Is Crypto Going Extinct? with Stacy-Marie Ishmael #583

much less and you might be a little concerned. Um. And if so, it turns out you're not alone because a recent bank Rate survey show that only about thirty of millennials are comfortable investing in crypto today, which is down from about a year ago. There's just not as much confidence in crypto as there used to be. And so we're excited to be joined by Stacy Marie Ishmael for yours. Stacy, she used to work at The Finance Times,

where she started the block Alphaville. She's worked as a senior editor at Apple, and now she's a writer and podcaster over at Bloomberg, where basically she eats and drinks crypto every single day. So, Stacy, thank you for joining us today. Thank you so much for having me. I wouldn't say that crypto is like super delicious as a mean, I was wondering. Yeah, bacon eggs in a side of cryptos like that that sounds like a nice breakfast and

and well balanced, probably too. Uh Well, the first question we ask everybody that comes on the show, Stacy, is we want to know what they explored John Matt and I we sported John beer. We already showed you ours before we started recording. It's uh an expensive like twenty dollar bottle craft here that we're enjoying on today's episode and very much looking forward to talking about this at the end. Yeah. Well, and so we we sporge on

that while we're saving and investing well for the future. So, yeah, what's that sport for you? What do you like to spend money on where people might think you're you're a little crazy for for doing it? Fountain pens. Oh, very nice. It's basically like the sit of cryptocurrency, like what is the most Yeah? Absolutely? Was this something you've always been into or was it because you needed something to juxtapose against cryptocurrencies and all the digital stuff that you're into. Oh,

I've always been into it. So I'm left handed and a curse of being left handed, as you find that most pens don't work for you, and so I kind of fell down this path relatively early on of trying to find the perfect pen and trying to find, you know, something that would make my handwriting look a little bit less like chicken scratches. And somebody was like, have you heard of fountain pens? I was like, no, but I'm

going to find out everything there is to know. And then I found out how expensive these can get, and it was a whole thing. So Matt and I we have a mutual friend who got so into fountain pens. He and I didn't. I was like, oh, that's cool. I'm glad that you're that you're interested in this, and he would talk about it occasionally show off his pens. But he went to a physical conference I have really wanted to go to. Okay, he had a really good time.

So I think it would be worth the time and energy that it would take for you to get like, I didn't know that was a thing, but okay, So can I ask what is the most expensive pen that you own? It's okay, ask you can ask, um, the most expensive pen that I own is not the most expensive pen that I want, but I would say that I have spent at least there was one pen in particular that cost me more than all Right, I like it. I would love to just I mean, I've never held

a pen like that before. It is I'm gorgeous, It writes beautifully, it's perfectly balanced. It is a work of arts. Okay, yeah, that's exactly. I have to follow up with this then, So how often are you writing letters to people? Because I would think if this is a sporge, like you don't want to get these pens just so you can you're not looking just look look at I'm putting them on the wall or something like that, Like are you are you often writing letters like old school style to

fans and family? I even make wax seals for them. That's that's all. That is awesome. That is Can you send us a letter? We will send address. We'll give you our our millions, like put us on your your Christmas card list or whatever whatever in holiday card you send out. We would love to be on the receiving

end of that beautiful writing. Well. I love that it's coming back to and and that you're helping bring it back because it's it's one of the like there's not much better than something handwritten from somebody to share to show that like you, you, you were thoughtful about you, you care about them. So I think it's cool. I think it's super cool as well. Thanks for sharing that, Stacy.

Uh So, your background, right, like, you've lived, You've gone to school all over the world, just generally speaking, How has spending just a significant amount of time, you know, on a few different continents, how has that impacted your perspective when it comes to just economic matters that we're

dealing with today. I think I've been very fortunate to be able to live what it feels like to not just like think about things like foreign exchange in the abstract, but actually go from one country to another where you know, all of my savings were in the Trinidad and Tobago dollar and I was paying bills in the the British pounds sterling, or to experience what it's like to have in one place, what would be considered kind of like a very comfortable standard of living that costs X y

z amount, and then you moved to say San Francisco, where for exactly the same amount and rent you essentially live in a closet with no window. Um and it's it's really made me appreciate how important having a range of understandings of local contexts is as a as a reporter, as an and as an editor. Okay, talk to me, talk to me about your how you got interested in cryptocurrency, because yeah, you're at the point you host a daily

podcast about it. Like Matt said at the beginning, you eat and breathe crypto and so like, what what got to this point where Stacy Marie Ishmael is now like that enthusiastic, that interested in the space where you hold client sinker that's your day job. Now, this is a reasonable question, and it comes from, I think the confluence

of several of my interests. So when I started as a finance report to financial journalist, I was responsible for covering structured finance, for covering things like derivatives, for covering things that were called credit default swaps, um. I was looking at mortgage backed securities, you know, all the things that in two thousand and eight seemed like a good

idea until they stopped seeming like a good idea. And so I've been I've always been interested in, like what is the nerdiest possible corner of a financial market and how can I make that interesting and accessible to people other than me and my immediate editors. And I've always also been the kind of person who is super interested in technology, Like I've worked at large and small technology companies. I was definitely the friend that would build your website.

I was definitely the friend that you'd be like, I can't get by pre ne to work, like try this. And you know, crypto is essentially the confluence of risk pricing, financial arbitrage and speculation, and interesting underlying technology smashed together.

M Yeah, that makes sense. Okay, So I mean, on that note, can you maybe just give us a brief cryptocurrency history or just like an evolution, And obviously there's a lot to cover, but cover and kind of like go over the aspects of crypto that you think are

most important given where we are with crypto today. So in a historical context, the main thing to understand is that crypto, which started as bitcoin, started as a rejection of traditional banking, started as a rejection of the idea that governments should have a say in your ability to transact with somebody else, and started as a rejection of the idea that you should have to trust big centralized agencies like central banks or banks in general, to be

an intermediary in those same types of trans actions. And this was all written out in a relatively short white paper about thirteen years ago that was the origins of bitcoin, and it was based on you know, like some some political theories, some philosophies, some mathematical proofs, some conspiracy theory. Toadah, you've got a bitcoin white paper. And since then what it has evolved into is absolutely for a lot of people are kind of an ideological expression of other deeply

held beliefs that they might have. For some people it's a means of transacting. For some people it's a means of you know, kind of speculating and generating some kind of financial yield. And for other people it's just like an interesting problem to be solved. They're like, oh, this this is a cool piece of technology. What what can

I build on top of this? Yeah, So it seems like there's definitely some we mentioned political elements are certainly some like libertarian libertarian leaning elements right in a lot of the crypto space. And and we we take a look step back and you look at maybe decentralized finance as a whole um I guess what what do you

think what makes it worth striving for? Or what do these people, the people who are who are crypto enthusiasts enthusiasts, what what what makes them think that the centralized finance is worth striving for. I guess to our listener, the average American, right, it feels like the current system works decently well. Sure, the banks, their credit card companies, they make lots of money on every transaction that we make. But you know, the system, it meets our needs pretty

well and it seems to hold up. So why in the world do we need defy in our lives? Well, if let's jump back to two thousand and you know, the sort of late two thousand's, early two thousand tens, when for a lot of people, particularly people in the United States, they wouldn't say that the financial system was working particularly well. There were tons of people that had lost their homes to mortgage foreclosure. There were people who

had lost their savings to bank failures. There were people who were looking at those same banks that they were saying, hey, sorry, we we can't pay you back. We're out of money.

Their ceo s were like flying around in private It's like there was this real perception on both ends of the political spectrum that you know, banks, the financial system was not serving the quote unquote average American and a lot of the belief system of crypto is well reject that system that wasn't serving you, and let's create a different one that is based on much more egalitarian principles.

And that idea of we don't need to rely on somebody else who is just like looking to monetize us to you know, to be able to participate in a financial system was really powerful for a lot of people and remains really powerful for a lot of people, even though a lot of people are doing just fine and are not facing foreclosure and actually are using banks to store their considerable assets that they may have generated from

bitcoin or otherwise. You know, this narrative, the story the white paper behind crypto, like our bitcoin specifically, like it's it's been like like you said, it's been around for a while, but I think a lot of folks have kind of jumped onto it within the recent years. Um, do you think that that story, that narrative combined with than what we experienced with the pandemic, right, like the

pandemic coupled with stimmy checks. Do you think all those things combined contributed to the to the rise and the fall that that we've seen cryptocurrencies and door Absolutely, So I have a um, my friends will have heard me say this, So if any of them are listening, they're about to rule their eyes. But I have I have a unified theory of like video games, meme stocks, crypto reddit, which is that all of these things kind of tapped

into a desire to be a part of something. They tapped into the fact that a lot of people were just spending a lot of time staring at computer screens because they couldn't go outside, and that for various reasons, some folks had like an above average amount of disposable income.

And so you know, whether it was people suddenly spending a bunch of money playing video games or getting aggressively into online poker in the states where that's allowed, or you know, trying to persuade everybody that buying game stop is a good idea, or shares and game Stop was a good idea. It was the sort of the same fuel. Everything was fueled by very similar things, and none of those things really have to do with that sense of

you know, pure libertarianism. None of that necessarily requires you to have read a white paper. It's just a sense of, Oh, this coin that looks like a sheba. You knew that Elon Muski is talking about. That seems fun and I need fun, and I'm going to do something like that. And you know, so there was it is impossible to separate some of the price increases of the past two years with the overarching macro reality of all of these

other things that were happening at the same time. It's it's almost like it was just in the right place at the right time. Like it kind of makes me wonder if cryptocurrencies didn't exist, Well, what when we have turned to write like just as a world in particular here in the US, Like, what would all of those individuals have done instead of dumping that money into crypto As physical communities are kind of breaking down and you can't in time with people that you're close to in

the ways that you're used to. It's the cryptocurrency is kind of filled a void and I don't know what they absolutely did, And it's you know, whether you look at subreddits like our Cryptocurrency, which is one of the largest on Reddit, or you know, Discord, which I tend

to describe as like slack for video games. There were so many people in there that in between sharing trading tips or whatever they were talking about, we're just like talking about their lives and you know, just kind of sharing experiences and finding community in a way that also happened to be like, oh, by the way, I'm buying this thing is going to the moon. You should get in on that as well. Yeah, okay, so I guess there.

But there are more and more naysayers in the crypto space now or or or like you know, they talk about crypto even though they're not they're not in on on the game. And Jamie Diamonds, the CEO of Chase, he recently he called crypto. I mean this, I mean, I'm sure this made ripples in that Reddit community, right.

He called crypto a decentralized Ponzi scheme. And he's He's not the only one who's kind of a Debbie Downer in this regard, but it certainly feels like, you know, anyone like Matt Side at the beginning, who invested some of their money around Super Bowl time earlier this year, like they might feel the same way as he does, so, I don't know how how has the crypto community responded to big time players like it are they? Is he

like the arch nemesis now of the crypto community. There are so many animals in crypto, like Jamie Diavon, like some you know, the it's like you know those murder boards where there's just a bunch of people and they're connected by red string like some dudes. Somewhere definitely has like Jamie Diamond's face as well as Somewhere board somewhere. Um, well,

I'll say a couple of things. One is, it is very much the case that a lot of people bought into crypto because prices were hitting all time highs and there was this this you know, legit fomo, this fair of missing out, this idea of like wow, all of my friends are suddenly rich on paper, Um, I want to get in on this action. And so, and that was before the super Bowl. For me, the Super Bowl was kind of like the toppi Ist top of the

marketing crency. Um, you know, if like million dollar ads with famous celebrities, exactly Matt Damon is telling you to buy something, it's like a strong counter indicator. Otherwise you're weak, are you not your exactly so, but that enthusiasm has been going on for several months, and you know, like that September to December period is when you couldn't if you were a celebrity and you weren't talking about your board ape and ft like, were you even a celebrity?

And but the reality for a lot of other people who bought into crypto in two thousand thirteen, two thousand fourteen when it was trading like the low thousands of dollars, is that even though it's down, you know, more than fifty this year, those people are still fine. And so you have this kind of dichotomy emerging in the market of folks who piled in at the top and folks

who have been in from the beginning. And it's sort of it's almost like two sides talking past each other because a lot of the folks who piled in at the top, and to be clear, some of the people piled on the top were very sophisticated. They were, in kind of parlance, I'm sure folks and you're shore familiar with,

considered like qualified investors. Right. They had they had the liquid assets, they had the background, they had the experience um, and they made decisions that institutional investors, including major hedge funds, were also making, Like this token looks like a smart bet, you know, hindsight and all that stuff. So I would be very careful not to say that everybody who came in because of the Super Bowl was like didn't know

what they were doing. People who very much knew what they were doing also made bad bets and bad calculations. That's very true, good distinction to make, Stacy. You know, we're kind of talking about crypto here, just kind of widely and broadly. We're gonna take a quick break, but after that break, we're going to dive into kind of some of the more specific and practical applications that we

can see cryptocurrencies impacting our lives directly. We'll get to all of that right after this our we're background the break, still talking with Stacy Marie Ishmael about cryptocurrency. And you know, we covered a lot of history, old history, recent history just a second ago. But obviously since the Super Bowl time, right since the topi ist of the top Stacy, we're we're experiencing a lot of volatility um a lull in the crypto market, right and so I guess I'm curious

to hear from you. Like, We've got a lot of history to draw from when it comes to stock market recoveries, but we just, you know, we just don't have as much history on the crypto front. So how have you seen investing strategies shifting in the face of less data less information? There's a phrase in crypto that is deployed in a way that's not always helpful. Um that's called

do your own research. And it's this it's you know, you would have seen this at the heights of meme stocks as well, But it's just this idea of you should be able to find out and you should be able to you know, like use Google, use Reddit, use discord talks to your financial advisor, whatever, but you should

be able to figure this out for yourself. The reality, though, and I say this from the vantage points of somebody who works at in a newsroom that has access to like the best, fastest, most real time financial data in the world, you can stare at crypto data all day long and not be sure what exactly you're looking at because, as you say, you have a relatively short amount of like sample, right, it's you know, Thirteen years is not a long time for a financial asset to be in existence.

You have many different types of pricing because one of the things about being decentralized is like you don't necessarily have one single clearing price that everybody agrees on is is the price. It can be quite hard to get certain other kinds of data, like volumes, you know, things that if you are like a traditional look at a person coming at this from a traditional financial perspective, You're like, how do you assess the fundamentals of bitcoin? Question mark?

And the folks on the more skeptical side of the spectrum will say, well, bitcoin has no fundamentals, And the folks on the more maximalist side of the spectrum, she'll say, the fundamentals don't matter. What matters is like the future and the optimism and the limited supply, and so trying to value this thing like a traditional financial asset is extremely difficult. So what folks have done instead is things like, okay,

what is crypto correlated to? And for a decent stretch over the past several months, it was very correlated with like big cap tech stocks, So you know, whatever Apple or Meta or Amazon were up to or even Netflix, like that was what you were going to see in bitcoin. You know, if you were to chart Bitcoin versus the fangs for a while, it looked like a single chart. Some people would look at this from the perspective of something that you said earlier. Okay, like nobody has stimmy

checks anymore. There's less liquidity in the economy. That means that fewer people are going to have the appetite for riskier assets. We're going to expect that we're gonna adjust our price targets downward. But again, those are things that are almost orthogonal to crypto itself that folks are trying to model on top of, because again they're just there are very few crypto native inputs that are scalable and

available for the average person to analyze. Right, Yeah, as we're trying to find these corollaries, I mean, a lot of folks said that Bitcoin that it would be this inflation hedge, almost like a like a digital form of gold, right, and so folks turn to sort of like those safe harbor assets like gold when you're seeing, you know, the market tank. But obviously as inflation has been soaring, Bitcoin has been crashing along with the market, and yeah, So, I mean, I guess why is it that you think

bitcoin hasn't lived up to its billing. Is it just an improper comparison to something like gold or to something like some of the top stocks. Well, I think it's the difference between like theory and the reality of markets, right, which is, you can have a really good theory and then markets will be like ha ha you thought. And one of the but one of the things that is true about crypto is this is a This is an asset.

Whether you're thinking about you know, the big ones like ethereum and bitcoin or even the you know things like stable points, but this is an asset that started in retail. It started with people who were interested enough to solve math problems on paper in their bedrooms, and then you know kind of like upgrade their their PCs versus starting from you know, fully formed from the minds of some

person at Goldman Sacks or JP Morgan or wherever. And retail investors are much less predictable than your average institutional investors and much less likely to be engaging in trillion dollar group think. Billion dollar group think absolutely, but you know, generally speaking, the capitalization of any one retail investor is

way way smaller. But as institutional investors got into the market, they do the kinds of things that institutional investors do, which is they pile into a position or or a series of positions. They allocate their portfolios where they're looking for things that can hedge, so you know, they want something that's going up while something else is going down

and vice versa. And that has this like same making tendency where trades become very crowded and they become identical because you have a bunch of very large entities all moving in the same direction at once. So something that somebody else would argue is supposed to be uncoupled from sociain kinds of fundamentals like becomes coupled because people who are prone to big investment band group think are now

playing in that space. All right, I want to know about like we we've seen problems with wallets and crypto storage and people losing their passwords and getting locked out and they've got like a deadline in order to figure out what their password was or they're gonna lose like a ton of money, and um so yeah, I guess what's the best way for people maybe to go about investing in cryptic currency. Do E t F solve this problem? Like that's something that's happening outside of the United States.

We don't have any crypto approved ets here inside the US yet. But is that the future and is that the best way for people to have some exposure or I guess there's two different problems. There's one like the the investor wants some sort of exposure, but then there's also that somebody who feels like there's a use case they want actual crypto in some sort of you know, at crypto wallet. Right, yeah, I mean you hit on something really important, which is that the user experience of

crypto is challenging. Most people in most countries have figured out paper money. A large percentage of people in countries that you might not have expect have figured out digital money. Right there, like Venmo native or Empesso native. They're like cash, what is cash? I'll venmo you or i'll you know cash app you or whatever those things are. Crypto has

not quite reached that same level of user friendliness. You you start from a place of if you forget your password, r I p all your money, right It's it's not like you can call your bank and give them, you know, nineteen different forms of identification and your firstborn child, and they'd be like, okay, we've unlocked your account. Here you go. There's none of that because again, this is a rejection of centralization. There's no appeal to a higher authority to

say it comes down to you. And frankly, most people are bounded password managements. It's just not a strength for acquired right now. So you know, anything that gets like really intensely built around make sure you remember this very complicated combination of characters and never forget it's a hurdle. Uh So, I think the last problem number one. I think problem number two is the way that some folks think about crypto is that as if it's as safe

as other kinds of financial assets. You know, like a lot of the most um depressing testimony from people who lost money to entities like Celsius and Voyage has been folks saying I thought you were a bank, and I thought you had f D I C type insurance and I thought that'd be okay. And you you know, this was marketed to me as a savings product. And so I think there's a misunderstanding of the levels of risk here.

Even when you get two products like e t f s, which are supposed to provide more of those traditional looking things, they're still just rappers on an underlying asset class that's right volatile, or on equities exposed to an underlying acid

class that is very volatile. Basically, that's why stable coins weren't so stable, right because at least some of them, Yeah, right, right, yeah, because like they get labeled as such, they get wrapped in it's in the name exictically, it kind of gets wrapped in that way, gets promoted, gets marketed the less volatile form of cryptocurrency. But like you said, some of

them didn't experience that. But okay, so you're kind of talking about some of the reasons why cryptocurrencies, how they're not actually being used as a currency, right, Like you're you're talking about first of all, it's tough to manage whether or not they're safe. It's not an actual bank. Are there other reasons that we're not seeing countries adopt cryptocurrencies? We've seen too, right, right, So yet El Salvador, right, like they made it their national exchange, but it just

in the Central African Republic is the other one. But it doesn't seem like it's it's getting widely adopted. Up. I'm curious if there are some other reasons that you think that that's the case. Yeah, I mean the big one is slowness. And and this is thing that is

not like talked about as often. It's like you want to send, like you want to buy something on a blockchain, or you want to send money from one way to another, most of the solutions that are available to most people are nowhere near as fast as your average like Venmo transaction. There's just a lot of latency built into these networks, and there are fees that folks might not expect. Right.

It's which is not to say that there are no fees in banking, because like every time I get dinged for a wire transfer fee, I'm like, ah, But in every single time you do a transaction in crypto, you you pay some kind of fee to process that transaction. And I remember in like last fall, when folks were doing they were like, oh, we're going to save the

world by raising money in crypto. Donate here and we'll send it to good cause of your choosing, And people be like, great, I want to donate a hundred dollars and then on the other end they'd be like, great, that will be fifty dollars in fees, And excuse me for you know, so that I was a calculation you were not expecting because even the world's most aggressive credit card is rarely going to charge you a fIF on

on some kind of donation. And then I think, just like a third thing is the inherance volatility of the thing itself. Like one of the key expected attributes of something that acts like a currency is that it's a store of value that at the beginning, middle of the end of transaction, this one dollar is still going to

be worth a dollar. And if you combine like the slowness and the fees that I mentioned, that you're by the end of a transaction, you're one dollar might be worth two dollars or it might be worth twenty cets. And that is a degree of instability that not everybody is super comfortable with. Yeah, and and something else that people aren't comfortable with in the crypto space or more there's more more discomfort with these days, is is hacking in scam attempts? Right, because we saw it just the

other day. Stats came out that more than two billion dollars has been stolen in crypto accounts this year alone, and so I guess, uh, some of these some of these places where people buy in store cryptocurrency, they're not as secure as may be the end end user thinks, and then they find out that their money has been

stolen by hackers. I mean, how big of a problem is this, because it seems like the more the more money that's being ripped from people's hands as they're getting into the space, that that creates just preponderance of issues for adoption of crypto in general. This is a problem, and it's a problem for all of the reasons you've

identified and a few more. And one of the things is that a lot of the energy coming into like crypto hacking are non state or state actors like the Lazarus Group, which is, you know, kind of an infamous North Korea based hacking collective who five years ago might have been ripping people off or attempting to hack into into like non crypto things, but there was less money

in crypto five years ago. So what you have are these incredibly sophisticated, well organized actors that are very opportunistic and they're looking for where is there a bunch of money slashing around and the opportunity to confuse people and make an easy book as a result of that. And

that is a real challenge. And when I say sophisticated, it's you know, some of my colleagues on the cybersecurity team here at Bloomberg have reported on things like that group will bribe employees at Team Mobile to get them to clone your simcard, you know, so that they can redirect your two factor authentication code and log into your account. I mean, this is not like your average like somebody clicked on a spa bammily link in an email thing.

This is legit incredibly sophisticated attempts that are very hard as an ordinary human being to protect yourself against. So that's the first thing, and I think the second thing is, yeah, there's also just a bunch of like you click on a spammi link in an email, or you know, somebody loses or had a very weak password on their Instagram account and then their Instagram was taken over and it's a celebrity account. So people are like, oh, yeah, why is so and so celebrity telling me to buy dogecoin.

I guess I'll buy dogcoin, but it was in fact somebody who has compromised that celebrity account. Or you know, you get an email that looks like your n f T provider and it says click here for a free n f T and everybody loves free stuff and they click on the thing. But the thing is a link to some kind of malware, and that malware, you know, connects to a server, and that server is like, cool, thank you, We'll take all your actual n f T s and we will make our merry away with it.

You know. So I don't think that the hacking is necessarily like new I do think that the the opportunity is so large that a lot of folks who are being like sketchy and netherious in other areas have turned their attention to crypto. That makes a ton of sense. You're getting hit on both ends. You're getting hit by the folks who are trying the less sophisticated spam attacks. But then you've got, like you said, some of these

big players as well. And I think some folks would say that like one of the solutions to this frauds these attempts would be tieder regulation. So can you talk about how you think that type of regulation by the state,

how would that affect something like cryptocurrencies. This is one of the hardest simple questions because crypto is global, right, So when you're when you're talking about regulation, you're also talking about you have to have some kind of cross border framework, because you can't only regulate bitcoin in the United States and then have nothing happening in Europe because you're gonna want to You're gonna have people in Paris who want to send something to people in New York,

and then you're gonna have a conflict of regulatory entities. So that's kind of a huge problem. And there are there are many efforts by the folks who are paid to write white papers that are very long about global financial stability and regulation, that are attempting to find solutions to this problem. But then you have different kinds of

potential regulation. You have regulation at the state level. As you say, so, like I live in New York City, the New York Attorney General and others have been very aggressive in saying, okay, crypto companies, if you want to operate here, if you want to have New Yorkers sign up for your stuff, you are going to have to abide by a higher class of disclosure requirements. There's way more paperwork in your future. Get ready. And by the way, if you don't follow up, we will find you out

of existence. Other states have been like, word, chill, we we have no requirements. Do what you will, it's fine. Then you have federal level regulations, right, So you've got the Securities and Exchange Commission, you have the the cftc UM and others saying we are going to make sure that at the level of like qualified Investors or Kim Kardashian, that no one is engaging in behavior that contravene existing laws.

Then you've got the legislators, so people who are trying to say, well, I as a congress person or I as a Senator, I'm proposing that we do more stuff with stable coin. And here's my five page long bill. Will somebody please remember to vote on this before the midterm elections. So you've got this sort of stew of different kinds of things, and that's leading to a bunch of people in the industry being like, woe is us. There's no regulatory clarity. We don't know how to proceed.

And in the meantime, the people who are really suffering are those individual investors who thought this thing was a bank. Yeah, I guess when we're talking about decentralized find its right to currency is a part of this movement to get away from traditionally regulated ways of doing of doing business, sending money and does regulation kind of flying the face of that is does it kind of up end like toss over to the apple cart? Per se? It absolutely

does by definition. So it's because this to regulate something, you have to be able to define it. You have to be able to say, these are the this is the jurisdiction that you operate in. There is there are a couple of crypto companies that famously are like we are not headquartered anywhere, no one can regulate us, and regulators like, um, yeah we can. We will regulate you in every place that you have in office like good try. Uh you know. So it's this this idea of statelessness,

this idea of being entirely decentralized. There are always people behind these protocols, and those people will say things like well, you can't regulate software and the European Union and be like tell that's a Microsoft, my guys, we absolutely can regulate software. So you know, I think that this this paradigm of you want something that is entirely decentralized, entirely stateless, but also safe, it's very hard to reconcile. Yeah, all right, We've got a few more questions we want to get

to with you. Stay. That's that's fascinating. I'm so curious. I feel like this is one of those things where like what happens here is where I'm on the edge of my seat because it's in tossing popcorn of my mouth while I watch um. But yeah, we've got a few more questions to get to with you, including we want to talk about n f T s. We also want to discuss maybe like crypto and how it seems to have religious elements to it going on. We'll we'll

get to those questions right after this. All right, we're back from the break talking with Stacy Marie Ishmael about cryptocurrencies, and just before the break, you heard it here Stacy is a proponent for one global organization to regulate all the one ring to rule the act exactly. It sounds

like even watching the series as well. Stacy. On that note, let's talk about religion, because yeah, a lot of segues here, like earlier on, like you're kind of talking about this sort of like your unified theory as to why it is that folks were sort of latching onto something like crypto.

I mean to that end, like do you see parallels between cryptocurrencies and sort of like fundamentalist religion, because I feel like the like the fear, uncertainty, doubts, the mantra, the combined with continued calls for fellow crypto enthusiast to hold all to keep the faith like that has a lot of these kind of like quasi religious elements, which kind of makes this an even weirder asset class. Oh, it's super weird. Um. One of my colleagues was on

the team in London, Emily Nicole. She academically studied cults and has a kind of a research background in understanding, you know, what makes people coalesced a round, either an idea or particularly compelling personality, And it's so interesting to get to benefit from the perspective that she brings to covering this for all of the reasons that you've just described, which is I don't know if I would necessarily go so far as to say it is religious, but it

is certainly a space that is marked by charismatic leaders and by people who are held up as quasi deities. You know, whether it's like you believe in Doge and Elon Musk, or you believe in Jack Dorsey and bitcoin, or you perhaps some of your listeners are familiar with something that was called Home and was a very interesting set of tokens that relied very heavily on the idea that if nobody ever sells, this can only go up, which is in other parts the financial markets described very differently.

But this was led by a person who was pseudonymously known as Zeus, and Zeus would hold these town halls where he would like rally his followers who call themselves Om's and talk about the need to keep the faith and you know, all of us have to be in this together. I mean they're down like ninety seven percent since the height of the height of those town halls.

But there is something about crypto that is very much based in this idea of community, which is very confusing when you think about the fact that it is also explicitly a rejection of trust, right that this whole thing is supposed to function even if you don't know or trust your counterparty. And yet so many of these kinds of appeals are to identity, are to the idea of like tribe or nation and other kind of collective organizing principles,

like crypto people even invented companies. They were like, you know, forget ll c s, we can have decentralized autonomous organization because we like, we need a way to make decisions collectively. So I absolutely think that I don't know if it's inherent to the asset class or if it's that the kinds of people who are attracted to this tend to manifest in very specific ways, but there are there are very much elements of this that are defined by that

appeal to charisma. I'm sure that that unknown identity of Satoshi, right has to has to play a little part in that, right, the ambiguous nature of who wrote the paper and kind of like it came from on high, what's started. Yeah, it's like the tablet's coming down from the mountain and you're like, all right, cool. And that has to be a part of it, because if you could just point to a nerdy individual like in their mom's basement, you might be like, okay, well, some of the mystery is lost,

and I'm not going to keep the faith in that. Yeah, I mean, mythology is really important, right, It's people love hero they love villains even more, but they do they do love a hero, and they do love the idea that somebody out there was like smarter than everyone else and figured something out and then like rude off into some kind of financial sunset mysteriously. Yeah, yeah, I want to know to Let's talk about n f T s for a second, because this is very much a part

of this DeFi space. And and you know, obviously we remember when picks of apes and crypto punks were going for millions and digital pet rocks. Basically we're costing hundreds of thousands of dollars and when you think about it, though, it really wasn't that long ago, although it looks like art based n f t s have seen this enormous drop in value. But yeah, what's what's going on in the n f T space. What do we need to know? And is is there a future for enough T s?

What does that look like? Well, I'll start with the question of is there a future for n f T s and an n f T fundamentally is just a piece of software. It's a way of defining encode, rights, obligations, and benefits. And for you know, say about a year or so, the primary use case of that software was telling somebody you have the right to be recognized as the owner of this picture of a monkey, which is

definitely something you could use software for. Sounds goofy, that seems fine, um, but there are other things that you can do with that software. And that's where I think, like, we haven't seen anything close to actual use cases. And by use cases, I don't mean you know, like nobody's doing this. I mean like widespread utility and usefulness and

you know, but I've seen people do experiments. They're like, well, we can sell music in the form of an n f T, and that software, that code that defines this transaction can say you know, if I, Stacy sell this to you at and then you sell this to somebody else, I will still get royalties without having to do anything.

And you don't have to do anything either, because that's just encoded into the contracts like the world's smartest analytic basically, right yea um, And that's you know, that's that's really interesting. There are other people who are trying to design n f T s that would allow like portability between video games. Right, so, say you have like some really cool bow and arrow

set in Fortnite, but you also play elden Ring. There's a bunch of assumptions based into this, including that Fortnite and the makers of elden Ring will ever get along stay with me? Um, so you know, see whom the video games were interoperable, and you could like take that bow and you know, that bow and arrow out of

Fortnite and into elden Ring and vice versa. Like you would do that in the form of software, and you would do that in the form of an n f T and like those sorts of things where you're sort of taking a step back and imagining the possibilities of software that reacts intelligently to circumstances. Is I think a much more expansive way of understanding the reality of n

f T s than apes. But but it's also like less profitable immediately, right, Yeah, I mean it kind of makes me think just to early computing and just some of the applications early on, it was a lot of it was kind of dumb stuff, maybe like we've seen today, like with the digital pet rocks and monkeys in stomical

cheese were brilliant. Yeah, but it does seem like that there's a lot of future ahead of us when it comes to just the application specifically of blockchain, which which kind of makes me then want to ask you how excited should we be about the possibility that blockchain is going to be able to change the future and a

how likely is that do you think to happen? And then be do you think we can do that without going all in and buying actual cryptocurrencies because the underlying technology will solve problems and we don't necessarily have to egg it on with our investing dollars. I mean that phrase that you used people have used in like crypto skeptic drinking games, which is like somebody's going to say

underlying techno and we've alway said once, thank goodness. So but this is kind of this is sort of the challenge, right where a lot of those early tech things that you're describing, like some of that turned into pets dot Com and some of it turned into Apple, and it's very very hard to predict what direct action any of this is going to be used for is you know, is crypto gonna go from like interesting but marginal from a technology perspective to redefining the way that you understand

the universe. There are absolutely people, mostly venture capitalists, making extremely significant bets in that direction. But then there's also a ton of people that are like, I don't know, I'm not sure, and you know, I think journalists in general are not prone to like wild bouts of enthusiasm or for any particular thing. But I think what makes class Fountain bens foreshort, that is like where I channel

my enthusiasm. Um. But I think what makes this as the class interesting to me is the fact that I don't know, right, It's the fact that sort of every day, some utterly chaotic thing happens that makes me think about the potential both in terms of upside and downside in very different ways. Again, this is another thing where I'm be on the edge of my seat, popcorn like watching how things play out. Because in the next ten years,

it's right a fascinating space. We're going to continue to see developments for sure, And uh, Stacy, Marie Ishmael, we really really appreciate you joining us today on the podcast Where can Our listeners go to find out more about you and what you're up to. Well, we're all part of the I Heart Radio family, sir. The Bloomberg. The Bloomberg Crypto podcast is Monday to Friday. It's available wherever you get your podcasts um I am on easily findable

on the internet. But please do check out the work of my fantastic reporters and editors on Bloomberg dot com. It's awesome. We'll make sure to link to all of that. Stacy, thank you so much for joining us today. My pleasure. Well, all right, Joel May, what a fun conversation we just had here with Stacy Marie ishmael Um. I feel like we were able to this truly did feel like a conversation we had with a friend, Like I felt like

she was here with us. We're all having a beer together and we're able just to talk about a topic that you and I are very interested in. But simultaneously it's difficult for us to die, like really dive into it a because we're we don't have the depth of knowledge that someone likes Stacy does, but we're idiots on this front. But also we I want to talk about

it too much. Um, and that's something I'm afraid, Like, I wonder if we talked about it too much back when it was more hots and folks bought more of it maybe than they should have. We're still talking about and we're still hating on the folks who are just too enthusiastics. And I will say that's the right to

bring some nuance conversation. That's a nice thing about having a journalist on the show to talk about it who covers it with ridiculous frequency like Stacy, because you're you're not getting someone who is sold out to this asset class who believes the cryptocurrency is the future. And if we interview somebody like that, it would be difficult to

temper their enthusiast and ask them the hard questions. But Stacy is like involved talking to all the players in this space, and so I feel like she has a really nuanced helfold take and just provides a lot of understanding. So now I feel like I understand crypto more now after that comment, and even possibly the future depending on I mean, who knows what's actually gonna happen, but the

possibilities are there. She's not holding her own town halls where She's just launched her own coin, right, and it's just like, let me tell you, you can get it on the ground floor, this nig the Stacey Coin, Fountain pen Coin. But yeah, do you have a Do you

have a big takeaway from this conversation? Yeah? I think my biggest takeaway was when she said that we we have this misunderstanding of risk when it comes to crypto markets, and I thought that was I thought that was really smart that oftentimes we're thinking about the risk of like, are are the price of the asset going down? Deploying some capital into the crypto space and then seeing that we have less money six months from now than we had before, and that is a real risk, right, and

we a lot of people have experienced that risk. But when I'm thinking about like all of the risks in the crypto space, like there are actually a lot more than there are with other traditional asset classes. So so not only are you at risk of deeper price cuts, you're also you potentially experienced faster gains right in the

crypto space. But not only are you at risk of of even deeper price cuts, but you're also at risk of fraud, hacking, scam attempts, and so I guess, um, I think crypto is, like we said, it's a fascinating space. There's a lot going on, there's a lot to kind of keep your eyes on. Um. But I think with with the preponderance of nefarious activity we've seen in the space, I think your risk appetite has to be pretty strong to be in the crypto game, to have to hold

many of your assets in cryptocurrency at the current time. Yeah, and I think I thought you're going to go in this direction, like you're talking, we're talking about different countries that have adopted cryptocurrencies as their national medium of exchange. And she was talking about how that that volatility that you're talking about, Joll, is what is keeping it from being becoming more widely adopted because people don't like that. I mean, even just with inflation that is providing some

uncertainty within our lives, you see prices rising and dropping. No, we don't as a people, we don't like that kind of uncertainty. There's enough uncertainty that we have in life, let alone the the mediums of exchange that we're using within our lives. But if you're trying to use your money as a store of value as a medium of exchange if it's up or down by ten percent in a given day, doesn't work well as a store of

value if it felluctuates that much. And that's so that's clearly a hurdle that has to be overcome before I think, before it becomes widely adopted. So that was a little, I guess, small idendum to yours, But my big takeaway she said the phrase that you need to like in a lot of cryptocurrency circles, how you should be doing

your own research. And man, that stood out to me because not only is that true when it comes to a more speculative asset like crypto, but how about everything that we put our money towards uh and within the world of personal finance, and not just cryptocurrencies, but just what it is that you spend your money on from a consumption standpoint, the bank that you choose to leave your money with where you're expecting it to stay safe,

the different kind of investments, whatever company you're thinking about joining with in order to earn money, all the different arenas it's important that we vet do our own research and all the different arenas within our personal finance life as a whole. Because like, truly there, I don't think there should be anything that we just take for granted. I really do think that there should be a higher level of personal responsibility when it comes to what it

is that we each do individually with our money. That it makes me just think that anybody who's listening to this show, even if they've been listening for a long time, and they're like, man, I really think Matt and Joeler spot on a lot of things, and you you might be like, they're idiots on a lot of things, which which which is probably true. But even that, even in that like take our word with a grain of salt, like,

listen to us. Hopefully we can provide you valuable information and a helpful way to think about important topics in your life, like whatever personal finance conundrum you've got going on.

But we're also fallible human beings, and and it just makes me think of like TikTok and how there's some great people dishing some good advice on TikTok, but there's a lot of bad information out there too, and it's coming at you in these bite sized bits that are, you know, a minute or less in length, and so it's really hard to communicate effectively when we're talking about complicated maneuvers that we might be making with our money. So yeah, I would listen to a range of people.

I would read books, blogs, I listen to podcasts. I would kind of run the gamut when I'm getting my information on things. And if you found one guru in the crypto space that you're beholden to, then you're treading on really risky ground at that point. Yeah, that's true. Although I will say, like, there's nothing that we stay here on the show that we don't personally do. Although I'm sure those gurus out there say the same thing as well. Yeah, they're like, no, this is what I'm doing.

Obviously I believe it. I mean, we we plent crypto broke. We try to say things that that only that are in the best interest supper audience, and that's our goal three days a week, every week. And I think it is important to mention that, to say that that's kind of the standard we hold ourselves too. But there are a lot of other people who might say the same thing and then not actually practice it. That's right, Okay, let's get to our amazing beer that you and I

enjoyed during this episode. Well, this is a barrel aged blended strong ale by our friends over at Monday night brewing. So this is their anniversary beer, their anniversary ale. They used to call it tie whatever on, like whatever year it was, So if it was the fifth anniversary, tie five on. So this one it doesn't say tie eleven on, but it just has an eleven on there made out of neck ties because neck ties are kind of their thing.

It's kind of like their original original thing was like a young professional individual who was loosening as tie after a hard, hard day's work. Essentially, they were trying to like combat the we're drinking beer on the weekends. It's like, no, no, we make sophisticated beers that you enjoy during the week. It's more about quality than quantity. Munch of the clock, leave your work, go get a good beer at the end of the day, exactly. And this beer is a

quality beer, I'll say. So. It's a blended strong ale. And the reason it's not a particular style is because this is truly a mash up of a bunch of different beers. Like like they say here, it's a mash up of a stout quad brown Ale, barley wine Ale, Doppelbox. There are so many different beers that they've brewed in order to blend together. In some of these extra special makes, Burana would barrels. I guess this is what they stuck

these things. It's like Brazilian Brazilian. That makes me think of when I was a kid, and you would do the suicide of this and but awestent times that tasted like trash. But this this one does not. Because when I hear because it's funny, I was like, man, this has some quad like elements. So this has some barley wine like elements. I didn't the label and know that, but I can taste it all coming through. It wasn't it works. It was like a traditional stouts Russian Imperial,

or it wasn't just a straight up barley wine. It's just a dark, rich, flavorful ale that also happens to have some vanilla. But yeah, man, this was a fantastic beer. Often, when you're doing that, it takes like a master blender. Blending multiple beers to create a great beer is actually a really difficult thing to do well. And there's a lot of really crappy, blendid beers out there, but this is a really really good blendid beer that yeah, I

would like to have more of for sure. Yeah. The technique they borrowed from the world of scotch, because that's typically that's how you get some of those consistently amazing scotches like you you know, the Johnny Walker whatever, You've got the different colors, like each one of those are blends, and so you've got single malts, which are a single like vintage basically a single year. Most folks like the

consistency that comes with the blend. But then there's folks who use that blending technique to create entirely new products, which is the beer that you and I are enjoying today. It's like blending on steroids. Yeah, absolutely, so good, agreed, delicious. So that's gonna do it for this episode. For folks who want show notes links to anything that that Stacy mentioned in the interview, Will will put those up on our website and how to money dot com. That's right,

So Joel, that's going to be it, buddy. Until next time, Best Friends Out, Best Friends Out,