Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Nathaniel Popper: Digital Gold – The Inside Story of Bitcoin

Episode Date: June 1, 2015

From the mysterious creation story, to the early development among a small group of cypherpunks, to the emergence of the Silk Road, the collapse of MtGox, to the entry of a tidal wave of VC money and the Silicon Valley elite, Bitcoin’s short history has been action-packed. It’s no surprise that this could make for a riveting story and NY Times journalist Nathaniel Popper’s book ‘Digital Gold – Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money’ is precisely that. Popper joined us for a conversation about his must-read book about the remarkable story of Bitcoin. Topics covered in this episode: How Nathaniel Popper ended up writing a book about Bitcoin Why he chose ‘Digital Gold’ as a title and some of its different connotations Why he chose to focus on the people and stories of Bitcoin rather than the technology The story of the Silk Road and how it played such a critical role in the early days of Bitcoin How Xapo CEO Wences Casares came to play a crucial role in evangelizing Bitcoin among Silicon Valley’s power players The rising tension and passing of influence between the old, ideological guard and the newer Silicon Valley crew Episode links: Get 'Digital Gold' on Amazon Nathaniel Popper's website Can Bitcoin Conquer Argentina article Decoding the Enigma of Satoshi Nakamoto This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/081

This episode of Epicenter Bitcoin is brought to by Ledger, makers of the Ledger Nano Hardware Wallet. Have peace of mind and knowing your private keys are protected by industry standard physical security. Go to ledgerWallet.com to learn more and use the offer code EB-09 at checkout to get 10% off your first order. And by ShapeShift, with no account or sign-up required, it's the easiest way to buy and sell counterparty, gems, swarm, dogecoin, and other leading cryptocurrencies. Go to Shapeshift.io at instant link converture all points and to discover the future of cryptocurrency exchanges. Hi, welcome to Epicenter Bitcoin, the show which talks about the technologies, projects, and startups driving decentralization and the global cryptocurrency revolution. My name is Sebastian Guzio. And my name is Brian Fabian Crane.

We're here today with Nathaniel Popper. Nathaniel Popper is a writer for the New York Times and the Wall Street Journal. And he's written a book that just got out named Digital Gold. And yes, I was going to hold it up as well. You know, if you have like a print book, this looks really cool. But, you know, we have a Kindle. Don't get the Kindle, get the book on the Kindle. And so we just finished reading it both of us.

And it's been really fantastic. So we're super excited to have Nathaniel on. So thanks for joining us today. Thank you guys for having me. And I'm surprised that as Bitcoin lovers, you would be so still. enamored with print books. I mean, come on, guys, this is... No, no, this is a... This is a Kindle.

I know. I know. You're... Like, it's not cool to hold up an electronic book. That's even better. Well, it's, at least it's not as, like, it's not as... You couldn't have gone back 50 years ago. Yeah. And I just want to point out, but by Brian saying we just finished reading it, I actually got my copy less than 48 hours ago and I've been reading it nonstop. And I've finished reading it probably about 15 minutes before we came on live. Man, I'm sorry to your family. It's all fresh. I've got so many questions. Yeah, yeah. So, I mean, before we dive in, so what I really loved about this is that there's just

all these stories behind the, all these little stories about the history of Bitcoin, right? Because, I mean, most of us have, you know, heard about Mount Cox, heard about Silk Road and know maybe a lot of things about it. But there were all these, like, who exactly was there, who was talking with whom, how did it exactly happen? So you write about all those things and you talk with all those people. And that was just so interesting and so enjoyable for me. So I absolutely loved it because it just gives you this different perspective. It feels like it's sort of behind the scenes of the history of Bitcoin.

And they're just, I mean, it's a great story, first of all. Bitcoin's a great story. but there are so many great stories within that bigger great story, you know, even more so than I anticipated when I began this project. And that's what made doing this book so much fun, and I hope it's what makes reading it so much fun. There's a whole lot of great stories that I ended up having to leave out of here just to try to streamline it.

But you certainly picked up on something that I felt in reporting it. No, totally. I mean, I think that's one of the things I came away with as well. like just such a wealth of interesting, strange, and different people and interesting situations and scenarios and crazy stories. And yeah, I'm sort of, I mean, I think obviously that a lot of that is just how Bitcoin happened. So we were talking, I and Sebastian were talking about this before, is like, you know,

is this mainly you doing a really good job as a writer that people come across is so interesting? or is this just the Bitcoin space? Absolutely. No. No, these people are interesting on their own, and that was why I decided to write the book. I mean, as I began reporting it, it was, and we can talk about this more, but it was as I talked to people and got to know the people,

it was actually the people that convinced me to write the book rather than the technology. And so tell us, how did you get involved with this in the first place? How long has this project been going on for? How does this come about? Well, my first story about Bitcoin was, I wrote in March, actually, I think April 2013, so pretty late in the game. And actually, the first story was about the Winklevoss twins and their hoard of

Bitcoins, which hadn't previously been public. And it kind of came out of the closet with us, so to speak. and that was a story I kind of wrote, you know, nobody had been covering this at the times and there hadn't been too much interest in it. And that story just generated so much feedback. It was the most red story in the New York Times for a while that it kind of woke me up to the fact that there was something interesting going on here. And in any case, I sort of continued covering it for much of the next year.

and ended up signing a book contract in almost exactly a year later in March of 2014. And, you know, it was a long process of how I got to the point where I wanted to write the book. But once I got started, I took a leave of absence from the paper here. And for basically the first three months of that, I just traveled around reporting. So obviously some of that I could do in New York. I mean, I went to visit Charlie, who, Charlie Shrem, who was under house arrest at the time, and I got to spend a bunch of time with him and some of the other New York characters who are important like the Winklevoss twins.

But I spent a bunch of time out in the Bay Area. I went to Japan. I went to China. I went to Argentina and just sort of immersed myself in this world. That's really fascinating. And what I thought was really inspiring about this book is, these people that you talk about in this book, these people that you write these stories about,

that's what they were doing. They were also traveling all over the world. And I thought that was just really inspiring. And in fact, after reading the book, I was like, man, I want to start a Bitcoin business. Like a Bitcoin startup. That was, I think, as I was mentioning, one of the things that sort of convinced me to do the book,

was seeing the degree to which people had sort of left their old lives behind to pursue this thing, you know, to pursue this promise that seemed to lie within this technology. And actually, I have to give Charlie Shrem credit because it was a day that I met with him at a bar, a bar that he had invested in along with some of his Bitcoin. And I met with him and Nick Carey at blockchain. And this was actually just like two weeks before Charlie got arrested. And the two of them sort of talking about how this pursuing Bitcoin had just changed their lives made me realize there was something deep there that I needed to understand and didn't understand.

I think that's the case for a lot of people working, working in this industry. I mean, a lot of people that we've talked to came about it in some way from hearing about it by a friend, or it was definitely the way that I came into it and I think Brian as well. So, I mean, for the most part, I think that story is, it will, people will resonate with that story. Yeah. And I think, I guess this is similar, yeah, for Charlie Shemnick Harry and India, a lot of us, including myself, for example, you know, you start seeing this thing and understanding, you know, what Bitcoin is and just what it can do. And I think you pay, you do a great job at sort of showing the belief that people develop

in the potential of this. And it was the same thing with me, right? And then it's just like, well, why would I focus on anything else but that? It just makes complete sense. And then I guess for the, especially for the. people who were so early, right? That's just, of course, had then also, like, all kinds of other dramatic implications, including, like, some people getting extremely rich and were starting to work on these

revolutionary projects. I think it's shut down. I mean, I think also one of the interesting things that I often think about in the context of Bitcoin is I have some old Bitcoin magazines, and if you look at the companies there, basically the only one, you know, who were advertising back. then, the only one that's still around is generally bid pay and everybody else is gone, you know, and I think that's also just shows how much crazy transformation it's been going on in such a short time.

Yeah, absolutely. You've sort of been through different generations of companies. I mean, I think there are, I'm trying to think of companies from back then. I think actually Bit Stamp is one of the older ones that's still around. And there are a few other names like that. crack in actually ripple got started all the way back way them but but but but you're right that that a lot of the names that were kind of leading this for a long time are are not are not around anymore it was obvious to me when a lot of the names in the book I mean I wasn't even aware

of some of the some of the early or failures I had never heard of myself and and and and some of these characters who are who are no longer around and yet who I think without you know Bitcoin might not exist yeah absolutely no I mean and I think that's another thing given I knew that in the beginning it was there was not very much interest but it's just I wasn't aware that it was like so little you know there was literally like two people for like six months or something right right and I mean yeah that that the two early characters who I focus on, we can get back to him, but how Finney and Marty Malmy, but Marty particularly fascinates

me just because, you know, he largely started working on this basically because he didn't get a summer job in college. And I think if he had gotten a summer job, you know, I don't know if Bitcoin would have stayed alive during that summer. I mean, it was basically just Satoshi. And there weren't really too many other people who were willing to put in any time. So, you know, little things like that that are sort of fascinating. So before we get into some of the content, the title of your book is Digital Gold. Why did he choose that title? Well, some of it is purely practical.

I actually, when I sold this book, it was called Making Money. And actually my publishers felt that that, it was kind of this pun. but they didn't feel that it was a strong enough statement. And so we kind of went through alternatives. And I didn't particularly want Bitcoin in the time. I didn't want to throw people off. We wanted to give some sense of just like this sort of universal idea. And I think digital gold sort of has that sort of boldness to it.

So it's partly just a matter of publishing tastes. But I think that, you know, as I came to understand it more, There are a few metaphors that I have used to explain Bitcoin. And to me, that's kind of the first one. That's the simplest one to understand. It's this scarce digital asset. And it's a way for people to begin to understand what this is. So, you know, no better way to sort of start it than with that idea.

One, two things that came to my mind when I heard the title and as I read the book and that I think that make a lot of sense for me, is one is the idea of this gold rush, right? This is like land of opportunity where you can go and there's like this promise of enormous riches and people like leave their old lives behind and go there. And then of course also with the gold rush, right? If you think back, there was, you know, people leaving the east of the U.S.

go to the west and this idea of sort of a new frontier, right? Like you step into this unknown. And I think with Bitcoin, and that's the way, yeah, you risk a lot. And not everybody, not everybody finds those gold nuggets that they've set out for. Yeah, absolutely, right. Was that intentional to write the book, especially the beginning of the book, as though it was some sort of a gold rush?

Absolutely. It's actually, to go back to this question of how the book came about, I actually, agents were approaching me about writing a book, and I because I was writing about it and I found these sort of interesting characters to talk about I wrote a story about the Winklevoss twins I wrote a story about this Bitcoin mine

in Iceland that people got really into and so around those stories agents approached me and said you know you should write a book this would be a great book and I initially just said no you know this is too fleeting there's not enough here and it was actually my colleague here Andrew Sorkin who he's the guy who wrote too big to fail and he's a he's a he works for the times he's also a tv host

but he pulled me into a room at one point after one of these stories i think it was after charlie got arrested and he he said you have to write a book you have to do this and i said yeah i'm just i'm not sure i don't think i don't think there's enough there and he just said you know what you just have to tell this like a gold rush story. This is a gold rush story. This is people just chasing this thing. And that night, I kind of still said, no, you know, but that night I went home and talked to my wife. And that, that phrase literally was what made me realize, okay, there's a story, you know, there's a book to write here, not just like a, oh, what is this technology? Doesn't matter. It's a tale. You know,

it's a story. And so very much that was the inception of this. And, and it, It just so happened that I was a part of this moment in the Sierra Nevada Mountains, this event at a vacation house of this old Goldman Sachs guy, that happened to be in the midst of where the old gold rush was. Literally, Truckee, California is where a lot of that, you know, 1849 gold rush was. and it ended up being the scene where I began the book, but that was probably more an accident, but a very happy accident. How did you end up there? That's, I mean, for the people who haven't read the book, right,

that's when you, that's the house of Dan Moorhead, who's the head of Pantera Capital, and Pantera Capital has invested in a lot of Bitcoin companies and done, I guess, been one of the most active sort of financial institutions. investors in the space. Yeah. So how did you... Yeah. And that was...

They've done a couple of these events that they call Bitcoin Pacifica there where they bring together, you know, the elite. And so that was where I met Nick Zabo. And, you know, when I was there, Jed McCaleb was there. And Roger there was at one of them.

He wasn't at the second one because he had renounced his American citizenship. but all these characters going back, you know, Bobby Lee from China and, you know, people from New York. So, you know, I kind of got lucky. They asked me to come out to that. They haven't otherwise had journalists there, but they knew I was working on this book, and it was a pretty great scene to get to witness. How did it feel to be there?

I mean, it must have felt like you were among, that you were witnessing something happening, like a changing of, changing of the guard from the previous financial world to like into the new financial world. Yeah, exactly. I mean, that's why that scene was so evocative and why I began the book with it.

You know, here you had this Wall Street guy who'd kind of gotten excited about Bitcoin, Dan Moorhead, who runs Panterey. and he'd invited a bunch of his sort of hedge fund bank guys. So there was people from some of the largest banks who were there. They even had some regulators there. But they invited and flew in all of these old school Bitcoin people like Eric Borges and Jed McCaleb because they wanted to learn from them.

And I think this is one of the tensions throughout the book. but, you know, to what degree is it those early people who are kind of guiding Bitcoin versus this new generation of Wall Street and Silicon Valley people who, you know, might have a different vision for it. But, you know, you could see that conversation happening there. And certainly a lot of the old guys were very excited that it had brought them to this place where they could be flown around on private jets and catered to and, you know, go on private skiing runs with Olympic gold medalists and stuff like that,

which was part of that weekend as well. Yeah, and let's not mention all the apparent trips to strip clubs in this book, which seems to be one of the main things that these guys like to do with all their money. well you might even be referring to the sex club rather than just a strip club it gets a little bit better than just a mere strip club but what's that yeah that was that was in vienna where there's a i guess a famous sex club and and uh the crew went out the bid instant crew went out to that one night i actually i i will i'll i'll you know defend these guys for their wives. That wasn't such a common thing and, you know, the way that came about in Vienna may have been somewhat unique. And, you know, again, one of the things that struck me not to be

sort of, well, one of the things that struck me is a degree to which people were happy to sort of just sit around all night and talk about Bitcoin rather than going to a strip club. I mean, that certainly happened, but, you know, obviously part of what's so amazing about this is, you know, the degree to which people can just sort of talk about Bitcoin endlessly. This episode is brought to you about a ledger. We've been talking and we will talk a lot in this episode about Mount Cox, and it's such a pivotal story in the whole Bitcoin history. And if it has thought us one thing,

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If you go to ledger wallet.com and use the code EB09 at checkout, you'll get 10% off your first order. So there's no point in waiting to get a secure setup. And by the way, that officer code is valid until September 30th of 2015. So go to ledgerwlett.com and give it a try. And we would like to thank Ledger for their support of Epicenter Bitcoin. In your book, you focus a lot on the people and the stories. Why did you make that choice? I mean, we touched on it maybe a little bit, but...

Yeah, I mean, I think just practically as a journalist, part of what I saw as I began to cover this was that articles where people sort of talked about the technology in dry terms, didn't seem to be particularly captivating or compelling. I mean, it's just, you know, you hear about this and you're trying to figure it out, and it just ends up being off-putting. And I found, you know, my first story was about the Winkle Boss Twins, and you have these people through which you understand this.

Okay, they own it. What does it mean that they own it? And, you know, what do they do to get it and how do they hold on to it? And suddenly you put it into the physical world of real people, and it starts to become comprehensible. And I found the same thing, you know, when I went to this mining operation in Iceland, you know, when you talk to people about how bitcoins are made, it's, you know, people's eyes glaze over, they can never understand it.

But you say, okay, there's a bunch of computers that are sitting in a data center in Iceland and they're really hot and why are they hot and what are they doing there. why did this guy choose to do it in Iceland? And suddenly you start to have a way to talk about things. And that was, you know, I think that's what my colleague here picked up on when he said you should write a book. This complicated topic that everybody's sort of fascinated with, they get bored when they read about the sort of technical specifications of it.

But when you start talking about the people, you understand, okay, here's why people care about this. The reason this is interesting is because people care about it. If people didn't care about it, it would have died a long time ago. And so you kind of start with that human emotion and it becomes a lot more approachable. So one of those people and of course the first person is Satoshi. And you also made an interesting argument. You're certainly not the first person to make that, but that Satoshi is Nick Sop.

Can he what has your impression been of of this Satoshi that character or that that mythical figure in in the in the Bitcoin story? Well, just just you know to be clear I mean my I sort of end the book with the sense that Nick Zabo does seem to be the person that most most educated Bitcoiners kind of think of as the best candidate right now, the people, you know, who are named frequently as Satoshi. And I kind of looked into, okay, why is that? I got a chance to meet Nick and talk to him about that. I mean, I'm certainly, certainly not sort of saying Nick is Satoshi. I've tried to be very careful about that. But I think Nick's story gives you a window, even if he's not Satoshi,

into how these ideas sort of percolated up and came together in Bitcoin. And again, a personal story through which to understand that. Because it was something that really came about over two decades of experimentation. It wasn't a bolt out of the blue. It wasn't just Satoshi came out of nowhere and said, here's Bitcoin. It was all these previous innovations. concepts that were pulled together to make Bitcoin. So that's sort of the background on Satoshi.

I mean, I think, you know, Satoshi is a very vibrant character in this book. I tried to make clear to everybody from the beginning. You know, I'm not setting out to try to find Satoshi. That's not my goal here. I don't think Satoshi is actually a central character in the story of Bitcoin as it developed. He was central in the first year and a half, but he was really as central as some other people. And again, if it had just been Satoshi, this thing would have never gone anywhere. It was all the people who decided to use it and care about it that made this into what it is.

So I think part of the interesting story as it begins is how did Satoshi sort of start to get those first followers, get those first people who bought into this and started helping out. And I think in the end, maybe we can get back to this, but in the end, the anonymity is, you know, the fact that we don't know who Satoshi is, has actually been a big help to Bitcoin because it's meant that everybody has sort of been able to write their own vision onto Bitcoin.

And there isn't some person to stand up and say, this is what I meant with Bitcoin. Each person can kind of envision it in their own image and pursue that image. And there are a lot of different images and visions for what this will be. And the fact that there isn't one central person to define it, I think, has allowed that to happen. Let me put it like this. If you had to defend the fact that thinks Ebo is not Satoshi, what arguments would you use? I mean, if I would have had to argue that he wasn't Satoshi? Yeah.

Let's think. What are the best arguments against it? Well, I think even in my, the sort of article that I wrote about this, I didn't get to go into this in great detail, but I hint at it. Nick Zabo isn't known as being a crack programmer, particularly C++, which Bitcoin was written in. And so I think, you know, there's a sense that if it was Nick, he probably had some help with the coding. And there are some other sort of smaller details that people point to. I mean, you know, there's Satoshi, some of his writing has Britishisms, British spellings of words, and Nick is not British. I mean, I think I find that a little bit less compelling because it's pretty easy to decide you're going to spell color.

differently, you know, like a British person would rather than an American would. But, you know, that's there. I think, I don't know, there are some of the sort of quirks in the dialogue that Satoshi had with early people that, you know, could suggest that it was someone other than Nick. But you kind of have to dig very far down into the details to get to that. Yeah, one of the impression I have of Satoshi, and I read recently. this the book of Satoshi which is like a collection of of this forum posts and I always came away with the impression that this guy had really good social skills he was like somehow very of course maybe it's just an online setting and maybe he didn't have those

in in the real world it's possible but I just always had the impression he he's very good at taking like responding to criticism in a way that like wins the other person over he's very good at presenting his arguments, a very clear writer. So that's, yeah. I think that's actually some of the strongest reasons that it is Nick Zabo. I mean, he is, he is an incredibly sharp writer and good at interacting online, not, not from what I understand as good in person, but I think a lot of people, and I would actually count myself in this, in this crowd, people.

who aren't necessarily as comfortable in social settings actually overdevelop their online communication skills to compensate. And as I say, I often think of myself in those terms. So that's actually, I think, the way Nick deals with people, and there is a long history with Nick of his communicating on these message boards, on the cypherpunk boards, on the extropium boards and he's actually very good with that sort of dialogue. So to me, that's that is true that that's something that you see in Satoshi's writing, but I think it's also something that you see in Nick's writing.

Cool. It's also something that you see, for instance, with Mark Carpellis, you know, in terms of having the ability to interact online and not having so many social skills. No, no, I disagree. He was certainly more comfortable. Mark was more comfortable interact. acting online, but he wasn't very good there either. So, yeah.

Well, one more thing about the Satoshi story. So that's something I sort of got from your book that I didn't really see like that before. But I had the impression in your book that this, the whole, a lot of the ideology of this libertarian ideas and of the 21 million being this, you know, finite quantity, that those were sort of not so much his but brought by people who joined the project

like Marty being one of them but then others afterwards and that he sort of promoted those as primarily as it means to actually get people to to work on this project and to invest time in it yeah

as I mean Satoshi kind of evolved as he went along his presentation of it and he adapted the presentation of Bitcoin. Certainly later on, he did not talk a lot about the ideology. And initially, at the very beginning when he presented Bitcoin, he focused on the technical stuff. But one of the things that's interesting in looking at the writing and interactions with people is, you know, after a month or two, when it wasn't really catching on, he began to, in the presentations,

focus more on the sort of libertarian anti-central bank potential of Bitcoin and talk, you know, talk to the sort of gold bug mindset that, you know, we have these free spending central banks that are bailing out banks and bailing out Wall Street. and there was a kind of shift there to emphasize that more. And it did indeed draw in Marty Malmy, who's this Finnish kid who was very important in the first year and a half in Bitcoin's development. And I think one of the things that drew him most initially

was that sort of gold-bug-ish kind of argument. And it was that adaptability that I think, allowed, again, Satoshi to draw different types of followers at different times. Today's magic word is Frontier, F-R-O-N-T-I-E-R. Head over to let's-talk bitcoin.com to sign in, enter the magic word, and claim you're part of the listener reward. Can you tell us a little bit more about how Bitcoin evolved after that? maybe after that sort of initial, you know, getting started and getting the first followers?

Yeah, I mean, there are sort of a couple of big spikes where I think it gained most of its followers. The first one was, you know, at the tail end of Marty Malmy's involvement, there was this item on slash dot that was sort of the first media coverage. of Bitcoin, and this was like a year and a half into Bitcoin, and up to that point it had been worth essentially nothing. And Slashdot was where Jed McKaylor found out about Bitcoin and started looking into it and decided to create Mount Gocks. And a bunch of other important programmers at that point sort of got excited about this idea.

That was around the time that Gavin and Driesen first got involved. And so you saw a big surge there, and that was the first time where you could no longer mine bitcoins with your CPU and your computer. After that, you basically needed, you started to need GPUs, and, you know, you couldn't just sort of mine bitcoins at will. And so that was the first big spike. Then the next year, after the creation of the Silk Road, and the first media coverage of that, you saw a big, big spike that coincided with Mount Gox's rise and that kind of drove a big increase in the price, which brought on a lot of new people, including a lot of people who ended up being important later on. Charlie Shrem, that was when he first gotten involved. And then there was yet another crash,

or that was the first big crash, I guess. And then you had another one in March 2013. where the reasons I think are debated. But it sort of moved in these big spikes where the price went up a lot. Suddenly the press got interested, new people read about it and learned about it and sort of got involved and started doing their own things. And it really kind of moved in these cycles. And the last one of those cycles was, I think, you know, at the end of 2013, the beginning of 2014, when you had this big China run up and all this excitement in China

and then sort of came crashing down with Charlie Shrum's arrest and the end of Mount Gox. And I think it's kind of been a slide since then, and I think you're sort of waiting for that next big uptick. To what extent do you think that the role that Mount Gogs played in these crashes because it seems that in the book, when there are these crashes, Mount Cox seems to be some sort of Mount Cox incompetence that coincides with them at some point. I mean, I think that certainly the April 2013 crash was essentially entirely immediately caused by Mount Cox.

And I think that over the last year, the biggest damage to Bitcoin. The confidence within the wider world and the interest in Bitcoin was a result of problems at Mount Cox. I mean, I think in each case, you did have a big run-up before that was likely to encounter, you know, likely to come down somewhat. But I do think that if you'd had a sort of a more competent business in control of all of these Bitcoins at those times, the story could have looked very different. It fell entirely to them. And I mean, part of what's amazing is that despite the number of times that they proved that they weren't up to it, people kept going back there. That is amazing.

It's certainly, you know, that's true with exchanges is the most valuable thing that an exchange provides is liquidity. And so if people are there, other people have to be there too. you know, the sort of lure, the inertia of that kept everybody at this place that, you know, had proven itself not up to the task several times. But yeah, that's also something that has really amazed me because when I got interested in Bitcoin, it was maybe around May 2013. So it was, you know, after that crash. And, you know, it was, I guess, late, quote, unquote, but it depends.

At the time, Mount Gawks had a terrible reputation. And I was like, I had zero desire to use Mount Gawks, you know, it was already that it took a long time and you get your money out in Fiat. And it was like, so it was like obviously you cannot trust that place. And there was other options, you know, WittStand Bitcoin E, local bitcoins, all these places you could go. So it is really amazing that people kept using it and never moved their money away because it, you know, for at least a year or more, it was just a question. sort of a common view that Mount Cox is incompetent maybe

has some other problems so yeah it's quite amazing how much inertia there was in that and I think that you know this is a this is something we could debate but

and I think it probably wasn't debated adequately but you know there was often a desire in the Bitcoin community to say that Mount Cox the weakness there was not the weakness of Bitcoin. And that's true that, you know, Mount Gox was a centralized institution holding everybody's money and Bitcoin was created for the opposite reason so as not to rely on centralized institutions.

But I think at the same time, the fact that Mount Gox, the fact that Bitcoin was this decentralized technology made it so that there was nobody who could sort of step in and say, you know, this institution should not be operating. It needs to give people its money back. And I think that's, you know, that was something that wasn't necessarily discussed enough at the time, but it was, I think, to some degree, a weakness of Bitcoin and the way this technology worked, that something like Mount Cox could keep going up to the end in that way. And in the book, you keep coming back to that. You keep coming back to the initial sort of ideological ideas that the Satoshi had that

Bitcoin shouldn't be in centralized exchanges or shouldn't be kept by companies. And right, I mean, people just kept keeping their money in, you. exchanges and keep getting gocks at multiple occasions. And keep to continue to this day. It's, you know, I, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's easy to tell, but I would wager that most bitcoins are still held in sort of centralized organizations like Coinbase, Zappo, you know, where you have a third party that is responsible for your money. And, you know, you go back and look at the, you know, you know,

at the Bitcoin White Paper, and that's why this was created so that you didn't have to rely on a third party. So, I mean, that's not the only reason Bitcoin exists, but, you know, that's true to this day. And I think, you know, I make this point in the book, but I think there's a degree to which it makes you wonder whether people really want to have control over their money, whether they want, whether they trust themselves enough. you know, even people like Roger Vair throughout the, you know, initial years of Bitcoin, he's obviously this staunch libertarian, you know,

talks about having control of your money, but, you know, he put a lot of his money in these central institutions. And the reason people do that is because they don't trust themselves to hold on to their private key. Or because they... Yeah, or because they provide the service. responsibility to somebody else. And, you know, that's how governments come about.

You know, you want to offload some of that responsibility so it's not on your shoulders. And, you know, it's been one of the central tensions of this whole experiment. So our episode today is brought you by ShapeShift. If you're going to read this book, Digital Gold, actually one of the key characters in the book is Eric Borges. who's brought us this wonderful creation of an exchange where you can exchange coins,

but it's actually non-exchange, so you don't even account, so it's much better. And he's one of the few characters in the book that have sort of survived and have bridge being an early adopter and really advocating this technology and decentralizations. And they're still here today and doing things that actually work instead of being in jail,

unfortunately, or drinking papatinos and getting haunted. by angry ex-Mount-Gox users. So that's, I think that's a real plus, and that's something good, you know, when you use ShapeShift. Well, Brian, I couldn't put it better myself. Very well said. So if you want to trace some all coins,

go to Shapeshift.i.O. And get it down unless in one minute with no counter sign required. They now support more than 30 alt coins, and they're adding new altcoins all the time. So good job, guys, on providing such a great service. We'd like to thank Shapeshift for those support of Hepburner Bitcoin.

So let's talk about the Silk Road story because that also has such a central world. I mean, one of the ways I think about this, right, so if you think of Bitcoin, most of it is all like potential and dreams and aspirations and hopes. But they are, in my view, there are like two big successes so far of Bitcoin. And the one is actually sort of the thing you're talking about, right? this digital, decentralized, stateless, global asset that just didn't exist before. And it has, you know, maybe it's still small, but at least, you know, several billion dollars. A lot of people put a lot of time and money in that.

So, you know, that's definitely success, right? And then the other thing is Silk Road, right? Because otherwise, none of these businesses that exist really have made money or found a business model that really works. And Silk Road, you know, was so early on and such a big success. So it's such a crucial part of that story. Do you think Silk Road was inevitable? Well, I think first of all, you know, there is often a desire now to sort of play down Silk Road and to say, oh, you know, that was that was never a big part of the system. And, you know, you over exaggerate that.

I think absolutely, you know, for at least a year or two there, Silk Road was the main way you could use Bitcoin. And I think, you know, if you look into the buildup, you know, in the years, really the two years before the Silk Road came about, there was constant discussion on the Bitcoin forums about how are we going to find something for people to do with their Bitcoins. and everybody always came back to porn and drugs because, you know, you needed to find something that you couldn't do with normal money, right? You, with normal credit cards, online commerce works pretty smoothly for most people. You know, it's not, it's, there, there's no roadblock to buying stuff online, but what can you not do is, you know, buy illegal things.

And so, you know, Ross Ulbricht, his first member, message about the Silk Road advertising it was interestingly just a continuation of a long forum post or a long thread on the Bitcoin forum about creating a heroin store. So this had been a conversation that had been going on for six months and there was all this debate about could you create a heroin store in which Bitcoin is the currency and you know people had gone back and forth about why it would work, why it wouldn't work, here, you know, How are people going to trust each other? And it was into that debate that Ross launched the Silk Road.

So, you know, I think it was something that people were sort of waiting for. And when it came about, I think people figured out pretty quickly, okay, this is something we couldn't do before. And I think to a certain degree, to a certain degree, you're still waiting for another thing that you couldn't do before, that people really start doing. You know, people talk about remittances, and there are people using it for that,

but, you know, not in any widespread way. I don't know that anybody's really making money off of that yet. So, you know, I think the Silk Road is crucial to understanding this story. Did you get to talk to Ross Albert? I did not. I talked to his family. I talked to people who knew him. In the end, in the trial that took place,

you had more personal documents on display there than I had about almost any other character. I mean, the amount of things he kept on his laptop that really others haven't mined yet, you know, his diaries and his logs of activity. I mean, it's almost easier to know about Ross Oldbrose, than it is about anybody else in the Bitcoin project because of the number of things

that were captured by the authorities when they arrested him. So are these diaries, etc.? Are they all publicly available? Essentially, yes. I mean, they were all entered into the court as evidence. And, you know, I attended the trial, and so they kind of distributed them there.

Other people have posted a lot of them online, but they're generally available within the court documents for that case. Okay, interesting. What I found interesting was so that in sort of the Bitcoin media, when he was arrested and trial and everything and sentenced, that's happened next week. Yeah, so when the impression that I got from this guy, It was as, you know, the Bitcoin media sort of portrayed him as a, you know, a collateral damage and sort of a victim of the system. And, you know, that he, that, yeah, that he was a victim and made an example. But in the book, like, I read him as, like, a criminal, you know, like he, whether it, these people got murdered or not, like, he intentionally wanted to have these people,

murdered to protect himself and to protect the business that he had built. What was your impression about him? Yeah, I mean, one of the things you see in the documents, in his documents, is his evolution. I mean, I think at the beginning, he was very sort of pure in his intentions. And he was very insecure, and he was okay with the fact that, you know, it was illegal to sell drugs. He didn't, he wasn't bothered by that, but he hated lying to people. and he kind of evolved over time into this person who, it seems in the end, was willing to kill to maintain this business. You know, whether or not he did end up, whether anyone ended up dying, I think, is, it seems like probably nobody did, but it seems pretty clear that he was willing to kill for this business.

And I think, you know, in the end, he was willing to kill, in part because he really believed in the ideas that this site represented. And he thought it was, you know, it was fair for one person to die if it would protect, you know, 5,000 members of his site from getting arrested and going to jail. But I think the debate, since he's been arrested, you know, does, there is this division between, running the site and whether that was an admirable thing and allowing people to buy drugs online and, you know, is that something that you should admire? And then this other set of issues with, you know, being willing to kill for the site and is that something to admire? And I think you, you know, there's frequently a divide in people over those, you know, two separate issues. Yeah, absolutely. And then I agree, right?

that in a way we are in this Bitcoin community, what everybody is looking for is sort of, you know, a new Silk Road. I mean, a legal Silk Road, but that sort of thing that you can't do otherwise, and that gives us such a compelling reason for Bitcoin. And yeah, that search sort of hasn't, you know, the killer app, right, exactly. And Silk Road, without a question, I mean, my view was the second killer app for Bitcoin, right? the first was the bill wrap as a store of value. Or maybe, I guess this two kind of went together. Let's, you know, it seems like the Silk Road was really pivotal in the first part.

And then you talk a lot about this transition where a lot of venture capitalists become interests, a lot of Silicon Valley people. And one of the things that really amazed me in the book, and that just wasn't aware of before or not nearly at the extent that Vences Casares, the CEO of Xappos, was absolutely crucial in recruiting people and convincing people and talking to people with a lot of power and getting them excited about this technology.

Can you tell us a bit more about his story and how that ended up playing such a cultural role? He was somebody who I wasn't particularly aware of when I started writing this book. I didn't realize his significant. against. And I think in part because, you know, the people who were sort of the spokesman for Bitcoin, people like Roger Vair and Charlie Schrem, they, those early folks, they didn't get convinced by Wences. And so actually, the first time I met him, I almost, he showed up

late and I almost sort of walked out and never talked to him. But he actually called. taught me as I was on my way out of the building and started telling me his story and started telling me about the people he'd convinced sort of quietly long before starting Zappo. And I actually spent that next week in Silicon Valley and San Francisco. And everybody I came across said, oh, well, have you talked to Wences? He's the one. He's the one who sort of got all of us excited about this. and it wasn't a public thing.

So it wasn't something you could see on the message boards or at conferences. I mean, more recently he's spoken at conferences and all of that. But this was all kind of in these private exclusive events with Silicon Valley people and Wall Street people. And it sort of began slowly in 2012. He got David Marcus, who was the president of PayPal at the time, and a good friend excited. That was one of the first people he sold on it, and David began buying a lot.

And then he got the guys at Fortress Investment Group, which is one of the biggest private equity hedge funds around, actually on a helleskeen trip out in Canada. And it kind of went from there. And I think the kind of culmination of that, to some degree, was March 2013. I mentioned this big spike in price then. And a lot of people at the time,

time attributed that spike to the problems in Cyprus, or there was a guidance from the Treasury Department, people kind of thought, oh, that's why the price is going up so fast. I think hearing it through Wences and sort of getting to know some of the people who he convinced, what you see is that was the month where there was a conference where he got some of the biggest names in Silicon Valley excited, and they were buying like hundreds of thousands of orders that I think may have, you know, cumulatively been responsible for that big spike in price. And that's something that people aren't necessarily aware of when they think about that.

They think about big world events as having caused that. But usually when you look at the spikes in price, it's because somebody put some big orders in and it pushed the price up. Yeah, I mean, that's another thing that really surprised me. And I think it has been clear for a while that PayPal has been, you know, aware of cryptocurrencies and interested in, at least researching it to some extent. But I wasn't aware that, you know, David Marcus, is he the president or this? He was the president. He's not anymore. He's now at Facebook leading, he was kind of personally

recruited to Facebook by Mark Zuckerberg, working on their messenger app, which, by the way, is working towards integrating payments. But, yeah, he first got excited when he was at PayPal. and got PayPal into this, and got the president of eBay, which owned PayPal into it, and developed a pretty big stash of Bitcoin's himself. Yeah, and was at the first Bitcoin conference, right? So that's really, it's really surprising,

especially because in the Bitcoin community, I mean, on the Reddit and stuff, which I always thought it was a little bit nonsensical, but it was always like PayPal sort of painted as this ultimate adversary. So there's this force of evil where, you know, the president of PayPal is like at the Bitcoin conference, like learning about Bitcoin buying Bitcoin at the same time. So that that was...

Right. And one of the funny little elements of the story is that he actually, when he went to that conference in San Jose in 2013, he was so unimpressed by what he saw that he almost decided to quit PayPal and start a Bitcoin exchange. He just thought, this is such a mess. somebody needs to create a professional business, with a professional exchange. And he contemplated it for a few weeks before he kind of decided not to.

So as we kind of come to the end of a show, let's talk a little bit about where you see Bitcoin going. What are your expectations over the next year or years? Well, you know, this is the area in which I am the least well informed and probably, you know, my opinions on this are as valid as either of yours. I mean, I think for one thing, one of the places I probably ended up is that it's, it, this may take a lot longer than people in the Bitcoin world want it to. You know, Wences said some memorable stuff on this, you know, front. You know, he said, if this takes five years, if it takes 10 years, if it takes 20 years, I don't care. You know, this is not about two years from now.

This is about 50 years from now. And, you know, obviously the comparison with the Internet gets tossed around a lot, but it did take a long time before things could be built on the Internet that, you know, ordinary people wanted to use. And so this process does take a while. I think there's a lot of interesting stuff going on right now. I think certainly the stuff that Wall Street is trying to do could drive real money into this market in a way that hasn't been the case. But I think that's going to take a while. I think that this idea that we have in the Bitcoin space, so first of all, that it's going to take as little time

as people like to think it will is completely nonsensical. And this idea also that there's some sort of finality like at some point like we've made it. This is like you know what we were trying to achieve is also pretty nonsensical because everything is still evolving. I mean like who says we're

at the finality of the internet right? Things are still being built and I have a little bit of a different opinion on that. I mean I think it may take a long time and it's unclear to me how this is going to happen. I mean, it's clear to me, I think that cryptocurrencies and this blockchain technology will change the world in dramatic ways.

I don't know. I am a lot less certain whether, you know, Bitcoin will be the new world currency or become the sort of digital gold that, you know, still has value 20 years from now. But one thing I am convinced of is a really unique property of cryptocurrencies and of Bitcoin, particularly, is that sort of inherent. virality by giving people this incentive, right? Because, you know, you buy into Bitcoin, you all of a sudden have a lot of interest to convince other people, and you have a lot of interest to go first, which is, I think,

it's kind of unique, because often otherwise with technologies, maybe you rather wait for the people to do it and then go. But with Bitcoin, because of this dynamic that, you know, as more people get interested, it, price rises. And I think actually that was an absolutely crucial thing too to get Bitcoin started at all was that there was always this possibility there that you work on these really speculative project that may not go anywhere. But if it does, you know, you can become rich.

And I think that was, I mean, in my view, that must have played a crucial role in the early years of Bitcoin and still does. And I think that also has the seed in it. for this really, really explosive developments. Yeah. They may call or may not come, right? But I think the incentive system is, you know, at the very center of what Bitcoin figured out.

And Nick Zabo said when I talked to him, he said that, you know, he had created this thing called BitGold before that didn't really go anywhere. And he said what, what Satoshi figured out was a way to get people, excited about this and to make people care and that's the incentives. And the incentives, I think, you know, they're what will make it work if it works. And, you know, there's a lot of other stuff there as well,

but it's already worked in getting a lot of people to care about this. Maybe let me throw in here one last point that I saw that I thought was interesting. You wrote somewhere that Coinbase, at one point had to convince the Silicon Valley Bank that they knew what happened with Bitcoin's leaving

Coinbase. Do you know what happened with this? Is this something that they are, you know, they continue to have to monitor in order to work with their banks? So that, you know... This is all, I mean, all the American companies that are large work

with Silicon Valley Bank because it's the only bank that will work with anybody. Actually, Itbit is different. now, but that's the whole danger to the banks. That's the reason they're not getting involved is because they're afraid they don't know where it's going and it could be going to Hezbollah or, you know, North Korea and they won't know. And so essentially, they do allow transactions to take place if they're small, even if they

don't know who the other address is. but once they reach a certain limit, they have to be able to know something about who is getting the coins. And so I think generally that's going to be done in a way that both parties are aware of. So it's not as though this is going to be kept from, you know, it's not as though Coinbase is going to be necessarily secretly keeping track of where the money is going. but I think they and Circle and others, you know, when big amounts of money move, when I, you know, I don't know if there's a hard limit, whether it's $1,000,

I think it can sort of move somewhat, but they have to know that, and that's the only way that they can continue working with their banks. Yeah, yeah. I mean, we had a podcast, we did a podcast a few weeks ago with Michael Gernard, who's doing a startup called Chainalysis that does exactly that. right, that they monitor the blockchain, try to figure out where things are going, so they can, I guess, sell this to companies like Coinbase. So, well, thanks so much for coming on. It was super interesting talking with you. Thanks again so much for writing this book. It was a true pleasure to read it, and to our listeners. I can highly recommend it. I think anyone who's interested in Bitcoin at kind of any level will get a lot out of this book and a lot of super fascinating background stories.

Thank you, guys. It's been a lot of fun. fun. Of course we'll have to link to the book in the show notes. So if people want to want to buy it, it will be available there. Great. Thank you. And is there some other place people can reach you? Is there a website for the book? Yeah, just my name, nathanielpopper.com. Okay, perfect. So we'll put it in the show notes. That if people dig, they can find my email address on there. So, you know. So if people have other exciting stories to tell you, then perhaps you could write a second

edition. Yes, exactly. Yeah, thanks so much for joining us today. So we release new episodes of us having Bitcoin every Monday. So if you want to, you can subscribe to the show on iTunes, SoundCloud, or a new favorite podcast app. We can also get the show on YouTube at Epicenter BTC. If you want to, if you'd like to show, you can always send us a tip,

and the tipping others will be in the show description. So thanks so much, and until next time.