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COIN TALK is produced in partnership with Medium and hosted by Aaron Lammer and Jay Caspian Kang. Press “Listen to the story” above to play the episode. (You can also subscribe on Apple Podcasts, Google Play, download the MP3, or email us at hi@cointalk.show)

Show Notes


Transcript

Brian: Hey. How are you doing Aaron?

Aaron: You are the author of “How Money Got Free. Bitcoin and the Fight for the Future of Finance.” You are also are a senior staff writer at Breaker, which is actually what made me think to talk to you when these Senate hearings came out. ’Cause you had a piece in Breaker, what was that, a couple weeks ago?

Brian: Yeah. September.

Aaron: Yeah. Mr. Bitcoin goes to Washington, which is basically a history of how crypto lobbying, crypto interests came to be part of the Washington establishment.

Brian: Right. Yeah. It was a fascinating subject to dive into.

Aaron: How did you watch the hearings? Did you stream them live? Did you sport center recap them afterwards?

Brian: I did both. I watched some of it live, and then I kind of had some other stuff to do, ’cause I was on deadline, and so I Sport Center recapped some of their later.

Aaron: What was the biggest surprise for you?

Brian: Well you know, the biggest surprise for me was just how big a fan of bitcoin Nouriel Roubini is.

Aaron: He totally changed his mind. He’s all about it now.

Brian: Yeah. He surprised everyone. Came out and said, “I’ve converted. I’m a believer now. And I have nothing more to say. I’m going to go sink my portfolio into bitcoin.”

Brian: No. Look. We got their written testimony in advance. I thought this was a really interesting Senate hearing because there were only two witnesses. And so it almost took the form of a debate. Back and forth. It was like some kind of Oxford debate society thing. And Nouriel Roubini of course, was incredibly strident. I thought, painting a very black and white picture. Except there was no white. There was just black. And then Peter Van Valkenburgh, I said in my feature that you mentioned, “Mr. Bitcoin Goes to Washington”, he’s kind of consistently been one of the most articulate experts to testify before Congress on matters related to cryptocurrency. And I thought he continued to be that yesterday. I was fairly impressed with his delivery and so on.

Aaron: Yeah. It’s weird. I was saying this. Last night I talked to Zack Vall, [phonetic 00:03:36] who was there. And I was like, “Weirdly both of these people seem like the wrong person to talk to the Senate about this. One of these people believes this thing literally should not exist.” It’s like if we were having hearings on stock regulations, and one of the two people talking about it was like, “We should shut down Nasdaq.” You know? Which is a really extreme opinion. And then the other person was say, a lobbyist for Goldman Sacks. Which also I would be like, “This may not be-” No shade to Peter Van Valkenburgh, who’s been on this show. I think he’s great. If you want to hear someone really smart make the case for normalizing coin regulation, he’s the perfect person to do it. But these are both people who have a strong vested interest. These aren’t exactly independent investigators. And I don’t know who an independent investigator, I mean, this is probably the truth about crypto is, no one is in a great place to talk neutrally about crypto. Maybe journalists? And they’re not going to be asked at a Senate hearing, right?

Brian: Sure. I’d love to see a journalist, being that I am one. But I think you’re right in a way. But I guess part of it gets to that idea of having skin in the game. Which is, some people say that … Nicholas Natim Taleb [phonetic 00:05:06] has argued that sometimes you should only listen to people who have skin in the game, in a certain industry, or on a certain topic. Because they’re going to be the ones most passionately devoted to learning everything they can about it. Becoming real experts, and understanding hopefully the nuances and where the pitfalls are, and things like that.

Brian: On the other hand, you can certainly make the case that those people have a vested interest, and therefore, will perhaps not be the most objective people. I think Peter Van Valkenburgh is certainly better as a witness than say someone who works for a crypto investment fund, and is just hocking his book and trying to pump up the value of these assets. Coin Center is a non profit. And actually, it’s funny, when I met with the guys in their office in D.C., Peter Van Valkenburgh, and Jerry Brito, who is the executive director there, and Neeraj Agrawal, who’s their communications director. And I’m sitting down with them in this leeward space that they use as an office. And I started to refer to the industry. You know, the blockchain industry, the crypto industry, and I’m saying you guys kind of lobby, and you advocate for the industry. And man Jerry Brito cut me off immediately. He said, “No. It’s not the industry. We care about crypto. We care about how-” You know how Peter Van Valkenburgh emphasized at the beginning of his statement. “We care about open block chains.” And that’s sort of all that they’re interested in, are these open, permission-less networks that are available for anyone to use.

Brian: So I think you have a point, certainly, but then on the other hand, he’s not nearly as biased, I guess, or someone with a direct financial interest as you could find. And the question of, well how do you find someone who’s impartial but also has decided to become an expert on this stuff. I don’t know that that person totally exists.

Aaron: Well it’s always been our belief in doing this show Coin Talk, and I’m curious what you think, because you’re also … You’re a journalist. I’m not a journalist. But most journalists that I know, do not hold any coins as a matter of professional principal. And we’ve always been really big believers on this show of, trying the stuff for ourselves. Buy some coins, but make some off the chain flops, and various exchanges. Basically try all of the rides in the amusement park, and you’ll have a better idea of what to do. And I think that falls under the loose rubric of the skin in the game. If it’s not skin in the game, at least my skin has touched the thing that I’m interested in.

Aaron: The part that gets interesting for me is with something like Coin Center. Full disclosure, I am friendly with Neeraj, so anyone who is looking for a conflict of interest, there’s conflict of interest here, but I’m actually going after my own conflict here, which is Coin Center, and this comes up in your piece also, it’s not their own skin in the game, it’s someone else’s skin in the game. Or it’s advocating for all of the skin in the game. And the contours of personal skin in the game versus collective skin in the game end up looking really different. And I think people jump to the conclusion, possibly incorrectly, that the most important skin in the game, when it comes to a Washington lobbying, or I think they don’t like to call it lobbying. A Washington perspective. Is the skin in the game that’s in coin base and Gemini, and these larger companies that really are the whales in the room. And that the advocacy doesn’t … It’s not a grass roots advocacy. It’s mostly advocacy for the larger players. Is that accurate, or is that an unfair characterization?

Brian: You’re talking Coin Center specifically?

Aaron: Yeah. And the whole Washington effort of crypto. Like if a person who’s a Senator has heard of crypto, it’s at the behest of someone from a Gemini, from a Coin Base. Or those kinds of companies are giving to a place like Coin Center, and then Coin Center is going out and doing that work.

Brian: I think that’s right to an extent. I would want to differentiate maybe in fairness to some of these groups, between say a group like Coin Center that is trying to kind of advocate for the technology. I mean, Van Valkenburgh says they’re mutual brokers. They’re not out here to sugar coat the technology, but neither are they out here to white wash it. Now you can take maybe them saying they’re mutual brokers with a grain of salt because yes, they are funded by industry cash. When Coin Center first launched it was funded by one million dollars of industry cash. And in fact, earlier this year they had their best fundraising year ever, and that started when Jessie Powell, CEO of Kraken, which is one of the biggest U.S. based crypto exchanges, he pledged one million dollars to coin center in May, and he said that he would match up to one million dollars in further donations from other parties through the end of the month. And they ended up successfully doing that. They got his original one million, another 1.2 million from others, and then a further one million from Jessie Powell from Kraken which was matching those other donations.

Brian: They raised over three times their original annual budget in the space of a month. And certainly the people, I don’t know where all those donations came from. Some of them could have just been individual crypto enthusiasts, you know? Giving a hundred bucks or something. But certainly at least two million of that came from this big crypto exchange. And it’s CEO. And I think that has to be recognized.

Aaron: I also don’t want to sugar coat the other side, which is that basically all lobbying works this way. Very little lobbying is grassroots donations. It is in general institutions funding lobbying on their own behalf. That is the lobbying industry.

Brian: Right. Well, I think they’re the ones with the capital to do it, right? And they’re the one’s with perhaps the biggest motive to see it done. Now, like I was going to point out, Coin Center is not lobbying on behalf of Kraken, on behalf of Coin Base or any of those. They’re essentially just trying to define good regulatory frameworks, or what they see as good regulatory frameworks, towards these open sourced, decentralized technology. Now you do have a group like the Chamber for Digital Commerce, which is a trade association. So that is a member support group that has, I think, over 200 members now. And it’s got companies, maybe like Coin Base. It’s got a number of different start ups in the crypto and blockchain space that have all joined. And they essentially paid dues. They pay fees to be members, and then the organization lobbys on their behalf. So that is very much more of an industry group than I would say of Coin Center.

Brian: And it is kind of interesting when you dig into this topic to see that there are these different types of players. And sometimes their interests align, and sometimes maybe they don’t entirely align. Because the Chamber of Digital Commerce has big bang among their membership. Whereas Coin Center is not interested in this sort of private blockchain space, or what they call Bankchains. They are really interested in these open technologies. Yeah. It’s kind of interesting to learn where all the chess pieces are on the board.

Aaron: Yeah. I guess I was almost a little bored while I was watching the hearing, because I’ve already heard Nouriel Roubini’s opinion of bitcoin. Very loudly and clearly on Twitter, and every other time he’s been asked. And I’m also fairly familiar, both from talking to him, and actually reading your reporting, with what Peter Van Valkenburgh and the Coin Center people believe. So I was trying to think of what are the voices that are not in this hearing, right? What is not being said to these Senators? And the two major camps that I see not being there, well the main one that’s looming out there is the true crypto anarchists community. Which is where bitcoin came from. And those people want nothing to do with this.

Aaron: I was talking actually yesterday with Zack Vall about it, and he was like, “You know who’s never testified before the Senate? A single member of bitcoin core.” So no one who’s been involved in making bitcoin has ever talked to an American politician in an official, on the record testimony way about it. Which is pretty wild in a way. It’s as if we were doing these Facebook hearings, and no one from Facebook would show up to talk about Facebook.

Brian: So it may be true that no member of bitcoin core has ever testified at a Senate hearing, or a hearing in the House of Representatives, but in the early days, 2013, when bitcoin advocates were just starting to interact with Washington. There was a one day conference held in June 2013 at the United States Institute of Peace, and these were the bad days of bitcoin, when all the headlines were related to silk road, and buying drugs, and possible money laundering. The Department of Homeland Security had just seized five million dollars belonging to a US subsidiary of Mount Gox, which of course the following year imploded. But at any rate, a few people showed up to speak for bitcoin. One of them was Patrick Murck, who was the general councilor for the bitcoin foundation. At the time the only advocacy group for the whole industry. And another was Gavin Andresen, who had been Satoshi’s right hand man, and became bitcoin’s lead developer after Satoshi faded into the background. And then finally one with Jerry Brito, who hadn’t even watched Coin Center yet. He was just this D.C. policy wonk working at the Mercada Center.

Brian: And anyway they, all three, represented bitcoin at this conference. And that then became the meeting that launched a thousand other meetings, and really started the careful diplomacy that started going on behind the scenes.

Aaron: It’s like when the mob family’s all meet for the first time. Decide how they’re gonna split up the Eastern seaboard’s heroine trade.

Brian: Well, that’s your analogy, not mine. But yeah.

Aaron: This is the wonderful thing about not being a journalist, is I can just say whatever I want at this show. So for you … I wanted to actually say, and then there’s one other voice that I think that we haven’t talked about. Which is, in some ways I think Nouriel Roubini’s a bit of a soft critic. I know that a surprising thing to say, but Nouriel Roubini thinks that bitcoin, and crypto is total scam bullshit, and should go away. Which, in some ways, if there is a true threat to America from crypto, a person who thinks it’s all a silly scam, and is going to go to zero, that’s actually not a very alarmist opinion. In fact the government doesn’t really need to do anything in the Roubinian world view, because it’s going to zero. He’s been saying it’s been going to zero forever.

Brian: Right. Since it was just in the hundreds, right?

Aaron: I’m wondering where the … we talk on this show about the scorched earth bitcoin future, where there’s no vegetables. Who is expressing the, “This is such a powerful idea it’s actually really dangerous” viewpoint. Which is the viewpoint that I’m both sort of uncomfortable with, but I think there’s something to that viewpoint. That if you really, really, really believe in bitcoin you need to really, really, really believe that it’s going to have a lot to do with the US government because that’s what happens if we go into the Saifedean Ammous Bitcoin standard future. We’re talking about replacing our financial system. It’s going to need a lot of hearings.

Brian: Right. Well, first let me address what you said before about the Crypto anarchists, because I think that’s a really good point. They definitely have not been heard on Capital Hill, and this is a direct result not only of their ideology, which is to avoid contact with the state whenever possible, but it really arises out of this debate that broke out in the Bitcoin community in 2014 after guys like Jerry Brito and Gavin Andresen and Patrick Murck had been starting to meet with people on Capital Hill and in other parts of Washington.

Brian: And then, at the time, there was still this very strong digital libertarian or Crypto-anarchists wing of … among Bitcoin users, and they basically said, “Look, we don’t think you should be doing any lobbying. We don’t think you should have anything to do with Washington.” This one guy said, “Bitcoin’s greatest chance of success is by ignoring regulation rather than lobbying against it. The more anarchist Bitcoin is, the more valuable it is to investors.”

Brian: And I don’t know whether there’s a right side of history or not, but the way it played out is that those guys lost the debate. And one of the funny things about a de-centralized network or community like Crypto, is that even if one group says, “We don’t want to do this,” another group can say, “Well, we think it’s in the best interest, so we’re gonna do it.”

Aaron: Right.

Brian: And indeed, that’s pretty much what happened. And so, the Crypto-anarchists started to lose ground and lose influence in the community to some extent.

Aaron: Yeah. It’s … it has some echoes of forking itself, which is anyone can take a group of their followers and make a 90 degree right turn in the desert and walk a different direction, and if you give it a few years they will actually seem like distinct groups with distinct identities. The irony in the case of Bitcoin is that while there has been all that forking, we’re still talking about the single through-put Bitcoin core coin, we’re not talking about bcash or any of the altcoins which have actually taken that vision and created a different project out of it, we’re still talking about the original project.

Aaron: And I think that the Crypto-anarchist view is still very much represented with an open seat at these hearings, and that open seat is for Satoshi Nakamoto. The fact that he is not there to answer questions about his creation is maybe the most powerful thing about these hearings. I think Bitcoin would be totally fucked if Satoshi Nakamoto was getting questioned by the Senate. And that’s actually something that I think is gonna be a big problem for ethereum should “The Flippening” ever happen and the prime directive of these hearings be ethereum is I don’t think Vitalik does great in that hearing.

Aaron: And I don’t think that actually trying to defend yourself and explain why all these problems are not problems is a particularly good tactic. Satoshi, either through some alien genius or just random luck and being a hermit by nature, made the right decision, which was to not stick around for the Q & A, and not put himself in a position where he needed to argue for Bitcoin.

Aaron: I think that his voice, which I guess is the Crypto-anarchist side, is almost there as the hollow, echo-y reverb in the room that is not saying anything, and I wonder how long the Senate will go down this path before they say, “Hey, who’s the CEO? Who’s the leader? We need someone to speak for this.”

Brian: Well fortunately, I think the understanding, or general level of understanding, in Congress, it’s still not at a very high level, but there are now enough people on the one end of the bell curve who do understand it quite well, or at least compared to how they did a few years ago, so I think there is now an understanding that there’s no CEO of Bitcoin or something like that. We saw a number of senators and other government officials who might have that question.

Brian: But I think you’re right, that in some sense it’s actually more powerful that Satoshi created something that now there are all of these other people around the world who are willing to speak for it and fight for it, because rather than him having to be there as if he’s the lone voice raised in favor of his own creation and said, “He’s not there,” and there are all these other people saying that what he created is of huge value and revolutionary potential as Van Valkenburgh put it yesterday, and that in some ways is more powerful.

Brian: I’ve long argued that Satoshi stepping into the background and decided he no longer could be involved with his own project, was kind of a stroke of genius, whether or not he meant it that way. If you look at, say, ethereum, ethereum is a very powerful platform and certainly there are a lot of people excited about it’s potential, but in some ways it is shackled still to Vitalik and some of the other co-founders that … There was … A while back, there was a hoax that Vitalik had died and all of a sudden the value of ethereum plunged until it became clear that that was a hoax, and that’s kind of what happens if you’ve got one cental messianic figure or prophetic figure who’s the Moses that is seen to be leading his people out of the desert, to go back to your analogy. [crosstalk 00:23:44]

Aaron: Yeah, messiah’s are a form of centralization. We’ve … We know this from religion. The Pope is centralization.

Brian: Right.

Aaron: These ideas have already occurred in human history.

Brian: Right. And so, I think Bitcoin truly is a new thing in the sense that once Satoshi stepped into the shadows, Bitcoin could have failed at that point, people could have lost interest once they no longer had the Oracle of Delphi to speak to them. But instead they picked it up and moved forward, and now Bitcoin is standing on its own legs, and there are many people, especially the more Crypto-anarchist people, who will argue, “It doesn’t matter who Satoshi was, it doesn’t matter if he’s alive or dead today. What matters is that the code exist, and anyone can look at the code, anyone can review the code, and anyone can, as a result, trust that the network is going to function as it’s supposed to.”

Brian: And that’s certainly a powerful idea, I think in some ways more powerful than having the messianic figure still around to tell people, ’cause … Can you imagine Satoshi was still embroiled in the debates that break out today, or when Bitcoin was gonna break away into Bitcoin Cash? [crosstalk 00:25:01]

Aaron: He pry woulda been shot by now, like a crazy bcasher would have killed him. There’s so many bad outcomes with him being public, or her.

Brian: Right, or he would just have lost his status maybe, because some people would end up hating him.

Aaron: Yeah.

Brian: Or he would put his foot in his mouth somewhere along the line and … Yeah, as it is, it’s much more powerful, but-

Aaron: And also, people would be like, “Oh, of course you think that. You’re a billionaire.”

Brian: That’s the other almost self-sacrificial thing he did, is that as far as we can tell none of those Bitcoins that he got in the Genesis block have ever been moved, and so it looks like he’s never actually tapped into all of that wealth that he … that was generated for him.

Aaron: I like to think of Satoshi like Joan Osborne song, “What If God Was One Of Us”, and that he’s in the hearings with a funny hat on, just … He’s just been checking in every once so often. I also like the idea that Satoshi has a family and his family is really sick of hearing about Bitcoin, and … so he’s just living a boring life. “Oh, there’s gonna be a Senate hearing on Bitcoin. Oh, I’ll go check that out in my weird costume.” That’s my favorite idea of who Satoshi is.

Brian: Sure. Yeah, and he’s … Maybe he’s a crazy homeless guy who tells people like, “Hey, I created Bitcoin,” and then they’re like, “Yeah, sure. Sure, buddy.”

Aaron: Maybe he lost his private keys and he’s spent the last decade using his resources to try to find the keys that hold that original wallet. That is one explanation why that wallet has never moved at all.

Brian: That could be. That would be a, you’d think, a big blunder for the guy who created this whole system to make, but anything’s possible [crosstalk 00:26:55]-

Aaron: Human’s have blundered. Most of the worst nuclear scares have been human error, not the system itself breaking down.

Brian: Oh, yeah. We’ve come very close to annihilation more times than I care to think about just as a result of human error. But I wanted to address what you had said about Roubini being an … almost a soft critic compared to some of the people who might really be afraid of, not what if Bitcoin fails because it’s a scam, but what if Bitcoin really succeeds? And one of the earliest … certainly one of the guys that sticks in my mind the most was the science fiction writer Charles Stross, who in December of 2013, he wrote this post on his blog called “Why I Want Bitcoin To Die In A Fire”, and this I think was later approvingly quoted by Paul Krugman in the New York Times in his column that had the un-improvable headline “Bitcoin Is Evil”.

Brian: But at any rate, so although Charles Stross didn’t think that … And this is a guy, by the way, who writes science fiction novels in which digital cash is a feature of society, and so you would think if anyone would be prepared to appreciate Bitcoin, it would be a guy like that. But in fact no, due to his team’s political or ideological commitments, he says Bitcoin looks like it was designed as a weapon intended to damage central banking and money issuing banks with a libertarian political agenda in mind.

Brian: And so, he feared that, although the didn’t really believe Bitcoin was going to work, and he thought that it would probably totally fail, he was actually very worried about the black market uses, he was worried about it being used for tax evasion, he was worried about it undermining the social safety net and things like that.

Aaron: Yeah, I think … Once you go down that route, there’s a bunch of different places to go. But if I really think about what I would want the Senate to consider, which I don’t think the Senate is ready to consider this yet and maybe by the time they are it will be too late, but just imagining that we’re at the very nascent stage of something revolutionary rather than the mature stage of something modest.

Brian: Right, or the end stage of a … just a huge bubble that’s in the midst of collapsing forever.

Aaron: Right, ’cause we’re seeing these two-year half-lives, in which a year or two Bitcoin is in a totally different state than it was a couple years ago. And yes, the market is down two-thirds from it’s high. It’s still up over two years. Bitcoin is … it’s claws are deeper into the world than they were a couple years ago. And looking at price as the only basis of that, I think, misses a lot of the nuance of the story. Everyone’s talking about, “Oh, during a bear market everyone BUIDLs.” And I don’t particularly buy that, but I do buy the … Politics is on a four-year cycle for the most part, so if you’re thinking of Bitcoin now during your term as a Senator, the next time there’s gonna be someone else in that seat or we’re gonna come full-circle once, is four years, which is like 10,000 years in Crypto time.

Brian: Right. Right. Everyone remembers the 2017 Crypto-boom, and now we’re … we’ve been looking at this, what they’re calling Crypto-winter or this long bear market, for pretty much all of 2018. But before 2017’s Crypto-boom, there was the 2016 doldrums for Bitcoin when everybody was talking about how … it’s not about the coin it’s about the block chain, and all these banks and companies like Microsoft were starting to look into how it could be used for things like back office functions and supply chain management and things like that, and there was this thinking that Bitcoin is just a crazy idea. Never gonna work, it’s utopian or it’s anarchist in intention, or whatever. But look, let’s salvage what we can from it, which is this great idea of the block chain.

Brian: And then, in 2017 the narrative shifted again massively as there was this explosion of ICO’s, there was this huge boom in prices, and so on, and you’re totally right, that I think in two years that landscape could again look massively different. And although I don’t totally subscribe, as you were saying, to the idea that we’re in a bear market, everybody just BUIDLs, and so you shouldn’t worry ’cause everything is just fine.

Brian: On the other hand, there is some truth to that. You’ve got a company like Coin Base that is … looks like it’s gonna raise a new round of $500 million from Tiger Global at a valuation of $8 billion. And so, oddly enough, even as the asset class itself has declined in value this year, some of the companies like Coinbase have continued to increase in value and have continued to attract further investment. And so, that’s certainly a trend that can’t be ignored, and it very well could be laying the groundwork for some future explosion.

Aaron: Not only has Coinbase raising at an $8 billion valuation, and I don’t even remember how much the Bitmain IPO was, but it was similarly in the billions. These businesses succeed whether the price is through the roof or in a little bit of a winter. It’s a good business to be Coinbase selling people Bitcoins for $6,500, and it’s a good business to be selling Bitcoins for $20,000. As long as you’re just the person who’s mining them and selling them, as long as the whole project doesn’t go away, it seems like you’re in a good position. I’d kind of rather be Bitmain than stupid American holding Bitcoin in my Coinbase account. You’re driving the ship, I’m just riding in the ship.

Brian: Right. Well, not to compare Coinbase to any malfeasance and traditional finance, but if you’ve seen “The Wolf Of Wall Street” you might remember that scene where the Leo DiCaprio character has just joined the … has gotten his first job on Wall Street, and Matthew McConaughey character explains to him, “Look, we’re stock brokers. Our clients think they’re getting rich, which they are on paper, but whether or not they do well, we’re getting rich in the form of commissions which we get to take home as cold hard cash.”

Brian: So yeah, if you’re the one facilitating the trade, then I guess ideally you want yourself to do well and you want your clients to do well, but even if they end up at some point taking a bath on their trades, on their investments, you very well … you might still be doing quite well.

Aaron: Yeah. I feel like it’s really important to recognize who is actually long and who is saying they’re long. Everyone in Crypto is gonna tell you that they’re long on the space, on everything, except Shitcoins, everyone’s gonna say they’re long. But there are certain people who are truly market neutral and will more or less succeed no matter what happens with Crypto, other than a total collapse. And then there’s certain people who, I think retail investors are probably the biggest pool, who’s success is gonna come mostly from price, and there does seem to be a disconnect that the biggest companies, and this is why I bring up that those biggest companies are the people who are funding Coin Center, not to throw shade on Coin Center, I actually think everyone’s acting in pretty good faith.

Aaron: But the lobby money is not really coming from long money, it’s from “Let us continue to take commissions and, regardless of what happens here, we want the right to be selling people the pickaxes, the minors, the coins.” That seems like the real industry that’s being entrenched with these hearings. Not so much the … We’re not hearing a lot about what it means to be an individual holding private keys, we’re more hearing about what it means to be a large exchange.

Brian: Mm-hmm (affirmative). Yeah, and I think it’s partly because some of the issues of security and multi-signature wallets and things like that, are just … they’re hard to get into if you’re still answering questions for the U.S. Senate that are … like the Bitcoin 101 level.

Aaron: Absolutely.

Brian: Peter Van Valkenburgh yesterday started his testimony by saying, “What is Bitcoin?” Or “Why is it useful?”What makes it revolutionary? And you’re still having to have those conversations to prove-

Aaron: He must have given that spiel like ten thousand times at this point. He probably-

Brian: Right and of course during a Senate hearing-

Aaron: … could do that. I’d like to see like, Peter Van Valkenburgh dosed with various psychedelic drugs giving the flawless Bitcoin pitch. ’Cause he must have it just deep, deep in his muscle memory at this point. And-

Brian: You’re right, right, somewhere in his, yeah, in his-

Aaron: … And I think it makes sense on another level which is the U.S., everything that Bitcoin says says you can’t regulate individual investors. Unless you can go into people’s houses and be like, “I’m putting a gun to your head, where are your private keys?” It’s very difficult to imagine a future in which crypto is regulated at the individual investor level effectively.

Aaron: So, it makes sense to me that it’s the platforms who are going to be regulated and the platforms that are going to talk to the U.S. government about regulation because that’s the level. Like, if you want to regulate crypto, you should regulate Coinbase and Gemini and all these places; you shouldn’t try to like make laws on the individuals. Most individuals are gonna have to go through a Coinbase or a Gemini at some point anyway unless you’ve got like a home mining rig; you’ve gotta buy Bitcoin from someone.

Brian: Well, and I think there are some individuals who have been prosecuted in certain jurisdictions for… You know, which I personally think maybe should not be the case, but they’ve been prosecuted for doing peer-to-peer transactions for Bitcoin.

Brian: So, for instance, rather than selling crypto on an exchange they might link up with someone in person and do like a Bitcoins for cash kind of transaction or something and then I think there’s been some thoughts that it might-

Aaron: A little McDonald’s Micro Morgan exit parking lot Bitcoin transaction.

Brian: Right.

Aaron: Yeah, sure.

Brian: I think there’s some thought that they could be prosecuted in certain jurisdictions as like unlicensed money transmitters or something and I, you know… But be that as it may, you know another reason that individual traders or holders might not be showing up to these Senate hearings; not only ’cause the Senate aids don’t know how to find them in and extend them an invitation, but also it may not be in your best interest if you hold a million dollars worth of Bitcoin as a private citizen to show up to the Senate and declare that publicly in front of everyone, right?

Brian: So I think it’s kind of natural that certain people are the ones who end up testifying more often than others. But, there’s another group that has benefited from this curtail of Blockchain explosion over the last almost decade now and that is a lot of young, tech workers. People that, who knows what jobs they may have had otherwise, but they have found places at companies like Coinbase and Kraken and Gemini and Bitmain and a number of others and they’ve been able to contribute to this eco-system as engineers, right? Or, as communications professionals, or a number of other roles and I think this, just like the birth of the internet, this has created a lot of new jobs. All you have to do is go on I think Coinbase’s website and a number of others and look at the page for their open job listings and some of them just have dozens upon dozens of roles that they’re looking to fill. One day [crosstalk 00:39:34]-

Aaron: Yeah, if you go on Consensus right now and look at the jobs page, you would think Consensus was Google based on the amount of open positions they currently-

Brian: Right? Right. Consensus is one I meant to mention, yeah. Yeah and they already have, I think, over a thousand employees. You know, Coinbase has over 500 and Coinbase just opened a New York office where I live and I think they started with 20 people there. They’re planning to grow it to, just that one office alone in New York, to over a 150 by like the second quarter of next year and that’s pretty tremendous growth for a start-up. And that’s their plan even if the market sort of stays depressed, you know? Because they’re not just saying that it will, but you can imagine that if the price to skyrocket in the next six months again then they may be able to hire even more.

Brian: And so that I think is another, certainly another group there are a number of very elite or what are generally thought to be elite universities that are now offering courses in blockchain or cryptocurrencies and related technologies. And so there’s a new generation kind of coming up just behind everyone who’s working in the industry now and these are people that are actually getting it as part of their college education and are maybe gonna be primed to enter the industry themselves when they graduate.

Aaron: Yeah, I look at this a little bit like the trajectory of music. From illegal to legal music streaming where when you really look at the jobs of all these people who are being hired by Coinbase, they’re to create a user experience that is so superior to buying Bitcoin in a McDonald’s parking lot, that no one buys Bitcoin in McDonald’s parking lots anymore. And I think they’re pretty far down that pathway now and that is what gets rid of the sort of darker side of Bitcoin when the brighter side is so easy to use, so fun and joyful that no one would consider the crypto-anarchist alternative and for that reason, I see Coinbase as the Spotify in the room that’s trying to make this a consumer product as much as they’re trying to, you know, revolutionize world finance.

Aaron: Like, I think Coinbase’s success or failure will be more how good of an app did they make and how well did they get the government to approve of the “know your customer” regulations; more so than like, what is the true decentralized, perfect vision of Bitcoin? Like, whenever you start a real vision that you can actually use starts competing with the idealized, white paper vision, it’s only a matter of time, I think, until that consumer vision just keeps getting better and better and people forget about the McDonald’s parking lot vision.

Brian: Yeah, yeah I mean I think that’s right in regards to Coinbase and I think that some major investors were looking at it that way from the beginning. Coinbase famously got its start at Y Combinator, which is obviously the most prestigious sort of Silicon Valley incubator for tech start-ups. And then got investment from Union Square Ventures, I think, and Jason Horowitz and some others. I think Union Square Ventures led their first round of like five million dollars.

Brian: But, regardless, that’s how they were looking at it too. They said, “Okay, there’s a lot of craziness happening in this space from our perspective. There’s a lot of things that are probably, eventually gonna run afoul of the U.S. government, with the U.S. government and looking at them yet, but we’re going to sort of future-proof this business in advance by treating it differently.” You know? And having it be kind of the more regulated player in the space; the one that is trying to stay on the right side of the law and all these regulations.

Brian: But, the analogy to kind of the early music streaming or maybe like the peer-to-peer file sharing networks like Napster, I think is a good one in some sense where if you think that… Okay, so like Sean Parker is not in jail, right? And he never was and he was able to go on and be an investor in Facebook and so on-

Aaron: Sure.

Brian: And have a successful career despite having gotten his start with this thing that was deemed to be illegal also. So-

Aaron: Sure. Travis from Uber also never went to jail.

Brian: Well… Right, so the point is, if you think that, right… And here’s the point I wanna make, because I think it applies very much to crypto as well: if you think that there’s no value in music streaming, or peer-to-peer file sharing, or ride hailing and you think that that’s nothing but a scam then you probably think those people should be in jail because ultimately, you don’t think they’ve given anything to the world.

Brian: Same with crypto, if you think that crypto and blockchain represent the mother of all scams and bubbles, as [Anoya Rabidi 00:44:21] says they do, then any security or law violation, any of that is just one more black mark against this industry that is infested top to bottom with scammers and charlatans, right?

Brian: If, on the other hand, you think it’s more likely that blockchain will add 3.1 trillion dollars of value to businesses worldwide by 2030, which it something that Gartner predicted last year, then you may be willing to overlook or excuse or forgive early crypto pioneers kind of penchant for coloring outside the lines, right? And similarly I think with Uber and similarly with Napster and so on.

Aaron: Alright, I wanna tie it up here, but I got one more question for you: so, you are a-

Brian: Good.

Aaron: … you are a Senior Staff Writer at Breaker; for anyone who hasn’t checked Breaker out, if you listen to this show, you described it as a new digital magazine covering the people and ideas of blockchain for a general audience. If you like this show, this show which we refer to ourselves as “Crypto-moderates” on, I think you will enjoy Breaker magazine.

Aaron: You are putting yourself as someone who’s career and journalistic trajectory is increasingly linked with crypto. Sort of in the same place as people who are holding a lot of crypto, which is if it really goes to zero that’s not so great for you I would think.

Aaron: So, what was it like for you choosing to focus your reporting in this area that could go away?

Brian: Well you know, life is interesting, it’s sort of about as much about what doors, sort of, close to you as what doors open to you. But, when I at first wrote about Bitcoin in August of 2012 for CNN Money, I just thought it was this really interesting thing that was worth writing about.

Aaron: Yeah.

Brian: And as it became kind of bigger and bigger in 20… And I didn’t write about it again for a while. And then as it became kind of bigger and bigger in 2013 I was a staff editor at Entrepreneur and they wanted me to write about it for them and I started writing about it for the New Yorker as a freelancer and then I eventually I got this book deal. My book had a bit of a tortuous road to publication I will say, but I originally got the book deal in December of 2013-

Aaron: Say the name of the book so people can buy it.

Brian: Sure, it’s “How Money Got Free: Bitcoin and the Fight for the Future of Finance” and it is a very deep-

Aaron: Link in the show notes, link in the show notes, everybody go buy it.

Brian: Yeah, so it’s a very deep kind of a journalistic, you know, non-fiction narrative history of the rise of Bitcoin and its implications for the world. It’s told through the eyes of this ensemble cast of its pioneers and I approached it much in the way that maybe Tom Wolfe approached “The Right Stuff”, which was his book about the early Mercury astronauts. And if you read that book or you’ve seen the movie you know that like those guys were eccentric and brilliant, but they were much more cowboys than the type of very straight-laced people that get recruited as astronauts these days and that’s part of what makes it such a fun book to read.

Brian: And so that was part of what drew me to the subject was the type of people that were in the space back then and that human story that I could tell about them. And then another thing that attracted me, you know, was not sort of Bitcoin considered narrowly as a phenomenon, but it was the fact that its story opened windows onto some of the largest issues and trends of our time. Things like, obviously the financial crisis and Great Recession, but also things like the fact that the way that we live and work is changing; the fact that more of us are working remotely or being digital nomads.

Brian: Some of the Bitcoin start-ups were among the first companies to have, like, you know, 20 employees spread across four continents and actually working all pretty seamlessly together. And so that stuff was remarkable as well. I thought that telling this story of Bitcoin was a way for me to get at a lot of those different things that, you know, about the way we live and work today. And then also I thought the technology certainly was as disruptive and revolutionary as some people have said it could be and that was worth taking seriously as well. I didn’t wanna just do it as a story as like a social phenomenon or weird subculture, but I really did wanna take the technology and the economics of it seriously and so, that led me to delve in to even some of the kind of fringe, maybe, economic theory that some of the early Bitcoin pioneers subscribe to. And, ’cause nobody had really done that yet and that would constantly get short shrift in the Bloomberg articles or articles in whatever publication that came out about this stuff in those early years. So, um, yeah.

Aaron: Yeah, I’ve been really glad that Breaker exists because there’s, again, with the two pole sort of diametrically opposed visions, there’s a CoinDesk, CoinMedia slightly more, like, I sort of describe it as the TechCrunch of crypto perspective and then there’s a deeply detached New York Times often pretty no-coiner perspective. And what I’m always looking for is the deep dive skepticism. Like, I’m looking for the serious reporting; takes crypto seriously, sort of believes in crypto, but still can be critical of it perspective. And that’s what I’ve seen in the limited amount of Breaker that I’ve read so far.

Brian: Right, well, yeah if I can just say one thing about Breaker before we leave here it’s that: yeah, you know there was a time when I thought that doing that book of mine would kind of be my final, pretty much final statement on this whole world-

Aaron: They keep drawing me back in!

Brian: … Yeah! Well, it was like a Serpico thing for sure, it’s just, you know, every time I thought I was out, kept getting pulled back in. And, actually, I was traveling a lot this summer and working on a novel quite seriously and the guys behind Breaker really reached out to me and sort of head hunted me for it. And I was excited by their offer because the way we talked about Breaker, the way I still conceptualize it is kind of like the early 1990’s Wired Magazine, but for the world of crypto and blockchain.

Brian: And what I mean by that is, like when Wired launched the idea of internet culture wasn’t really a thing, right? Certainly not something that would interest the general audience. You had magazines like PC World and it was just like this thing for really nerdy kind of hardcore geeky people and Wired said, “No, we’re gonna connect this weird world of the internet so all of these real world phenomena, all of these big issues and we’re gonna do crime stories; we’re gonna do politics stories; we’re gonna do in-depth feature profiles, you know; we’re gonna do business stories; and we’re gonna show how interesting this is but also the fact that this like weird hot house world of the internet actually has implications for the world that all of us live in.”

Brian: And I think crypto and blockchain, you know, there was a big gap in the market for a publication that would do that for a general audience on these subjects and not just be a trade publication like CoinDesk. No offense to them; you know, they do a good job at what they do, but definitely a trade magazine sort of speaking about the industry to the industry. And then some of the other sites that are out there that are not, I think, very high quality. So, yeah, it’s been kind of an exciting start up journey.

Aaron: Here’s a bizarre anecdote: I was walked the Camino Portugues in Spain to Santiago de Compostela a couple weeks ago with a group of-

Brian: Oh, wow. I’ve always wanted to see that.

Aaron: … friends and strangers and one person who was on that walk with me was Kevin Kelly, who founded Wired Magazine. And-

Brian: No kidding!

Aaron: … of course, if you walk alongside someone for seven days, Bitcoin comes up in approximately every ninety minutes somehow the conversation comes back to Bitcoin. And he literally asked me, like, “So, like what is the Wired for crypto?” And I was like, “I dunno, it might not exist yet, but it probably like this Breaker has the best chance of being it.”

Aaron: So-

Brian: Well thank you for doing that, then.

Aaron: … it has now come full circle. I hope you do become the Wired Magazine of crypto, because it gives me stuff to talk about on the show, which I’m often in this winter looking for anything not simply negative to talk about. So, I really appreciate all you’re doing and will you come back on the show when you got something else you want to talk about?

Brian: Yeah, I’d love to come back on the show. I’m, you know, my mandate there is to do some kind of smart ideas driven columns and a deep feature of reporting so, that’s what I’m looking to do.

Aaron: Alright. When you’ve got something you want to get off your chest, send me an email, we’ll do it again. Thank you so much.

Brian: Absolutely, thanks, Aaron, thanks [Devin 00:53:25].

Aaron: That was Coin Talk, thanks to our editor James Nicholson, thank you to my erstwhile co-host, Jay Kang, thanks to our partners at Medium; they make all this stuff possible. Two, count ’em, two Senate hearing shows, yes, we’re back, Coin Talk, in effect. Send us an email: hi@cointalk.show

Aaron: See you soon.