Open Book with Anthony Scaramucci - Nick Black On Mastering MMA & the Markets

Episode Date: August 30, 2023

This week, Anthony talks with former MMA champion and crypto expert Nicholas Black. Nick is known for his fighting spirit in both the markets and the ring, and has a unique ability to explain and summarise the most complex of investment strategies whilst teaching us all how to develop a winners mindset. He shares his predictions for the future of regulation, price points, AI and more.  Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Free of charge. BetMGM operates pursuant to an operating agreement with Eye Gaming Ontario. Hello, I'm Anthony Scaramucci, and this is Open book where I talk with some of the brightest minds out there about everything surrounding the written word from authors and historians to figures and entertainment, neuroscientists, political activists, and of course, Wall Street. Sorry, I can't resist. Before we get into today's episode, if you haven't already, please hit follow or subscribe, wherever you get your podcast, and leave us a review. We all love a review, even the bad ones. I want to hear the

parts you're enjoying or how we can do better. You know, I can roll with the punch. You know, I can roll with the punches, so let me know. Anyways, let's get to it. As an undefeated MMA champion, a leader in the cryptocurrency space, and a successful entrepreneur, there's a lot to talk to Nick Black about. How can we apply Nick's fighting experience in the ring to the volatile markets? How should we be altering our mindset for success in any field? And what's new in crypto? We get into all of that and more on today's show. So joining us now on Open Book is Nicholas Black. The Let's legendary Nick Black. He's a writer, cryptocurrency consultant. He's an undefeated MMA champion. He's also an unbelievable entrepreneur. And somebody I'm excited to talk to because you got so many things

going on in your life. I want to start with the MMA fighting before you got into crypto. Take us through your back. How did you get into MMA fighting? I was in the Navy and I was going through dive training and we were on the beach in Coronado all the time. And one of the guys there that was in our class going through was a Gracie jujitsu guy. And so we didn't know what any of that was, but we thought, you know, it's pretty cool because we saw him beat up a wrestler on the beach at a beach party when this wrestler guy got drunk and all this. And so he popped this guy's arm out of socket. We all thought that was the coolest thing ever. So a couple of us started kind of training with him. And then I got interested. I kind of got the jujitsu bug at that point. And I had

had boxed when I was younger and I had done some other kind of useless martial arts and stuff like that, but it was, you know, good for self-development. But the Brazilian jiu-jitsu, the ground fighting seemed directly applicable to like the real world. Gravity always wins. When two people get together, more often than not, they end up on the floor. And so I thought, well, this is, this is something I want to kind of learn before everybody else figures it out, just kind of stay ahead of the crowd. So I went back to Texas after I got out of the Navy and I was training there with some early Brazilian jiu-jitsu guys, and I was lucky enough that we were doing stunts for Walker, Texas Ranger, and there Chuck Norris had brought in one of the Machado brothers, which are in the

Gracie family lineage, to be his personal instructor, and one of the sound stages was converted into a little gym, a jiu-jitsu studio. So we would go and train there, and then in between, sometimes we would go do stunts and stuff like that. It was actually really cool. And so, yeah, I trained for a while probably many, many years. And then you get that bug too, like, okay, I've done all this training, but does it really work? And so I had a friend who was like, hey, man, I can get you a fight. We'll go on the border of Mexico and Texas and we'll like do an MMA match. And I was like, oh, hell yeah, that'll be cool.

And so we did it. So we went down there, me and my buddies, we fought for like 300 bucks each. And that was a really cool experience. And then we just did it, you know, just kind of more and more. and eventually we set up an MMA gym in, I mean, it wasn't even called MMA. It was in HB at that time, No Holds Barred, which is kind of silly because there were obviously rules. But we set up a gym in Dallas, and it was the first kind of full functional MMA gym that had

Thai boxing and jiu-jitsu and, you know, a fairly decent boxing program and a lot of good equipment. And so we put a lot of good fighters out of there, and we were just ahead of the curve. We were just training with better coaches. And if you have better kind of source material, you're results. are usually better. And so we, I think, I feel like we won a lot of easy fights, because people were just not equipped. And then when I saw that I wasn't probably going to have a great career, I wasn't going to retire wealthy, you know, punching people or, or getting punched.

So I kind of, I kind of eased my way into something that I thought had a, you know, a longer time horizon financially. Okay. I mean, it's an awesome story and it leads into why you're so good at so many different things. But I want you, before I transition, I want you to take me through a day, of MMA training for a fight. What happens to Nick Black? How does he get up? What does he eat? What's the regiment?

Eight to 12 weeks out, depending on how close you are in weight. I fought at about 160, 162 pounds. Look, right around that area. And I always walked within, you know, like I carried myself within about 10 pounds of that. So I never got more than about 170 because you don't want to just cut tons of weight

right before a fight. At least we didn't. So for me, a day would be, let's say we're eight weeks out. And hopefully I'm not nursing too many. injuries, it would be wake up at 5 or 5.30 in the morning, get something light to eat, go do a light cardio for 30, 45 minutes, then probably do some kind of boxing, then go eat breakfast, relax for a little bit, go get in the gym and do some groundwork for another hour, two hours,

mostly technique, go relax for a few hours, eat, get some protein, get some carbs, get back in the gym in the evening and do some cardio that's fight focused. So whether it's up against defense, you know, working on scrambling or, you know, working single leg takedowns until you puke, or just finding some very specific area of the fight that you could find yourself in and working that cardio. And then maybe some, about every other day, some very light sparring, getting lighter as you approach, you know, the actual fight. About a week out, you're done sparring. And again, everybody has their own systems. But my whole thing was don't be injured going into a fight, right?

Like if they, if they injure you in the fight, that's fair. But don't injure yourself. Don't take yourself out of the fight. So be close to your weight as you get there the day before you'll do weigh-ins and things like that. and the closer you are, the less stress you have. So just good kind of preparation. So, Nick, I've watched some of these fights and, you know, I've seen boxing match. I mean, when you're getting slammed in the face like that, how do you stay conscious?

Well, you don't stay conscious. You either are conscious or you're unconscious. But you do in your training learn to kind of minimize the impact, right? So the more you practice your takedowns, the more you kind of learn how to get hit, how to go down. So in other words, I'm going to put. I'm going to punch you in the face. You've trained yourself either to steal yourself a certain way or to defend impari a certain way where the blows are not as direct or they're somewhat glancing or how would you describe it?

Yeah, yeah. You're going to, no one dodges anything, right? Like you get hit a lot. You just don't get knocked out a lot, right? You only get knocked out once. So the idea is to, if you're going to take damage, just take damage that's minimal or glancing. So here's an example. I can leg kick somebody and they can either take the leg kick in the thigh, which they

can't take too many of those, or they can bring their shin up and we can go shin to shin. So if we go shin to shin, that's equal damage. We're both in pain. If they don't raise their leg, I hit them, they're in pain. Three or four of those, and their peronial nerve starts to tighten up, and they can no longer walk, and they get slow, and then my boxing's more effective. And so it's just a kind of brutal, but very kind of thought out chess match. And the smarter players, the smarter kind of fighters, they do figure out ways to extend the life

of their career by kind of maximizing their brain power in certain areas, which is again why the grappling is so great because you can really beat someone up and just submit them without just pounding them over and over, just those repeated kind of blows to the head. But as far as like, do you get knocked out? I mean, I never got knocked out, but if I had fought long enough, I certainly would have. Yeah, no question. It's just kind of, it's part and parcel to the, to the training. No question. I want to traverse. Now traversing. You did this for a living. You are, one of the leading thinkers on the cryptocurrency space. I go to you on so many different things to get your advice.

You've got a great sense for the markets. How did you develop that? What was your eureka moment in crypto? When did you decide, okay, this is an asset class I need to be a part of, and this asset class is transformational? So I was exposed to it early on. My brother was one of the early Bitcoin miners, and I just wasn't interested in 2010.

It didn't make sense to me, but I was in the gold business at that time. and I was hedging mostly in the silver markets, but a little bit in gold. I worked for a refinery in Texas. And we processed, I don't know, three or four hundred million a year of carrot gold and, you know, platinum, palladium, rhodium, you know, go down the list. And diamonds as well. And anyway, just being in that kind of hard money space, right, like the gold bug space,

Bitcoin didn't make sense to me. And I kind of gave the white paper a cursory look. And I just thought, I don't know, man. I just don't trust it. To me, it doesn't make sense. I can't hold it in my hand. And then over, you know, a couple of years ago by and I start thinking, well, I can't hold these futures contracts in my

hand either, not really. It's all this stuff is synthetic. And so I started to open myself up to the idea that you don't have to hold something for it to have value. There can be an intrinsic value argument. And again, no one can tell you or me what value is. We can only make a value argument and hope that we're front running someone else's price discovery, right? Like I see something at four bucks. I think it's really worth eight. But the market thinks it's at four, because it's at So if I'm right, there's an arbitrage there, right? Like a value arbitrage. So that was what I was trying to figure out is in the gold and silver markets, that was a lot easier to do.

Because we could see pockets where we could make money. In 2014, I went to a hackathon where the super nerds that I was with, which were much, much more intelligent than myself, were building a crypto exchange. And so my part of it was I thought, well, let's spin up a little ETF against it. Like that'll be our hackathon thing. Anyway, we didn't win because people weren't interested. But three or four days later, M.T. Gox happened. You know, the M.T. Gox exchange where Mark Carpellis lost 850,000 Bitcoin, which we're still dealing with even until today.

And when Bitcoin didn't completely collapse after that, when it started to rebuild, I was like, well, that's it. This is a religion. And religions, they find a way, right? Like, Scientology finds a way. Like, it doesn't matter how ridiculous something is. If it becomes a religion, if it becomes a religion, if it's, you know, gets zealots in ideologues, you get in behind it. And so I thought, okay, this starts to make sense. And so for about the next kind of 18 months, I was on the verge of pulling the trigger of investing.

And then something told me in late 2016, me and a buddy who was a software engineer, we just kind of got this weird feeling like enough is enough. We have to do this. And I think Bitcoin was around. Actually, my entry price was $692 and $17 on Ethereum. So anyway, basically, I just went down the list. I was like, okay, I need this. because I looked at Bitcoin as digital gold. All right. Oh, I'm going to get me some of that. And I thought, okay, smart contracts.

I don't even know what that means, but I like contracts. And if they're smarter, that's even better. So Ethereum. And I thought, okay, what will bankers use if they got into this space? Well, at that time, Ripple, which now XRP, it made sense. It doesn't make sense now. But it made sense at that time. So I bought some XRP.

I bought some Lumen. And there may have been one other thing that I bought. But anyway, I kind of built a little portfolio of like, you know, less than 10 grand. But, you know, over 2017, I had a few more input. But I basically, I flipped that into just shy of a million bucks. And I was like, well, this seems like I won the lottery. And then I decided, I didn't feel like giving that back. And that forced a real deep dive. So I could say it was when I bought. But the Eureka moment was in 2018 when, when crypto market cooled off. And I had to decide, is this a fad? Do I just take my money and go back to the gold market? Or is this something where

it's going to continue to grow. And I felt like it was going to continue to grow. So I really dug in in kind of mid-2018, going in 2019 and reading white papers and just digging up everything I could to try to understand where my value argument for myself would be. And then I just said, okay, I'm going to do what the rich people before me have done. How do people go from rich to wealthy? And that is, they buy infrastructure, right? You buy the roads and the highways. And so that's just, I'm an infrastructure investor in this very illiquid, illogical asset class. The world is incredibly volatile, as we both know, cryptocurrency markets in general, incredibly volatile.

But you and my listening to you are personal conversations, your own renditions and your own podcasting, different things that you're doing, you seem unstinting in your long-term conviction related to what we'll call Web3, crypto assets in general, things like the Bitcoin, Ethereum, et cetera. Tell us why. So I think this is for humanity to move meaningfully forward.

You have billions of people that have been ignored for a variety of reasons. And many of them are political and some of them are structural. But without getting into that, there's a lot of people that just got left behind.

That has to change, right? So you have to find a way, I know the colloquial term like, we're going to bank the unbanked. But I don't think it's so simple as that. I think we're going to give identity to a lot of people that don't have identity. And that's financial identity and voting identity. And the only way this works is in some disintermediated system by removing the rent takers, not completely, because you do need adults in the room. I'm also not one of these people that believes that you decentralize everything in the world's a better place.

I don't agree. But what I do see throughout voting systems. and ID systems and school systems, I mean, just systems in general, that try to do the greatest good, or at least endeavor to until dirty politicians get involved. But they try to do the greatest good. And to do the greatest good, you need to reach as many people as possible. You can't just go because democracy, because as we know, democracy is usually two wolves and a lamb voting on what's for dinner. But what we need is a lot of these frictions can be eased, personal identity, and financial identity can be created in a way that's somewhat disqualified.

intermediated and we have technology now. Anybody that has a phone can now participate in the world financial system, or at least they should be allowed to. They should be given the opportunity. And, you know, opportunities are not handed out evenly throughout the world, as we know. There's a lot of inequity. However, these disintermediated systems through smart contracts and through, you know, stable assets and things like this, and a lot of the cool technology and code can be used to bring a lot of people out of the dark and into this system and let them participate. So everybody should be able to participate. And while crypto doesn't solve all that, it's not a panacea, but what it does do is gives us technology and code that we could use to at least bring everybody

to where they have an opportunity. Now, what they do with it, that's on them. People can squander, but people should be given the right to squander their opportunities, but they have to have those opportunities. I'm going to throw out some concepts that you talk about. about a lot, and I would like you to explain to our listeners some of these concepts. Got it. The blockchain. I'm in the elevator with Nick Black. He's got a few minutes to tell me what the blockchain is. What is it? Crypto can kind of be broken down into three kind of easy steps. Make a block of data,

just a chunk of data, send it out to a group, and then validate it. So make it, send it, agree on it. The making it part, this is all these different consensus mechanisms, proof of work, proof of liveliness, proof of stake, proof of whatever. We got to to agree on a chunk of data. Okay. Now, once we agree on this, and in the case of Bitcoin is a great example, a block is a 10-minute chunk of data. And that data has all these transactions that occurred in the last 10 minutes. So we have to have some way to define a block. And different crypto systems have different blocks, different block times. And again, this is a very basic 10,000 foot. But we agree on the last 10 minutes worth of transactions. Now we need to take that block of

data. And we need to send it to a bunch of people in this participatory, very trustless, kind of interesting network where people are game theoretically incentivized to participate. They get paid to offer up compute resources and participate in what normally a banking cohort would do, right? Like there's no central bank of Bitcoin. There's just the code and all of the human participants that offer up compute resources and electricity and things like that. So we get a block of data. I send it out to the rest of the group. Everybody gives me the thumbs up. Boom. It goes into perpetuity. I don't need to trust anybody on the other side of a transaction. I don't need to know anybody. The integrity is in the math. The integrity is, it's algorithmic integrity. So a

blockchain is a chain of those blocks, 10 minutes. And then another block comes 10 minutes later. And then another block comes 10 minutes later. We now have a chain of blocks that goes all the way back to the very beginning. And the beauty of that is, anywhere along the way, if someone was to come in and change any of that data, it would make that entire line of blocks invalid. And so we know who's cheating in real time. And the incentive to pervert a number. enough of the network to get away with it would be so incredibly expensive. That doesn't even make sense. And so you have this mathematical integrity that is then made more secure by a giant group of people participating and they are economically incentivized to do the right thing.

Because they do the wrong thing. They get booted. Okay. I mean, it's an excellent rendition. So that dovetails into Bitcoin. In my eyes, Bitcoin is kind of an electric, a digital ancillary to gold. I think it's a pretty good store of value. It's not a perfect store of value because it doesn't track inflation, not perfectly over time it does. It's also, though, the most impre, kind of, let's see, the best way to say it is, it is the most impressive or appreciating asset in human history. So people can argue the why. Oh, why do you have Bitcoin? I think it sounds cool. I like, I like the color orange or the Michael Sailors. It's going to be, the whole world is going to use Bitcoin. And so you have all these people all across the,

the spectrum, the Bitcoin delusion spectrum. But the reality is, it's still the most appreciating asset in human history. It has a lot of interesting characteristics that make it a pretty good store of value. It will, in my opinion, it's not a currency in the traditional sense. It is a good peer-to-beard payment system. I don't think Bitcoin is going to replace all world currencies because currencies with fixed supplies don't do really well over time. You know, most currencies in a system need to be elastic. And if you don't have currency elasticity, you have a lot of problems. But I think that Bitcoin is a great store of value. But I don't think you're going to get rich holding Bitcoin. But what you might do is not go poor. If you are in a place where you could see some currency

instability and some massive printing in actual inflation, not this nonsense right now, but like real, real inflation, debasement of currency by printing, then having something that's fixed with a hard cap that is, you know, very easy to transact and very portable and divisible makes a whole bunch of sense. So Bitcoin as a store of value, as long as you don't peg it and say, you know, it's a direct, an anti-inflationary thing, all that. You've got to leave all that rhetoric on the side. It's still nice to have some Bitcoin as a savings account tucked away in your back pocket. Okay.

Let's keep going. AI is a big Nick Black thing. You think AI, you were early on this, man. I mean, you were three years ago talking with the level of passion that the media is talking about it now. So let's talk about AI. AI made me a lot of money. So it seems like a natural and obvious kind of technical evolution. Eventually, you know, software is going to look or behave really intelligently to the point where it usurps human skill sets.

And I think we've reached that point where it's now abundantly obvious. I mean, it should be absurdly obvious to everyone that none of us individually can't compare. with the power of even something as simple as a large language model. So as these artificially intelligent and very narrow systems become bigger, more robust, are easier to use for the average person, you know, text to image and text to video and, you know, anytime you can put all of the world's data in a bag and put a lookup engine on top of that bag, that becomes incredibly valuable. And it just, it moves humanity forward. Now, on the other side of it, the path, these are all narrow AI systems.

But when you get a bunch of these systems together, think of like a swarm of really, really, really smart systems, they can behave in a way that looks a lot like a generally intelligent system or like a digital superintelligence to where you start asking because the answers that you're receiving from it is so good. You start going, is there someone in there? Like, is this thing imbued with some kind of entity? And right now I would say no. But two years from now, I'm not sure we will be able to say no.

So this is, it's moving very fast. And I think to reduce it, if you do a job anywhere in society where you take some data that's available and you manipulate it in any way and you serve it to somebody else, you're already unemployed, you just don't know it yet. And this is going to create a very weird next few years as a lot of people that like tech jobs and things that's were traditionally safe are going to start finding themselves not, not working anymore because, you know, you run a pretty nice shop over there, Anthony. And if if you have software that replace it.

as people and your job is to your shareholders and to your investors. And that is to maximize shareholder profit and get the greatest return on investment. And you can put four pieces of software in place of four people collecting $280,000 a year. Well, guess what? Those people are, they're on the soup line. Because you have to as a corporation, right? And so I think that people are grappling with this right now. Who's safe and who's not? And I think people that believe that what they do as humans is so unique and creative, there's going to be a pretty rude awakening to the reality that, you know, if you put all of humanity's data in a bag and you can search it and you can next word predict enough, what you get is something that looks a lot better than what any of us individually could probably

produce. The last question on this, then we'll move on to something else, but I want you to further fuse the two because AI and blockchain together, I think it, create something that unleashes tremendous amounts of economic innovation. Again, I'm paraphrasing Nick Black. So tell me what that is. So I think that there's a lot of pent up value that's not been unlocked. I think a lot of the benefits of disintermediated systems, right, like removing the rent takers, which you could think the rent takers don't necessarily have to be a bunch of, you know, fat, rich white nudes from Omaha. It could be handshakes and diodes and transistors and all of the bits of software that slow down a transaction that slow down some permission system. I mean,

imagine a system that monitors the brain health of your grandma. And that system is slowed down by all of these software handshakes that occur as transactions propagate back and forth. So if you could clean that up, if you could reduce all of those frictions where that system could monitor grandma's brain at light speed or near light speed, you know, like what hypercicles doing with their ledgerless blockchain. Then you have something where human community can move forward in a very interesting way. And so in traditional rails, I just don't think that's possible. So I don't know that when humans get to generally intelligent systems, AGI or digital superintelligence or digital synthetic intelligence, whatever word soup you prefer,

that's the last invention that humans make. But I do think that the railway for it will be a lot of these distributed systems, a lot of these protocol layers where it eases the friction so that health and welfare and medical and research and science and, you know, just general city infrastructure and planning and just overall life will improve. Like, it will be demonstrably better because of a lot of these foundations that have been built in these protocol layer assets in the crypto space with AI sitting on top of it. One of the old, you know, things in crypto used to be like, what's the killer app? Everybody's, everybody wants the killer app.

And I think that maybe the killer app is artificially intelligent systems. on their way or on their path to generally intelligent systems. I mean, if that's the killer app, I mean, it's the last one. Hopefully, killer does not mean like T1,000's descend on us from Skynet, right? Well, I mean, if you're Elon Musk, I'm certainly worried about that. But I, you know, I'm in the camp that we're doing it one way or another. And we have adversaries. We have allies always as the fate of human race.

And so the human race. So we got to do it. So we're going to do it. So we have to leave it at that. But I get to something about you that I find. fascinating because you are self-made and you can completely transform your life. And so we have a lot of stuff going on in the world right now where there's some people that have a lot of hope, but frankly, there are other people that have a lot of hopelessness. And we also, in the age of social media,

Nick, you and I have talked about this. We do a lot of comparisons. And we're comparing our unfiltered life to somebody's very filtered life. And I think it brings some people down once in a while. And so I want, I want you, if you don't mind, to give the Nick Black uplifting message to my listeners about how you think about all this, how you went from $50 a day of living expenses to where you are today and how people have to frame their mindset for true success. That's kind of a loaded question, but I'll start with this. One, you have to pick a budget that's two kind of two mental clicks beneath what you could spend. So if I could spend a thousand bucks a day, then I should probably spend a maximum of like, you know, $200 a day, right? Like, worst case scenario. I try to always live

two clicks beneath my means. Obviously, that's changed, but I still keep myself at $100 a day budget. I can spend $10,000 a day until I die, but that's not, that doesn't make any sense. One, it's not going to get me any more happiness. And two, there's no longevity there. And then I don't have a lifeboat. So I've always lived beneath my means as just a general rule. And any time I've had any kind of windfall throughout my life. Now, and just to kind of walk that back. When I was living on 50 bucks a day, I had I had kind of sacked away many hundreds thousands of dollars that I've been making over the years. I just, I spend as if I'm frugal and thrifty and I'm not going to say poor because that's poor as a mindset. So is rich, so is wealthy.

These are all mindsets. There's no dollar amount. The happiness you experience as a, as a millionaire or multimillionaire is the same happiness that you can buy for $8,000 a month. That's, that's like the actual amount in a linear market anywhere in the United States where if you make $8,000 bucks a month extra, you live the same happiness, 90% of the same happiness, probably more than a multi, multi, multi, multi millionaire because they have all these other stresses that maybe you don't. So, you know, to your comparison point, people do compare to the Joneses and to their, to their neighbors and to the people that are on the on Instagram and their filters and things like this. But you have to just look at your life and you have to say, okay, how can I

incrementally make my life better? And then the way I found to do that was, you, you can arbitrage either stupidity or laziness. So my fundamental thinking is get out of your own way and move forward faster than the people around you. So the way I get out of my own way is I study cognitive bias. It was a really great speech by Charlie Munger in 1995, Harvard, which I'm sure you're familiar. And he went into what he thought were the 25 cognitive bias.

And this was when he, I think Charlie Munger was at his best. Not that he's not, but this was like Charlie Munger, right? And it made an impression on me. So I listened to it several times and I started digging into understanding cognitive bias. And these are these systematic deviations in rational thought that we have. An example, you're raised in Alabama versus someone that's raised in upstate New York versus someone that's raised in Sacramento or in San Francisco. Your indoctrination into the world, right?

Your nature and nurture and that self-evolution is going to be a lot different. And you may all have your own thoughts and prejudices and kind of immediate. judgments that may not be based on reality. And so when you're exposed to situations, we have all these cognitive bias, these things that because of our nature and our nurture and this weird self-evolution, we may have irrational thoughts that get in the way of very rational sound judgment. So if you're aware of these things, these cognitive biases, then you might not be able to defeat all of them, but when you see them presenting themselves in your decision making, you go, ah, wait a minute, I got a scale back. That's a reaction, not a thought. You know, I need to,

be aware that these biases exist in my personality. And then I need to have a structured way of thinking, a way of thinking critically, and that is my structure is game theory. When I really started studying game theory and how it applied in economics and psychology, it just got real easy to outthink the people around me because you don't have to, you don't have to be 100% better than anyone. If you're two to three percent better decision maker in time management, in not spending stupid and being somewhat frugal and being aware of the benefits of compounded interest and

being able to front run just public discourse and thought by just a few weeks to a few months, then you make so many decisions in your life that you just rise above your peers by doing nothing more than being aware of your cognitive bias and thinking game theoretically, looking at all these strategic interactions between all of the players in these complex systems. And you just reduce the noise and your decisions just accidentally get better. and you win. I didn't want to interrupt because I think your thought process is spot on and I wanted people to hear the linear but also the exponential levels of the way you're thinking. And, you know, one of the things that I believe, which is why I think we're close, is the whole notion that you

have enough, the whole notion that you don't have to be the billionaire, not that it's not great. And of course, if you had the billions, yes, you'd buy your requisite yacht and you'd float it in the Mediterranean. But there are so many simple pleasures in life that you, can take in that you don't necessarily need that. And I think people need to just relax into their lives a little bit more. You know, I went on safari and I got a lot out of it. I mean, but one of the main things is that, you know, the animals don't care about dying. You know, they're here living, you know, and they're just working on it. Because of our sentions, we know we're going to die and it creates all kinds of phobias and anxieties related to it. At the end of the day, just watch the

animals. There seem to be having a good time. We have to figure out a way to do that for ourselves. I'm down to the last part of our podcast. What I do with everybody, authors and thinkers and leaders like you, is I'm going to put out five concepts and I want you to react to these five words. It could be a sentence. It could be a word. It could be just your sort of Malcolm Gladwell blank reaction. Okay. You're ready?

So here's the first word. Volatility. Arbitrash. Okay. Is it manageable? Is volatility manageable or is it just require patients? I mean, volatility is necessary to be able to find arbitrage and markets value arbitrage. I think without it, none of us would be able to make money.

If all markets were linear and smooth and the graph was sloping straight up and to the right, no one would have any more than anyone else. Everybody would index in. And there's no benefit to being either smarter, faster, luckier, or more intelligent. Okay. Very well said. Adoption, like in something like Bitcoin, how do we encourage adoption? I mean, I don't believe in encouraging adoption.

I believe you encourage inclusiveness. If you show people that there are opportunities for them in places they haven't looked, that's, in my opinion, way better than trying to convince people of some weird technology that they still might be grappling with. I mean, between me and you, most of the people in this space are still grappling with it. Even people that run big money are still grappling with it. So, you know, I think you lead people by showing them that there's all sorts of benefits. And it's kind of like a little, what is it? like a cafeteria, just grab the benefits you like. And if it fits, put some in your back pocket.

Regulation. What should it look like? What is the U.S. getting right and wrong? It needs to be thoughtful. I'm not in the, I hate Gary Gensler camp. I'm actually, Gensler's a smart guy, man. He's MIT for a long time. And he's, he's not a dummy. I think he's in a really tough, unenviable position. I think thoughtful regulation is important. But people are asking for the SEC to do, the SEC is not a, they don't write law. All they can do is regulate with a very narrow tool set. It's Congress and our elected representatives that need to expand these definitions and create some kind of thoughtful regulation. And we're in a position where most of those are maybe aging and having a tough time grappling with how complex the world is and maybe crypto regulation is not on their mind. However, inclusivity is paramount. And in order to get that, we need disintermediated systems to at least. least be a possibility to ease friction. And the only way that's going to happen is with thoughtful regulation. So if I was to sum it up, I would say that just in the case of Gary Gensler, I think he

wants to be sued. I think they want to be taken to court and they want to be forced to put, you know, to put it back on regulators and legislators to legislate first and regulate second. Okay. All right. So, I mean, yeah. I mean, I think one of the criticisms would be on Gensler, at least, that he doesn't have the mandate from the Congress. what they did in years past when they were creating new businesses is they went to the Congress with a set of proposals. He hasn't really done that. He's claiming that the current laws on the books and records that exist now are appropriate enough to regulate crypto. That's, you know, you can listen to his interviews. That's more or less what he says. Do you believe that to be the case or do you think we need a different set of laws?

I mean, most of these things look like securities if you really boil it down. Right. So if we're being intellectually honest, most of this stuff is. is they are securities. The ones that aren't scams. Now, there are a good handful, a dozen to 18, 20 assets that fall in this weird space of commodity and rail. We totally agree.

I guess that's the point I'm getting at. It's the commodity and rail piece that I think is the one that I'm getting at, you know? Yeah. And, you know, again, I think some thoughtful lobbying. And I think, I see what Gary's doing. He's trying to scare the creeps out of the space. I don't think that's going to necessarily. work and I think that they're going to be overwhelmed. But again, what's the cure for no regulation?

Regulation. What's the cure for high prices? You know, higher prices, create lower prices, right? So the market at some point will force. Now, if they end up kicking everyone out of the United States, well, then that's on the U.S. They'll look back and they'll say, boy, we blew that. Okay, two more. Ready? Location. Let's say you were starting a cryptocurrency company today. What is the best located? What is the most friendly location? Well, probably somewhere in Europe. Right. So the European seems to be a little bit more open and a little bit more practical than the Americans, right? Right. They just have poor financial governance and like just systemic problems and most of those nations are profligate. So they got their own, they have their own bag full of

problems. Yeah, it's very tricky. Luckily, most of these, you know, distributed systems exist in a world that has no boundaries. And so at the end of the day, you would probably take a kind of approach like Binance, where you just go everywhere you can. And if you step on a landmine, you just pull up, you pull stakes and go somewhere else. I mean, I, I just, I think Coinbase is taking that same approach now. You'd have never thought three years ago that Coinbase would say, we're heading to the Bahamas. But here you are, you know, it is what it is. And so these companies are going to do what's best to maximize shareholder profit and do what's

best for their version of what the ecosystem should look like. Completely get it. America. How could we do better? Well, if I knew that answer, I'd probably be nominated. But I would say that people need to be less judgmental. and they need to focus inward instead of outward. You alluded to this earlier.

I think if people stopped comparing themselves to what they see, and I know the blanket term social media, but if you compare yourselves to other people you've already lost, you need to just pursue your own happiness and try to imagine that it should not come at the expense of someone else's happiness or freedom. And if you can manage that, I think you have already gotten like a kind of rich or wealth effect

that no amount of money can possibly offer you. Amen. I think it's really, really, really well said. So before I let you go, because you're a predicting king, a couple of last minute predictions here, where is Bitcoin and Ethereum at the end of 2003? So if you math that out a little bit and you assume that that's probably when we would start seeing rates coming down, even though, again, nothing the Fed does matters, but a lot of dummies believe it does. So I always imagine what would dummies do? So risk assets probably move. Tech probably moves, although that's mostly pushed by AI. So imagine three, four months of this dithering, a pause.

They roll over rates start reducing, you know, back to zero bound is where we're going. But we're also in the throes of a recession. The good thing about a recession is no one admits it until you're halfway through with it. So now we're on the way out. Hopefully, hopefully some bad banks go bad. Hopefully some regionals get folded up into bigger banks, but they don't all go into the fold of Jamie Diamond. and by end of 2023, I would say we're two or three months into a more bullish phase. So I would probably see, you know, I don't know, 40 to 60K Bitcoin again.

Seems fairly reasonable. Ethereum, I'm not so sure about. I think the argument that Ethereum is money is a very poor one. It's tragically flawed on a bunch of levels that we won't get into. And the fee paradox has not been resolved. And no one of the theory, everybody there is rich. They don't care. They wake up in the morning.

They have zero given S in the tank, right? So I just think Ethereum is probably languishes in the mid, you know, kind of the 1500 to 3,000 range. Obviously, there'll be some excitement if the market were to pick up and people run into it. But at a certain point, people ask, wait, why do we own this again? Oh, I was saying buying FTs. Okay, cool. That's not exciting to me.

And as these other, you know, like Algaran and Cardano and some of these other really quality, what I think are quality infrastructure plays, start hosting more new companies, new assets, it's just going to make sense that you don't, everything isn't Ethereum anymore. I mean, even Ethereum isn't Ethereum. Everybody's using layer, you know, if you're doing anything, you're going on Polygon, you know, with Maddo or you're going on optimism. And if you're not going there, you're going on Harmony 1. Like, people are choked to death.

So I don't think Ethereum is the play, but it probably melts up. And then I would say in the next 15 or 20 assets, you just see a general meltup. And we're probably back in that kind of two to three trillion dollar range as far as just total kind of crypto asset market cap. Discounting the AI space. That's its own sector inside the crypto space, which there are no rules. That space, I think, will do very well. And there's some people that there will be some 100,000 X assets.

I don't know which ones. But in the AI where it meshes with crypto, I think that's where the next, you know, billionaires and 100 millionaires are going to be mentored. Well, listen, you are fantastic as always, legendary Nicholas Black. I appreciate you joining me today on Open Book. We're going to catch up with you at the end of the year. We're going to pair notes again. For sure.

All right. God bless, man. We can learn a lot about life from Nick. Incredible discipline, preparation, training, building good habits, being present, listening. You know, Nick is an undefeated fighter for a lot of different reasons. Certainly he's talented, but how many talented people that you know fall short of their dreams because they're not motivated? So you need talent and motivation and discipline. You need to push yourself that extra mile.

You need to get up sometimes earlier than you want. You need to go to bed sometimes earlier than you want. It's that sort of thing that drives people to this level of success. So I'll tell you, when I met Nick for the first time, I was blown away by his in-depth knowledge of crypto, and I was blown away by his almost fanatical approach to wide open intellectual curiosity. One of the things I pride myself with is being intellectually curious and trying to learn a lot about many different subjects. But here's a guy that is killing it in crypto.

This is the guy he didn't talk about this on the show, but he's got this huge rental business and exotic cars. I can't wait to get to L.A. and actually rent one of his Lamborghinis, as an example. But he's killed it in crypto. He's killed it in car rental. And he's killed it in MMA. There's a reason for that. I'm so happy that you had this opportunity to meet him on this podcast. I'm glad Nick is on our side in crypto because I certainly wouldn't want.

want to be on the other side of him, given what he's done in the MMA world. My next guest was a guy named Nick Blackma. He was a former MMA fighter, so that's where it's not just boxing, but they kick each other and they go crazy on each other. This is stuff that my cousin Bobby does or his son Robbie. You know, you know what I'm talking about, right? It's like all the karate. Yeah, on Robbie.

Right. I think Robbie is a good driver for you because if you ever got in trouble with some nut, Robbie would step in and he would twirl him and throw him out the window. Oh, yeah, no, he gets a $50,000 bonus if he breaks somebody. Someone's coming after me and he breaks the kid's jaw, but the jaw's got to be hanging. He gets a $50,000 bonus. So he knows that. So, of course, I've publicized that, so people are a little wary, you know.

Okay. Yeah, but people, I don't know. I think that he would kill for you. I do. Well, I know. He's a good kid. But what would you have done if I took up fighting, right? I wouldn't want you to tell.

What if something happened to my nose? Wouldn't that be bad, Ma? Yeah, because you have a perfect nose. I have a perfect nose, right? Yeah, you have a defile nose. Of course, it's the Defeel nose. It's not a scaramucci nose, right? Well, it's not a doorknop, that's for sure.

Oh, my God. Don't is. Don't ask me. So my father has a doorknop for a nose, ma. Is that what you're trying to say? He's got a bad nose. You know it. Oh, my grandson.

children say, how do we miss that nose, Nana? Oh, my God. Oh, my God. Oh, my God. All right. They have pepper noses, too, some of them. But, Ma, we learned how to defend ourselves as kids, though, right? That neighborhood was tough, right? A neighborhood had it missed. What happened with Billy Whiteley, me and Nana? Your mother, what happened with Billy Whiteley? You remember that story? What happened? He was a tough little kid, and my mother was very with it. And she said, Antoine he'll go outside and I'll stay in the door and I want you to beat him up.

You remember that? He was picking on me. He was bigger than me. He was picking on me. I went inside the front door of the house crying and Nana, your mother said, what the hell's wrong with you? What are you like a bambino? Go out there and punch him right in the face.

And I remember I said, I said, Nana, he's twice my size. You go out there, you punch him right into face. This was a different time in America, right? I went out there. I smacked Billy Whiteley right in the mouth. I got up on top and was beating his ass. You remember this? Right?

And then what happened, right? What happened? He stopped, right? My mother was thrilled. My mother was thrilled. No, your mother was making meatballs over that. Billy cried, ran inside the house, but then what happened? And he never touched you again.

Yeah, there you go. That's the true story. All right, so to be a true story. But to be a fighter, you have to be disciplined, no? To be a fighter, you have to be disciplined. Yeah. You don't just fight with people. You have to know, know, you're a fight.

time when it's a fight. All right. Sometimes you've got to walk away, right? Particularly if the person could beat your ass in, right? It's a pet. It's like Robbie wouldn't walk away. He would beat the kid up. You remember the fight I got into in high school?

I got suspended for two days? Yes. Yeah, that cost me my admission. With Zon. Remember that? Yeah. Of course. Yeah.

You went to school with his father, right? I sure did. Uh-huh. And he was a real bully, the Zon kids were. He picked a fight with. Very tough. picked a fight with me. I smashed his head against the wall a few times, almost knocked them out, and then I ended up getting suspended, right? You remember that? Right. Yeah, that was another.

Bobby, Bobby, the disabled children were raised together with my children in the same area, and they, you kids stuck together. No, I was not doubt about that. No, my older cousins would never let anybody that was bigger than me beat me up, right? That's for sure. I mean, older than me, I should say. All right. So they were more street. the kids. Ma, what's your... They were raised without a mother. Right.

And a motorcycle shop. And they were raised tough, but they, they were very good in the heart. You know, they were good kids. But God forbid if anything happened, you were David. Susan was a little too young, but they would be right there to have polarized whoever. That was the neighbor we grew up in, that's for sure. Ma, what's your routine like now, Ma? What are you watching?

You're watching Dr. Phil Still? What do you do? What are you watching? I watch the prices right, make a deal. And Dr. Phil. Those are your favors, right? Yeah. And that's it.

Then you go get your nails done. You talk cops out of parking tickets. You get your hair done. What else do you do, Ma? I get my hair done twice a week. Right. Which is real selfish, but it's my vice. And I get my nails a manicure once a week and a pedicure every three weeks.

All right. That's your routine. But no exercise, God forbid, any exercise, right? No. I can't because I was a heavy smoker and I get a. out of breath. Between leukemia and the smoking, I get totally out of breath. I would love to walk. I used to walk with Sonny up at the landmark. I tell you, you could go. I can't do it anymore. You could walk down a block and back a little bit. You know, you can build it back up. You don't want to

listen. All right. I just checking out. Dr. Forte tell me if I don't do it, I'll lose it. Right. That's what I'm trying to tell you. And I went to the other corner of Webster and I couldn't get back almost. I was panting like an idiot. But how about it in a verbal fight, Ma? Aren't you like an MMA fighter in a verbal fight? Can't you just, like, torture people? Well, let me put it like this. I take a lot of guff.

My personality is easy, breezy. But if you keep hurting me, then I can't get myself in control. You go crazy on a person. I got that from you, right? No one's ever really seen me lose my temper, but one or two people have, but look out, right? But when you lose it, it's over. Right. And that's how I am.

I don't know if that's the right. way to be. Probably not the right way to be, Mom. But what are you going to do? We're Italian. We've got to live with it, you know. Right. All right.

I love you, Ma. Thanks for joining the show. I am Anthony Scaramucci, and that was Open Book. Thank you for listening. If you like what you hear, tell your friends, and make sure you hit follow or subscribe wherever you listen to your podcast. While you're there, please leave us a rating or review. If you want to connect with me or chat more about the discussion, It's at Scaramucci on Twitter or Instagram.

You can also text me at plus 1, 917, 909-29-29-69. I'd love to hear from you. I'll see you back here next week.