Odd Lots - The Time One Of Our Co-Hosts Launched His Own Cryptocurrency

Episode Date: August 27, 2018

Joe Weisenthal is a co-host of the Odd Lots podcast. He also once launched his own cryptocurrency called Stalwartbucks. On this week's episode, we speak with Guan Yang, who along with Weisenthal helped launch Stalwartbucks in the early weeks of 2014. We talk about how they did it, what they learned, and why, sadly, it ultimately failed.  See omnystudio.com/listener for privacy information.

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And we have a very, very special episode for you today. Many of you will have been following what's been happening in the cryptocurrency market where Bitcoin recently dipped below $6,000 per coin. That's down from a record high of, I think it was $18,000 back in January. And of course, lots of people scratching their heads trying to figure out what to make of the recent price movement. And lots of people trying to figure out, still, what to make of cryptocurrencies in general. So today we have a treat for you, ladies and gentlemen. We're going to be talking with two people who set up their own cryptocurrency.

And one of them happens to be my co-host, Joe Wisenthall. Joe, say hi. Hi, Tracy. Thanks for having me on online. today. Yes, a little bit of a role reversal for you there. And your partner in this cryptocurrency endeavor is also a previous guest on the Odd Lots podcast. It's Guan Yang. He is a data scientist at a tech startup. Hi, Guan. Hi, Tracy. So in that brief intro, I mentioned that you had set up your own cryptocurrency. Do either of you want to sort of set the stage for when you did this?

and why you decided to do it? Well, Gwan, what year was that? It was in January of 2014. It was a time when it felt like everyone was setting up there on cryptocurrency. And a lot of these were vanity currencies. There was, do you recall, Coinier West, which didn't really get to actually launch. And as I remember the story, I was on vacation in Arizona, and you DM'd me and said, there's all these people setting up their own cryptocurrency, and there are journalists doing it.

And, you know, this is a big problem because. you wanted to be the first. Yeah, I don't remember. I remember like over, over New Year's vacation at around end of 2013, beginning of 2014, I had this idea as like, oh, I should launch a cryptocurrency. And then I thought, you know who would be really interested because he's really fun and he has a great sense of humor? And a say yes to new projects, Joie de Ville, would be Gwan. So I messaged Gwan.

I said, Gwan, let's launch our own cryptocurrency, and we did it. We did, yeah. And I think we got ahead of at least the other cryptocurrencies in media, at least. Gwan, as soon as you said that Joe needed to be first, I started laughing because that's the Joe that I recognize. Okay, so you make this decision to do it, but it can't be that easy, right? You have to actually figure out how your cryptocurrency is going to work. So how did you go about doing that? So at the time in January 2014, there were actually people trying to make it easier.

I found this paid service and I actually paid them amount of Bitcoin that would probably be worth thousands today. I'm sorry. And it was like a cryptocurrency as a service. You know, you paid them some Bitcoin. You put in the name of your cryptocurrency and the way they would work and they would create it for you. It turned out that it didn't work that well. So, you know, like any good artist. I decided to steal something that already existed.

And the most obvious choice was this cryptocurrency that was quite popular back then. And it's still pretty popular, I think, called Dogecoin. Is that how you would pronounce it, Joe? Yeah, Dogecoin. Yeah. Dogecoin is based on a meme of this particular Shiba Inu that's kind of a fox-like Japanese dog breed that's like the Instagram version of a corgi. Becoming more popular in the U.S., by the way.

there was a particular Japanese Shiba named Kabosu who became a meme. There were all these captions like, wow, and such something, very something. Such moon. Exactly. Yeah. And obviously when that happened in 2013, someone had to create a cryptocurrency based on this poor dog. Well, and the other thing is you mentioned stealing, but like all these currencies, the code is open for the most part. So Bitcoin, light coin, dogecoin, which I think is based on.

light coin, all you have to do in a way is copy and paste the code and then change a few parameters, maybe change the name, and essentially everyone's kind of copying off of everything. Yeah, and until a couple of years ago, all of these cryptocurrencies were almost all basically copies of Bitcoin. Dogecoin is based on something called Lightcoin, which changed some key details, but the basic architecture, if you open up the software on your computer, they all sort of look the same. In the case of Dogecoin, they changed a lot of the menus and the the branding to be more meamy, of course. So stalwart bucks was a clone of Dogecoin, which was a clone of light coin, which was a clone

of Bitcoin. Yeah, we would say a fork. A fork, yes. Right. And stalwart bucks, for those who don't know, Joe's handle on Twitter is, of course, the stalwart. So you named it after yourself, even though Guan was doing all the work, of course. Have you ever told the origin story of that name?

Oh, yeah. I don't know. I feel like I might be an unreliable narrator on this. What's your recollection of the origin story? I don't really know. You had some kind of stock tips blog with this name. Well, I had, I don't know what the reasoning was. It sounded pretty goofy. Like, Stalward Buck sounds like maybe like some sort of like fake currency you would get at an arcade or something like that, like that you would only be able to use to play video games or something. I think in retrospect, though, that may have been our first error is not giving it a more august and serious sounding that. I think that right off the bat may have said a song the wrong fun. You know, it was that like many startups, it was like that rush to launch and move fast. It's not always a good idea.

Okay. So we have a little bit of foreshadowing there of what's to come. But, you know, you mentioned Stowartbucks is a clone of Dogecoin, which is a clone of light coin. And this is a question I always have about cryptocurrencies, which is that anyone can launch these things. And so in order to be successful, you kind of have to focus on either first move or advantage or adoption. So what was your big plan to get people on board with stalwart books? Well, so this was actually the one idea that I think we were pretty legitimately ahead of our time on. So obviously the trend in 2017 was initial coin offerings.

And the premise would be that of many of these coin offerings that the token has some sort of redeemable value. So for example, some projects are we've seen like, oh, you could use this token to buy storage space on people's computer. for data or something like that. And we had the idea that every month, Guan and I would host a dinner among journalists or among people and we would like get together and talk about economics or cryptocurrencies and that to come to the dinner, you would have to pay in stalwart bucks and that that would sort of set a floor for the currency. So if it was really desirable to come to this dinner, then people would have to bid up for the currency to get it. One of the first currencies, I think, to attempt to underpin the currency with real world.

world value. You did have to pay for the food separately. Right. So it didn't get, the currency didn't even get you the food. It just got you the ability to come to the dinner. The honor of being there. Okay. So how many of these dinners did you actually hold? And what was adoption like? I think we've had about 10, 10 or 11 so far over the course of three and a half years. We've had, I think we've had more than that. I bet we've had close to 20 and we still have them. But even starting from the first one, I think, we were never actually able to convince people to actually use the currency to come. So we would insist that you want to talk about?

I think at the first dinner, maybe about half the people at the dinner actually paid the acquired fee in stalwart bucks. And lately it's been a lot less than that. Zero. Wait, so how did people actually go about acquiring stalwart bucks? So there were basically two ways. One is that you could buy StarWat Bucks from someone who already had them, or you could get them. I would often just give them out for free, just for fun.

And like most cryptocurrencies, the other way that you could get them is by mining them, by solving this computational problem, this math problem, basically. And the blockchain, the software, would then award you some stalwartbugs as a reward for spending some time on your computer. and some electricity to solve this problem for us. And how people were mining them, right? People were mining. You were probably the biggest miner, but what's the history of the mining? I think that you and I only control about 10 or 15 percent of all the stalwart bucks in existence.

So, I would say the vast majority of the starboard bucks were mined by other people who were not sitting in this room. Right. So how many stalwart books are in existence now? Oh, this is a good question. There's a lot to this. There's a lot to this. So if you, you know, if we're checking the database, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, 15, 10 or 15 billion. But then also, wow. Another error that we may have made in terms of serious adoption is didn't we make it so that they were mined in increments of one, or like that each coin, each allocation was automatically a billion. So that from the moment you started, you were everyone, the moment they acquired anything was the stalwart bucks a billionaire. Do you want to explain this? Yes. Yes. So that. So that. So that. So that. So that. So that. So that. So that. So that. So That was the original goal that you would be mining an increments of a billion or maybe 10 or a large multiple of a billion. Unfortunately, the Bitcoin slash like coin slash dogecoin software that we use, the feel that they used to store how many coins you have was not big enough to both be mining an increments of a billion and have a reasonable amount in existence.

Right. So this was like the really where the user experience in my recollection broke down because you would instantly, wait, you would first get them, you would immediately get like a billion or actually several billion. Well, we would just label them as a billion stalwart bugs in the software. So when you looked at it, it would say, you know, 25 and then we would write B, SBX. So was getting those, or sorry, was mining those in increments of a billion? Was that supposed to be a gimmick just to get more people on board so that they can say that there are stalwart bucks billionaires? Yeah, I think you could say that that was a gimmick.

Okay. And the amount of stalwart bucks in existence, I mean, crypto proponents often talk about how Bitcoin is sort of self-limiting. There's a limited supply in existence. And in essence, and in essence, the thing is kind of deflationary. Was that the same idea for stalwart bucks as well? No, we decided not to limit the amount of solar bucks in its existence. No, it just keeps going. But it's growing very slowly now. Now it's 1,000 per mining. So it does decline on a predictable schedule. It's just there's no hard limit. There's no limit. It'll go on forever, unlike, say, Bitcoin, where eventually you're going to keep mining, but no new Bitcoin will be created at some point. And in fact, Bitcoin will be destroyed as people lose their passwords and so forth.

So do you have any idea of who else was mining or even buying Stowartbuck's? So I think most of the miners sort of in head cameras. were people who knew about it from the finance Twitter community. There were like a few, though, like on Twitter who from crypto, I think, the early crypto Twitter from back then, I think we would see people tweet about mining it from time to time. Yeah, but yeah, there are also people just sort of from the broader crypto community who already had a big mining rig and who, I don't know if anyone really took it that seriously, but who took their big mining rig and said, you know, for the next couple of hours, I'm just going to mine Starwood Bucks, why not?

I think at the time these days I don't think anyone who actually had any significant hash power or a mining rig would waste their time on something like that. But in early 2014, it was still like mostly weirdos and hobbyists. And even judging by the seriousness with which we took this project, no one knew that crypto is going to be as big then as it is now, obviously. So I think maybe it was a little bit more of a tolerance or interest in sort of quirky projects like this just for the fun of it, wouldn't you say? Yeah, I think none of the cryptocurrencies that people talk about now are even meme-based at all. That's really sad. Right. So one of the pervasive problems in many parts of crypto land right now is this idea of crypto whales or people who own big proportions of,

of a certain coin, notably Bitcoin, for instance. Do you have any suspicions that there's someone out there who, given possibly the limited participation that you had in Stoutwork Bucks? Forgive me for saying so. Do you have any suspicion that there's one or two people out there who are holding a big chunk of the market? Besides Gwan? Yeah, besides Gwan and yourself.

I don't think there's anyone who's both a Starwood Bucks whale and remembers that they have Starwood bucks. But didn't you say that at one point, you were surprised to see that there was one other, like, pretty significant miner in this space? There was, yeah. I don't think we ever figured out who that was. It was traded at one point. There was an exchange. What's the story with that? Do you remember? I don't really know the backstory. We didn't have any contact with them. Back then, there were lots of crypto exchanges. Mount Gox was still in existence in the early 2014, but there were tons of other exchanges that were trading all these weird cryptocurrencies like Black Coin and Dogecoin, Kittycoin, and all these others.

And the one that we got listed on was called Cryptocode.I.N. So crypto coin. I end is India, but it's not necessarily an Indian. Yeah, I don't think they're actually based in India. Yeah. But if I recall, it was traded on this one site, and the only pair was stalwart bucks to Dogecoin. Exactly. Yeah.

So there was at one point on an exchange, you could trade the Doge SBX pair. And so to figure out how much a stalwart bucks was actually worth, you had to figure out the Stullwardbuck's Doge exchange rate on this one exchange. And then the Doge to Bitcoin exchange rate. And then, of course, the Bitcoin to dollars exchange rate. Yeah. And as I recall, the maximum market cap in dollars was about $50,000. Isn't that incredible? that at one point, in theory, all of the stalwart bucks in existence on this very thinly traded exchange and this very tenuous exchange,

technically was worth about $50,000? You guys created $50,000 out of thin air. That's pretty amazing. Thin air and some electricity. Yeah, that's true. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow here to tell you.

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Get the reporting and the context from Bloomberg's 3,000 journalists and analysts we're all over the world. Listen to the latest from Bloomberg News Now on Apple, Spotify, or anywhere you listen. So you mentioned price discovery there, Joe. So without the exchange, would there have been any way to figure out what a Stowart buck is actually equivalent to in fiat currency or other cryptocurrency? I mean, I guess you could, the only other way to do it, if you don't have an exchange, would be OTC trades.

In other words, someone sends Guan a dollar for $10 billion, Starbuck, whatever. And those exist in cryptocurrencies today, those kind of OCC trades. But there would be no transparency or real market price discovery. Back in 2013, 2014, there was actually a pretty active Bitcoin OTC market. There were these internet chat rooms on IRC where you could say, you know, I'm based in New York. I would like some Bitcoin at this price. And then you would either PayPal them some money, which PayPal wasn't happy about. You might meet them at Starbucks and exchange dollar bills.

And they would transfer some Bitcoin to you. I kind of feel like that's getting to be the future of that eventually the crypto market might go back to that. It's totally plausible to me to see one day regulators be like, you know what, we don't want. banks to be dealing with cryptocurrency exchanges in the future for whatever reason. And it's totally plausible to me that the crypto market could once again return to people trading Bitcoins for cash on Starbucks again. Yeah, they even had this complicated reputation system where if you'd completed a successful transaction, there was a bot that would keep track of your reputation. And there were some scams on that channel too, as I recall.

scams with crypto shocking so you know you mentioned that you were acting a little bit like a sort of tech startup at the beginning were there any disagreements that you two had along the way in terms of how you were actually constructing or deploying stalwart bucks i don't think so i think like the biggest regret is rushing to market because i think we got the whole project done in like three days. And I think that if we had waited even like six days, we could have made a lot of user experience tweaks that might not have saved StarWark's, but at least given it a slightly better shot. Like we used, I think we just used the existing Dogecoin wallet. And that had a lot of like the Doge memes, like the dog paw print on it and stuff like that. Probably that would have been

worth a tweak. Rethinking about how cumbersome it would be to denominate everything in building. millions might have been helpful. So a few things like that, I don't think rushing out that fast was probably the best move for market adoption. And the person they were rushing to beat was Alex Hearn of the Guardian. Yeah. And I don't think he, the Hearn coin ever really took off. Right. He used, didn't he use the third party service?

I don't remember. I think he did. I think we were so focused on beating other people. And of course, our project went further than everyone else is. because I think those were just like one-day jokes. But if we had put any sort of serious planning into it, who knows what could have it? There was a coin that launched a couple of months later in March of 2014 called Arscoin from the Ars Technica folks. And they put in more of an effort to create tools to be useful to a normal user.

So they had, instead of having to download this complicated software, you could have an account on a website, sort of like a bank and store your Ars coin there. But it hasn't thrived, has it? No. Well, I guess that makes me feel good because it means no matter what we did, ours probably wasn't going to thrive either. Yeah. And what's the big takeaway that both of you've learned about either cryptocurrencies or normal fiat currencies based off your experience?

I'll be honest. I'm still kind of upset that we were like launching a currency in 2014 and are not insanely rich. Like I kind of feel like if we had taken it a little bit more seriously or a lot more, actually a lot more seriously. And you never know. Like it could have been the next light coin or even like Dogecoin. I think at one point this year had like a total market cap like close to a billion dollars. So if you have like 10 or 5 or even 1% of that, that is really an extraordinary amount of money.

And Dogecoin has really outlived the Doche meme itself. Yeah, it has. So in retrospect, I think like you have to be pretty impressed with anyone who is into crypto and launch their own coins in 2014, who is not now, like, incredibly loaded. And that's sort of weird to think about. Yeah, I would agree. I'm also very upset that Joe and I are not insanely rich. I think one, another sort of sad aspect of this is that the, so the original concept

was that all these dinners would be at Korean barbecue restaurants. And the one that we always went to Kang Su on 32nd Street is now closed. and all of Korea Town is, you know, still thriving, but in a very different form with no more mom-and-pop restaurants. Yeah. But I will say on the plus side, you know, we continue to have these dinners. And if there are any odd lots listeners who want to come to the next one,

they should shoot me a message. We've met a lot of people at those dinners, and we've made, like, some good friends, and we always have a good time. And we usually, I think we have, like, what, like four or five a year, something like that? Yeah. We've probably had about four or five a year.

since early 2014. So something lasting and good came out of the project. And one thing that I strongly feel about all cryptocurrencies is they are sort of like de facto social networks. They only have value because people decide they have value. And the ones that more people decide have value tend to accumulate more value. So we sort of got the social networking aspect right, just on an incredibly microscale. Right. You just need a bigger social network there, Joe. Yeah, exactly. Well, that has really been a fascinating discussion. I'm going to bring Joe back in as a co-host because I feel very uncomfortable doing it on my own. But Guan Yang, thank you so much for joining us again on the All Thoughts podcast. Really fun episode.

Thank you for having me. So, Joe, I know you were just talking about this. But one thing that I probably am taking away from your experience is the important of the crypto exchanges when it comes to price discovery for crypto and sort of legitimizing these things. And to your point, I do think the exchanges are really, really important to what we've seen over the past year or so when Bitcoin and other coins were really going gangbusters, reaching $18,000. And I wonder what that market looks like if you don't have those functioning exchanges. Oh, I think there's no question that the professionalization and security of the exchanges, the idea that, I mean, first of all, a lot of these exchanges or most of them at that time,

you couldn't even buy Bitcoin with fiat currency. So the idea that you can even use dollars to buy cryptocurrency these days is kind of extraordinary. And I think a lot about like these exchanges as being the pipes in for money. And back then the pipes were incredibly thin. And these days, the pipes in have gotten a lot thicker. But of course, we know from the. efforts to have ETFs and to have futures and other sort of cryptocurrencies or Bitcoin traded on more traditional exchanges within the community. There's still a huge effort to just make it as easy as buying anything else. And that's very important, I think, for sort of financial adoption. Yeah. And as much as people complain about the difficulty of buying or selling

crypto using various services, it has come a long way in a relatively short. amount of time. Joe, I have one more question for you. Yeah. Can I have a stalwart buck? I'm going to, you'll have to get one from Guan because I never, I have to admit that I had my wallet only on some computer at my old job, which I left like four years ago. So I am a, I'm broke and a stalwart buck's. I have zero stalwart bucks. But Guan actually does still have his functioning wallet. And I have a feeling that next time you're in town, maybe we'll have a Stalward Books dinner, and if you want to properly pay, he would be glad to give you some so that you can pay your entry fee.

All right. Another valuable lesson about keeping your wallet safe. Yeah. This has been another episode of the Odd Lots podcast. I'm Tracy Allowway. You can follow me on Twitter at Tracy Allaway. And I'm Joe Wisenthall. You can follow me on Twitter at the stalwart.

And you should follow Gwan on Twitter at Gwan. And you should follow our producer on Twitter. Chofar Forges, he's at Forges T, as well as the Bloomberg head of podcast, Francesca Levy, at Francesca today. Thanks for listening. I'm Francine Lacqua, an award-winning journalist, and I've got a new podcast, leaders with Francine Laqua from Bloomberg Podcasts. I've interviewed everyone from heads of state to fashion icons about the news of the moment. But I've always been curious, who are these people as leaders? I don't think there's one right way to be a leader.

Make decisions. A poor decision is always better than no decision. Listen to new episodes every other Monday. Follow leaders with Francine Lacroix wherever you get your podcasts.