47
Speaker 1: been shown. People are looking for an alternative. He comes
6:50
Speaker 1: up with an alternative and people take to it, and
6:52
Speaker 1: it kind of goes viral. It takes a little while,
6:55
Speaker 1: but inside this community of uh they call him cipher punks,
6:59
Speaker 1: you know, anarchists, libertarians, coders, tinkerers, this small clack, this
7:05
Speaker 1: thing does go viral and it starts getting this community
7:08
Speaker 1: very quickly around. Initially a lot of skepticism, but once
7:11
Speaker 1: it goes live and they see it working, people start
7:13
Speaker 1: coming on and and and originally what you have is
7:16
Speaker 1: a lot of again tinkerers, programmers, anarchists, cypherpunk's. This small
7:21
Speaker 1: group it grows within that probably takes a couple of
7:24
Speaker 1: years until it starts hitting the mainstream. So let's talk
7:28
Speaker 1: about that period before it ramps into the mainstream. You
7:31
Speaker 1: download the software you want to create coins, so you
7:36
Speaker 1: have to solve a complicated mathematical problem, and there's only
7:40
Speaker 1: a finite number of potential coins twenty one millions, right,
7:45
Speaker 1: what bitcoin has? It's really actually and to degreed to
7:49
Speaker 1: the degree that I understand coding and programming at all, Uh,
7:52
Speaker 1: it's really it's a very elegant program. The idea is
7:57
Speaker 1: to create a program that can support a currency, a
8:01
Speaker 1: digital currency that does not need a centralized party controlling it.
8:07
Speaker 1: In other words, you don't have a computer company running
8:10
Speaker 1: the software and responsible for it. You don't have a
8:13
Speaker 1: government or a bank running the software, responsible for the
8:15
Speaker 1: software and the currency. You have to come up with
8:18
Speaker 1: a way to create a system that can opt that
8:21
Speaker 1: can be self self sustaining by this sort of decentralized
8:25
Speaker 1: group of people. So within that there are a bunch
8:28
Speaker 1: of ways that he There are a bunch of levers
8:30
Speaker 1: that he pulls to make that happen. One of them
8:33
Speaker 1: is you you want to you want to you want
8:37
Speaker 1: people to come on or you want to people to
8:38
Speaker 1: download the software. You want people to run it. You
8:40
Speaker 1: need people to run the software for the program to work, obviously, right,
8:43
Speaker 1: how do you do that? How do you entice people
8:45
Speaker 1: to contribute their computing power to a volunteer project. Well,
8:50
Speaker 1: one way you do it is your reward them. What
8:51
Speaker 1: do you reward them with bitcoin? So the way bitcoin
8:56
Speaker 1: is created is you download the software. You are contributing
9:02
Speaker 1: your computing power to the network. What you are really
9:05
Speaker 1: doing is you are confirming transactions. That's sort of the
9:09
Speaker 1: live operation of this software is you and I trade, Right,
9:14
Speaker 1: So my mobile app on my phone, I used to
9:18
Speaker 1: send you five bitcoin. Now five bitcoin would be like
9:21
Speaker 1: a hundred thousand dollars. I'm not sending you that. Then
9:24
Speaker 1: it was pennies. How did that leap from that period
9:29
Speaker 1: to bursting into the mainstream? So the program is released
9:34
Speaker 1: in two thousand and nine, two thousand nine, two ten.
9:37
Speaker 1: It is like I said that this small group of
9:39
Speaker 1: codas tinkerers, programmers, anarchists, libertarians, cypher punks, uh and the currency.
9:48
Speaker 1: And you know it's funny people argue, is that a
9:49
Speaker 1: currency is not whatever I'm gonna call it a currency.
9:51
Speaker 1: For um, it really had no actual value, right, I
9:55
Speaker 1: mean it was it was a program that these guys
9:58
Speaker 1: were using. There was nothing in the real world you
10:00
Speaker 1: could do with it. You could argue that any currency's
10:03
Speaker 1: value is only the populace is willingness to assign it
10:06
Speaker 1: a value. Well, of course, right, So so no currency
10:10
Speaker 1: has a value unless people are willing to use it
10:12
Speaker 1: as a medium of exactly the very first time bitcoin
10:17
Speaker 1: gets used to buy something in the real world is
10:22
Speaker 1: programmer in Florida. Uh, this programmer and Florida, Da says
10:28
Speaker 1: that he on a on a message board. He says,
10:31
Speaker 1: I will give anyone ten thousand bitcoin if you'll buy
10:34
Speaker 1: me two pizzas. So, in other words, he wants to
10:36
Speaker 1: show that bitcoin can be used to buy things, but
10:39
Speaker 1: he can't do it directly because no one's gonna take
10:41
Speaker 1: a bitcoin because to start out, it's just amongst that.
10:43
Speaker 1: It's just among the uh, the pizza places don't have
10:48
Speaker 1: a bitcoin swipe here for bitcoin. So this guy, and
10:51
Speaker 1: it's a pretty famous story, you know, he has this
10:54
Speaker 1: open offer. He says, I'll give anyone ten thousand bitcoin
10:56
Speaker 1: if you buy me two pizzas. And he does that
10:59
Speaker 1: for about two weeks, and people are sending pizzas to
11:02
Speaker 1: his house and he's sending them ten thousand, multiple pizzas,
11:04
Speaker 1: multiple pizzas. Yeah, the first one was I forget that
11:08
Speaker 1: early in May, and then he kept this thing open
11:10
Speaker 1: for about two weeks and he probably you know, spent
11:12
Speaker 1: about two hundred thousand bitcoin on it, which is to
11:15
Speaker 1: day of fortune God. But that was the first time
11:20
Speaker 1: that it was proven that you could actually use this
11:23
Speaker 1: to buy something in the world, real world, It could
11:25
Speaker 1: actually work as a currency. At that point it starts changing.
11:31
Speaker 1: Now people realize there's something here, and of course at
11:35
Speaker 1: the very beginning, it's really only being used basically on
11:39
Speaker 1: the dark web, right, I mean, people who want to
11:41
Speaker 1: buy and sell things sociately. He was the early criticism
11:46
Speaker 1: that I recall hearing about this is used for drugs,
11:51
Speaker 1: this is used for human trafficking, this is used to
11:55
Speaker 1: buy hitmen, this is used for all sorts of nefarious things,
11:59
Speaker 1: and there for it will never be incredible well product.
12:02
Speaker 1: I mean, the answer to that is there are two
12:04
Speaker 1: answers to that. The first answer is, yes, it is
12:06
Speaker 1: being used for that, but that is not the main
12:08
Speaker 1: It really isn't the main use of it. It's still there.
12:11
Speaker 1: And look, we're in the media. We love sensational stories
12:13
Speaker 1: and we tell those stories, but it really is a
12:15
Speaker 1: very small percentage of overall bitcoin track and the dollars
12:21
Speaker 1: so is the year. I mean, every currency is used,
12:24
Speaker 1: So that's not really criticism of bitcoin, that's a criticism
12:28
Speaker 1: of currency. Right, So people start realizing this can be
12:35
Speaker 1: used to buy and sell things. And what is the
12:37
Speaker 1: price of bitcoin back then? Oh, I think it's in
12:41
Speaker 1: the single dollars. It's in the single dollar. I mean,
12:43
Speaker 1: if we pulled up the chart, we could find out, uh,
12:46
Speaker 1: it's in the it's it is in single dollars around
12:49
Speaker 1: the same time, and we're not to go into the hold.
12:53
Speaker 1: But anyhow, in it starts getting out of this small
12:58
Speaker 1: sort of cipher on uh programm or community, and it
13:03
Speaker 1: starts permeating a little bit into the mainstream really into
13:06
Speaker 1: sort of more the the the tech press, the tech mainstream.
13:10
Speaker 1: From there probably around starts hitting the mainstream mainstream. Because
13:14
Speaker 1: I remember first reading about it in early July, it
13:19
Speaker 1: finally gets over ten dollars exactly ten dollars, right, so
13:25
Speaker 1: inteen it kind of has its first wave of mainstream
13:32
Speaker 1: uh awareness, almost runs by November that year, it's just
13:36
Speaker 1: under a thousand dollars itself. Is a great run from
13:40
Speaker 1: ten box. Now. Yeah, also remember too, and your audience
13:43
Speaker 1: will appreciate this and you will too. The thing you
13:46
Speaker 1: have to keep in mind when you're talking about bitcoin
13:48
Speaker 1: in the price of it, you have to keep in
13:50
Speaker 1: mind that this is still a relatively small market, a
13:53
Speaker 1: relatively a liquid market, and it is a relatively one
13:56
Speaker 1: way market, meaning you could buy it, but it's very
13:59
Speaker 1: hard to actually convert that into cash. Yeah, it's well,
14:02
Speaker 1: it's difficult to convert into cash. It's difficult to sell it.
14:05
Speaker 1: Uh it. You know, they're look, they're just starting to
14:09
Speaker 1: build derivative products, they're just starting to build different more
14:12
Speaker 1: more you know, intricate ways to bet on, bick on
14:15
Speaker 1: things that are in the market right now. It is
14:16
Speaker 1: also a market that run has no there's no closing bell,
14:20
Speaker 1: there's no circuit breakers. It goes in whatever direction it is.
14:25
Speaker 1: It is wild West of trade. If you like open markets,
14:28
Speaker 1: there has never been a more open market than this
14:30
Speaker 1: you have, So you have to keep that in mindment
14:32
Speaker 1: talking about the price. The price can go in crazy
14:34
Speaker 1: directions because of those reasons. But it goes from ten
14:40
Speaker 1: to eighty, back down or whatever. Then you know, in
14:42
Speaker 1: the second half of the year it goes up to
14:44
Speaker 1: almost a thousand. You have an exchange called mount Cox
14:47
Speaker 1: which was handling about seven year eighty percent of all
14:50
Speaker 1: the trading and Mount Cox was a terribly created financial exchange.
14:56
Speaker 1: It was just bad. It was not they call not secure,
15:00
Speaker 1: are not well built, not well constructed, and all the
15:02
Speaker 1: money is going through it, so the liquidity there is
15:05
Speaker 1: almost nothing. So when Mount Cock shuts down and you
15:07
Speaker 1: can't get your money out easily, what do you do
15:11
Speaker 1: to get your money out? What you gotta offer higher prices,
15:14
Speaker 1: really higher prices just a big reason why to sell.
15:19
Speaker 1: So you're offering higher prices to sell or lower I
15:21
Speaker 1: would think you're offering lower prices to sell the only
15:25
Speaker 1: way you can get it out because withdrawals were limited,
15:28
Speaker 1: so and it was thin. There was not a lot
15:31
Speaker 1: of liquidity, so you know, you gotta entice people to sell,
15:34
Speaker 1: so you're offering higher prices. So the price goes flying up.
15:39
Speaker 1: It kind of comes down a little bit. Now you're
15:41
Speaker 1: now you're starting to get more and more in the mainstream.
15:43
Speaker 1: People are seeing it and you what you have though,
15:48
Speaker 1: is again still longer. It's still completely a volunteer community.
15:53
Speaker 1: I mean, this thing is just being built by volunteers,
15:55
Speaker 1: by volunteer coders. You're starting to have some people realize
15:58
Speaker 1: that there's money to be aid here. And you're starting
16:01
Speaker 1: to have people try to build businesses on top of bitcoin,
16:05
Speaker 1: and that was sort of the um and that was
16:10
Speaker 1: sort of the first time you have some infrastructure being
16:13
Speaker 1: put around this computer program that I was talking about before.
16:16
Speaker 1: And importantly too, I think there are I think there
16:19
Speaker 1: are a couple of things that you have to keep
16:20
Speaker 1: in mind when you're talking about bitcoin, and I think
16:22
Speaker 1: this is why people kind of get so screwed up
16:24
Speaker 1: about it. There are really three main things there. And again,
16:27
Speaker 1: this is one of the reasons why I love this
16:29
Speaker 1: so much as a writer. There are so many angles,
16:31
Speaker 1: there are so many stories. You have to keep in mind.
16:34
Speaker 1: A couple of things. One, this is a computer program.
16:36
Speaker 1: That is really what this is. If Microsoft in two
16:39
Speaker 1: thousand and nine had said, hey, you know what, We've
16:41
Speaker 1: come out with a new feature on Excel that will
16:44
Speaker 1: allow people to run a shared database that will be
16:49
Speaker 1: all all your transactions that you put onto This database
16:52
Speaker 1: will be recorded, an exact copy, will be distributed to
16:55
Speaker 1: everybody in real time, and it will be cryptographically secure.
16:59
Speaker 1: It will be impossible to counterfeit, to create false entries.
17:03
Speaker 1: It is an open source, a transparent database that an
17:07
Speaker 1: entire community can run and can feel confident that it's
17:10
Speaker 1: real and well. You would have said, Okay, that's nice,
17:13
Speaker 1: and Microsoft probably would have done well, and you would
17:15
Speaker 1: have said, oh, Sati has come up with a new product.
17:17
Speaker 1: You know, he's really doing a good job over at Microsoft,
17:19
Speaker 1: and that would have been the end of it. It
17:20
Speaker 1: would have been a nice program. However, what you have
17:24
Speaker 1: with bitcoin is you have the program, you have the
17:26
Speaker 1: time that it was released. Like you said, people looking
17:28
Speaker 1: for alternative way to do things, so you have this
17:31
Speaker 1: sort of viral community grow up around it. Personally, I
17:33
Speaker 1: think bitcoin is one of the three big social movements
17:38
Speaker 1: that erupted out of two thousand and eight. You have
17:40
Speaker 1: the tea party you had to occupy, and you have bitcoin.
17:43
Speaker 1: Bitcoin is a social movement and that is why people
17:46
Speaker 1: are so passionate about it. This is not just a
17:49
Speaker 1: computer program, This is not just digits, ones and zeros.
17:53
Speaker 1: This is a new way to build finance, to build
17:56
Speaker 1: a financial infrastructure. That's fascinating. Let's talk a bit about
18:01
Speaker 1: your career as a journalist covering markets and the economy
18:06
Speaker 1: and how that morphed into your coverage on bitcoin. How
18:10
Speaker 1: did you get into financial journalism, what what led you
18:13
Speaker 1: to your first first gig. Oh my god. Well, I
18:16
Speaker 1: mean it was quite simply. It was money, but not
18:20
Speaker 1: for the reason that you might think most people get
18:22
Speaker 1: into finance. I was just Look, I was working at
18:24
Speaker 1: a weekly newspaper. I had done been there a few years,
18:28
Speaker 1: making no real money. You make no money at community journalism.
18:31
Speaker 1: It's fun, it's a good place to learn the ropes,
18:33
Speaker 1: but you make no money at it. So I needed
18:36
Speaker 1: a job orr I can make some money. Dal Jones
18:37
Speaker 1: was hiring. It was a doctor. It was so everybody
18:40
Speaker 1: was everybody was hiring. Dal Jones was hiring editors. So
18:44
Speaker 1: I took the editing test. I passed the editing test.
18:47
Speaker 1: I knew nothing about finance. I did not go to
18:49
Speaker 1: school for finance. Really, I didn't know. No, I didn't
18:51
Speaker 1: study it at all. I literally passed the editing test.
18:56
Speaker 1: So they hired me as an editor, and my first
18:58
Speaker 1: job was rewriting press releases. And that's what I did.
19:01
Speaker 1: That's how I started out, rewriting press releases. How did
19:04
Speaker 1: you end up at what was so few young uns
19:07
Speaker 1: out there? The U C I LX terminals and other
19:10
Speaker 1: such um quote machines and the news feed would have
19:14
Speaker 1: a constant stream of of stories. But my favorite feedback
19:19
Speaker 1: in the nineties was Dow Jones market Talk, which were
19:23
Speaker 1: all these little blurby stories about what was going on
19:26
Speaker 1: in the market. It was Twitter before there was Twitter
19:28
Speaker 1: for it was finance Twitter before there was such a thing. Um,
19:32
Speaker 1: how how did you find your way to down Jones Market?
19:35
Speaker 1: So I spent a few years on what was called
19:37
Speaker 1: the spot news desk doing that press release rewrite job,
19:41
Speaker 1: which was actually another great education in journalism. And it
19:45
Speaker 1: sounds horrific to me, Well it was. I mean, it
19:47
Speaker 1: was a total It was. It was a grind, I
19:49
Speaker 1: mean it was it was. That's what I was thinking
19:51
Speaker 1: that you learn a lot about finding You're constantly looking
19:55
Speaker 1: at what companies are telling you, and if you're if
19:58
Speaker 1: you're being discerning about it, you're trying to find the
20:01
Speaker 1: holes in it. So I learned a lot about finance
20:04
Speaker 1: doing that. Then I spent a few years on the
20:06
Speaker 1: editing desk, and then I had a friend who was
20:08
Speaker 1: on market Talk, which which really was from I loved. Well,
20:14
Speaker 1: we still do market Talk, I don't think they published
20:16
Speaker 1: it in quite the same way. So we used to
20:18
Speaker 1: publish it on the web and then they stopped, so
20:21
Speaker 1: in two thousand and five, now I've been there a while.
20:24
Speaker 1: In two thousand five I started at market Talk with
20:27
Speaker 1: John Shipman, and it was it was great. It was
20:30
Speaker 1: just the two of us. It was it was actually
20:32
Speaker 1: a great job because you're right, I think our limit
20:35
Speaker 1: was a hundred words, so these tight little commentaries on
20:40
Speaker 1: which is about yeah, exactly right. So that was that
20:45
Speaker 1: was how I kind of got out of editing and
20:47
Speaker 1: into writing. And I did that for probably seven years. Again,
20:52
Speaker 1: another great education, right fast, right analytically and right short.
20:58
Speaker 1: That was it. That was our own only kind of
21:00
Speaker 1: remit and I did that for a long time. Loved it.
21:03
Speaker 1: John and I had a great time doing it. We
21:04
Speaker 1: were kind of left out on our own in the newsroom.
21:06
Speaker 1: No by the voice. It had a voice, don't get right,
21:12
Speaker 1: and the voice was my voice in John's voice. And
21:15
Speaker 1: from that I moved over to one of the blogs
21:17
Speaker 1: and then I heard about bitcoin. And my first reaction
21:22
Speaker 1: to bitcoin was, this is an online scam, this is
21:25
Speaker 1: an internet joke. We are not writing about this. We're
21:29
Speaker 1: not writing about this. Because I was gonna so how
21:31
Speaker 1: much bitcoin did you buy? An ask? The answer is zero?
21:37
Speaker 1: So My first reaction was probably what everyone's reaction is,
21:41
Speaker 1: is that this is some kind of scam, and I thought,
21:43
Speaker 1: we're not writing about this no way. But like I
21:46
Speaker 1: said earlier, it was starting to permeate into the mainstream.
21:49
Speaker 1: You're starting to hear more and more about it. And
21:51
Speaker 1: the more and more I heard about it, the more
21:52
Speaker 1: I read about it, and then I started to become interested.
21:56
Speaker 1: And at the time, now this is this is the
21:58
Speaker 1: spring of At the time, the Wall Street Journal had
22:02
Speaker 1: nobody writing about bitcoin, and I was exactly I was
22:07
Speaker 1: writing for our money Beat blog, and so I had
22:11
Speaker 1: a pretty wide, pretty wide latitude in what I wanted
22:14
Speaker 1: to write about. My my coverage was the markets. It
22:17
Speaker 1: was a market in the economy, so I could write
22:18
Speaker 1: about anything within that, which is pretty much everything, which
22:22
Speaker 1: is pretty much right exactly, which which was great. So
22:26
Speaker 1: because I had that latitude to write about whatever I
22:28
Speaker 1: wanted to write about, and I was starting to get
22:30
Speaker 1: interested in bitcoin, I started writing some bitcoin posts and
22:33
Speaker 1: I did that for a few months, and in the
22:36
Speaker 1: summer of I went to a conference here in the city.
22:40
Speaker 1: It was called Inside Bitcoins. It was a one day
22:41
Speaker 1: conference at the New Yorker and it was the first
22:45
Speaker 1: time that had ever been around bitcoin people. And again
22:50
Speaker 1: it was a small conference. They had like, you know,
22:54
Speaker 1: one one room, you know, one one conference room, a
22:56
Speaker 1: couple hundred people. Uh, there was a lobby outside and
22:59
Speaker 1: maybe a dozen, twelve or fifteen tables set up at
23:02
Speaker 1: little businesses. But it was again the first time I
23:05
Speaker 1: had ever been around these people these So two questions.
23:09
Speaker 1: One is what was the response to the blog post
23:13
Speaker 1: you were doing on bitcoin before that conference? And then second,
23:18
Speaker 1: how did what what was the impact of the conference
23:22
Speaker 1: on you? So you're talking about the reaction among readers
23:25
Speaker 1: of the news readers readers not much. Then you know
23:30
Speaker 1: what's funny is readers not much. In the newsroom not much.
23:33
Speaker 1: You know, there was enough interest among the editors that
23:36
Speaker 1: they said, yeah, I head right that it's it's probably
23:38
Speaker 1: worth us. There's something, but nobody knows what it is
23:43
Speaker 1: exactly right, And I think, and then how did the
23:44
Speaker 1: conference so? Well? The conference affected me in that what
23:48
Speaker 1: I got out of that conference was this incredible energy
23:51
Speaker 1: of this group of people, and the ideas are flying
23:55
Speaker 1: around and the it was very utopian, very pie in
23:59
Speaker 1: the sky. But again you have to remember all of
24:01
Speaker 1: this I'm coming to as a writer. I'm not an investor,
24:04
Speaker 1: I'm not an entrepreneur. I'm not looking to make money.
24:06
Speaker 1: I'm looking to write good story, interesting stories, and I
24:10
Speaker 1: realized that there are tremendous stories to be told here.
24:13
Speaker 1: Let's talk a little bit about some of the specifics
24:16
Speaker 1: of blockchain and cryptocurrency I want. I'm I'm comfortable getting
24:21
Speaker 1: into the weeds here, but before we do, let's let's
24:25
Speaker 1: start out a little basic. Um. What is a digital
24:31
Speaker 1: distributed ledger? So that is that's sort of the that
24:36
Speaker 1: is the heart of the Bitcoin program, and it has
24:41
Speaker 1: come to be called by a couple of different names.
24:43
Speaker 1: You call it distributed ledger technology, blockchain technology, just blockchain.
24:47
Speaker 1: But what it essentially is is a program that is
24:52
Speaker 1: designed to maintain this online ledger. It's a live ledger
24:57
Speaker 1: that is not operated from any one central server. In
25:01
Speaker 1: other words, JP Morgan has a ledger of every transaction
25:05
Speaker 1: that they don't take, but it's on JP morgan servers
25:08
Speaker 1: and JP Morgan maintains it and only JP Morgan can
25:10
Speaker 1: see it. What is it track? What is it? Before
25:13
Speaker 1: we even get into that, just what this is is
25:17
Speaker 1: a a program that can run on any number of computers.
25:23
Speaker 1: Every computer that is running the program live has an
25:27
Speaker 1: identical copy of the ledger. Every transaction that goes into
25:31
Speaker 1: that ledger gets updated on every single computer at the
25:34
Speaker 1: basically at the same time. The transactions are secured cryptographically,
25:40
Speaker 1: so it's virtually impossible to change them. So what you
25:44
Speaker 1: have is a live transaction history that is transparent because
25:49
Speaker 1: it's on any number of computers and anybody can see it,
25:52
Speaker 1: and it is impossible to change. That's what it essentially is.
25:57
Speaker 1: So that means that means it's a legitimate record of
26:00
Speaker 1: each transact and it's theoretically unhackable. And bitcoins blockchain has
26:07
Speaker 1: never been hacked. You hear a lot of stories about
26:09
Speaker 1: hacking in this world. It's always some company that got
26:12
Speaker 1: like mild like mauld Cox got hacked, or someone's wallet
26:15
Speaker 1: got broken into. That's possible too, But the the ledger itself,
26:19
Speaker 1: the transaction history, but has never been attacked. It's been attacked,
26:23
Speaker 1: it has never been hacked. Now you said, what can
26:25
Speaker 1: you do with that? Well, the question is, and that's
26:27
Speaker 1: why you have this sort of explosion and interest. The
26:31
Speaker 1: answer is, anything that can be digitized and recorded and
26:34
Speaker 1: tracked potentially these are still early days. Potentially could be
26:39
Speaker 1: done with this program. So, in other words, the first
26:43
Speaker 1: application of this technology was bitcoin. Let's track a peer
26:47
Speaker 1: to peer transfer, transaction, exchange, value exchange, it's a currency.
26:53
Speaker 1: Could you use it for land registries? Could you use
26:57
Speaker 1: it for identification? Could you There so many things now
27:01
Speaker 1: that people realize that you can use this fork Potentially
27:05
Speaker 1: can artists use it to protect their copyright and maybe
27:08
Speaker 1: make some money and track where things, you know their
27:11
Speaker 1: their works are being used. So anything that's transacted digitally,
27:15
Speaker 1: you could keep a perfect so perfect example. We were
27:18
Speaker 1: talking about the financial crisis earlier. Um Mers is a
27:23
Speaker 1: sort of unspoken villain of the crisis. This is the
27:27
Speaker 1: electronic registry of mortgages, and they were so overwhelmed with
27:32
Speaker 1: the number of transactions and collateralized mortgages all put into
27:37
Speaker 1: other derivative products that very often when there is a
27:40
Speaker 1: default and people would go to court to defend it,
27:44
Speaker 1: the people who thought they owned the mortgage couldn't prove
27:47
Speaker 1: they actually owned the mortgage. If you went to court
27:49
Speaker 1: with a lawyer, you very often won because the people
27:52
Speaker 1: suing you couldn't demonstrate they were the appropriate party. They
27:56
Speaker 1: were a mortgage holder. It's amazing. So Jane theoretically could
28:00
Speaker 1: solve for something like exactly, and it's you know, it's amazing.
28:03
Speaker 1: I always think of this. Uh. Two thousand and seven,
28:06
Speaker 1: Lehman Brothers reports record revenue, record earnings, best year in
28:10
Speaker 1: the company's history two thousand and seven, hundred and fifty
28:14
Speaker 1: years they've been around, two thousand seven best year. Nine
28:16
Speaker 1: months later they're out of business. How is that possible? Right?
28:21
Speaker 1: Morga total accounting fraud moving fifty billion dollars in links
28:28
Speaker 1: which which to this day Dick Fault still claims was legit,
28:32
Speaker 1: which is hilarious. So this is a really interesting program. Essentially,
28:36
Speaker 1: what you have is would prevent that sort of fraud
28:39
Speaker 1: theoretically if it was implemented, if the industry would accept
28:43
Speaker 1: it as a standard. That's the other thing. I mean,
28:46
Speaker 1: one big problem for the banking industry is that this
28:50
Speaker 1: is too transparent to transpor course it is. I mean,
28:53
Speaker 1: you know, you listen, you've been in the market's a
28:55
Speaker 1: long time. I mean you know that information and having
28:57
Speaker 1: it and having it before other people and a city
29:00
Speaker 1: are all virtues if you're trading. They are a feature,
29:03
Speaker 1: not abuve you can you could charge higher prices by
29:08
Speaker 1: bamboozling people and making things that are simple sound complex
29:12
Speaker 1: and eliminating transparency. And when the bank started experimenting with this,
29:17
Speaker 1: they were all interested in it, and they're gonna have
29:18
Speaker 1: their blockchain labs and everyone's gonna build something. Well what
29:22
Speaker 1: happened was they all realized it was way too transparent,
29:25
Speaker 1: and so they know really and it really held things up.
29:28
Speaker 1: And now people are trying to build things that are
29:30
Speaker 1: sort of that that will operate among a bunch of say,
29:34
Speaker 1: financial institutions, but they also are trying to put in
29:38
Speaker 1: checks so that nobody's order book is is visible to
29:41
Speaker 1: anybody else, so you can mean so they're trying to
29:44
Speaker 1: figure that out. So let's talk about this exact subject.
29:47
Speaker 1: What are some of the legitimate uses for blockchain and
29:51
Speaker 1: how likely is it that we're gonna see implementations at banks, insurers,
29:56
Speaker 1: brokers of this sort of technology. I think of actually
30:00
Speaker 1: we will. And I think the reason I think, I
30:03
Speaker 1: think there are two reasons why bitcoin kind of took
30:05
Speaker 1: off the way it did and why this technology is
30:07
Speaker 1: being so looked at the way it is. One is
30:10
Speaker 1: certainly just sort of the viral nature of it, the
30:12
Speaker 1: panic A two thousand and eight, the idea that we
30:14
Speaker 1: can have an alternative way, uh and and that was
30:17
Speaker 1: But the other reason, I think the more important reason
30:19
Speaker 1: is just that this technology fits our lifestyle today. We
30:25
Speaker 1: are digital, we are online, We are doing things across borders,
30:29
Speaker 1: across time zones, across continents, and this is a program
30:33
Speaker 1: that will allow you to track things across borders, across
30:36
Speaker 1: time zones, across continents, and to do things live and
30:39
Speaker 1: to do things in I hate saying the word real time,
30:42
Speaker 1: but real time. And it's one feature of the Internet
30:45
Speaker 1: when it was first built in the nineties, that one
30:47
Speaker 1: feature that it didn't have was an easy way to
30:52
Speaker 1: exchange value, to to do currency transactions. So what gets
30:56
Speaker 1: built onto the Internet, of course, or all the sort
30:58
Speaker 1: of existing you know, the third party credit card transaction
31:03
Speaker 1: literally literally punching in a credit card. And because you're
31:07
Speaker 1: doing this over such great distances and it's harder to
31:09
Speaker 1: verify identity, you have an entire industry that grows up
31:13
Speaker 1: around that. Right. You have very assigned. You have all
31:15
Speaker 1: these third party providers who will take your information, validate it,
31:20
Speaker 1: and allow you to do the credit card transaction. Bitcoin
31:23
Speaker 1: kind of takes that and and blockchain technology takes that
31:26
Speaker 1: and sort of uh flattens it and makes it all
31:30
Speaker 1: one transaction replaces it. So the transaction, the verification of validation,
31:36
Speaker 1: the valid and the exchange of value all happen in
31:38
Speaker 1: one That is it exactly? You don't sound like a
31:41
Speaker 1: skeptic on this, Barry Ridholtz, Well, no, I'm just so
31:44
Speaker 1: let's talk about the skepticism. It's not on the blockchain technology.
31:49
Speaker 1: And it's a cliche every time you hear someone say
31:52
Speaker 1: blockchain is fascinating, but I'm skeptical on bitcoint. To me,
31:56
Speaker 1: when I see something rise two thousand percent in six months,
32:01
Speaker 1: my experience, both in the markets and as a trader
32:04
Speaker 1: is immediately to screen bubble. And uh, I got a
32:07
Speaker 1: little lucky in the timing on on writing something when
32:11
Speaker 1: should you sell your bitcoin? Um? And the timing on
32:16
Speaker 1: that is as often luck as anything else. But how
32:20
Speaker 1: let's let's look at bitcoin. Is bitcoin separate from the
32:24
Speaker 1: underlying technology? Is that in a bubble? If it was
32:29
Speaker 1: ten thousand dollars and now down to ten thousan dollars, Well,
32:36
Speaker 1: like I said earlier, there, to me, there are three
32:39
Speaker 1: huge angles to this whole story. There's the software, which
32:42
Speaker 1: is what is really important, and its applications. There's this,
32:46
Speaker 1: by the way, is the thing people talk the least
32:47
Speaker 1: about exactly. There is uh, the counterculture movement, the social
32:52
Speaker 1: movement that I really fint I think is a big
32:54
Speaker 1: part of the story. And the third party is the
32:57
Speaker 1: speculative mania, the trading of it. And you know, you say,
33:02
Speaker 1: is this a bubble? I don't even know if it's
33:04
Speaker 1: almost it's such a it's such a pre thing. I
33:11
Speaker 1: don't even know if you can say it's really a bubble.
33:12
Speaker 1: I mean, this is it? Is this a speculative mania?
33:15
Speaker 1: Without a doubt. I think it is virtually impossible from
33:19
Speaker 1: a fundamental perspective to say what bitcoin is worth. I mean,
33:24
Speaker 1: obviously it's worth what anybody will pay for it. I mean,
33:27
Speaker 1: that's the simple answer. So if someone's willing to pay
33:29
Speaker 1: eleven thousand, twelve, nine thousand, whatever it is, that's what
33:32
Speaker 1: it's worth. But at that moment, at that moment, that's
33:36
Speaker 1: the problem. Can can you fundamentally value a technology that
33:40
Speaker 1: has not really been implemented yet? No, you cannot. I mean,
33:44
Speaker 1: does bitcoin run? Is it live? Two people use it? Yes,
33:47
Speaker 1: absolutely absolutely. Uh is there a lot that you can
33:51
Speaker 1: do with bitcoin right now? No? Besides trade it. I
33:55
Speaker 1: mean really, so what you what you have is a
34:00
Speaker 1: a mania, a speculative mania for a product that is
34:04
Speaker 1: virtually impossible to fundamentally value. And like I said earlier,
34:09
Speaker 1: still a small market. It's still a thin market. It's
34:11
Speaker 1: still a relatively a liquial liquid market. So you get
34:14
Speaker 1: these crazy volatile swings. So yeah, you're in in terms
34:17
Speaker 1: of the price. I think your skepticism is a hundred
34:20
Speaker 1: percent on um. I don't buy bitcoin because the Wall
34:25
Speaker 1: Street Journal would not want me buying and selling something
34:28
Speaker 1: that I'm writing about. I mean, it's obvious every journalistic
34:31
Speaker 1: operation has ruled exactly avoiding you know, you can't go
34:35
Speaker 1: buy a stock and then talk about it. You can't
34:37
Speaker 1: be the Apple Beat reporter and be day trading Apple shares.
34:40
Speaker 1: So it's the same thing. So I don't buy bitcoin
34:43
Speaker 1: for that reason. But even if the journal didn't have
34:46
Speaker 1: that restriction on me, I personally would not buy it anyhow,
34:50
Speaker 1: because it is a specular gambling. It's a speculative asset.
34:53
Speaker 1: You're betting that it is going to go somewhere, and
34:55
Speaker 1: it's going to be something, So you probably you want
34:58
Speaker 1: to do that, but you have to understand of what
35:00
Speaker 1: you're doing, and what you're doing is just you're you're gambling.
35:02
Speaker 1: So am I assuming too much in saying that you
35:06
Speaker 1: don't believe this belongs in people's four oh one k
35:09
Speaker 1: or their retirement portfolios? No, and I'm not giving financial advice.
35:13
Speaker 1: You're just asked me a question. I mean, does an
35:17
Speaker 1: unbelievably speculative asset belonging to four oh one k, which
35:20
Speaker 1: is essentially retirement portfolio? My answer is no, And I
35:24
Speaker 1: don't think anybody else would say. Nobody should say, let's
35:26
Speaker 1: put it this way, nobody should say yes to that.
35:29
Speaker 1: We have been speaking with Paul Vina. He is the
35:32
Speaker 1: co author, along with Michael Casey, of Truth Machine, Blockchain,
35:36
Speaker 1: and the Future of Everything. If you enjoy this conversation,
35:40
Speaker 1: be sure and check out our podcast extras, where we
35:43
Speaker 1: keep the tape rolling and continue chatting about all things cryptocurrency.
35:48
Speaker 1: I'll be sure and check out my daily column. You
35:50
Speaker 1: can find that on bloomberg view dot com. Follow me
35:54
Speaker 1: on Twitter at rid Halts. We love your comments, feedback
35:58
Speaker 1: and suggestions right to us at m IB podcast at
36:02
Speaker 1: Bloomberg dot Net. I'm Barry Results. You're listening to Master's
36:07
Speaker 1: in Business on Bloomberg Radio. So there are so many
36:17
Speaker 1: questions I did not get to during the broadcast portion.
36:21
Speaker 1: Let's let's spend some time on on those questions before
36:25
Speaker 1: I get to my favorite podcast questions that I ask everybody.
36:30
Speaker 1: One of the things that I had to ask is,
36:33
Speaker 1: so you write the Age of Crypto in what made
36:37
Speaker 1: you think that there was an audience for a book
36:42
Speaker 1: on crypto? It's interesting because the whole thing goes back
36:44
Speaker 1: to that conference in that I was talking about where
36:48
Speaker 1: I go to this conference and I realized that there's
36:50
Speaker 1: just this tremendous energy around this thing. I realized this
36:54
Speaker 1: is a story to be told. And I go back
36:56
Speaker 1: to the newsroom and I'm talking to another reporter, this
36:59
Speaker 1: guy Dave Benoit, very good reporter, and I'm telling him
37:01
Speaker 1: about the conference and these crazy people I saw, you know,
37:04
Speaker 1: and he's listening to me and he looks at me.
37:07
Speaker 1: He says, it sounds like something like a lewisid write
37:10
Speaker 1: a book about. And I'm trying to stop my fingers,
37:14
Speaker 1: like bang, lightbulb, Oh my god, this is And I've
37:18
Speaker 1: been looking for a long time. I wanted to write
37:21
Speaker 1: a book. I've always wanted to write, you know, I
37:22
Speaker 1: wanted to write a book. I never found a good topic.
37:25
Speaker 1: And he said that to me, and I realized I
37:27
Speaker 1: had just been handed a great topic and nobody else
37:31
Speaker 1: has done it yet. I'm like, I'm the first one
37:34
Speaker 1: there was that was this book? Literally, Age of Cryptocurrency?
37:39
Speaker 1: Was that the first book on this topic. By the
37:42
Speaker 1: time that went out, a few other people had also
37:46
Speaker 1: written their books. Uh, I don't I don't remember if
37:49
Speaker 1: Nathaniel Popper's book came out right before or right after
37:53
Speaker 1: hours around the same time. The New York Times is
37:56
Speaker 1: Digital Gold Popper's book, and it's a good book to digital.
38:00
Speaker 1: I shouldn't plug a competitor's book, but whatever, you know,
38:03
Speaker 1: you get a free one from me, Nathaniel. So I
38:07
Speaker 1: mean at that by the time our book came out,
38:09
Speaker 1: other people had gotten onto this this idea too, that
38:12
Speaker 1: there were books to be written. But I think Popper's
38:15
Speaker 1: book and our book were the first mainstream books, the
38:17
Speaker 1: first ones by big publishing houses to go out. He
38:20
Speaker 1: was made, Oh that's the paperback. That's the paperback, uh,
38:25
Speaker 1: digital gold Bitcoin and the inside story of the millionaires
38:28
Speaker 1: trying to reinvent money. Yeah, that was his book. So anyhow,
38:32
Speaker 1: so I realized there was a book to be written.
38:34
Speaker 1: I spend a lot of time. Actually, at the time,
38:37
Speaker 1: I wanted to convince the journal to let me write
38:39
Speaker 1: any book. No one else has done this. Let's do this,
38:43
Speaker 1: get it out quick. And I remember I went home
38:45
Speaker 1: to my wife and I said, I have this great idea.
38:47
Speaker 1: I said, I want to write I'm gonna try to
38:50
Speaker 1: do any book about bitcoin. And she said she slows down,
38:53
Speaker 1: and she says, let me get this straight. She says,
38:55
Speaker 1: you want to write a digital book about a fake currency.
39:03
Speaker 1: She's I think, she said, you want to write an
39:04
Speaker 1: electronic book about a digital currency. And I said yeah.
39:08
Speaker 1: And she said, so you want to write a fake
39:09
Speaker 1: book about fake currency. I said yeah. She said all right,
39:13
Speaker 1: She's like, just good do I don't want to hear
39:14
Speaker 1: another word until you get a check for me. Like
39:16
Speaker 1: just she thought it was in you know, crazy um
39:19
Speaker 1: And again you know that's because you know, people who
39:23
Speaker 1: grew up on our generation were used to tangible things, right.
39:26
Speaker 1: So anyhow, I come up with this idea, I try
39:27
Speaker 1: to sell it to the journal. They eventually don't want
39:29
Speaker 1: to do it. Uh. And then by that by that time,
39:31
Speaker 1: my Casey, my co author, had also started getting interested
39:34
Speaker 1: in bitcoin. So we put our heads together and Ike
39:36
Speaker 1: had written some books. He had an agent. We go
39:38
Speaker 1: to the agent, she loves the idea, and we find
39:40
Speaker 1: a publisher and we sell it. January it comes out
39:43
Speaker 1: and so you beat you beat uh Poper by like
39:46
Speaker 1: five months, right, So we beat Popria. So I guess
39:49
Speaker 1: we were the first mainstream book. So here's the question
39:52
Speaker 1: I have with you. My experience with writing a book
39:55
Speaker 1: was that it was like a PhD. You know, it was.
39:59
Speaker 1: It was your graduate thesis. It was it was exhausting.
40:02
Speaker 1: And immediately after you start getting some sales and they're like,
40:05
Speaker 1: how about a follow up? It's like, go away for
40:07
Speaker 1: a decade. You guys turned around and write another book
40:11
Speaker 1: three years later. That's and I wrote another book in between.
40:15
Speaker 1: That's a lot of book writing for someone who's also
40:17
Speaker 1: writing a regular column in the mainstream. Mean you have
40:20
Speaker 1: to realize, like, I'm a news drunkie. Yeah, I mean
40:23
Speaker 1: he was drunkie. I I want to write that's all
40:25
Speaker 1: I want to do. So for me it was not
40:28
Speaker 1: I mean, look it. Also, it helps tremendously having a
40:31
Speaker 1: co author, because what Mike and I would do is,
40:33
Speaker 1: you're too half books and other ones? How did you
40:36
Speaker 1: guys split over? What we would do is we we'd
40:38
Speaker 1: plot out the book, we'd plot out the chapters. We
40:40
Speaker 1: we kind of figure out what each chapter is going
40:42
Speaker 1: to be about, and then we just split them up.
40:43
Speaker 1: Who's written about this more, Okay, you've done this more,
40:46
Speaker 1: so you do that chapter. I've done this more, I'll
40:47
Speaker 1: take this track. Do you each then go back and
40:49
Speaker 1: then we so we would write our chapters, then we
40:51
Speaker 1: would send them to each other, edit what we were doing,
40:55
Speaker 1: rewrite what we were doing, send it back to the
40:57
Speaker 1: guy having to look at it again. Then we said
40:59
Speaker 1: it to ours. End up, we sent the book in
41:01
Speaker 1: chapters to our editors, which is a little bit unusual.
41:04
Speaker 1: A lot of times you'll just write the whole manuscript
41:05
Speaker 1: and send it to your editor. We were doing this
41:07
Speaker 1: in chapters, so you end up with this crazy dynamic
41:10
Speaker 1: where I'm writing my own chapter, I'm editing something Mike
41:13
Speaker 1: sent me, I'm getting back something that Tim Bartlett, our
41:17
Speaker 1: editor at St. Martin sent So you're doing it's it's
41:20
Speaker 1: a little hectic and crazy. But like I said, if
41:23
Speaker 1: you're a junkie for this kind of stuff, it wasn't
41:26
Speaker 1: that bad. I mean, it really just wasn't I don't know.
41:28
Speaker 1: I would work during the day, i'd come home, i'd
41:30
Speaker 1: see my wife, i'd see my son, they'd go to bed,
41:32
Speaker 1: and I put in a couple hours every night. So
41:34
Speaker 1: you guys did this very postal service, like if you're
41:36
Speaker 1: familiar with Postal Service. The band No so Ben Gibbert
41:42
Speaker 1: from Deathcap for Cutie and Jenny Lewis, who has been
41:46
Speaker 1: with a number of other sort of old country and
41:48
Speaker 1: alt rock. They start writing this music and literally mailing
41:52
Speaker 1: tapes back and forth to each other, and the first
41:55
Speaker 1: Postal Service album is this fascinating combination of odd electronic
42:03
Speaker 1: um music overlaid with a sort of old country sort
42:09
Speaker 1: of Yeah, you have to listen to it. It's actually
42:11
Speaker 1: quite charming and once you get past how initially confusing
42:16
Speaker 1: it seems. But they basically did an album the way
42:20
Speaker 1: you guys did the book, and today you can do
42:22
Speaker 1: all that digitally. And I think the thing too is
42:23
Speaker 1: a lot of people will say to me too, like
42:25
Speaker 1: you just said, like, oh my god, I can't believe
42:27
Speaker 1: you wrote a book, and you wrote another book books.
42:29
Speaker 1: I've written three books. Sin yeah, I wrote a book
42:32
Speaker 1: about the Walking Dead too, because that's my other sideline. UM,
42:36
Speaker 1: and people say, I can't believe you wrote a book.
42:37
Speaker 1: I've always wanted to write a book, but I can't.
42:39
Speaker 1: What I figured out early on is that it is
42:42
Speaker 1: an extremely mechanical process. There has to be a lot
42:45
Speaker 1: of thought that goes into analytics and yeah, but that's
42:49
Speaker 1: that's one element of it. The other the writing element,
42:52
Speaker 1: is extremely mechanical. And all you do is you say, okay,
42:55
Speaker 1: today is today. My deadline is this deadline. I have
42:57
Speaker 1: X number of days to write X number of words words.
43:00
Speaker 1: Do the division, do the math, figure out how many
43:02
Speaker 1: words you need to do per day, and you do
43:05
Speaker 1: that every day, no matter how long it takes, how
43:08
Speaker 1: short it takes. If you have a great day and
43:10
Speaker 1: you write two thousand words, then great. You can, you know,
43:13
Speaker 1: ratch it back a little bit the next day. If
43:15
Speaker 1: you have a terrible day and you only write a
43:17
Speaker 1: hundred words, you have to you have to amp it
43:19
Speaker 1: up the next day. You have to average that many
43:21
Speaker 1: words every single day until you're deadline, and you can
43:25
Speaker 1: do it it's it's it's it's work. It's hard, it's work,
43:30
Speaker 1: but you can do it when when you have to
43:32
Speaker 1: set it out, I think you have to set it
43:33
Speaker 1: out that way because if you set it out as
43:35
Speaker 1: here's my deadline and I need a book, and you
43:37
Speaker 1: have nothing, no structure to what you're doing in between,
43:40
Speaker 1: that's how you can kind of get lost in the weeds.
43:42
Speaker 1: When when people say they want to write a book,
43:45
Speaker 1: what they really mean is that they're subconsciously paraphrasing Dorothy Parker.
43:50
Speaker 1: They don't want to write a book, they want to
43:53
Speaker 1: have written a book, because the writing of the book
43:55
Speaker 1: is a lot of it. You describe it's heavy lifting.
43:58
Speaker 1: It's a bit of a grind exactly it is. But
44:00
Speaker 1: you seem to have been really enjoyed it. Well, I
44:02
Speaker 1: love it. I mean this is it's funny because I've
44:05
Speaker 1: been in this business since was my first journalism really
44:09
Speaker 1: twenty five plus years plus years, and for that entire time,
44:14
Speaker 1: I I always you know, look, anybody you know, like
44:18
Speaker 1: you want to be the guy at the middle of
44:19
Speaker 1: the story. I've always wanted to be the guy at
44:22
Speaker 1: the middle of story. And I never was the guy
44:24
Speaker 1: at the middle of the story, and in the journals newsroom,
44:27
Speaker 1: you would watch the guys and the girls in the
44:29
Speaker 1: middle of the story, and you'd see the other reporters
44:31
Speaker 1: who are covering a big covering the first story. We're there,
44:34
Speaker 1: the person there at the center of attention, there at
44:37
Speaker 1: the center of the big story, and it's great and
44:38
Speaker 1: you want it. For the first time in my career,
44:41
Speaker 1: I'm that person. And a lot of times you can
44:43
Speaker 1: go a whole career and never be that person. So
44:46
Speaker 1: I recognized that. I recognized that I'm in a very
44:49
Speaker 1: fortunate place and that I lucked out and getting interested
44:51
Speaker 1: in this early, and I kind of set myself up
44:53
Speaker 1: to be that person at the middle of the story.
44:56
Speaker 1: And now I'm there, and I just want to take
44:57
Speaker 1: advantage of it. So I love it again. I'm a
44:59
Speaker 1: news monkey. This is what I live for. This is
45:01
Speaker 1: all I want to do. So yeah, right, So you
45:04
Speaker 1: have you have two books on on blockchain and cryptocurrency.
45:07
Speaker 1: Is there another blockchain book, crypto book, bitcoin book in
45:12
Speaker 1: you or if you pretty much said everything you need
45:14
Speaker 1: to say about the topic, Uh, there's there's probably another book.
45:19
Speaker 1: I don't want to say. Definitely. It's funny because he's
45:21
Speaker 1: you know, it's at the launch event on that Tuesday night.
45:24
Speaker 1: People are saying to me immediately, oh, what's the next
45:26
Speaker 1: book about? Uh? And we got the I got the
45:31
Speaker 1: check for this book from my publisher, and my wife
45:33
Speaker 1: is very happy with that. It was all the money
45:35
Speaker 1: in the world. But by the way, if you want
45:37
Speaker 1: to earn a living writing books, if your name is
45:40
Speaker 1: and Stephen King of Michael Lewis, you're you're going to
45:43
Speaker 1: be disappointed. You're not gonna do it as a full
45:45
Speaker 1: time thing. But uh, my wife, we got that check
45:48
Speaker 1: and I immediately put it in the bank and she
45:50
Speaker 1: was happy with that, and she said, Okay, what's the
45:51
Speaker 1: next next book? You gotta keep Yeah, she's like, you
45:55
Speaker 1: gotta keep working. You gotta produce. You're the going you
45:57
Speaker 1: want to be the producer, you gotta go produce that.
46:01
Speaker 1: I mean, there will be There will definitely be another book.
46:04
Speaker 1: Whether it will be another bitcoin book, I I don't know.
46:06
Speaker 1: And Mike and I kind of shoot around ideas. There's
46:09
Speaker 1: just so many stories to tell in this, so yeah,
46:11
Speaker 1: I could definitely see another book coming out of it.
46:13
Speaker 1: So you mentioned the social network of of sort of libertarians,
46:18
Speaker 1: and um, uh cipher punk's libertarians anarchists. So the question
46:26
Speaker 1: that had come up um from Mike bat Nick in
46:28
Speaker 1: my office, who helps me put these questions together, is
46:32
Speaker 1: what's the overlap between the crypto enthusiasts and the gold bugs,
46:37
Speaker 1: because there seemed to be some similar If you were
46:40
Speaker 1: to draw a Venn diagram, it feels like the enthusiasm
46:45
Speaker 1: for something that is a speculative um asset that may
46:50
Speaker 1: or may not be worth a whole lot more or
46:52
Speaker 1: a whole lot less than a few years. They seem
46:55
Speaker 1: to have similar characteristics. They do. And the interesting thing
46:58
Speaker 1: about both the gold bugs and the bitcoiners is you
47:03
Speaker 1: can make a rational argument that you know, the world
47:07
Speaker 1: is an imperfect place and if you're investing in this world,
47:10
Speaker 1: things are gonna go up and things gonna go down,
47:12
Speaker 1: and you should probably have a hedge against bad times.
47:15
Speaker 1: What's that hedge, Well, gold is is, you know, traditionally
47:20
Speaker 1: been a store of value and you know, stable asset.
47:24
Speaker 1: You should have a little bit of gold in your portfolio.
47:27
Speaker 1: A bitcoin they're trying to set up as a digital
47:30
Speaker 1: version of that. So if you're looking to have a
47:31
Speaker 1: hedge against the world, something that when everything else goes
47:34
Speaker 1: down this is sort of stable over here, and it's
47:36
Speaker 1: a little different in my God, you can you can
47:39
Speaker 1: make that as a sort of rational argument, but it
47:44
Speaker 1: gets that message gets lost somewhere. There's a reason they
47:47
Speaker 1: call them gold bugs because they get crazy about it,
47:50
Speaker 1: and the bitcoin people they get crazy about it, and
47:52
Speaker 1: suddenly you go from this sort of rational argument about well,
47:55
Speaker 1: you should have a hedge against bad times, it might
47:58
Speaker 1: be this too. Gold is everything in the world is terrible.
48:02
Speaker 1: Bitcoin is everything in the world is terrible. And so
48:05
Speaker 1: they do have a sort of similar psychology in that
48:08
Speaker 1: they get so caught up in the idea that the
48:10
Speaker 1: world is terrible and everything is going to go to
48:12
Speaker 1: hell in a hand basket and we're just waiting for
48:13
Speaker 1: the next crash that you should put everything nobody should
48:18
Speaker 1: ever put everything into gold or bitcoin. And I think
48:20
Speaker 1: that's insane, but it's sometimes on it feels like that's
48:22
Speaker 1: their argument. So it's not their argument. My belief, and
48:27
Speaker 1: I am obviously biased. My belief is that is their
48:31
Speaker 1: post hoc rationalization. If they own all this gold and
48:35
Speaker 1: if the world goes to hell, gold or maybe bitcoin
48:38
Speaker 1: is worth a whole lot more, they start internalizing the
48:43
Speaker 1: concept that it's not my own gold because it's a
48:47
Speaker 1: possibility of the world going to hell. It's our own gold.
48:50
Speaker 1: The world has already gone to hell, and therefore this
48:52
Speaker 1: gold should be worth so much. So we listen, everybody
48:55
Speaker 1: does it. We all lie to ourselves. The easiest person
48:58
Speaker 1: to fool is yourself. Um, talk yourself into an at everything, absolutely,
49:03
Speaker 1: and so you you end up with So So that's
49:06
Speaker 1: what I've kind of find fascinating is there's not a
49:09
Speaker 1: cold calculating what is the value. Here's a price to
49:11
Speaker 1: book ratio. It's filter for these it's we don't know
49:16
Speaker 1: what this value is. But I'm so emotionally in tied
49:19
Speaker 1: up in it, not only my personal net worth, but
49:23
Speaker 1: my sense of self and how smart I think I am.
49:25
Speaker 1: And therefore this proves it. All objectivity goes goes out
49:30
Speaker 1: the window. And that's why I kind of I think
49:32
Speaker 1: Mike was looking at them as hey, here are some
49:35
Speaker 1: very similar or characteristics with two distinct groups. So the
49:39
Speaker 1: next question is what sort of overlap is there in
49:41
Speaker 1: terms of are the crypto people also holding gold and
49:45
Speaker 1: vice versa, or have those two groups never the twain
49:48
Speaker 1: shall meet. I mean, I'm sure there are people in
49:50
Speaker 1: this world who are holding bitcoin and gold, but I
49:53
Speaker 1: think the real bitcoin you know, uh, aficionados they think
50:00
Speaker 1: bitcoin is the better gold. So they're probably not you know,
50:04
Speaker 1: they're not holding bitcoin and gold, they're just holding bitcoin.
50:07
Speaker 1: The people are doing it are pride people who are gold,
50:10
Speaker 1: people who think the right right, right. Um, So let's
50:17
Speaker 1: talk about some of the companies that have grown up
50:21
Speaker 1: around this. So we mentioned Mount Cox, which very famously
50:25
Speaker 1: blew up and it was hacked then I want to
50:27
Speaker 1: say a hundred million dollars or something. I think they
50:32
Speaker 1: usually they lost eight hundred thousand bitcoin. They later recovered
50:35
Speaker 1: two hundred thousand bitcoin. And what's interesting is so they
50:38
Speaker 1: lost six hundred thousand bitcoin, which at the time I
50:40
Speaker 1: think it was worth four hundred millions something like that. Uh.
50:44
Speaker 1: The crazy thing now that they're trying to figure out too,
50:47
Speaker 1: is that that two hundred thousand that they recovered is
50:49
Speaker 1: now worth more than everything they lost. Who gets it?
50:53
Speaker 1: Who gets it? They have to distribute it. Do the
50:56
Speaker 1: creditors get it, does the company hold it? Do you
50:58
Speaker 1: sell it at what it was worth? Do you sell
51:01
Speaker 1: it what it's worth? Now? You know, like this has
51:03
Speaker 1: become a whole different issue with Mountco. But mount Cox
51:06
Speaker 1: was basically a one man company. It was a guy
51:10
Speaker 1: who had bought a website from another guy and just
51:13
Speaker 1: set it up and because there were no real exchanges,
51:15
Speaker 1: it just got all that traffic. It was never really
51:17
Speaker 1: a very well thought out company. What coin Base is
51:22
Speaker 1: another company that started in and initially I think they
51:26
Speaker 1: were just trying to build bitcoin wallets. So anyhow, so
51:29
Speaker 1: in another word, it is a place to say digital
51:31
Speaker 1: account where, yes, where you hold your bitcoin, although apparently
51:35
Speaker 1: lots of these have gotten halfed over the years. Well,
51:37
Speaker 1: you know, interesting thing about bitcoin is though one of
51:41
Speaker 1: the core ideas was that you are your own bank.
51:45
Speaker 1: You are holding your own money. You're responsible for your
51:48
Speaker 1: own money. You're not putting your money at a bank
51:50
Speaker 1: and then the bank gets to do whatever it wants
51:52
Speaker 1: with your money. You have it, so your wallet, your
51:56
Speaker 1: digital wallet, your account that is like that's the equivalent
51:59
Speaker 1: of your bank account. You are in control of it, though,
52:02
Speaker 1: so you have to secure it. You have to make
52:04
Speaker 1: sure that the security measures are there. You have to
52:07
Speaker 1: hold the private key, the the account number to it,
52:10
Speaker 1: never lose it. If you lose it, it is gone.
52:12
Speaker 1: You are the only person forever the only person with
52:14
Speaker 1: access to it. You lose the key, it's gone. There's
52:17
Speaker 1: been some estimates that twenty plus percent of bitcoin keys
52:21
Speaker 1: have been lost and that money has gone. Yeah, which
52:23
Speaker 1: again gets to my whole point I was making earlier
52:25
Speaker 1: about liquidity. I mean, if a quarter of all the
52:27
Speaker 1: bitcoin that exists can never trade, that's huge. But anyhow,
52:32
Speaker 1: coin Base started out building a wallet. They have grown.
52:35
Speaker 1: They now have an exchange. I think they do some
52:37
Speaker 1: uh and you know, enterprise business. They work with companies
52:40
Speaker 1: trying to implement bitcoin processes and everything. Uh. They have
52:45
Speaker 1: become probably you could safely say the premier bitcoin company.
52:50
Speaker 1: I mean they've kind of gotten into the mainstream. At
52:52
Speaker 1: one point last year in seventeen, their online app was
52:56
Speaker 1: the number one app in the Apple Store. It rose
52:59
Speaker 1: to the top up. Estimates are they made a billion
53:02
Speaker 1: dollars last year. They're making a lot of I mean
53:05
Speaker 1: a lot of money. Now people are realizing is in
53:08
Speaker 1: operating as a quote unquote exchange. I almost say quote
53:11
Speaker 1: unquote for coin Base their regulated company. Uh, they registered
53:15
Speaker 1: with the New York Department Financial Services. But a lot
53:17
Speaker 1: of these exchanges are quote unquote exchanges. They're just websites
53:20
Speaker 1: where people are trading back and forth. But there's a
53:22
Speaker 1: lot of money to be made in that. So right
53:24
Speaker 1: now the big money is being made by you know,
53:27
Speaker 1: offering trading services, the tel Aviv company. Let's see if
53:31
Speaker 1: I can pronounce this right. Commuter is commuters I think
53:35
Speaker 1: it is. Yeah, it's interesting. And again, you know a
53:38
Speaker 1: lot of these companies will come up and you have
53:40
Speaker 1: to realize that these are startups. They have ideas, but
53:44
Speaker 1: they have to build it and implement it, survive fund
53:47
Speaker 1: revee to build a business. Right, coin based started in twelve.
53:51
Speaker 1: There are a lot of companies that started in twelve
53:53
Speaker 1: that didn't make it. Coin Base made it. They built
53:55
Speaker 1: a business. Uh, Commuters is an interesting idea. It's sort
53:59
Speaker 1: of a bitcoin based version of Uber. So in other words,
54:02
Speaker 1: Uber is this great popular app everyone. You don't have
54:04
Speaker 1: to explain what it is now at this point, but
54:07
Speaker 1: it is a piece of software that's owned by a company.
54:10
Speaker 1: The idea behind Commuters is to have a piece of
54:14
Speaker 1: software that is not owned by a company that operates
54:17
Speaker 1: the same way Uber does. It's about hooking up riders
54:20
Speaker 1: and drivers, but the program operates the way bitcoin operates
54:24
Speaker 1: on a decentralized network of computers. That's it. That's the
54:27
Speaker 1: idea behind it. Uh, it's really interesting. I don't know
54:31
Speaker 1: how far they're getting with it yet. I was actually
54:33
Speaker 1: went online line last night trying to find some updates
54:36
Speaker 1: on how they're doing, and I couldn't really find anything,
54:38
Speaker 1: which is never a good sign. No offense commuters. I
54:40
Speaker 1: hope you make it great, good luck, But again, interesting idea,
54:44
Speaker 1: and there are a lot of interesting ideas out there.
54:47
Speaker 1: At some point you have to build a business on it.
54:49
Speaker 1: What else is an interesting idea built around blockchain? A
54:52
Speaker 1: lot of the hot ideas and I think these are
54:54
Speaker 1: going to be difficult to build quite frankly. A lot
54:56
Speaker 1: of the hot things are people want to build the
55:00
Speaker 1: platform now right. I mean the idea is you look
55:04
Speaker 1: at Ethereum, which is essentially an operating system. It's an
55:08
Speaker 1: operating system, it's like Android, it's like iOS on your mobile,
55:12
Speaker 1: but it's a decentralized operating system, rather than Apple owning
55:15
Speaker 1: it for computers or for computer for no, for computers.
55:20
Speaker 1: So you would download the software you get on the network,
55:22
Speaker 1: and then anybody who wants to build an Apple or
55:25
Speaker 1: service on top of that platform build it and then
55:27
Speaker 1: you have access to it if you're on the Ethereum network.
55:29
Speaker 1: That's what it is. So what you have now a
55:32
Speaker 1: lot of people and a lot of people have raised
55:34
Speaker 1: money to build their own version of the platform. So
55:37
Speaker 1: now you have this competition. Everybody wants to build the
55:41
Speaker 1: platform the next Android, Android for mobile, Android for mobile, decentralus,
55:47
Speaker 1: open source, decentralized. It's a good idea, but it's going
55:51
Speaker 1: to be hard. You have to build up all the
55:53
Speaker 1: network effects. You have to build up the community, you
55:54
Speaker 1: have to build up users, you have to have people
55:57
Speaker 1: coming on and building services on top of it that work.
56:00
Speaker 1: Uh So that's a really that's a big bet kind
56:02
Speaker 1: of thing. You know, that's pie in the sky. I'm
56:04
Speaker 1: gonna build the next Ethereum. What meanwhile, Ethereum is still
56:07
Speaker 1: trying to build the next Ethereum. What about other coins?
56:10
Speaker 1: Which is ethereum? So you have Bitcoin as the best.
56:13
Speaker 1: There's probably fifteen hundred coins whatever you want to call
56:17
Speaker 1: the cryptocurrencies, tokens coins, you know, yeah, this probably is
56:21
Speaker 1: at least not off of the same blockchain, not off
56:23
Speaker 1: the same blockchain. The idea because bitcoin is open source software,
56:28
Speaker 1: anybody can take that program rewrite it to their own specifications.
56:33
Speaker 1: So what are the top five coins? Out the top five,
56:37
Speaker 1: and I have to say of those fifteen hundred, I
56:40
Speaker 1: would my personal bet is no more than a dozen
56:43
Speaker 1: have any chance of ever becoming something. Most of them
56:46
Speaker 1: are just you know, either they're flat out pump and
56:49
Speaker 1: dump schemes or their well meaning their well meaning efforts
56:53
Speaker 1: that are not going to go anywhere. Yeah, I mean
56:55
Speaker 1: it's Look, it's hard to get a community of people
56:58
Speaker 1: to come together and agree to use your thing. Uh, Bitcoin, Ethereum,
57:02
Speaker 1: Ripple light Coin are probably the four major ones. Then
57:06
Speaker 1: you have offshoots of that. You have bitcoin Cash, which
57:09
Speaker 1: is an offshoot of Bitcoin. You have Ethereum Classic, which
57:11
Speaker 1: is an offshoot of Ethereum. Those are probably the half
57:14
Speaker 1: dozen that I think have the largest market value right
57:18
Speaker 1: now combined. Um. There are a couple others out there,
57:22
Speaker 1: but they're gonna have a harder time. But that's really it.
57:25
Speaker 1: There's not there are a lot of them out there.
57:28
Speaker 1: I think there are very few that have a real
57:29
Speaker 1: chance of kind of building a viable future for themselves.
57:32
Speaker 1: So I have I have two more coin questions before
57:35
Speaker 1: I get to my standard questions. One is explain what
57:40
Speaker 1: forking is, okay, and the other is uh i c oh.
57:45
Speaker 1: So so let's start with forking. Alright. So forking is
57:49
Speaker 1: it's a it's a term. It's a software term. Basically,
57:52
Speaker 1: what you're doing is you are taking the software and
57:56
Speaker 1: you are update, you're updating it. You're creating a new
57:58
Speaker 1: version of it, and you can have is a soft
58:02
Speaker 1: fork and a hard fork. In a soft fork, you
58:05
Speaker 1: are updating the software, coming up with a new version
58:07
Speaker 1: of it, but the older versions of the software will
58:09
Speaker 1: still work with it. Think of when Microsoft comes up
58:12
Speaker 1: with a new version of Word. You can download the
58:14
Speaker 1: new version of Word, or you can keep working off
58:16
Speaker 1: your old version of Word. They're still A hard fork
58:22
Speaker 1: is where there's a new version of the software but
58:24
Speaker 1: it is incompatible with the old version of the software.
58:28
Speaker 1: So say Microsoft comes out and says, well, we have
58:30
Speaker 1: a new version of Word that you have to download
58:32
Speaker 1: or the old version won't be compaled. That's a hard fork.
58:36
Speaker 1: In open source, this becomes a policy, It really becomes
58:39
Speaker 1: a political tool. Um, if there's a community that wants
58:42
Speaker 1: certain features and they're not getting them, they can hard
58:46
Speaker 1: fork the software. They can come up with their own
58:48
Speaker 1: version of every everyone has to come along or not.
58:53
Speaker 1: And I c O stands for initial coin offering. Uh,
58:58
Speaker 1: and this is a very nascent field. It's very contentious
59:02
Speaker 1: eyes when I asked that, it's just it's such a
59:08
Speaker 1: it's such a great story. Again, remember everything for me
59:11
Speaker 1: is the story. It is a great, great story. It
59:14
Speaker 1: is so much fun, it's so interesting. There's so many
59:16
Speaker 1: angles to it. So and I see O his initial
59:18
Speaker 1: coin offering. It's it's a way for companies to to
59:21
Speaker 1: raise money. It's kind of a cross between crowdfunding and
59:24
Speaker 1: an I p O. So a startup says. What a
59:27
Speaker 1: startup says is we have this digital product that we're building.
59:31
Speaker 1: We have this service. We are going to attach a
59:33
Speaker 1: token to it. You can buy the token and give
59:36
Speaker 1: us money, and we're gonna sell it. And that's it.
59:40
Speaker 1: That's really what it is. What I think happened in
59:43
Speaker 1: Seen was you had a price rally in Bitcoin and
59:45
Speaker 1: ethereum and a couple of the other coins. So people
59:47
Speaker 1: who were holding we're making tons of money. But again
59:51
Speaker 1: there's not much you can do with this stuff besides
59:53
Speaker 1: trade it. So they're sitting on all these paper profits,
59:57
Speaker 1: paper profits, digital profits without much to do with it.
1:00:00
Speaker 1: Here comes this other trend of the I c O
1:00:02
Speaker 1: startups saying, hey, invest in us, we could be the
1:00:05
Speaker 1: next hot thing. So you have a group of people
1:00:07
Speaker 1: who have a lot of money and nothing to do
1:00:08
Speaker 1: with it, and you have a group of companies over
1:00:10
Speaker 1: here saying we're gonna be the next hot thing. Those
1:00:12
Speaker 1: two things merge, they bang into each other, and you
1:00:16
Speaker 1: have this unbelievable speculative menia. The I c O market
1:00:20
Speaker 1: takes off, and I think it was it was six
1:00:22
Speaker 1: billion was raised last year via this method. Uh it is.
1:00:26
Speaker 1: It's most of which no one expects to do anything anything, virtually,
1:00:30
Speaker 1: all of which everyone expects will be dead money in
1:00:33
Speaker 1: the end. Amazing. All right, So let's get into my
1:00:36
Speaker 1: favorite questions. These are what I ask all of my guests.
1:00:41
Speaker 1: So let's jump into our favorite questions. Tell us the
1:00:44
Speaker 1: most important thing people don't know about your background. I
1:00:49
Speaker 1: don't know. I don't know if this is the most
1:00:51
Speaker 1: important thing, but and I'm probably important thing. I'm probably
1:00:55
Speaker 1: gonna expose myself here and maybe, actually maybe people would
1:00:59
Speaker 1: figure this out on their own. I'm basically self taught.
1:01:03
Speaker 1: I didn't go to school for journalism. I didn't go
1:01:05
Speaker 1: to school for finance. I didn't go to school for
1:01:06
Speaker 1: business or economics. I was an English major. Got out
1:01:09
Speaker 1: of college, needed a job and there was a newspaper
1:01:11
Speaker 1: in my town that was hiring. So I applied for it.
1:01:15
Speaker 1: And I knew the rudimentary writing and editing skills, so
1:01:19
Speaker 1: they hired me and that was it. So I learned
1:01:22
Speaker 1: everything I learned about journalism I learned on the job.
1:01:25
Speaker 1: Everything about finance I learned in my twenty years of
1:01:27
Speaker 1: working at Dow Jones and reading The Big Picture and
1:01:30
Speaker 1: some other blood. By the way, there was a long
1:01:33
Speaker 1: standing argument that said all of education is a function
1:01:36
Speaker 1: of giving students the tools to teach themselves. Yeah, well
1:01:40
Speaker 1: you know what the tools I got. I went to
1:01:42
Speaker 1: Fairfield University in Connecticut, which is a Jesuit school, And uh,
1:01:46
Speaker 1: the Jesuits give you a great education. They really believed
1:01:50
Speaker 1: them in New York as well. Right for them in
1:01:51
Speaker 1: New York as well. Uh. They are big on teaching
1:01:54
Speaker 1: you how to think, how to analyze, and giving you
1:01:57
Speaker 1: a broad introduction to everything. So I got a great
1:02:00
Speaker 1: I actually got a great education in learning how to
1:02:04
Speaker 1: think what you can apply to anything. So who are
1:02:08
Speaker 1: some of your early mentors. My early mentors were they're
1:02:13
Speaker 1: gonna be people you never heard of. Right. My first
1:02:15
Speaker 1: editor was a guy named Ward Mealy. My first editor
1:02:18
Speaker 1: at at the Verona Cedar Grove Times run in New Jersey.
1:02:21
Speaker 1: My first editor at Dow Jones was this guy Pete Rooney.
1:02:25
Speaker 1: And they were great mentors. They were old school journalists. Right,
1:02:29
Speaker 1: work hard, don't f with the news, go out and
1:02:32
Speaker 1: have a beer after work. This is just a job.
1:02:34
Speaker 1: Don't take it too seriously. Uh, And that was what
1:02:37
Speaker 1: they kind of taught. They kind of taught me how
1:02:39
Speaker 1: journalists operate, and and that was great. So my my,
1:02:43
Speaker 1: you know, look, I started in right, I mean, I
1:02:46
Speaker 1: started pre Internet era, so I have a little bit
1:02:49
Speaker 1: of a foot in the old, the old journalist world.
1:02:53
Speaker 1: And those those guys were more early mentors, and they
1:02:54
Speaker 1: were great guys, absolutely great guys. I picture you with
1:02:57
Speaker 1: the fedora with a little press for a band of that. Um.
1:03:01
Speaker 1: So you mentioned, uh you started in the nineties. Who
1:03:06
Speaker 1: were the journalists, who were the writers who influenced your
1:03:09
Speaker 1: approach to writing? Right? Uh? Some of them were actually
1:03:16
Speaker 1: let's see, you know you can read that. I'm impressed.
1:03:20
Speaker 1: I have classes classes, didn't do anything without classes anymore. Um,
1:03:25
Speaker 1: you know, it's it's funny a lot of And I'm
1:03:28
Speaker 1: not just trying to kiss up to you because you
1:03:30
Speaker 1: already gave me the interview and imagine you're gonna publish this.
1:03:33
Speaker 1: But I loved I know, I'm just like I loved
1:03:36
Speaker 1: the Big Picture the blog, you know, back in the
1:03:38
Speaker 1: early auts, when you were doing it, that was that
1:03:40
Speaker 1: was a big influence on me. James Stewart, Denna Thieves
1:03:44
Speaker 1: was a great book. Daniel Jurgan, the Prize. Those were
1:03:47
Speaker 1: great books to read, you know, they were great storytelling.
1:03:51
Speaker 1: They really kind of especially Denna Thieves got it all
1:03:54
Speaker 1: the craziness of the eighties that was going on in
1:03:56
Speaker 1: Jurigan's whole history of the oil industry was really fascinating.
1:04:00
Speaker 1: So those are those are some of my early influences.
1:04:04
Speaker 1: Tell us about this is everybody's favorite question. You mentioned
1:04:07
Speaker 1: Denna Thieves and the Prize. What are some of your
1:04:10
Speaker 1: favorite books, by the way, finance, non finance, unfiction, anything,
1:04:15
Speaker 1: most of it's it's more fiction. My favorite, my favorite
1:04:18
Speaker 1: book absolutely of all time is Zenna The Art of
1:04:21
Speaker 1: Motorcycle Makers. Repeatedly in college, did you yeah, I did too.
1:04:26
Speaker 1: I mean I not only did I read it repeatedly
1:04:28
Speaker 1: in college, I there was a point in my life
1:04:30
Speaker 1: where I was probably reading that whole book once a year.
1:04:33
Speaker 1: I mean, I just know people do that. So it's
1:04:35
Speaker 1: such a great book. Uh. That is, without a doubt,
1:04:38
Speaker 1: my favorite book. Then a lot of others. I mean
1:04:41
Speaker 1: there's a lot of other stuff. I think Dubliners by
1:04:43
Speaker 1: James Joyce's story short story collection, I just think that is.
1:04:47
Speaker 1: I think James Joyce is probably the greatest English language
1:04:51
Speaker 1: writer ever. You're not the first person who knows. I'm
1:04:54
Speaker 1: sure I'm not, but I think he is. And and
1:04:56
Speaker 1: like you know, Ulysses and and it's his novels can
1:05:01
Speaker 1: kind of you can get lost in them. They're difficult,
1:05:03
Speaker 1: but the short stories are unbelievable. They're great. Uh, this
1:05:07
Speaker 1: is gonna sound odd. I guess Meditations by Marcus Aurelius.
1:05:11
Speaker 1: Ryan Holiday just was talking about. I'm not kidding, that's
1:05:15
Speaker 1: one of my favorite books. That's in on my bookshelf.
1:05:17
Speaker 1: I turned to it off. Have you read his book
1:05:19
Speaker 1: The Daily Stoic? I have not, but I know who
1:05:22
Speaker 1: you're talking about. That is something you should check out.
1:05:25
Speaker 1: If you should if you like market, if you like meditations,
1:05:28
Speaker 1: check that out. You know what else, Give me one more,
1:05:31
Speaker 1: give you one more. I mean just giving me. I
1:05:37
Speaker 1: mean most of Hemmingway a lot of carouac. I think
1:05:41
Speaker 1: Fitzgerald was a great writer. I think it was a
1:05:43
Speaker 1: good I had a good command of the language. But
1:05:45
Speaker 1: I don't think he was a great storyteller, like I
1:05:47
Speaker 1: think if you look at Great Catsby, there's no real
1:05:49
Speaker 1: story there, which is I think why all the movie
1:05:51
Speaker 1: adaptations fail. The richer difference. I was on a flight
1:05:57
Speaker 1: the other day and I had been carrying him own
1:06:00
Speaker 1: The Old Man in the Sea, only like a hundred
1:06:03
Speaker 1: and something pages, And I had this thin book in
1:06:07
Speaker 1: my bag for weeks, and I figured, let me just
1:06:10
Speaker 1: bang out the first chapter and through. Six hours later
1:06:14
Speaker 1: we land and I had finished the book, and I
1:06:16
Speaker 1: was debating going back and reading it. Hemingway is a
1:06:19
Speaker 1: master of the language, mastering language, a master storytell Yes.
1:06:24
Speaker 1: I think people get caught up in his his persona,
1:06:27
Speaker 1: that sort of tough guy thing, uh, and they kind
1:06:30
Speaker 1: of miss his ability to write. Unbelievable writer. And Old
1:06:34
Speaker 1: Man in the Sea is just it's a master and
1:06:36
Speaker 1: it's so beautiful. The funny thing is it's so sensitive
1:06:40
Speaker 1: and so perceptive. It stands in stark contradiction to that
1:06:44
Speaker 1: exact guy ex drinking woman ezing. No Hemingways. I think
1:06:48
Speaker 1: Hemingway is a great writer. Yeah again not the first person. Yeah,
1:06:53
Speaker 1: have said that with me. Um, We'll give me one
1:06:55
Speaker 1: other Hemingway. But if you if someone says, hey, I've
1:06:58
Speaker 1: read Old Man, see what else should I read by Hemingway.
1:07:02
Speaker 1: The first one I read by Hemingway that I really
1:07:05
Speaker 1: fell in love with when I was fifteen, a sophomore
1:07:07
Speaker 1: in high school was Sun Also Rises, which was interesting
1:07:10
Speaker 1: at the time. But you know it's funny is at
1:07:13
Speaker 1: the time I really didn't understand half of what was
1:07:15
Speaker 1: going on in that book. I was fifteen years old.
1:07:18
Speaker 1: I was just in tranced by the way. Too young,
1:07:20
Speaker 1: too young. I went back and read it years later
1:07:22
Speaker 1: and kind of caught everything I was missing. But I
1:07:24
Speaker 1: mean all his all his early novels before, I mean
1:07:28
Speaker 1: Sun Also Rises? Uh, farewell to arm Well, that's a
1:07:32
Speaker 1: master piece. What's the one set in the Spanish Civil
1:07:36
Speaker 1: War and blanking on the name now obviously famous for
1:07:40
Speaker 1: Whom the Bell Tolls? For Whom the Bell Tolls? Yeah.
1:07:42
Speaker 1: I mean those are all great works. And his early
1:07:45
Speaker 1: short story collections are great too, They're very very good. Yeah,
1:07:48
Speaker 1: I really like his short So I'm a big Hemingway fan. Um,
1:07:52
Speaker 1: so since you joined finance? What has changed since you
1:07:57
Speaker 1: joined finance journalist? Him? Right, that's what I joined. Let
1:08:01
Speaker 1: me ask that question again, Oh, to have and have not?
1:08:04
Speaker 1: I haven't have not such a spectacular movie too. Um,
1:08:07
Speaker 1: since you joined financial journalism? What has changed in that industry?
1:08:14
Speaker 1: I'll tell you what a broaden it a little bit.
1:08:16
Speaker 1: I'll just talk about journalism, because since I joined the
1:08:19
Speaker 1: journalism industry, what has really changed? You know the answer
1:08:26
Speaker 1: you want to give as well, everything's changed. What has
1:08:28
Speaker 1: really changed is the business model. The business model and
1:08:32
Speaker 1: journalism and and it's funny. When I got in, we
1:08:35
Speaker 1: were still we were making the pages by hand. We're
1:08:39
Speaker 1: we're printing out the pages. We had a big piece
1:08:41
Speaker 1: of oak tag on a light table. We would cut
1:08:44
Speaker 1: out the stories with an exact o knife and glue
1:08:46
Speaker 1: them to the page. I did that in college. Yeah,
1:08:48
Speaker 1: that's what I got into journal That's what we did.
1:08:51
Speaker 1: But journalism hasn't really changed the business the journey. What
1:08:56
Speaker 1: journalism's you know model is goal is has not changed.
1:09:00
Speaker 1: What has changed is the business model. The business model
1:09:04
Speaker 1: was blown to smither reens by the Internet. The idea
1:09:06
Speaker 1: that you could create a product, a hard product of newspaper,
1:09:10
Speaker 1: sell ads in it, and make a business on that
1:09:13
Speaker 1: is gone. The Wall Street Journal does a wonderful newspaper,
1:09:17
Speaker 1: it really does. I love our newspaper. The Times does
1:09:20
Speaker 1: a great newspaper. That that is a business model that
1:09:23
Speaker 1: has been blown to hell. And in my mind, nobody
1:09:27
Speaker 1: has actually figured out what the new business model is.
1:09:30
Speaker 1: I I think that the two papers your names, along
1:09:34
Speaker 1: with the Washington Post in the FT that have a
1:09:37
Speaker 1: paywall up that charged for online access, that's the model.
1:09:41
Speaker 1: And and it looks like the whole fake news and
1:09:46
Speaker 1: the whole Facebook Twitter real fake news, not what the
1:09:50
Speaker 1: President calls fake news, but actual Russian bots and fake
1:09:57
Speaker 1: news has become this kind of buzzy drive. It's it's
1:10:01
Speaker 1: propaganda and it is I'm hoping that sends more people
1:10:05
Speaker 1: into the arms of the Wall Street General, the New
1:10:08
Speaker 1: York Times, the Washington Post FT. Because I've written about noise,
1:10:12
Speaker 1: I've written about signal. You can't just take something off
1:10:15
Speaker 1: the web and say, oh, I read it on the internet.
1:10:17
Speaker 1: That's a joke now, you know. It's so maybe that
1:10:21
Speaker 1: will imbute to the benefit of the big because you know,
1:10:26
Speaker 1: I think it's interesting in that we think we're living
1:10:29
Speaker 1: in such a different time and everything is different, everything
1:10:31
Speaker 1: has changed, and it really hasn't. The tools have changed. Uh,
1:10:35
Speaker 1: Politicians have always lied, political parties have always spread, you know,
1:10:39
Speaker 1: lies about their opponents. I mean, these things are not new.
1:10:43
Speaker 1: Readily how readily it can influence. And the job of
1:10:46
Speaker 1: journalism has always been to independently verify facts, too, independently
1:10:52
Speaker 1: tell the truth as best as we can get to
1:10:55
Speaker 1: it at that time. That has not changed and that
1:10:58
Speaker 1: will continue to be what our business is. The problem
1:11:02
Speaker 1: is just trying to do that profitably. And I think
1:11:05
Speaker 1: what you're you know, you can see pro Publica is
1:11:08
Speaker 1: a really interesting effort. The Washington Post. Look what the
1:11:11
Speaker 1: Washington Post did. That was a big, publicly traded company
1:11:15
Speaker 1: that bought a lot of pieces when things were hot,
1:11:18
Speaker 1: things turned in, things turned out, They went private, they
1:11:20
Speaker 1: sold off a lot of the business. They got back
1:11:22
Speaker 1: to their core pieces, They got back to their core,
1:11:26
Speaker 1: which is Washington not that they did, and so the
1:11:31
Speaker 1: business what what we do hasn't changed. Trying to figure
1:11:35
Speaker 1: out a way to do it profitably. That is a
1:11:37
Speaker 1: big challenge for us right now. Tell us about a
1:11:39
Speaker 1: time you failed and what you learned from the experience. Uh, time,
1:11:43
Speaker 1: I failed. So for a while in the nineties, and
1:11:47
Speaker 1: I guess they're early aughts. I thought I was going
1:11:49
Speaker 1: to make a career as a screenwriter. Really yeah, I did.
1:11:53
Speaker 1: I thought I love movies, I like telling stories. I'm
1:11:56
Speaker 1: gonna be a screenwriter. Have you have you written a
1:11:58
Speaker 1: screen play? I've written like ten. Uh, you know, I
1:12:01
Speaker 1: bossom software, read some books, try to figure out what's
1:12:04
Speaker 1: the mind? How do you broad a screenplay? Wrote a
1:12:06
Speaker 1: bunch of them, never sold one. One day, this is
1:12:11
Speaker 1: before this is before bitcoin. So one day I'm walking
1:12:14
Speaker 1: down the street in New York City. If this really happened,
1:12:16
Speaker 1: I'm walking down street, New York City. A guy comes
1:12:18
Speaker 1: walking up the street. He's on his cell phone and
1:12:20
Speaker 1: he said, I hear him say this. He says, I've
1:12:23
Speaker 1: got one day to get a script to Steve Bouschemmy
1:12:25
Speaker 1: and I've got a million dollars. And I my first
1:12:29
Speaker 1: thought was, I've I've got a script. Oh my god,
1:12:33
Speaker 1: Like this is Opportunity walking up the street at you guys,
1:12:37
Speaker 1: says I've got a million dollars. I need to get
1:12:40
Speaker 1: a script to Steve Brushemy. And I'm thinking I have
1:12:43
Speaker 1: a script, and I literally within within five seconds is
1:12:47
Speaker 1: how fast it went. I literally talked myself out of
1:12:50
Speaker 1: going up to the guy and saying, I've got your
1:12:52
Speaker 1: script right now. I I said, girl, maybe my script
1:12:57
Speaker 1: isn't right for Steve Bouchemy. I don't if he's the
1:13:00
Speaker 1: best character, would he really be interested in? And I don't.
1:13:05
Speaker 1: Opportunity walked up the street with me right and I
1:13:09
Speaker 1: and I talked myself out of it. Why did I
1:13:13
Speaker 1: talk to myself? Why didn't I just who cares? If
1:13:16
Speaker 1: it's right for Steve Bush, Like, here's a guy looking
1:13:19
Speaker 1: to buy a script, I've got a script, talk to him.
1:13:22
Speaker 1: And I didn't do it, and I regretted it my
1:13:24
Speaker 1: whole life. And how I learned from it is I
1:13:28
Speaker 1: led to the books when I realized bitcoin was a story.
1:13:31
Speaker 1: I was not going to let it go. You were
1:13:32
Speaker 1: not gonna get Steve not. I was not gonna Steve
1:13:35
Speaker 1: Bushemy myself again. Tell us the sort of advice you
1:13:38
Speaker 1: would give to a millennial or someone who just graduated college.
1:13:41
Speaker 1: You said, I'm interested in becoming a journalist or writer. Yeah,
1:13:44
Speaker 1: I would say, it's really it's it's two words, don't stop,
1:13:52
Speaker 1: don't don't stop, And it's funny. I learned this. I
1:13:54
Speaker 1: actually learned you know, talk you talk about tennis. For
1:13:56
Speaker 1: a while, I was running. I was jogging. And what
1:13:59
Speaker 1: I realized doogging was that as long as I didn't
1:14:02
Speaker 1: give up, I could build up my endurance. Whether I
1:14:05
Speaker 1: ran for ten minutes or for an hour, whether I
1:14:08
Speaker 1: felt good, I felt bad, I was into it. I
1:14:11
Speaker 1: wasn't into it. As long as I kept doing it
1:14:14
Speaker 1: and convinced myself I was going to keep doing it,
1:14:16
Speaker 1: I would get better at it. So if I didn't
1:14:18
Speaker 1: run for a day, if I didn't run for two days,
1:14:19
Speaker 1: if I don't run for a week, I was going
1:14:21
Speaker 1: to go back to it and keep doing it. And
1:14:23
Speaker 1: I did that for a while, and eventually I got
1:14:24
Speaker 1: pretty good at it. And I realized too, like in
1:14:27
Speaker 1: your career, that is the only thing you can control,
1:14:30
Speaker 1: is you right, don't stop. Especially in journalism, journalism is
1:14:35
Speaker 1: a war of attrition. I have seen a lot of
1:14:38
Speaker 1: good writers over the years just give up and get
1:14:40
Speaker 1: out of the business. It's not an easy business. It's
1:14:42
Speaker 1: not a particularly lucrative business. It's hard to do if
1:14:46
Speaker 1: you really want to do it. Thought, if you love it,
1:14:48
Speaker 1: if you're a writer, if you just don't stop. And
1:14:52
Speaker 1: our last question, tell us what it is you know
1:14:54
Speaker 1: about writing, uh and the markets today that you wish
1:14:58
Speaker 1: you knew when you began. I mean one thing, This
1:15:04
Speaker 1: is gonna sound very cliche, but but there is there
1:15:07
Speaker 1: is no substitute for experience. And it kind of goes
1:15:09
Speaker 1: back to what we were both saying years ago. I
1:15:12
Speaker 1: was a bad writer and the only way I was
1:15:14
Speaker 1: going to get good at writing was by writing for years.
1:15:18
Speaker 1: That's it. There's literally no other way to get good
1:15:21
Speaker 1: at writing, but by writing. No. I thought it was
1:15:25
Speaker 1: a good writer. I thought it was a good writer.
1:15:28
Speaker 1: My very first story, I interviewed three guys who were
1:15:30
Speaker 1: at Pearl Harbor the day it was bombed. So we're
1:15:33
Speaker 1: doing a fiftieth anniversary and there were three guys at
1:15:35
Speaker 1: the local VFW who were at Pearl Harbor the day
1:15:38
Speaker 1: it was bombed, and I interviewed them on December and
1:15:42
Speaker 1: I wrote the story and I thought it was you
1:15:44
Speaker 1: interviewed them. I interviewed them in Pearl Harbor, No. Fifty
1:15:49
Speaker 1: years earlier years. So I interviewed them. I wrote the story.
1:15:54
Speaker 1: I thought it was a really good story. I got
1:15:56
Speaker 1: this such a good story. I have gone back to
1:15:58
Speaker 1: read that story. It's a terrible story. It's not not
1:16:02
Speaker 1: for the guys. The guys gave me great story. They
1:16:04
Speaker 1: were at Pearl Harbor. The story itself is terrible. There
1:16:06
Speaker 1: was nowhere me my writing that terrible. That's amazing. I
1:16:11
Speaker 1: missed your did rollout events at the New York Museum
1:16:16
Speaker 1: of Finance. It's the it's the Museum of American Finance,
1:16:20
Speaker 1: museum in downtown on Wall Street, and you what was
1:16:23
Speaker 1: that an event was Well, we were going to have
1:16:26
Speaker 1: it at the museum. They had some water damage, so
1:16:28
Speaker 1: we couldn't do it there. When they got that fixed up,
1:16:30
Speaker 1: I encourage everyone to go to the museum. Oh my god,
1:16:33
Speaker 1: it's great. It's absolutely great. So we held it up
1:16:36
Speaker 1: at Fordham Law School in Lincoln Center and it was, uh,
1:16:41
Speaker 1: you know, it was a launch event. But we had
1:16:44
Speaker 1: a uh, we had a you know, one of these
1:16:46
Speaker 1: quote unquote fireside chats which might conducted with Joe Lubin,
1:16:50
Speaker 1: who is a co founder of Ethereum, which is another
1:16:52
Speaker 1: cryptocurrency platform, And then we had a panel discussion which
1:16:56
Speaker 1: was myself, your colleague, Josh Brown, and the Winklevoss twins,
1:17:00
Speaker 1: Tyler and Cameron with the Winkle Vye is Now, so
1:17:05
Speaker 1: I talked about that actually, and yes, I gave you
1:17:08
Speaker 1: a hard time for not gave me grief. It was Tuesday's.
1:17:12
Speaker 1: I have a standing date on Tuesday's, so unbelieving. Yeah.
1:17:15
Speaker 1: I leaned over to Josh before it and I said,
1:17:16
Speaker 1: Barry coming and he said, no, no, it's it's Tuesday.
1:17:20
Speaker 1: It's like, what are you kidding me? So I have
1:17:25
Speaker 1: to you gave me grief, But I really have to
1:17:27
Speaker 1: share why that was an issue. So I am very
1:17:32
Speaker 1: late to the game of tennis. I picked it up
1:17:35
Speaker 1: in my mid fifties, right, I'm and I'm only in
1:17:40
Speaker 1: my mid fifties, right. And there's a longer story about
1:17:44
Speaker 1: a younger, much dumber, fourteen year old version of myself
1:17:48
Speaker 1: being offered tennis lessons by my mom and saying tennis.
1:17:52
Speaker 1: Who plays tennis? Fourteen year old idiot? So anyway, I
1:17:56
Speaker 1: start playing, and this is really a bizarre digression, but
1:18:02
Speaker 1: since you've been You tortured me about it on Twitter.
1:18:05
Speaker 1: I have to explain this, so that was private. I
1:18:08
Speaker 1: didn't give your heart. You d mned me, which was worse.
1:18:11
Speaker 1: Publicly people can trash me and I laugh, but privately
1:18:15
Speaker 1: it's like, oh, he really means this. I start playing tennis,
1:18:19
Speaker 1: and if you've never really played before, but you have
1:18:23
Speaker 1: some I hand coordination and have played other sports like baseball,
1:18:29
Speaker 1: you feel like you can hit the ball wherever you want,
1:18:32
Speaker 1: and I could place the ball anywhere in the court.
1:18:36
Speaker 1: I could catch that back mine anytime I want when
1:18:40
Speaker 1: I'm playing with other newbies. Then you start progressing and
1:18:43
Speaker 1: you start playing with people who have some skills, and
1:18:46
Speaker 1: now you want to be in that group. They're hitting
1:18:49
Speaker 1: the ball with some power, and suddenly merely swinging back
1:18:54
Speaker 1: doesn't get it done, and you start to learn you
1:18:58
Speaker 1: have to have the eight mechanics of your swing, the
1:19:03
Speaker 1: distance to the ball, the footwork, there are all these things,
1:19:06
Speaker 1: and it's classic meta cognition Allah Dunning Krueger. Where As
1:19:12
Speaker 1: you get better at something, you developed the ability to
1:19:15
Speaker 1: self evaluate. Right. You ask most people you're a decent driver,
1:19:18
Speaker 1: and you know how many people are above average drivers
1:19:20
Speaker 1: in a room, hands go up. Most of them you
1:19:24
Speaker 1: are not, so I be. I am. I am among
1:19:26
Speaker 1: the group that I have. I have become skilled enough
1:19:29
Speaker 1: at tennis to know I suck, right. That is a
1:19:34
Speaker 1: skill set to be able to say honestly, Oh, I
1:19:37
Speaker 1: really have a lot of work to do. So a
1:19:40
Speaker 1: friend who I was playing with, who also sucked, disappears
1:19:44
Speaker 1: for a few weeks, and he comes back, and we
1:19:46
Speaker 1: were pretty head to head, evenly matched, and he starts
1:19:51
Speaker 1: running me off the court. I'm like, dude, where did
1:19:53
Speaker 1: this come from? I got a new guy I'm taking
1:19:55
Speaker 1: lessons from. You can't get it to see him. He's
1:19:57
Speaker 1: sold out. He coaches a no, no, it's absolutely true,
1:20:03
Speaker 1: like the top people at a particular tennis facility. So
1:20:09
Speaker 1: one day and so I I asked, hey, you know
1:20:12
Speaker 1: i'd like to take my friend said he's taking lessons
1:20:14
Speaker 1: with you. I'd like to take a lesson. He's like sorry.
1:20:18
Speaker 1: So a couple of weeks go by and I'm still
1:20:19
Speaker 1: getting my ass kicked. This like a year ago, eight
1:20:22
Speaker 1: months ago, and maybe with September October, I get a
1:20:27
Speaker 1: text on my phone, Hey, I had a cancelation. If
1:20:29
Speaker 1: you want to take a lesson tonight. I'm free, so
1:20:32
Speaker 1: I go in August September, I go take a lesson.
1:20:36
Speaker 1: The next day, I'm playing with a bunch of people
1:20:38
Speaker 1: and the like. And by the way, the lesson, it
1:20:40
Speaker 1: was just one of those things where just a few
1:20:43
Speaker 1: little mechanical changes, keep your elbow down, turn this direction,
1:20:47
Speaker 1: make sure your shoulders are like stupid things that I
1:20:50
Speaker 1: can't believe in hindsight, nobody else told me. Um, and
1:20:54
Speaker 1: you're unaware of the I think it's called prior perception,
1:20:57
Speaker 1: where your various body parts are in space. So the
1:21:01
Speaker 1: next day I go in and I just amongst my
1:21:06
Speaker 1: you know, the junior crew, I do really well. And
1:21:10
Speaker 1: I pin him back and said, that was a great lesson. Let's, uh,
1:21:15
Speaker 1: let's do another one. He's like, listen, I'm fully booked.
1:21:18
Speaker 1: I teach six days a week. If you want a lesson,
1:21:21
Speaker 1: if somebody drops out, i'll get But but you're committing
1:21:24
Speaker 1: to that space every Tuesday at seven o'clock for forever
1:21:28
Speaker 1: or or for a year. So I'm like, I'm willing
1:21:30
Speaker 1: to do that because my game. You you made me
1:21:34
Speaker 1: better in one lesson, and I understand the rules of
1:21:37
Speaker 1: diminishing returns, but I'm in. You get a cancelation, I'm there.
1:21:41
Speaker 1: So a few weeks later go by, I get a cancelation,
1:21:44
Speaker 1: and now I have to commit to him for the
1:21:46
Speaker 1: next six months. So seven listen, if I had the
1:21:50
Speaker 1: pope on the panel, would you have blown off the tennants?
1:21:53
Speaker 1: I like this Pope, but you have to extend my regrets. Absolutely.
1:21:58
Speaker 1: And and by the way, I'm not like a I
1:22:00
Speaker 1: was been playing tennis for forty years and I'm insane.
1:22:02
Speaker 1: I've been playing for three years and wish I've been
1:22:05
Speaker 1: playing for forty years. So I feel like I have
1:22:07
Speaker 1: a lot of stuff to make up. That's five minutes
1:22:10
Speaker 1: of tennis that nobody who's listening to this gives. If
1:22:15
Speaker 1: you want to make it, if you want to make
1:22:16
Speaker 1: it interesting and not just a funny anecdote. I do
1:22:19
Speaker 1: think it's interesting that in your mid fifties you decided
1:22:22
Speaker 1: to pick up something that is brand new pro at
1:22:26
Speaker 1: obviously no offense, but I mean, I think that is
1:22:30
Speaker 1: so I think that's a thing that people kind of
1:22:33
Speaker 1: lose as they and I'm fifty two, folks, so I'm
1:22:35
Speaker 1: not like in my third you know, I think people
1:22:37
Speaker 1: lose the interest in new things. Oh no, I'm fascinating.
1:22:41
Speaker 1: I think that really is a problem. I'm fascinated by
1:22:44
Speaker 1: new things. But I'm said when old things go away.
1:22:48
Speaker 1: So I used to play softball, baseball and softball, and
1:22:51
Speaker 1: you hit a certain age and you just can't do
1:22:53
Speaker 1: that anymore. I used to play basketball. I I have
1:22:56
Speaker 1: I have some, I have some. I got game and
1:23:01
Speaker 1: I remember, like mid thirties, rolling my ankle and usually
1:23:05
Speaker 1: the next day and it just takes days and days
1:23:07
Speaker 1: and weeks to heal. And finally at forty, you know,
1:23:11
Speaker 1: you're fatter, you're slower, you win, You're you're So there's
1:23:16
Speaker 1: there's lots of stuff with that one last tennis thing, keenness,
1:23:21
Speaker 1: you haven't lost any listeners. They're still they're gone. It's
1:23:24
Speaker 1: just dude, it's just the two of them. They're still here.
1:23:26
Speaker 1: So tennis tennis has ruined the Matrix for me, the
1:23:31
Speaker 1: original Matrix movie, because if you because if you remember
1:23:36
Speaker 1: the movie The Matrix, the scene on the roof where
1:23:39
Speaker 1: he's leaning back, bullets are going by and she has
1:23:42
Speaker 1: to jump into the UI and fly the helicopter and
1:23:46
Speaker 1: she calls in, Hey, Tanka, I don't know how to fly.
1:23:49
Speaker 1: You hold on and they download remember, and now she
1:23:52
Speaker 1: could and it turns out that's not true. Hypothetically, if
1:23:58
Speaker 1: you're in any sort of compute dissimulation, and someone could
1:24:02
Speaker 1: download a skill set. And I have watched enough of Dartfish,
1:24:07
Speaker 1: which is an online collection of of basically every tennis
1:24:13
Speaker 1: stroke by every major player. You want to see how
1:24:16
Speaker 1: federal served, you want to see how aggassy backhands, you
1:24:18
Speaker 1: want to see, It's all there. It's an incredible service.
1:24:22
Speaker 1: It's effectively free. I don't know how they do this,
1:24:24
Speaker 1: but anyway, intellectually I understand exactly how to do a backhand,
1:24:31
Speaker 1: how to do a forehand, a drop shot. But actually
1:24:34
Speaker 1: developing the muscle memory to convert your intellectual understanding of
1:24:40
Speaker 1: the mechanics of a specific stroke to executing that stroke
1:24:45
Speaker 1: is this Giants to the matrix is not a real place.
1:24:49
Speaker 1: It is a computer program. They're not manipulating their bodies.
1:24:52
Speaker 1: They're manipulating digits digits. Completely understand that for you. But
1:25:00
Speaker 1: even with they're not in the physical world. They're inside
1:25:03
Speaker 1: a computer program. To the muscles they're manipulating are also
1:25:07
Speaker 1: even within so then within the simulation, within the simulation,
1:25:11
Speaker 1: I can't believe this conversation is within the simulation, there
1:25:14
Speaker 1: isn't even a then why have a fight, because all
1:25:18
Speaker 1: you're gonna do is download various fighting techniques and so
1:25:23
Speaker 1: everybody ends up with the same various things. Either of
1:25:28
Speaker 1: skill matters. But the point is that most people in
1:25:31
Speaker 1: the program don't realize they're in the program. This is
1:25:33
Speaker 1: only a small group of people who have figured out
1:25:35
Speaker 1: they can manipulate the program. But the agents who are
1:25:38
Speaker 1: within the program, but their program, they know their party,
1:25:44
Speaker 1: they are programs don't exist in the right word, that's right.
1:25:46
Speaker 1: So so theoretically, Agent Smith of course busts out. But
1:25:51
Speaker 1: theoretically shouldn't shouldn't every agent have at least this the
1:25:57
Speaker 1: downloadable skill set that they do. Just why until Neo
1:26:01
Speaker 1: comes there? Unbeatable? That's why they say to Neo, if
1:26:05
Speaker 1: you've see an agent, run because the agents were unbeatable
1:26:08
Speaker 1: until Neo. Who is the one? And I hate that
1:26:11
Speaker 1: whole like this is a little Jesus anyhow, but but
1:26:18
Speaker 1: to me, so so let's we'll we'll bring this back
1:26:21
Speaker 1: to bit. We're discussing digital technologies and the application of them.
1:26:27
Speaker 1: So you gave me grief about not coming and the
1:26:30
Speaker 1: whole launch, the whole tennis thing is I made a
1:26:34
Speaker 1: commitment on Tuesday's there's a sunk cost. I'm paying for
1:26:38
Speaker 1: the uh lesson whether I'm there or not. So I
1:26:42
Speaker 1: sort of feel like an obligation to Plus, I respect
1:26:46
Speaker 1: your commitment to your game. You know what there are?
1:26:51
Speaker 1: There are things that I am interested in that I
1:26:54
Speaker 1: know I have skills or abilities. I may not be
1:26:57
Speaker 1: able to win a Formula One race, but I get
1:27:01
Speaker 1: on a track and hold my own with just about
1:27:04
Speaker 1: any other amateur. I wish I had more track time.
1:27:07
Speaker 1: That's another area. Yeah, it's it's if you ever get
1:27:11
Speaker 1: a chance, go to Lime Rock take a uh AN
1:27:14
Speaker 1: Advanced driving course. Um, they're amazing. You realize you don't
1:27:20
Speaker 1: most people think they know how to drive. You discover
1:27:23
Speaker 1: again back to the medicognition. Oh really, I could keep
1:27:27
Speaker 1: a car on a lane and I can make a
1:27:28
Speaker 1: left turn, but I really don't have the ability to
1:27:31
Speaker 1: manage a car in a variety of So you you
1:27:34
Speaker 1: run through this whole. So. I like being competent at things.
1:27:39
Speaker 1: I like being good at things, and it was frustrating
1:27:42
Speaker 1: to find something that was fun that I sucked at
1:27:46
Speaker 1: and the better I got, the more I realized how
1:27:49
Speaker 1: poor I was, Like with each additional skill that was added,
1:27:53
Speaker 1: it was oh really, so you think like on a
1:27:57
Speaker 1: scale of one to team him a five and suddenly
1:27:59
Speaker 1: you realize, no, no, you're five on a scale of
1:28:01
Speaker 1: one to a hundred. Did you ever find that early?
1:28:05
Speaker 1: Because now, obviously, I mean, if you host a show
1:28:07
Speaker 1: called Masters in Business, you should be a master yourself.
1:28:09
Speaker 1: But I mean, and you're early in your career in
1:28:11
Speaker 1: the markets, did you ever find that dynamic, that same dynamic? Um,
1:28:16
Speaker 1: that's an interesting question. I've talked about this before. The
1:28:20
Speaker 1: training you. I started as a trader, and the trading
1:28:23
Speaker 1: you get is essentially they throw you in the deep
1:28:25
Speaker 1: end of the pool, and whoever drowns is in a
1:28:28
Speaker 1: trader anymore. And oh the people who managed too and you.
1:28:33
Speaker 1: One of the things I picked up quickly was cut
1:28:35
Speaker 1: your losses short. But when you're winning, uh loss was?
1:28:38
Speaker 1: I felt the loss very intensely and would would if anything,
1:28:43
Speaker 1: cut my losses too fast. You want to call them quickly,
1:28:46
Speaker 1: but not instantaneously, but so you eventually iterate and get
1:28:49
Speaker 1: better and better. But I was more fascinated not by
1:28:53
Speaker 1: that process, but why the people around me on the
1:28:56
Speaker 1: long trading desk who were effectively all doing the same thing.
1:29:00
Speaker 1: How come this person is making money this month and
1:29:02
Speaker 1: last month you lost money. How come that reversed the
1:29:05
Speaker 1: last money last month? Act I was losing money, this
1:29:08
Speaker 1: month is making it, and I it set me down
1:29:11
Speaker 1: the rabbit hole of behavioral finance. And and so so
1:29:17
Speaker 1: I was a decent trader. I made decent amount of money,
1:29:20
Speaker 1: but it was very volatile and inconsistent. Um I liked it,
1:29:25
Speaker 1: maybe a little too much. I loved it. It was
1:29:28
Speaker 1: it was, you know, looking for a vein. And so
1:29:31
Speaker 1: all of that stuff ends up going to well, if
1:29:35
Speaker 1: you want to have a career in finance, you're gonna
1:29:37
Speaker 1: make your wife crazy if you stay as a trader.
1:29:41
Speaker 1: So move to research. Moved to market analysis so that
1:29:46
Speaker 1: you'll make less base money but more consistently, and she won't.
1:29:51
Speaker 1: I'm not a stress monkey. She is. So it's like
1:29:54
Speaker 1: I'm like, hey, honey, how is today I lost a
1:29:56
Speaker 1: hundred grand? And she would go throw up. No, no,
1:29:58
Speaker 1: you understand that happened all the time. I'm about a
1:30:00
Speaker 1: hundred of them down. Stuff happens and they don't care.
1:30:04
Speaker 1: Now she she's a teacher. She wants ready, steady life.
1:30:08
Speaker 1: The thought of you lost four cars or half a house,
1:30:11
Speaker 1: what's wrong with you? Sometimes a position goes against you
1:30:15
Speaker 1: and you have limits of how much you're willing to
1:30:18
Speaker 1: accept losses, and you know it's everybody's style is different,
1:30:22
Speaker 1: and all of that led to where we are today.
1:30:27
Speaker 1: And by the way, ps, if you go back and
1:30:31
Speaker 1: listen to the early versions of Masters in Business, I
1:30:36
Speaker 1: find their unlistenable. They're terrible. Yes, only because that with
1:30:44
Speaker 1: a lot of my old Do you go back and
1:30:46
Speaker 1: read some of your own right, listen? I think Bailout Nation.
1:30:48
Speaker 1: If I was writing it today, I would have adopted
1:30:51
Speaker 1: a much more dispassionate tone. I would have been a
1:30:55
Speaker 1: little less flamboyant, and some of you you probably would
1:30:58
Speaker 1: have asked me to be your co oer there instead
1:31:00
Speaker 1: of Aaron. Aaron was not my co author. Adarin was
1:31:03
Speaker 1: my editor. Kept me from having these long, rambling digressions
1:31:09
Speaker 1: and things like Aaron is a wonderful editor. So so No,
1:31:17
Speaker 1: but I do find that I things that I wrote
1:31:20
Speaker 1: early in my career, the videos that I made earlier,
1:31:24
Speaker 1: because I did a live show for the Journal for
1:31:26
Speaker 1: a while. All the early stuff. I go back now
1:31:29
Speaker 1: and I cringe. I just cringe. I can't stand it.
1:31:33
Speaker 1: I actually can't stand it. I don't like it. I
1:31:35
Speaker 1: don't like who I was. That. It's funny because experience
1:31:39
Speaker 1: do you get criticisms and you think that person doesn't
1:31:41
Speaker 1: know what they're talking about. I'd be that person now
1:31:45
Speaker 1: criticizing me. I have that experience every five years or so.
1:31:48
Speaker 1: Every now it's five to ten years, where you look
1:31:50
Speaker 1: back what you were doing five years ago and you say, oh,
1:31:54
Speaker 1: what I'm doing and whatever it is? Radio writing, management, assets,
1:31:58
Speaker 1: what whatever? Distructing portfolios. I'm so much better at X,
1:32:03
Speaker 1: Y and Z today than five years ago, and I
1:32:06
Speaker 1: assume five years from now, I'm going to look back
1:32:08
Speaker 1: and say, what were you doing in talking about tennis
1:32:12
Speaker 1: and trading? It's you clearly have have no idea how
1:32:16
Speaker 1: to host a radio show. And I will tell you
1:32:20
Speaker 1: is looking at this right now and it's like, oh
1:32:22
Speaker 1: my god, this is terrible. Everyone stopped listening. It's horrific.
1:32:26
Speaker 1: It's hope people are still listening because actually we'll move
1:32:30
Speaker 1: this to the end so people who hang out get
1:32:32
Speaker 1: you did have some interesting questions for me. One last
1:32:35
Speaker 1: thing about medicognition. I want to share with you if
1:32:38
Speaker 1: you've ever done live radio with somebody who's a pro.
1:32:42
Speaker 1: When I watched Tom Keane run a constant with the
1:32:46
Speaker 1: producer and you're counting down ten seconds to the commercial
1:32:50
Speaker 1: five four three to one. Live commercials were live billboards,
1:32:54
Speaker 1: live roze to people on the floor of the exchange,
1:32:57
Speaker 1: and he does it flawlessly, seamlessly. People don't appreciate how
1:33:02
Speaker 1: skilled the pros are because you just assume, hey, how
1:33:06
Speaker 1: hard is it to get on a mic and go
1:33:08
Speaker 1: blah blah blah for an hour. But when you actually
1:33:10
Speaker 1: watch the bullets in the air, the moving targets, the
1:33:13
Speaker 1: precision in which the timing has done, you realize these
1:33:16
Speaker 1: guys are amazing. And after thirty years, you certainly should
1:33:19
Speaker 1: be good, but they're astonishing, astounding. No, Tom is great,
1:33:23
Speaker 1: and I think you have to realize too, he has
1:33:26
Speaker 1: a team around him. Sure, he has a team. He
1:33:29
Speaker 1: has producers, he has people on the floor, control room,
1:33:32
Speaker 1: he has researchers. I mean, that is a huge team.
1:33:35
Speaker 1: And all those efforts get funneled through Tom Keane, But
1:33:38
Speaker 1: you don't He has to be able to maintain that
1:33:41
Speaker 1: and he does he's great. I mean, Keene's a total pro.
1:33:43
Speaker 1: He's great, but the listener doesn't see it. They don't,
1:33:47
Speaker 1: So that that's what I get why I keep coming
1:33:49
Speaker 1: back to Donning Krueger. You have to get to a
1:33:51
Speaker 1: certain point where you can understand exactly what goes in
1:33:56
Speaker 1: and how much you suck at it. So the joke is, wait,
1:34:00
Speaker 1: you host a podcast, will you interview people? You're my
1:34:03
Speaker 1: wife says I'm a terrible listener or something like that.
1:34:06
Speaker 1: I wasn't paying attention. So that's the joke. So now
1:34:09
Speaker 1: we're gonna go back in time, and we have been
1:34:13
Speaker 1: speaking with Paul Vina. He is the author and co
1:34:17
Speaker 1: author with Mike Casey of two books, the first being
1:34:20
Speaker 1: The Age of Cryptocurrency, the second being The Truth Machine, Blockchain,
1:34:24
Speaker 1: and the Future of Everything. If you enjoyed this rambling
1:34:29
Speaker 1: and digressive conversation, ban look up an Inch or down
1:34:33
Speaker 1: an Inch on Apple iTunes and you can see any
1:34:35
Speaker 1: of the other two hundreds such conversations we've had about uh,
1:34:39
Speaker 1: the art of the backstroke and the drop. Um. We
1:34:42
Speaker 1: love your comments, feedback and suggestions right to us at
1:34:47
Speaker 1: m IB podcast at Bloomberg dot net. I would be
1:34:50
Speaker 1: remiss if I did not thank the crack staff that
1:34:53
Speaker 1: helps put together these conversations each week. Medina Parwana is
1:34:57
Speaker 1: our producer Slash What You Engineer? Taylor Riggs is our
1:35:01
Speaker 1: book of producer. Mike Batnik is our head of research.
1:35:05
Speaker 1: I'm Barry Ridholts. You've been listening to Masters in Business
1:35:09
Speaker 1: on Bloomberg Radio.