Bankless - Nate Silver: SBF, The 2024 Election, & Prediction Markets

Episode Date: August 13, 2024

Nate Silver is a statistician, writer, and political analyst, widely recognized for his accurate predictions of U.S. presidential elections. He's now released an exceptional new book titled, "On the Edge: The Art of Risking Everything." The book delves into the world of risk, game theory, cryptocurrency, artificial intelligence, and poker—fields where the stakes are high and the outcomes uncertain. One of the central themes of the book is crypto, which is why we were thrilled to have Nate join us. Nate is not just a respected analyst; he's one of us—a fellow degen who shares our passion for the unpredictable and the frontier. But he's also much more. Nate is an avid poker player, a sharp sports bettor, an interviewer of Sam Bankman-Fried, an NFT enthusiast, and an advisor to Polymarket. In today’s episode, he offers keen insights into the brewing battle between the crypto world and its traditional incumbents. ------ 📣DEBRIEF | Ryan & David Unpacking the Episode: https://www.bankless.com/debrief-the-nate-silver-interview   ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2    ⁠  🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap  ⚡️ CARTESI | LINUX-POWERED ROLLUPS https://bankless.cc/CartesiGovernance  🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle    🌐 OBOL | STAKE ON DVs, SCALE ETHEREUM https://bankless.cc/obol  🗣️TOKU | CRYPTO EMPLOYMENT  https://bankless.cc/toku  ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/48   ------ TIMESTAMPS 0:00 Intro 5:32 Nate is one of us 7:56 Nate’s POV on crypto  11:07 ‘The River’  17:35 ‘The Village’ 19:15 Riverian & Villager conflict  25:38 Is the River better? 34:16 Sam Bankman-Fried 52:23 Sam Altman 59:13 Prediction markets & Polymarket 1:06:56 2024 election predictions  1:09:01 Riverian’s betting Trump?  1:10:50 How do we navigate this? 1:15:09 Advice for the crypto industry 1:16:38 Closing & Disclaimers ------ RESOURCES Nate Silver https://x.com/NateSilver538   On the Edge  https://www.penguinrandomhouse.com/books/529280/on-the-edge-by-nate-silver/   ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures  ⁠ 

Welcome to bankless. We're today on the episode, we explore the frontier of risk. This is Ron John Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Guys, we have an exciting guest today. His name is Nate Silver. He's on the podcast. You probably heard him in the context of maybe U.S. election predictions.

Remember when I'm looking at the election results, you know, pulling in from CNN or something like this on election night, Nate Silver is, like, generally there as a commentator. But he's more than that. He does more than just election predictions. He's a poker player. He's a sports better. He interviewed SBF multiple times, both pre-collapse and then post-collapse. He enjoys NFTs.

He is an advisor to polymarket, the crypto prediction market. And importantly, in our episode today, he's an observer of a battle that's shaping up between crypto and the incumbents. He has names for these two specific tribes that we'll get into. A few things we talk about today. The river versus the village. why the village is attacking crypto. The theory of mind for SBF.

Why did he do it? How SBF viewed risk and what we can learn. AI and Sam Altman. Prediction markets and polymarket. Predictions for the 2024 election that's upon us. This alliance between crypto and Trump. How to navigate this decade just like in general, where are we going? And advice for crypto.

All of this conversation is coming on the heels of Nate Silver's recent book release on The Edge, which Ryan just powered. through over the last like three or four days. And I was only able to read like a very quick chapter before I zoomed off to Argentina. So Ryan, Ryan's got the driver's seat on this episode today because he's actually the guy that studied the material. But I found it incredibly fascinating. And I've actually got the book waiting for me back, back home when I get back home. So pretty excited to open that up. So let's go ahead and get right into this conversation with Nate Silver, the author. But first, a moment to talk about some of these fantastic sponsors that make

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working to scale and decentralize Ethereum using DVs. And now you can get involved, introducing the OBLE contributions program. Visit obel.org slash bankless to stake on DVs, either through a partner staking protocol or at home. Earn access to future governance and ownership in OBLE while contributing to retroactive funding for projects that are actively decentralizing Ethereum. This is your opportunity to secure inclusion, one of the most important projects working to scale Ethereum's foundation for future growth. Visit obel.org to get started. That's obel.org slash bankless nation. I'm incredibly excited to introduce you to Nate Silver. He's a statistician. He's a writer. He's a political analyst. He's probably best known,

at least in mainstream circles, for accurately predicting U.S. presidential elections, or at least being less wrong about them, maybe in the rational parlance. He's got this incredible book out. It's called On the Edge. It just came out. It's about risk. It's about game theory. It's about crypto. It's about AI. It's about poker. It's about so many things. I can't even encapsulate it in kind of a brief intro. And it totally nerds my entire weekend, Nate, as I was finished this. Anyway, Nate, welcome to bankless. Thank you, Ryan. I really appreciate that. Dude, this was a great book. And I want to say at the onset, I didn't realize how much you were like one of us, let's say. I know. Yeah. I didn't, I'm not sure I realized either.

This book came out of feeling really estranged. with the political climate. I mean, 2020 was a miserable year for almost every American, I think. But between an election year, between the COVID stuff, between, I don't know,

I mean, it was a peak for certain types of progressive leftism, I guess, but also for Trumpism and the January 6th events. It was not a great year. And I kind of had always found my happy place in poker, basically. I quit my job as a consultant

way back in 2004 in the poker boom years to play poker. or online for a living. Did that for about three years until the government passed a law that basically banned my livelihood. And that kind of that kind of banked me

into being really interested in politics. I wanted the people who passed that law to be voted out of office. But yeah, I've always, the book started with me like flying to a casino in Florida in which technically is still the middle of the pandemic and it's every bit as much of a shit show as you would expect.

And branching out from there. And like, yeah, I think there's, you know, I'm not a huge capital C crypto guy. but there's just a like-mindedness in the kinds of things people are interested in, in the terminology that they use, in the attitude toward calculator risk-taking, sometimes airing on the side of degeneracy,

which in my world we kind of use sometimes as a term of affection if you call somebody a D-Gen. Our world, too. Yeah, totally. Yeah. And it's like, so it's like variation to this certain type of nerd who's like very analytical, but also very competitive, right? They're trying to apply this to make smart trades, to combat each other,

going to combat on the internet, et cetera. 100%. And that's exactly what I mean by sort of one of us. And by the way, you're actually like explicitly one of us. You're talking about your poker days. You were literally unbanked. You were literally caused to go bankless, right? And kind of like this poker legislation that the U.S. put forward and choke pointed all

of the poker website rails, right? So, I mean, that's a use case for crypto right there. And then I also mean it from a like team game theory, team like market. it's nerd, like team expected value calculation, markets, predictions, trading. It's all of that. That's really what I mean. I'm curious, Nate, what was your perspective on crypto, like going into this book? And then I know I didn't expect one of the throughlines of the book, like, one of the main

characters to actually be crypto, but it sort of was. And then it's like, what's your perspective on crypto coming out of this book? I mean, coming into the book, maybe I was skeptical on the one hand. I was also kind of jealous that like, because I was in this world, like, you know, you know, in 2015, some friend was going to sell me $10,000 in Bitcoin, and it kind of fell through, right? He got cold feet or something. I'm like, shit, that cost me a lot of expected value. But look, people in the world I come from, I mean, I think I come from our world, which I call the river in the book. There's another world, which I call the village, which is politics,

uh, media, government, academia, et cetera. And they kind of have like a skeptical attitude toward crypto. But what I found is just like, so I went to NFT, Basel in Miami in, I think, December 2021. And I'm like, there's something happening here, right? There's a lot of energy. I'm not sure how I describe it. I'm not sure it's 100% positive energy, but there are a lot of people here. There's something going on and people are looking for something interesting. And so, you know, look, I mean, SBF is a major character in the story and is not treated sympathetically. I don't think deserves to be. But I try to make a point of all the things I'm running about to be fair, right? I mean, you meet some fun and skilled crypto traders and you meet, I don't know, I just wanted

to be fair because I have a lot of friends who are like, you're not going to give a bad name to NFTs. I'm like, I'm just going to be a journalist and try to like not be a biased journalist and it's not 100% positive. But I think, I think it captures the intellectual origins of Bitcoin and Ethereum. And I think it captures, I think on their own terms, what the, what the movements about. Yeah, if I were to give a book review from a crypto native, I would say all of that is accurate. Like, I would say you did a great job, actually, even in parts explaining crypto to Normies in a way that I think sometimes the crypto community has a hard time doing. Like, you literally go through like blockchain and Bitcoin and you describe NFTs in some detail, including, you know, terms like a memetic

desire and, like, you know, associating some philosophy with that. So like, you did a great job, actually. And this is from a crypto native speaking. I really appreciate that because that's the stuff you get like a little bit nervous about the more technical stuff about crypto or about AI. I mean, look, I am sometimes guilty of maybe oversimplifying things a half step because it is going for a fairly mainstream audience. But I hope that the description is at least factually accurate and directionally correct. Yeah. And I think that's what I loved the most about this book is because it really appeals to a mainstream audience. you're really explaining this weird community.

You call it the river. This weird group of tech people, rationalists, crypto people, who they are, why they do the things that they do. And most importantly, how they think about risk. I think that's the on the edge part. And maybe we should talk about that in the context of the rest of this episode, how people in this community think about risk. But in order to see through that lens, I think we have to go back to some.

definitions here. So you used a term earlier in this episode, you said you call these people the river or people who are in the river. I think you used in the book the term of reverians a couple of times. What is that? What is somebody who is in the river and how does that contrast with the other group that you named earlier, people in the village? So what's a reverian? So the river is kind of a metaphorical place, although it's more of a literal place than I thought when I started the book. So the river in poker, poker had its origins on the Mississippi Riverboats, like literally in like the 19th century. So you're on the kind of frontier of risk.

You're gambling a lot. There's a fair amount of degeneracy. But it's also people who are very analytical, kind of taking the moneyball skill set and applying it to fund things or not fun things or serious things like effective altruism. But it's people who are always trying to think in terms of expected value and maximization is one way to define it. People who it's an applied thing, though, right? It's not academic.

It's not theoretical. It's people who are actually trying to make bets and think there's honor and winning a bet and that it's a challenge intrinsically to try to beat the market. The more I wrote the book, though, the more like these worlds really do cross over a lot, right? Like, I'm now an advisor for Polymarket, which is a big prediction market startup. And of course, is very, very, very crypto adjacent to say the least. You know, these people kind of know one another. I play in hedge fund games with like the all-in podcast or poker games with the all-end podcast guys, for example.

People, it's a small community. It's not for everybody. It's not for the mainstream ever. But you just see the same archetypes again and again and again. And it's just like, you know, I just know that if I sit down and play poker with somebody, like we're probably going to get along. And I can't think of any other activity for which that's true. The name, the river. Why is it called the river?

How'd the name come to be specifically? So partly because it has this poker origin, right? The river is the last card in Texas Holden. It's the last of five shared cards that are dealt. And poker has this Mississippi Riverboat origin. But also because, like, at first I was going to call it the pool. Like isn't like a betting pool, for example, or pooling your resources. And of course, like, you know, people in this world love water metaphors, fish and whales and things like that.

The problem with the pool is that that makes it sound like it's some country club or membership club when in fact most parts of the river are very participatory. If you want to go and play in the World Series of Poker main event, you should have to go up to the window and hand them $10,000 and they'll give you a ticket and you might be seated next to the biggest best poker players in the world, right? You can't do that in the NBA. You can't voluntarily sign up for like a three-on-three tournament with Steph Curry and Michael Jordan, for example.

You know, crypto, whatever else you say about it, I think is very kind of lowercasey democratic and decentralized. And that part of it, I think I appreciate a lot. So it's just the nature of the fact that like it's a region where people kind of speak the same dialect. It's like being from like the south of the United States or something, right? If you migrate to the north, you're always like, yeah, there's just things a little, something are a little different down here in the south. And I think it's the same for the river. Yeah, I totally appreciate the metaphor.

I think it works on a number of levels. It was very clarifying for me. And it kind of like unites a few sub-tribes, I would say. It's like one thing that's really interesting is a lot of people who are in crypto have poker experience. I always kind of wondered why that is. A lot of them, of course, are like from the VC community as well. And they're, you know, Silicon Valley. And so what the river does is does a good job of kind of uniting several.

different sub-tribs, I would say. Effective altruists, rationalists, the L-Ees or Yukowski's, and even the people like Beth, Jeff Jesus, who are like tech accelerationists and the crypto people and the Silicon Valley people and Mark Andres and all of these are revarians under your lens of things.

And like, you have this chart where you talk about a cognitive cluster and like some of the tools that they use. They're analytical, they're abstract. They tend to decouple things. But then there's also this like personality cluster. So they're super competitive. They're highly contrarian. So like they've got this independent mindset and they are incredibly risk tolerant as well. These are the characteristics of people

that are in the river and how they think. It sounds like people who are always pushing the frontier. They're on some sort of frontier of risk and knowledge. And if you talk to certain people, I mean, most of the people I talked to in the book are like quants of one kind or another. But I also talk to physical risk takers, like to an explorer. and an astronaut, you know, a guy that will walk up on a Perna in Argentina, a tallest mountain in the Western Hemisphere and be like, yeah, there's a 2% chance that I might die. But it's worth it because it'll be really fun and a big accomplishment. And like, that's a certain, I think there has to be some type of genetic component.

If you talk to the explorer, he's like, yeah, it's a small fraternity and we all feel like we were born with some of this. Because often people who are very analytical, you might think of as being very cautious, right? They're calculating. They're an actuary. They're an accountant or something like that, right? They only invest in mutual funds and things and or index funds, I should say. And these are people who really want to have a chip on their shoulders sometimes and want to

compete and want to win or at least have fun and gamble a little bit while they're doing it. And like it's more people than you would think. And kind of, I think a lot of New York, DC journalists kind of treat them, give them the cold shoulder and kind of treat this community as, you know, weird or cringy. And it can be weird and occasionally can even be cringy, I suppose, but also it's people who have had, like, a lot of success. In some cases, they're making a lot of money is, by the way, like a pretty big audience. I mean, I think this audience has been neglected by a lot of mainstream publications. I think that's why you see a lot of crypto-native media doing pretty well. But it's as part of

the world that's very important in some ways as winning as tech and finance, because more and more a share of the economic picture and is poorly understood. At least in the in a crypto industry, we have become so insular about our own like personality types and who we all hang out with that we start to call people who aren't us normies. And so if all the river people are all kind of just like hanging out, like everyone else who's not us are the normies out there. So but the river people are the Varian's are supposed to be in contrast to the villagers, the people that live in the village. Maybe we can illuminate who these these people are. What is this tribe? So in some ways, the village is a more familiar term and

like similar terms have been used by other authors, but it's the establishment, the professional managerial class. It's the New York Times and Harvard University. It's the U.S. government when a Democrat is in office, maybe less so Republican. And it's conventional thinking. It's risk averse. It's very concerned about reputation and not being canceled. It is good about some things. I mean, it tends to be fairly competent about some things. The Democratic Party tends to nominate less wacky candidates in the GOP, for example. You know, it's college educated. It's kind of the expert class.

But it's also become politicized where especially in an election year, like we're in now, then kind of where expertise begins and where partisanship ends is kind of a blurry line a little bit. And it's a natural world. And we should be clear that like both these tribes are weird, right? both people who are pretty weird, and it might be 1% of the country each or something like that, although in the river you kind of, you know, sports betting or whatever is a fairly mainstream thing, but like it's people who are who are different types of successful elites and are competing for power and influence. Well, now this gets to the conflict, because I think a major

thesis of the book is that the river and the village are kind of at war right now. This is both a a war of ideas and maybe a war in other ways as well. So like, why is there this conflict? There's an entire chapter titled, The Valley Hates the Village, right? And you're talking about Ravarians and Silicon Valley and kind of like big tech and, you know, the Mark Andreson, they 16 Zs of the world. And like, why are these two tribes at war? And what are they fighting about, really? I think you can tell two basic stories. And they're probably both true in large respects. One has to do with the personality clash that I talked about before where in the river, we say that we're contrarians. We may not be.

I think there's a lot of conformity within Silicon Valley, for example. But, you know, you're always suspicious of, like, group think in the conventional wisdom. I think events like the COVID pandemic precipitated some of this, for example. I think for other people in the river, the notion that Hillary Clinton was going to win the election in 2016. And then she didn't, I think, you know, undermine the credibility of the village. a little bit. Such one narrative I think is true. And also the fact that like, you know, let's

face it, some people in the river have a big chip on their shoulder. It may come from a challenging upbringing. It may come just from being really wired to be competitive even when you've kind of already won. But, you know, people like Elon Musk or Peter Thiel are very competitive. Peter Thiel tried to destroy the business of

Gawker, for example. So that's part of it. The other part of it's a more boring kind of Wall Street Journal version of the story, which is about that they have competing financial interest, where if you're in the river, then you don't want Lena Khan regulating you, right? You want better treatment for crypto. You want lower taxes. If you read the backstory and how did Elon Musk kind of become more conservative, I mean, it's partly personality, but also like he thought the Biden administration

wasn't fair to Tesla because it wasn't unionized, for example. So the fact that like some people, And by the way, if you took a survey of like everybody in the river who you're going to vote for for president, I still think Harris would get more votes than Trump. And then you'd have like a lot of overperformance for third party candidates, libertarians, RFK Jr., etc. So to some extent, like the fact that you have these very vocal team kind of red reverians is is real and growing, but just a part of it. But still, it's also, you know, they are trying to avoid regulatory capture and trying to avoid high taxes. and it's very, there's a very traditional story in some ways, too. How much of this do you think is like just power dynamics shifting, really? Because I would say there's almost like a revenge of the nerds type story coming from the, you know,

if you go back and look at some of the movies from the 1980s, like it's been a while since I've seen some of these, and I haven't seen all of them, but it's very much like, there's an era where the jock is kind of king, right? And very much the village class is kind of like the reigning governors, it's their sort of era. And since the 80s or so, the Ravarians, like the tech, the geek class has been very much on the upswing. And they've accrued a lot of power. And we're not just talking about like success stories and unicorns and billions and capital. We're actually talking about now that's translated into political power. And it seems like in the last like 15 years or so, the village has kind of woken up and been like, oh my God.

Like did, I don't know, did Facebook swing an election? Like, you know, can these social media tools be used to actually influence opinion? It's almost translated into some hard power, and it caught the villagers by surprise. And so they lash back against it. And now there's this reaction in kind of the river in Silicon Valley saying, well, now we have to resist it. We don't like politics. But now they're forcing us to actually get involved. So how much of the dynamics are just that?

It's just like power shifts. And that is recalibrating in some way? Yeah, look, I think in some ways because the village was like, oh, we can like dismiss these weird crypto and AI people, right? And we had our whole money ball phase where we embrace the likable nerd. And now we're, and now we're beyond that. It's kind of cringing it. It's like, okay, you can do what you want, but look at which taxis of the economy are growing. And look at how people who become very rich, and maybe it's not the best thing to become very rich.

But like, you know, the people who get very rich tend to have this crypto or river mindset, sometimes crypto, sometimes not, a new money mindset and not kind of the old school world of Harvard and Princeton and Yale and the old kind of, East Coast establishment. And they are waking up to that fact a little bit as you have explicit battles. I mean, Bill Ackman against the presidents of MIT and Harvard and Penn, is an explicit crypto, excuse me, River versus Village Battle, or like the New York Times suing open AI, right? Those are some of the most important institutions in the respective world, although the New

York Times is, I'd say unusually well run as a business for a Ravarian institution or for a village institution. You know, the stuff over Google Gemini, where I think people felt like, oh, maybe now Google is getting too woke, I guess, is one term for it. And they're supposed to be a part of the river. So, yeah, you see more and more explicit and open conflict. You know, look, maybe I wish Scott Alexander, who I'm sure some people on this podcast will know from Astral Star Codex, use the term gray tribe, which meant people who are kind of opting out of the red, blue wars, and they're kind of aloof and rational and more recently probably lean more anti-Trump than pro-Trump. And in some ways, I like that culture, but for better or worse, I think there are people who are

getting killed a little bit by politics. It's kind of partly that competitive contrarian instinct. It's partly like, well, you don't like me. Well, I don't like you back. And actually, I'm going to buy a media company and make your life harder. And also, I have a lot of money. So I'm going to put that to use in election campaigns. So, yeah, I mean, look, all of these people are flawed human beings. They're very competitive to want to get on that top point, oh, oh, 1% of the wealth distribution when you've already won all these bets in a row

inherently requires a special personality type that founders or that VCs are looking for and that is often a difficult personality type. But it's not surprising this is kind of burst into open conflict. Okay, so what of my like takes reading the book and even going to this episode is, I very much resonate with kind of the river people and the way they think about the world, this ability to be abstract, analytical decoupling, this basically this drive to kind of start new things.

It's like the river people get things done, do you know what I mean? Like is my perception. And it takes a little bit of risk, right, in order to move things. I see very much see the village as being kind of managerial, antiquated, like you just slow down, not getting things done. And so I think part of my bias and part of the bias of a lot of people in the river, which if you're listening to Bankless, you probably are, is that just river thinking is better. It's like the next evolution.

It's just like, okay, like now we've discovered expected value and probability. So let's just like apply some rationality to politics and any outcome. We get better results. Like the river is less wrong, isn't it? So the first part I agree with and the second part I don't. I mean, the part I really agree with is the ability to make decisions with incomplete information, right? Like, I've done consulting work for financial firms before and where there's some real event happening. And they're like, we need an answer the best test you can give us now or in 10 minutes, right?

You don't have enough time to go write a whole academic paper about it. So moving and taking uncertain opportunities, I mean, I think that's very valuable. I think understanding game theory and expected value is extremely valuable. I do think the track record of Ravarians when they go into politics is pretty mixed. Peter Thiel, for better or worse, had good instincts to kind of bet on Trump in 2016. It's like, okay, this is an undervalued asset, I think you thought. I mean, I think Peter's also pretty conservative. But here's an undervalued asset.

And if I back him, then I can have like a lot more influence and anticipated how a lot of the rest of his cohort would move four to eight years later. So you have to give some credit for that. But, you know, SBFs forays into politics were kind of notoriously unsuccessful and inefficient. Yeah, that was bad. Some of Peter Thiel's other candidate. I mean, Blake Masters, who co-wrote his book, was a Senate candidate in Arizona, Republican, and underperformed a lot. You know, even a little bit like, it's not quite classic reverian, but like the Michael Bloomberg for president campaign in 2020. Like, all the finance buddies I have in New York were like, all we need is for Michael Bloomberg to get on the race.

And then everyone will be like this centrist. He won American Samoa, spent a billion bucks to win American Samoa, and that's it. So, yeah, look, I think one of the better critiques of the river is that people don't know their own limitations and that some things require more domain knowledge than others and or, you know, in some things, it helps to be a part of the establishment. And or it's too hard to, like, reorient everyone's thinking. I mean, maybe if you could have like an entire candidacy that was just around by everybody. river people might do okay. But the village is good at, you know, in some ways, the core mission of the village is to win elections. And even though I think they're sometimes irrational about that, that's kind of the thing they do that they do pretty well. And Democrats, to their credit,

I mean, look, they won the 2020 election. They have salvaged from the jaws of defeat a 50-50 chance or so, maybe slightly higher than that. If you look at prediction markets or our model in 2020, Democrats have good midterm in 2022. So maybe they're actually okay at the at the election winning thing. My intuition here, Nate, is when these like two archetypes show up. You know, liberals versus conservatives, left versus right, Democrats versus Republicans, river people versus the villagers, is that the one is generally a check on the other. Like these things exist in a balance with each other.

They are harmonious with each other, even though that they are both intention. It's like kind of like yin and yang. Is that how you kind of interpret these things as like you can't really have one without the other? I mean, that's how it should be, right? Society benefits both from people who take risk and push technological innovation faster, perhaps, or we orient like kind of social moors, right? Let's say, let's kind of make this world more inclusive in different respects. You can debate if the envelope gets pushed too far or not,

but there's been a push toward, you know, inclusivity and widening the circle, and I think that's good. But you also can have unconstrained risk where you have problems like moral hazard, where if I get bailed out, if I take a risk, then that gives me incentive to be really risk loving in a ways that might not be kind of rational or good for society, generally speaking. You have issues like the prisoner's dilemma where, you know, if you think or an arms race, where if you think that, let's say you think, and I don't think this, but let's say you think that we should halt AI production, you face the problem that. China or your competitor across Silicon Valley might say, well, okay, that's great. Now I should have like more of the market to myself. And so, you know, you also need people who are smart regulators. I mean, I'm definitely like on the libertarian side relative to most people. But I think a certain amount of regulation helps the industry to grow.

A certain amount of trust helps the industry to grow. I know there's a vibe of trying to have trustless banking and maybe it works. Maybe it doesn't. I'm not trying to weigh too much on that. but like, but this has kind of gotten, but I think it's gotten too bipolar, where you have bimodal, maybe I should say, where the village has gotten like very risk of hers,

although it's gotten better since I think like 2021 when I started writing the book, which, you know, I kind of started writing it when we were just literally coming out of lockdowns, which I personally thought were an overreaction, especially for younger people. We were in a community where it felt like if you said the wrong thing about the wrong person

on this list of like 16 times, topics, identity politics or COVID or, you know, Israel or whatever else. If you said the wrong thing to the wrong person, you'd be canceled and piled upon. There's been a retreat from that a little bit, but that's kind of a form of a risk aversion. You know, I do, even though I think, for example, Revarians, Elon Musk have like a lot of bad takes. I find some admiration in being willing to say, I have fuck you money, so I'm going to say what I want, right? Even if it's wrong, you combat that, I have some admiration for that. Maybe because I do that myself, I guess.

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and take advantage of smooth, seamless synergies with the Uniswap web app. So go and download the Uniswap extension today by clicking the link in the show notes. Just another way Uniswap is helping you swap smarter. All right. So this is great, Nate. So talking about we've got this lens now that we've defined, I think pretty well about the river versus the village. Now, I think we want to define it to other areas, maybe crypto and others, because I think your word balance or what David was getting at with, you know, one versus the other is pretty important with respect to risk here, because they have different pathologies, right?

Which is to mean, like, when they go wrong, they go wrong in different ways. And that's why I want to bring in the conversation of our friend, Sam Bankman-Fried. Okay? And obviously, the crypto world is very familiar with this name. as are you. I was delighted to find out, to my surprise, in this book on The Edge, there's like a mini novel all about Sam Bankman Fried, and you had the opportunity, kind of a weird twist of fate opportunity, if you ask me, to talk to him both before all of the chaos while he was upward on his way on the ascent, and then also after, like literally interviewing him at his parents' home

somewhere in California when he had the old ankle bracelet on. And he was a, about to go to trial. So this is a pathology, let's say, of maybe the river. And so as we get to the story of Sam Bankman-Fried, and I want to get your take on it in a second. But first of all, do we really have to claim him? All right. So like, crypto, we're in the river, totally acknowledged. But is Sam Bankman-Fried a Ravarian? Do we have to claim him? Or can we just say, nah, he's not like us. Not our guy. I really just don't want to fully claim him, Nate. The river has to claim him. I don't think crypto alone has to claim him. claim him certainly, but he has too many tentacles, I guess it's an unflattering description,

but too many ties, too many parts of the community, right? I mean, look, he was an investor in Anthropic, the big AI company. He was invested in by some of the top venture capital firms. He was very, very active in the effect of altruism movement, maybe the most important financier in that movement, which, you know, is kind of like the river thinking without the gambling part of it, basically. They kind of are the same nerds, but I guess for good and not and not evil, although I don't come down particularly kindly on them in certain ways. But no, you have to claim Sam as like a metaphor for when this thinking goes awry. Because it was, yeah.

And because the number of people who vouched for him, too, it's like, you know, oh, it's Sequoia Capital and it's these Oxford philosophers and he's up at the stage in the world economy. I mean, even the village kind of embraced him, right? He's on the stage at the World Economic Forum in shorts and with the fidget spinner or whatever. So I think we have to claim him. I agree, actually. And whether or not we claim him, the village blames the reverence for Sandbankmanfried.

They're basically the exhibit A for everything that they want to do on tech or in crypto. They're basically like, yeah, give us another Sam Bankman Fried. That's what you're trying to do here, right? So they use it. Whether we claim him or not, he's kind of in the discussion. I just want to ask you about kind of the making of this. How surreal was it to actually like witness his? epic rise and fall because as I said just a minute ago you were there for both like how bizarre is that

it was very surreal being in the Bahamas I guess you know seven days after they declared bankruptcy and five days before they before he got arrested somewhere in that in that vicinity um you know one reason that it's weird is that like you fought in the Bahamas and I had been to like as far as like tropical I've been like Hawaii and Costa Rica right so I kind of thought oh it's going to be this luxury resort and the whole island's going to be really nice. And instead, there's a lot of wealth inequality in the Bahamas. So I'm staying in Nassau, which is kind of where the two major casino resorts are and kind of the cruise ships and things like that. So Sam's complex, the Albany is on the other side of the island.

It's quite remote. It's quite isolated. And there's this like giant condo where they're down to like five people left, Sam. The two remaining FTX employees, because they all fled. And then his parents. And when I got there, they're like, oh, yeah. Sam's asleep currently, but we'll have his mom wake him up. I'm like, this is pretty fucking weird, right?

And it's like, it starts at like three at night and then, but the sun goes, you know, it's a long, long interview, right? And like, it's getting darker. It's very weird. It's like, I don't want to turn the lights on because if you're an interviewer, you want to like put pressure on your subject, right? And I'm like, it's getting very weird. It's like, all fucking like pitch black now, right? And like, but yeah, look, I think Sam after the bankruptcy, um, I mean, he has mixed motivations.

I think part of it is simply being lonely, even though I think he often had trouble, like processing human emotions. I think it's difficult when, like, don't have your girlfriend run your hedge fund is one lesson that I have. There's so many lessons here. Okay, so, okay, so you were there after bankruptcy

where he was kind of like panicking, but prior to arrest, you were there in the Bahamas. And that's the, I was reading in your book and you were talking about, like, you actually didn't know whether, like, Sam would just, like, sprint from his chair,

wherever you were interviewing, really grabbed your recorder at some point in time. You know, he's kind of like backed into a corner at the time of your interview, right? I mean, look, he was in a pretty desperate situation. He was telling me things that, you know, would look bad, right? I mean, he told me a lot of things on the condition

that we agreed on it, like, this can be published for the book, but not sooner, right? I couldn't go to the New York Times and say, oh, I have a big scoop on Sam. It's newsworthy, therefore publish it. He only said certain things because he thought it was going to be published a year and a half later. It was actually two years later, basically, in some cases. But he said things that I think were somewhat incriminating. He also said a lot of things that

were lies, were false, and that was contradicted by lots of court testimony. And I have advantage of being able to write the book after I could get the court transcripts and things like that. There were times when it pretty explicitly felt like he was also auditioning arguments with me. Like, will this work in front of the jury? Will this work in front of the media? And that felt at times a little bit uncomfortable. But at the same time, he has given me these very candid interviews. You have some work in separating out the kind of have truths from the lies from the mostly

truths. And so it was a great story that kind of fell into my lap. It's an incredible story. And of course, so you interviewed him. He was obviously arrested. By the way, a bizarre behavior, not just to you, also publicly. the fact that he was tweeting all of this. Yeah.

Like, what is that? Why is he doing that? How do you explain that personality? I think partly is just the isolation is hard to understate, especially because he's gone from like shooting commercials with Tom Brady and being invited to like the Metgala and being seen is like, you're the next royalty, right? You're the next Elon Musk and he had dreams of being worth a trillion dollars. And now it's all gone.

So part of it just kind of that famous tweet storm that starts out with one. what or whatever? Like, I think we shouldn't assume that this is all part of some rational calculation. I think he was desperate. I mean, his mind was kind of literally reeling. You could almost like hear the proverbial gears turn about how is there a way I can get out of this and he had some crazy idea where he would be able to, you know, it would be handed back to him so FTX could begin trading to occur again so they could get trading fees

and therefore over a long period get their way out of bankruptcy and things like that. So he just, look, maybe it's if you're ever. in a position where you're stuck in some cave or something, right, in Thailand and you're like waiting for the rescue crew. Maybe you're kind of like, do you have the instance of like, okay, how can I increase my chances of surviving from zero percent to five percent, even if it's desperate? Like maybe you have some weird, bizarre admiration for that, but he was in a bad spot, you know, and I think as someone who thinks it's dishonorable to, I mean, I think he has trouble feeling emotions, and that's part of what causes an issue.

But also, I think he has trouble opening up and being vulnerable, although after a long day of interviews, then you could see times when he felt let down. Again, I am not trying to dignify this. I'm going to just report what he told me, right? He felt very let down by his community. He felt like the Silicon Valley VCs were useless and never gave any real advice. It was just all boilerplate. He thought the effective altruists were kind of fake. he thought

he was always pretty cynical about crypto he's like yeah it's just a way to make money and and flattered himself that way

I think that oh I'm going to like I mean it's kind of an interesting thesis right I want to get really into crypto and make these

you know arbitrage trades between Korea and Japan to then invest in effective altruism I mean it's I kind of get it if you like

kind of map it out it's like okay I can see how if A and B and C and D and F are all true then that makes sense

but like somewhere somewhere along the way that chain of assumptions might be dubious, I suppose. He clearly also had a competitive streak, as nearly every Ravarian does, and was interested in politics. I mean, who's making, donating a lot to Democratic candidates, donning a lot behind the scenes to Republicans as well. You can argue it's rational that there's a lot of money on the line based on crypto regulation and probably lobbying pays for itself pretty well. But I think had fairly naive ideas about politics. He invested, for example,

millions and millions of dollars in one congressional primary in Oregon for a candidate named Carrick Flynn, who didn't actually know Sam, but was effective altruist adjacent. And it got to the point where when Carrick would go around and knock on voters' doors, they'd be like, oh, here are all the flyers you sent me. Here's all the literature. And they were really annoyed that Sam McManfried, this mysterious pack had sent them 33 flyers about Carrick Flynn, their nice little rural household in the Willamette Valley or whatever. So not being not being actually a great assessor of risk and being a little bit too.

It was like an overconfidence. And that story was an overconfidence. He invested like $12 million in this Democratic primary. And because he was like sending out so much spam with all of his money, he could actually cause this Democrat to actually lose the election, was the story you gave. Which I think that's what you're talking about when you say when Revarian step into politics, often they do so with such an overconfidence. they just, they're in over their skis.

I want to get Nate, kind of your theory on SBF, okay? Because, like, I think you, you talked to him before and after and through this lens of risk-taking. I think you have probably the best theory that I've ever read, or at least the most comprehensive, in assessing the different modes. And it's basically, you lay this out, there's this nice table. It's a four-quadrant table in your book. And I'll just, like, go through it at the high level, like, in terms of,

what it said to me. You're basically like, okay, so the theory of SBF, there's four different theories. First of all, you've got this axis, he either knew what he was doing, right? Like it was intentional or it was unintentional. It was negligence. So, and by the way, the moral framework here is, at least in a court of law, if it was intentional and he caused all these people who's all this money, it would be evil, right? That's a thing. If you're doing this intentionally, you are an evil person, at least according to our morality, ethics, and legal code. If it's unintentional, all right, well, you still have culpability, but it would also be sad and tragic. At least it's not as evil. So you've got this axis of, was it intentional or unintentional? Then you have this other access

of his capability. He was either an incredibly capable person or he was an incompetent person, right? This is either, he was either a boy genius or he was kind of like a fake it till you make it nitwit. And so in your book, you've got these four quadrants. And, like, I gave names to these quadrants. He's either, he was either an evil genius. Okay. That's if he was doing this intentionally and he was good at it. Or he was a tragic genius. If he was doing this unintentionally and he was good at it. Or he was an evil moron, like kind of a fraud, right? That's if he was doing this intentionally, but he just sucked at it. Or he was a tragic moron, which would be if he was doing this unintentionally, but like very deficiently. And so what's your take? Like, what do you think

he is? Is he the evil genius, tragic genius, evil moron, tragic moron, where do you fall down on this? No, look, I lean pretty heavily toward the evil moron part. I mean, it's clear that he knew what he was doing. I mean, the court testimony from Carolyn Ellison in particular is very, very, very, very compelling on this, enough so that the lawyer I talked to kind of as the case was running up was like, SBF should not take the witness stand. The government's case is too good. He will only make the jury mad. He will only potentially bring up perjury charges and get a longer sentence. He should not do this. And he did it, of course, and got a 20-year sentence. He went with the tragic genius defense, didn't he? He tried to, right? He tried to say,

it was just all, you know, I mean, I mean, I think he overestimates his ability for how effective his bullshit is, although, again, like, I don't know. Um, One problem that I have with the effective altruist community that I bring up in the book is that they kind of think, oh, we're the moral people here, right? We take this effective value, maximization skill set and apply it to make the world better. But the one thing they don't have is they don't have skin in the game, right? They don't know what it's like to make a tray that you feel really great about, and then you get crushed and you're totally on the wrong side of the news or what it's like to play a poker tournament where you're like, I'm going to win that fucking tournament this time. and then you take a bad beat or punt off chips in a hand. And they don't have this like hands-on experience where you have to be in the river a little bit wary and cautious of people.

We've all seen people who are more hype than reality who are too good to be true. And Sam, by the way, also like played into this intentionally. I mean, like, look, he's not the world's most charismatic guy naturally. But he figured out that, look, if you kind of play the stereotype of like the spectrumy founder who comes in, to the meeting in a hoodie or in shorts, right? And, oh, you're playing video games while you're in the meeting and you actually let that be known and you're slipping on a beanbag. And like some of these things are half true.

Some of them are less than half true, I suppose. Some are mostly true. But he very deliberately kind of cultivated that image to kind of hack the VC algorithm and like, oh, here's the next Mark Zuckerberg. Because the thing I heard over and over again from VCs, and I talked to some of the best in Silicon Valley is we don't want the next Mark Zuckerberg to head out our door. when they could have made us 1,000 X or 10,000 X our investment. They all have some big company they missed, right?

They missed Elon or they missed Google or they missed Facebook or, you know, or Uber, et cetera. And they all regret it and think about how much money they could have had if they, if this guy they thought was a little weird, had been allowed to pursue his idea and giving capital. So, so, you know, they helped to enable SBF2. Yeah, they have to, they almost from an EV perspective, have to invest in the SBF persona, right? And I want to emphasize that you actually think Sam's way of thinking about this world from a risk perspective is actually evil. Like, let's say just like morally reprehensible. And this is pulled from the court documents, which we've talked about on bankless, but yeah, I don't think we've ever quoted.

Caroline, his girlfriend, of course, bankless listeners would be familiar with. She talks about in court how SBF really assesses risk. And this is a question from the prosecution, did the defendant ever give any examples? example to describe his approach to risk taking. This is Caroline of replying. Yeah, he talked about being willing to take large coin flips, like a coin flip where if it comes up tails, you might lose 10 million, but if it comes up heads, you might make slightly more than 10 million. And the prosecution goes, do you have any other coin flip examples? And here it is. She says, yeah, I guess he also talked about this in the context of thinking about what was good for the world,

saying that he would be happy to flip a coin if it came up tails and the world was destroyed as long as if it came up heads, the world would be like more than twice as good. Okay? Yeah. So a coin flip for the entirety of humanity, a bet on the world, so long as it was positive EV,

Sam Bankman-Fried, on behalf of humanity, is willing to take those odds. And that's the demented part when it comes to risk assessment that the villagers see from Ravarians, right? Because the thing about Sam is, He's making this bet on behalf of all of his depositors' money, and he hasn't asked them. They bear all of the risk.

He gets the upside. And he's making the bet in an undemocratic way. It's just like him deciding for everyone else. And I think the village sees this. And they're like, you can't make those types of decisions for us. And they should think that. I mean, look, the first time that humankind got the ability to, like, destroy itself was, was in the atomic tests in New Mexico in 1945, right?

And like, there was a chance at those tests in the Manhattan Project. The physicists were a little bit worried, had like a one in one thousand chance that maybe our calculations are wrong and we'll start a global fireball that will engulf the entire Earth's atmosphere. But at least then, it was in time of war where they felt like the world was an existential threat and it was a government-run project. But, you know, SBF was a big investor in Anthropic. There is a world in which he spins out of FTA.

and is running a AI company or something. And some people in our world, I guess, think that if AI is misaligned, it could have very bad effects, including the destruction of civilization as we know it. And like, who the fuck gives Sam Beckman-Fried or Sam Altman, who the book is more positive on, to be sure, the right to decide that for all of humanity, that just doesn't seem, and also the fact that he always miscalculates, right? It'd be one thing if at least you actually got your 51% odds,

but like with Sam, they might really be. 30 or something like that. And so we're not even, we're not even making a plus CV bet, even by his framework. But no, he demonstrates that the limitations of utilitarianism taking to the extreme. And I think he was based on multiple sources, really was willing to push things to the extreme. I mean, he really thought that like his objective when, when running FTX was like, how could I maximize the chances of being a trillionaire, even if the risk of ruin is incredibly high, right? Who thinks he's? like that.

It's so weird. You kept asking me, Nate, do you think if I had played my cards differently, I could have saved off the bankruptcy for a few more months and then kind of figure out another plan? I'm like, yeah, sooner or later, I think you're probably going to, you know, it's not a really sustainable idea. He's like, yeah, it's probably true, right? But like, I wanted to keep playing the game for another few months and maybe you get lucky

and there's a big uptick in the market and then your and then your finances are liquid again and your portfolio looks okay. And so he was very, very, very willing to make this insane bet. for literally for the future of the world. Okay, so that's what the village sees when they look at crypto, I think. But when they look at the river in general, they see that. So you invoked his name, a second Sam is here. His name is Sam Altman.

He's a podcast guest. And we'll use him as a representative from the AI community in general. So we have kind of act one, which has been crypto. And we've seen how the village antibodies kind of respond to that, particularly in the wake of SBF. And they say, you guys don't calculate risk in a healthy way. We can't trust you with this. And now they're seeing AI, which has the potential to be a more fundamentally world-changing

technology, at least in a number of measures, right? There's people like Elisier Yukowski, who's been a podcast guest as well, who say this is basically the end of humanity. If you call the stakes wrong on this, this could wipe out all of human civilization. And he's very positive that this is the case. I guess my first question, because you've gotten to know both of them, and you see through this lens. Is Sam Altman, does he approach risk in the same way as SBF? Is he just kind of like a mini SBF, perhaps a bit more savvy, maybe a bit more competent, but does he think the same way?

I think, I mean, look, I talked to a lot of sources and asked them that question and the consensus with one dissenter, one person actually said, yeah, he's SBF. Most people saying no, they think he's very risk-on relative to most of society, but more of a typical, you know, know, typical Silicon Valley VC who is not to SBF levels of pushing the button for 2x utility in the world. Now, he might push the button if he thinks that we have a 90-10 bet, right? We have a 90% chance of doubling the amount of utility in the world and 10% chance of being destroyed because he actually has said in congressional testimony, and like,

yes, actually, there's a chance that this could go really badly. And, you know, when I talked to him for, I talked to him in bits and pieces afterward, but the main interview was in August 2022, which was an interesting time because he was more unguarded than he might be right now. And like, look, Sam A, like, always has, like, good Twitter game. And, like, he's definitely like a reverian and kind of owns that and it's kind of fun. But it's like, yeah, I think AI is going to solve global poverty very literally. And if we can do that, then how can't we take this bet? And yeah, it might not work out sometimes, but, like, the upsides outweigh the downsides. but like, like, I think he's a better calculator of risk than SBF.

And I think he's also like more, this sounds weird, but like, he's also just more socially connected than SBF. At some level of the day, people want to live to respect themselves and have the admiration of their peers and they care about their families and their kids if they have them. Interesting, a lot of the Silicon Valley's VCs actually do have kids while we have like a fertility crisis elsewhere, right? And so like, so I think they care on some level about the future of humanity. they maybe overrate the ratio of good to risk that they do potentially, although they are on the right side that, like, fundamentally speaking, technology has done far more good than ill for society, right? I mean, the amount of people who've been lifted out of poverty, the amount of rights

have been extended in different parts of the world. So you can see why they're like, hey, look, we've brought you all the risk takers, inventors, investors, right? We've made the world what it is and had to have these 80-year life expectancies and, you know, $70,000 per capita incomes and things like that. We gave you that, so maybe you should trust us. And the village doesn't like that story. But still, look, I think the consensus is that people thought open AI is in relatively good hands with Sam A.

But like anything else, it's kind of a market. If the engineers that work for Sam think he's being too risk averse, then they'll go work for somebody else. So you do get a little bit of this is like prisoner's dilemma issue. I think he's a thoughtful guy. I think, you know, all three of the major labs are less bad than they could be, maybe. Although I'm also not like LES or levels of terrified about P. Doom. I mean, look, I defer to some extent.

In the book, I kind of punt on this question, right? It's like, what's your P. Doom, which I think most your listeners will know, but the probability of like catastrophic events from AI, which is defined differently by everybody, by the way, which is one reason why it's hard to answer. but like I just give a range of 2% to 20%, which means I don't want to weigh in here. You have a book where you kind of hear all sides of the debate, and I'm like, I don't want to like stake my claim. You can decide for yourself. It does seem like we have had a plateau or a gentle upslip and capabilities since like chat GPT 3.5.

To me, that's getting the point where it's material. It seems like it's not some sudden doom loop forward that's going, a little bit more slowly. It's certainly a very important technology. It's like the technology of the decade, if not the century, but I am not quite as convinced that it will be uncontrollably transformational, but we'll see. Yeah, I get it. There's so much complexity in this, including kind of the, look, we didn't know that SBF was as bad as he was or as risk-taking as he was until the aftermath of the catastrophe. And it came out in court documents, right? And so there's an element of like, we really don't know.

And there also could be the case of, you talked about the three leading AI companies, least in the U.S., being like responsible with their leadership, that sort of thing. Well, I mean, the leading crypto exchanges, Brian Armstrong, Jesse Powell, they were very responsible. And then this upstart who seemed to like move fast and break things, he entered the scene. And it was growing and it was successful. So we don't know what the next generation might bring about. And who knows, game theoretically, what another country is. country is doing. But all of this culminates into, I think, the clash of the Titans with respect to

the village and the Revarians in the 2024 election. And of course, we've had a number of Revarians kind of weigh in on this. And the village kind of responds. So Trump has said, I'm the pro-tech candidate. I'm the pro-Silicon Valley candidate. I'm the pro-Crypto candidate, even. And I think that there's a lot of things to talk about when it comes to the 2024. A lot of lot of. But maybe the first actually is prediction markets. So something we've been following pretty closely on bank lists since the beginning is what are prediction markets doing in general? What are they doing in crypto?

We're familiar with Robin Hanson's work on this. And I'm just going to pull up the current polymarket outcome. And I know we'll have disclosed in the intro, Nate, that you are an advisor for the polymarket project. So it seems to have captured your interest. I know prediction markets in general do. Right now at the time of recording, Kamala according to polymarket has a 51% chance. Donald Trump has a 46% and Michelle Obama is coming in with a 1% chance. So I feel like you've got domain expertise here from a number of different vantage points. I just want to ask the basic question. How accurate is this type of prediction market on polymarket?

I guess I'll give you like a slightly longer answer, right? Historically, the election forecast. that I made for 538 had been more accurate than prediction markets, which kind of shouldn't happen in an efficient market because until recently, now they're behind a paywall, until recently they were free. So like if they're accurate, you should like incorporate that model into your own like meta model or whatever else and incorporate subjective information. But I think until recently these markets were not very mature in the sense that like sometimes the language of how you could buy in trade, create.

a lot of inefficiencies in the market. They're like just wasn't that much liquidity in the market. It wasn't obvious what the focal point was. And now, I think, you know, substantially with polymarket, oh, there are other markets out there too. You have, like, real money being traded. You have it being reliable enough where it can set a benchmark. And also you have a lot of political risk that, like, Wall Street, hedge funds, investment

banks have to think about, you know, regulation on many things. I mean, the price of Bitcoin might be affected by who wins the election, obviously. And so, like, if you're pricing financial risk in general, then you're interested in election risk, and you'd like to price that. At the very least, just to hedge and look at kind of proxies or things like that. But you have more and more firms that are like, look, the world's all politics now, therefore we have to predict election outcomes, therefore we want a liquid way to do this without having to use some, some knockoff derivative proxy for it.

As the polymarket markets have risen in volume and just interest, we've seen both the crypto industry and the broader outside political industry start talking about prediction markets more and more and more. This election cycle specifically, you're seeing prediction markets just be cited left and right by people who are probably citing polymarket, and maybe they don't even know that it's a crypto app. And there's been a lot of conversations that have kind of spawned out of this.

Are prediction markets just glorified betting markets? Are they a threat to democracy? Are they an anti-authoritarian truth-seeking mechanism? What do you think of just like the general role that a prediction market, like, polymarket, might be able to, like, to provide society? What is the puzzle piece that it's providing society? Look, one way to put it is that a prediction market is a tax on bullshit. I'm describing that from, copying that from Alex Tarabock,

who's an economist at George Mason, who works at with Tyler. Cowan. But it's like, yeah, look, because I'll, look, I got frustrated before Biden dropped out, there was this historian named Alan Lickman, who has this kind of very subjective model that said, Biden's going to win based on what he calls the 13 keys to the election. And my model had Trump at that time as a heavy favorite, three to one. And he kept yapping on on Twitter. And so I'm like, Alan, do you want to bet $250,000 on the election?

Because, like, you seem to be really confident. And you've a really good bet. And we'll just bet it even odds. It's about the average between us. and was like never heard from again, really. So there's some notion of like tax on bullshit and kind of put your money where your mouth is. There's some notion on being able to price like things that otherwise show up in derivatives and make it kind of harder for markets to be efficient.

But also like as a somebody who has equity in polymarket, I also think the team does like a like a really smart job. It's a little inside base. I think they do a really smart job with like their Twitter feed and like their social media, right? And they're kind of having like fun with it and they understand their audience. and they understand like when they can like poke the bear on politics stuff a little bit to add a new market. They have when I think about like, will Biden outlast like a head of lettuce decaying, for example. So they, I really like their marketing.

And I think they, I'm a part of it, I suppose they hired me in part to make them more visible. But I think they, I think the combination of like being the smart brand and then having real liquidity makes them a more interesting player than the earlier kind of more upstart companies. Over the last like two months or so, everybody in crypto has been just like touting the good words of Polymarket because we're all very, very stoked that one of our crypto products is being just like talked about and referenced. But lately in the last like week or so, there's been some more contrarian takes about what the role of Polymarket, prediction markets generally provide to specifically elections. Since we're bringing up this conversation in the world of Ravarians versus villagers, a very famous villager by the name of a little bit of a little bit of a little bit of a little bit of a little bit of. Elizabeth Warren wrote a letter calling not Polly Market, but prediction markets generally an affront to democracy, a threat to democracy. I'm wondering if you have any like perceptions or takes about like the ways that a prediction

market and an election might actually interact with each other. Do you have, do these, does one just respond to the other? Does the Polly Market respond to the elections or is there actually a back and forth conversation here, anything like this that comes to mind? I mean, look, to me, I mean, you always hear. the fear that this will give somebody an incentive to alter the outcome of the election. It's like, well, there already are a lot of incentives, right? For certain sectors of the economy, you know, for health care, Democrats want to be much better

than Republicans or vice versa, whatever else. There already are like, people are already making huge bets based on the election, but now they're doing it in a way that's a little bit more centralized and direct and not like a proxy for it. No, look, I think people don't respect if you're on the left, then, and again, I'm pretty centrist myself, maybe center left, but like, but I respect. markets because I've tried to beat markets, sports fitting markets and other types of markets. And in some ways, the media is a big market itself.

And, like, you know, I think markets are an amazing innovation because they are collective decision-making. And they're not, and they're decentralized. And that's like an incredibly powerful tool. And I think she doesn't understand that. I think there's also just some sense in which just people in the river kind of, or in the village, take all these nerds and like, oh, they're cringe, right? They're inherently cringe.

And we shouldn't pay attention to them. By the way, the same people who were getting in their high horse about democracy were most of the people that were like, oh, we can't replace Biden. That's just not how things are done. And now they have replaced Biden. Now their chances have like at least doubled. And now they should be thrilled about that if I think that Trump is this big authoritarian danger. And so clear-headed thinking, I think, it goes a long way. Well, we're on the election.

Do you have any election predictions? So what do you think is going to happen? What does your model tell you? Do you still put out a model, by the way? We do. If you go to Silverbleton, Natesilver.net, then you can subscribe to the model. It's $10 a month. Yeah, we have Harris currently as a 54-46 favorite.

There were some new polls that came into before I was doing this interview. Haven't seen the effect that those might have yet. They look pretty good for her on the surface. But like, it's basically 50-50. If you're a poker player, you're allowed to say that like 54-46 is not 50-50. You know, you'd always rather have like a 54% spot or 52% even instead of 50. But it's basically a toss-up. I mean, I think if you had an election today right now, then Harris would be favored, but not a sure thing.

I mean, the polls have been way off and, well, lots of recent elections. People don't know any need any reminding of that. And also, we still have three months to go. You know, I think it would be harder for the Trump campaign to have as bad at three weeks as I've just had where he is going off the rails a little bit on some things. And, you know, you think he might recover his footing because you actually have lots of, obvious vulnerabilities with Harris, where she inherits some of the problems of the Biden administration, like inflation and immigration. She ran quite far to the left in 2020 and did some unpopular, did and said some unpopular things. So there are like legitimate lines of attack against her,

but Trump has gone, you know, an attack to her race and things like that. That if I were advising him, I'd say that's not very tactically smart and lost the plot a little bit. But we'll see. I think August is likely to be a month that's pretty good for Commonwealth Harris. Then we have debates in September. And by the way, at least Trump recognizes that he needs to add volatility now, right? He needs to add as many debates as he can. They have one confirmed so far. So on some level, at least his campaign recognizes that it's 50-50 or less, which the Biden campaign,

I think, naively maybe didn't do, although I guess famously did have this debate in June. But the execution's been, I think, quite poor lately. And what do you think of the Ravarian sort of bet on Trump? A16 Z, Mark Henderson, Ben Horowitz, who came up with a podcast and say, we're doubling down on Trump. They kind of brought that into the Overton window of acceptability, certainly in crypto circles, right? You know, the Republicans, the Republican Party has come out being very pro-Crypto,

and the Democrats and Harris White House, or the prospective White House, has really said nothing about it. So there's definitely a pro-Crypto Republican bent. Do you think that this is a good bet that the reverence are making? It depends on if it's for ideological reasons or if they're trying to like get in good with the next administration. Look, it certainly looked like a better bet when Joe Biden was Democratic candidate and you had a 75% chance or 80% chance of winning that bet. Because just for purely cynical reasons, yeah, to be an early supporter of an incoming administration, especially an administration that does not have that much support among traditional and meaning Trump, Fortune 500 companies, then you can have like a lot of power and influence.

I think it probably worked out pretty well for Peter Thiel overall in 2016. But I think they underestimated how badly Democrats wanted to win and would be willing to replace Biden if it increases their expected value. Would they make the same bets in a 50-50 election today? I mean, maybe. I mean, there are lots of overdetermined reasons why they might side Republican. And it's like inherently not that surprising for for rich entrepreneurs before kind of the Obama era, then generally people with a lot of money would vote Republican.

But I wonder if they would want to redo if they thought they're going to lose that bet half the time instead of just occasionally when Biden wins by some miracle. Nate, this has been great. You know, thank you so much. I guess maybe as we sort of close things out, I want to close with maybe some of your thoughts on where we go from here. I think part of the value of your book here and injecting it into public discourse has really been about helping people in the river understand those in the village a little bit and certainly help those in the village understand the river. And we're in like a very weird era, I think, for humanity. Maybe it's always been like this, but I don't know, since Harambe died, it feels like it feels like shit got real.

And like, you know, everything's accelerating. And it feels a little bit like we're a ship on the sea and we've got no compass. Like what's our North Star when it comes to risk assessment? It seems like people in the village, they want to say, breaks, breaks, breaks, don't do anything. Stop, stop, stop, stop. And then the people in the river are just like they react to that. And they're like, accelerate, accelerate, accelerate, don't stop, don't stop.

And is there truth in the middle? Do we need to find balance? And if so, how do we find balance? I hope we find balance by understanding one another better. that's part of the mission of the book. Look, I think we're in a very exciting and dynamic time in a lot of ways. One thing I think that the river is right about, you know, if you talk to Sam Altman, he's like, these people in the village are too pessimistic, right?

And it's become like cool to be pessimistic. And that sucks, right? It's a bad way to go about your life. It's certainly a bad way to go about a business where a, you know, early stage business, kind of by definition, needs optimism to attract employee talent, to attract further rounds of investment and things like that. I think it's been a good play in the world to lean on the side of optimism in the middle this pandemic where everyone was telling you that you're supposed to be miserable all the time

and not show any joy in life. And so, look, the election campaign has become more fun than I thought for me personally, but also like, you know, the Kamala Harris campaign is kind of like bratty in some ways. Trump, who I again, I think the January 6th stuff makes it very dangerous. I'm not going to vote for Trump. he is a little bit of a comedian though. He can be quite funny at times. He can have moments where he's very possessed of himself,

the moment after the assassination attempt, where I don't care. What you think about terms of politics, you have to give somebody credit where they're just shot at and they have the presence of mind to, like, raise their fist and pose for this photo that would be one of the, you know,

100 most famous photos in world history, probably. So I don't know. I think the vibe shift's been good. I agree it's a very risk on and volatile world. I'm just trying to get through the election year and the book cycle, but I'm having fun at least. And I think that attitude is perhaps helpful. Nate, your three words for us at the end is the title, a chapter title called Foundation, but the three words that you picked out are agency, plurality, and reciprocity.

Why are those the three words that we should focus on as a kind of North Star? So it's kind of the parallel to liberty, egalite fraternity, which is the motto of the French Revolution, which is a triumph of like liberal democracy, basically. So agency means that we want people to be able to make decisions that are real decisions, where they have like real choices and are not being tricked or not being coerced into a decision. It's kind of a higher order version of liberty, basically. Plurality means that I still believe in consensus and group decision making. I do not want anyone person, Sam Bickman-Fried, with the resources to destroy the world or make a 50-50 bet. And reciprocity comes from game theory.

It means that we assume people are acting in their own best interests and are smart and are able to kind of stand up for themselves and punch back and kind of figuring out like what's a, what's a, it's a higher order version of like fairness, basically. And understanding that like the world's dynamic. And too many people have non-player character syndrome, I call it, in the book. It's a video game term, of course, for like, you assume this guy's like some innkeeper who just waddles back and forth and gives you the keys to the end, right? And has like no agency. and like, that's bad. I mean, you know, Trump and then Harris, all politics responds to, like, how the electorate changes and, like, and things that were fashionable before are boring now.

And so we live in a complicated, adaptive world and having those three traits, I think, are helpful attitudes to keep in mind. And finally, just any advice for crypto, and here, I want something specific. So it wasn't just Sam Bankman-Fried. It was Alex Mishinsky. It was Doe Kwan in stable coins. It was Three Arrow's Capital. there are a number of these blowups, right?

It wasn't that crypto just put their trust into one individual. But we don't want to do that again. So how do we recognize an individual that enters our industry and is either a fraud or is taking like massively irresponsible risks that are going to cost us in the future? How do we detect those earlier on? It's a great question. I mean, and this is the one thing where it's a little dangerous, right? But like to lean even further the direction of being willing to like trust your own thinking,

and come up with your own judgments, because there were a lot of warning signs from Sam. He gave interviews like to Matt Levine on the Bloomberg Oddlots podcast or to Tyler Cowan or to me where he kind of said a lot of things before the bankruptcy that were pretty unhinged about his attitude toward risk. People kind of said, oh, ha ha, ha, isn't that funny? He just has a little bluster. But like, don't trust these focal points that conform within the river, right? The fact that, like, these people vouch for him every now and then, every now and then,

most of the market's right. We know that. Every now and then it's a house of cards because everyone else believes that everyone else has done the due diligence and nobody really has. And so, and so, you know, just skepticism about the next hyped up object, I think is inherently very helpful. Guys, the book is called On the Edge. It is available now. A fantastic nerd snipe. I didn't expect to read all of it.

It is a thick book. And I ended up reading all of it because it was just that good. Nate Silver, thank you so much. for coming on bankless with us today. Thank you, Ryan. Thank you, David. Gotta let you know, of course, crypto is risky. None of this has been financial advice.

It's on the edge. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.