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