Unchained - What Bitcoin's History Says About Its Future

Episode Date: November 14, 2017

Love Unchained? Please take this extremely brief survey to help us obtain more sponsors: https://survey.libsyn.com/unchained Days after the SegWit2x fork was called off, Nathaniel Popper, New York Times tech reporter and author of the book Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money, put this latest suspenseful chapter in Bitcoin's history into context. He discusses why he thinks Bitcoin has become such a vicious, polarized community, why so many of the early Bitcoiners ended up becoming supporters of big blocks, and what could happen to Bitcoin now that new money is entering the system but transactions are expensive and often backlogged. We also dive into who Satoshi Nakamoto might be, whether there are any viable Bitcoin businesses other than ones buying and selling Bitcoin and where regulation of the space is likely to go. Show notes: http://www.forbes.com/sites/laurashin/2017/11/14/what-bitcoins-history-says-about-its-future/ Digital Gold: https://www.harpercollins.com/9780062362490/digital-gold Nathaniel's story on ICOs: https://www.nytimes.com/2017/10/27/technology/how-floyd-mayweather-helped-two-young-guys-from-miami-get-rich.html?rref=collection%2Fbyline%2Fnathaniel-popper His story on who Satoshi Nakamoto may be: https://www.nytimes.com/2015/05/17/business/decoding-the-enigma-of-satoshi-nakamoto-and-the-birth-of-bitcoin.html?_r=0 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unchanged, the podcast where we hear from innovators, pioneers, and thought leaders in the world of blockchain and cryptocurrency. I'm your host, Laura Shin, a senior editor at Forbes covering all things crypto. If you love Unchanged, help spread the word about the show. Share it on Facebook, Twitter, or in your secret slack and telegram channels. And if you enjoy this podcast, give the show a rating or review on iTunes. And don't forget to follow me on Twitter at Laura Shin. This week's episode is brought to you by OnRamp. Your branding and website are the first things your users will see. And in the current Wild West of ICOs and blockchain startups, you need to stand out from the pack. OnRamp is the full service creative and design agency that will help amplify your brand with a perfect website, logo, collateral, or custom design project. Get big results in no time by visiting think onramp.com. Today's guest is Nathaniel Popper, tech reporter for the New York Times, and author of the book, Digital Gold, Bitcoin, and the Instagram, inside story of the misfits and millionaires trying to reinvent money. Welcome, Nathaniel. Thank you for having me.

So let's start with this week's news, the suspension of the Segwit 2X hard fork, which for listeners who don't know about that, that was the topic of the last podcast, which you can check out. So, Nathaniel, what's your take on what happened and why Segwit 2X was called off? Hmm. My take on what happened and why it was called off. Boy, that's, I guess, what, it's been sort of three years in the making. I can just hear whatever glib comments I make here setting off the Twitter mobs. I will say this is going on a tangent, but it is amazing how merely talking about the fork and what the outcome is, no matter what work. you use, you are, you know, immediately offending probably both sides, usually, almost always

at least one side. So, you know, in sort of interpreting it, I have to say, I've become very sensitive to that, as I'm sure you have. But, you know, I think at the end of the day, you know, I think both of us probably wrote about the fact that this was about really two different visions for what Bitcoin was. In the end, it was not just a technical dispute. Now, I think the question sort of moving forward is, you know, the small blockers, the folks who won this, said that this is going to be something like a digital goal that we're going to build other layers on top of. And I think the real question is going to be, can they build those things on top of Bitcoin faster than other coins, you know, start getting adopted for, you know, these payment

channels and things like that. So I think that's going to be really interesting to see moving forward because, you know, at this point, some of these things are sort of technically built, but, you know, it's not clear that they're going to work. So I think it's a real sort of moment of uncertainty for Bitcoin, which you've seen in, you know, the price over since the fork, you know, sort of seesawed up and down. Yeah, and I'm totally with you on the political stuff. It is so scary to write about this just because, or scary is not the word, but, you know, it's so sensitive.

You just know anything you say, somebody's going to attack it. And it is usually, you're right. It is usually both sides, which is kind of interesting, that they both just read into whatever sentence or word choice, their own projections. And I think that ultimately that is very destructive. probably for this whole project. Not like there should be an open debate and everybody should be able to state their opinion,

but kind of the degree of viciousness in this community is something that really didn't exist three years ago. And, you know, I hear a lot of developers who say, like they were, you know, just turned off from the whole project, you know, working for either side, really, because it's just so nasty in person. and, you know, that there are other sort of communities, other virtual currency communities that are just sort of more friendly places to be. Right. Do you have any theory about why it's changed so much in the last three years?

I think that for the first six years of Bitcoin's existence, and we can sort of talk about this with the history of it, this project had a leader. So for the first two years, it had a leader, Satoshi Nakamoto, who kind of generally had the final work on things. Obviously, you know, open source software, you know, everybody was running around the world. But, you know, at the end of the day, if nothing else, he was the only person who had commit access to, you know, the GitHub repo. And, you know, he then handed that over to Gavin, Andreessen, who, you know, frequently referred to himself as a sort of benevolent dictator. And, you know, he was somebody who could make a decision and just sort of cut things off and just stop the arguing at a certain point. And since Gavin left, there has not been a leader. And that comes with certain advantages. But I think it also comes with certain disadvantages.

And you've seen that. And I think, you know, even sort of comparing it to Ethereum, I think is really interesting because Ethereum obviously has a leader. And a lot of people criticize Ethereum for that. But here's somebody who can sort of set the tone. And, you know, at some point sort of step in and give an answer. And obviously a lot of people don't like that about Ethereum. But you see how that plays out in the project and the community that forms around it. Right. And I think the other thing that Ethereum has going forward is that the people that disagree already split off and they have their own little project out with their own classics. So I think that also helps.

Although now we have the same in Bitcoin, too. Yeah. No, it does help. I mean, I think the other thing that happened, and this is true of Gavin and Fatalic, and sort of totally putting aside, you know, their technical chops or their vision for the project, whatever it is, they were interested in like goodwill. they were interested in sort of goodwill prevailing. And so, you know, if that meant certain compromises at certain point or sort of stepping back at certain points or, or on the other hand, sort of putting your foot down at certain points and saying, like, that's not, like, that's not an appropriate way to treat a person, you know, in a community.

They wanted that. And I think, you know, part of what you see in the Bitcoin community today is that there's a real viciousness on both sides. and there isn't somebody sort of stepping in and saying, you know, you on my side, like, that's not how we want to treat people. Like, this is a community. We need to treat each other with respect. And I think that's been true to a certain degree on both sides. And when you look, when I've sort of looked more deeply at Patelic and looked back at Gavin going back, he didn't want to fight.

And he was okay if you insulted him. You know, he always said, you know, I'm the, I'm the sort of useful idiot in the project. I mean, he was kind of self-deprecating in that way. And I think Bitcoin sort of as a community could use a bit more of that if it wants to be a welcoming place. Now, all that being said, you know, I think to a certain degree, you know, to the degree that people want this to be a revolutionary project that isn't compromising, you know, maybe this is, maybe this is the right way to go. Maybe it isn't a project that should compromise. You know, and that's, that's, I guess, to some degree, what this whole thing has been about, you know, in addition to what is the Bitcoin project going to look like?

Is it going to be more focused on payments? It's going to be more focused on store value. I think a big part of this was just like, how do you compromise? And, you know, I think to a certain degree sort of Bitcoin, you know, the the Bitcoin, not Bitcoin cash, has said at this point, like we're not, this isn't a community that compromises. We can move forward and we can make changes and we can, but it feels like that was sort of one of the markers that was laid down. And that maybe that's what this project sort of wants to be. You know, that's what the followers, sort of people who are buying it, people are investing in it. But I think that's sort of very much in the water right now as a subject of debate. Well, something that was so interesting to me, which you may not remember,

but when I was rereading the book, by the way, listeners, I barely slept because I was trying to finish the book, which I did do. I had read it before back in 2015, but I just wanted a refresher. And by the way, I need to recommend the book. It is so good if you were into this stuff. You definitely should read it. I think the only really, is it the only narrative? book on Bitcoin, I think it is, right? I think that more recently, Brian Iha has come out with one. That is a sort of told as a story, which is how I approached it. I did not want to write a book that explains how Bitcoin works or why it will or won't be important. I just wanted to sort of explain how it happened and who the people are. And that's kind of been my goal is not to come to

any conclusions about what it is or isn't, but just look at the people who are doing it and why they're doing it and how they're doing it and how it works and how it doesn't work. And did you read Brian's book? Because I haven't yet. I have not yet. Okay. Oh, so they're, okay, it's not the only narrative book, but it is the first narrative book, and it was a really good one, so I really do recommend it.

But one thing I couldn't help but notice when I was reading it was that the vast majority of the main characters in your book ended up being two Xers. Gavin, Eric Forgeyhees, Robert Revere, Bobby Lee, Wences Casares, and then a bunch of the minor characters as well, like Jeff Garzik, Mike Hearn, Barry Silbert, Chris Dixon,

Brian Armstrong, Fred Ersom. And if you don't know all these people, I am not going to run through all the lists of the CEO names of the companies that they're CEOs of or developers for. But anyway, I did notice there were just a few one-exers who were Charlie Lee, the creator of like coin,

Nix Napo, a well-known cryptographer, who sometimes thought of as Satoshi and then Charlie Shrem like switched from being a two X or one Xer. So do you have any theories about why that is or do you think it's just a random coincidence or? It's an interesting point. And I hadn't thought of that before. I certainly had noticed that a lot of people who were really sort of passionate about Bitcoin on an ideological basis. You know, libertarians who came to this. because they wanted to evade government, you know, oversight, you know, government censorship, you know, you might think that they would end up on the small block size of this argument.

You know, that the small block size is frequently kind of, I think, associated more with like ideological purity when it comes to these ideas and values behind Bitcoin. But, you know, they ended up on the Tuix. I think, you know, to a certain degree, when you look back at the history, I mean, I know there's so much, you know, quoting Satoshi to support this side or that side. But, you know, I just went back, was reading the white paper this week. And you notice when you read the white paper, I mean, the first thing it talks about is cash, right? The first thing it talks about is electronic cash, being able to do transactions outside of government oversight. So that was there very firmly.

And I think probably a lot of the early folks that I was writing about, I think that's kind of what drew them in. It was the fun of this thing that you could send around. And, you know, I think there's no question that it's become harder to just simply send bitcoins around. It's become more expensive. You know, transactions get delayed. Now, it could be, those problems could be worked through. You know, the Lightning Network could have.

happen and this all gets that this is no longer a problem right now there is not a solution so right now if you want to do the things that you know just sort of send money around you know roger vera was famous for you know just anybody set up a wallet i'm going to send you three dollars look how look how amazing this is you can't really do that anymore you know it costs five dollars to send somebody three dollars and i think that probably the kind of ideas about what Bitcoin could be, you know, and what it is are evolving. And I think maybe part of that is early on. It seemed like it could be everything.

It seemed like it could be everything to everybody. It could be digital gold and it could be PayPal. And I think that people really thought it could be both. And I think it's becoming clear over time that it can't really be everything. And I think there are a lot of really smart technical people who say it can't really be a payment system. So it's not worth trying to be that. Yes, it could be a payment system if things are layered on top of that.

But in itself, the Bitcoin network would have to scale so much. You know, it would have to, you know, orders of magnitude in order to handle payments in order to be able to compete with PayPal and Visa. So, you know, you just look at it on a practical basis. It's not worth trying to do that. It's such, it's sort of an impossible goal. But, you know, on the other hand, when you look at sort of what was distrable. described initially, there were a lot, there was a lot more, I mean, I'd be interesting to do a kind of

word bubble from Satoshi's early writings to see how often he talked about payments and cash versus commodity. I mean, he talked about both. And again, I think early on there was an idea that it could be both. But I do think that, you know, the first words of the abstract and the first words of the white paper and the first words of the first pitches he made were about cash. And I think that, going back, the precedence for this are hash cash and digit cash, and it was about digital cash. It was about private anonymous digital cash, looking back at the history of this whole project, going back to the 90s. And so it's not entirely surprising that people would still have that in their head as the thing that they want this to be. And I think what's interesting now is you, you, you

you have this argument that maybe it's actually not fine. That may be what was there, but it may not actually be that good for that. And maybe, you know, we need to sort of acknowledge that reality. Yeah, actually, now that I think about it, this was in your book a little bit

where you described the very, very beginnings of it, like the first year or two, where he had written about digital cash and so forth. And then somebody that got involved, was it Martin Malmy? Did I get that name? Marty Malmy?

Yeah, the Finnish kid. Yeah, wasn't he the one that was all, like, injecting kind of a libertarian aspect? Or it was someone very early. And I remember that Satoshi was a little bit like, like, there was some point when they were making the website or there was some aspect like that. And then the person made it all about like, this is about, you know, evading governments and blah, blah, blah. And Citrus was like, whoa, whoa, let's walk the language back. There was some incident. Something like that.

Yeah. I mean, Marty Momi, it would be interesting to check in with him, actually see where he came down. He still gets involved. he's not quite as visible. But, you know, I think the thing that is amazing to me about Marty, and I always talk about this with my book, is, you know, he was really kind of, he kept Bitcoin alive for about a year. It was like it was gaining so little traction.

And he was so committed, this kid, Marty Mom, and he started, you know, three or four months into the project, he emailed Satoshi and said, I love this. You know, can I help you build the website? He was sort of doing all the dirty work for Satoshi. And he would check in with Satoshi and say, are you still doing this? What's going on? There haven't been any transactions in a while. And I just love the fact that this guy who nobody has, you know, really heard of really sort of kept it going, kept faith when even Satoshi, it seemed like, had lost faith. But, but Marty, you know, part of the reason he was so drawn to this was he was very ideologically driven. He was probably one of, you know, six libertarians in Finland. And his first descriptions of it were about sort of, sort of, avoiding the government. And Satoshi, you know, in a lot of those early communications, was much more cautious, you know. So let's see how this works. Let's see how this evolves. You know, a lot of times he would say, I don't think we're ready for that yet. You know, we're not there yet. And, you know, he had that mentality of somebody of a sort of builder rather than, you know, a dreamer who just wanted to sort of throw it all up and say, this is a revolution and, you know, we're going to win.

The other thing that I want to ask about, like, because I, you know, I just love that you do have this context of kind of the big picture from Bitcoin in its early days to now. How would you place this Segwit 2X chapter in the larger history of Bitcoin? Well, I think one interesting thing I've been thinking about recently is that I think at a lot of points in Bitcoin's development. So there's always been this tension between the. kind of purists and then the new business interests coming in and kind of wanting, you know, to be more practical and realistic. And that has been this, that has been this tug of war from, you know, this first year from the set, you know, I would say the first year or two, that it didn't exist because there were like 20 people doing it. But, you know, as soon as it

started to have value, you had this tug of war between like the new people who wanted to make it useful. And the old people who were like, no, we have to, you know, keep, keep the spirit of this thing alive. And I think at a lot of previous points, the new corporate folks who wanted to be more practical, one. And I think one of the most fascinating things about this Segwit 2X thing is that the practical business interest did not win, right? So that as it's scaled to which largest size ever, the kind of grassroots idealism, I think, won out over that, you know, kind of like we need to be practical and expand this thing. And so that's kind of a reversal. And it's interesting to, you know, at the point where it's grown the most and, you know, probably the most people are owning it having

contact with it, it's sort of, it's, I wouldn't say gone back to its roots because I think both sides in this debate could, you know, legitimately argue that they're going back to the roots. But the kind of people who aren't as interested in the business of it, you know, the, the purists, the programmers have won. And so now that we do see all this pressure of new money coming in, but yeah, at the same time, on chain, there's kind of like this limit that transactions may bump up against? What do you think is going to happen? I mean, yes, certainly my guess is as good as yours and probably as good as any of the listeners. I mean, you know, this is another one of these moments where you realize like Bitcoin is an

experiment and we don't know how it's going to turn out. And I know that people on both sides are very certain of how it's going to turn out. They know exactly how it's going to turn out. But, you know, I think one thing we've learned through Bitcoin is that you just don't know how it's going to turn out. Like, how important was, you know, BitPay has all these companies that are using it to pay bills. They're, their bit pay is helping pay salaries in foreign countries. They've been using Bitcoin. You know, talking with them, they've been pretty clear. We are now going to look somewhere else.

Like, we have to look somewhere else. They are already looking somewhere else. They're already experimenting with other blockchains. So if they stop using Bitcoin, does it matter? If black market sites start, you know, shifting entirely to Monaro or Zcash, does that matter? How much did those transactions matter to this whole ecosystem? And I don't think we know. I do think that, again, it's going to be a bit of a race to see if these second layers

solutions, if they can get, you know, the Lightning Network, can that get going, get working so that people can easily send Bitcoin around on the Lightning Network before people turn to Ethereum or Bitcoin Cash or, you know, any number of other coins for these sorts of payment use cases, which is definitely something that a lot of businesses have been built on. So I think that that's the open question at this point. And, you know, there's certainly an argument to be made that there's a real business use case for like the digital gold vision, that this becomes the settlement layer. That's, that's like a reasonable argument, but we don't know if it will work. And, you know, again, it's like this idea that Bitcoin is an experiment. And that's, I mean, ultimately,

that's what keeps me coming back, what makes this so fun to cover, what makes it worth putting up with, you know, the trolling is that, like, you just don't know where this is going to end up. And, I mean, you know, I just think back to one of the pieces that got me more hate mail than anything else was my piece about Mike Hearn quitting Bitcoin. I remember sort of a lot of the criticism when I first wrote that piece was, you know, he doesn't represent anybody. He's going to, you know, this is nothing. This is going to, you know.

And that was like the beginning. of three years of, you know, literally civil war. And, you know, I'm not saying Mike Herm was right, but, but that, you know, that thing that seemed really small at the time, oh, you know, that's, we're going to figure this out, that his views on this don't matter. Like, whether you think he was wrong or right, the fact that he had strong opinions of it, I think ended up mattering, right? I mean, those views were reflected by others.

And, you know, he did have a point that others ended up making not, not, not about like the price of Bitcoin. You know, people love pointing out that he sold his Bitcoin back then and missed out on all of this price appreciation. But, you know, the concern that he expressed then was something that certainly ultimately resonated with a lot of other people who are trying to use this thing. Yeah. Well, so I agree with you about like, I just can't stay away from this story because to me

it's like the most exciting thing. And I have been interviewed Barry Silverett this week just for a really quick little. story. But I think I asked him like how he felt about it. And I said, well, I care because I'm disappointed because I don't get to write about like if it had happened. Can you imagine? Like that would have been the most amazing thing ever. I was just like so excited for that. Like just from a spectator perspective. Right. Yeah. To sort of see how the game theory of it worked out. Right. But going back to because you, you talked about, you know, covering this. How did you even learn about Bitcoin in the first place and come to write the book? With MX Platinum, almost every purchase made

with your card can be covered with points, including new tastes, new fits, and virtually everything in between. That's the powerful backing of Amex. Conditions apply. I mean, my first story was about Bitcoin for the New York Times was about the Winklewoss twins and the fact that they had amassed this sort of stockpile of Bitcoins. And at that point, they had not been out with their interest in Bitcoin. And they sort of came to us. And I was just covering financial markets. And we didn't have anybody writing about Bitcoin. I think everybody had sort of thought it was going to go away.

It was a joke. And I wrote that story. And then I just became the person who knew about this as it continued to go on. And it probably took me a year before I didn't think it was going to disappear. And, you know, it was about the point where I thought, okay, you know, there's enough here that something of this is going to survive or do something interesting that I decided to write the book. And actually, a lot of it was not, I mean, some of it was the kind of ideas behind the project, but a lot of it was like after a year, I had just met enough people who had kind of given their lives over to this that I realized like, this is a story of our time that needs to be told. you know, regardless of where this whole thing ends up, like just the degree to which this has caused

people to leave their old lives behind and sell everything they own. And, you know, that whole idea, just like, what, what is it about this? I wanted to understand. And, you know, that was, I think, when I decided I wanted to write a book about it. Okay. So we're going to talk about who Satoshi Nakamoto might be, initial coin offerings, Jamie Diamond and more. But first, I'd like to take a quick break to tell you about our fabulous spot. sponsor, OnRamp. If you're starting up a new project or need some design or branding help on an existing one, OnRamp has you covered. UnRamp is a full service creative agency that has helped numerous companies, including many in the crypto space, maximize their brand awareness, gain traction,

and accelerate growth. OnRamp has a passion for assisting brands and boosting business results and can help with everything from website and logo design to social and content strategy. Focus on your core technology and leave the rest of OnRamp. To learn more and see how they've helped passionate entrepreneurs achieve their dreams, go to thinkonramp.com. Thanks onRamp for being a supporter of this podcast and all of our listeners. I'm speaking with Nathaniel Popper, tech report of the New York Times and the author of Digital Gold. So let's talk about regulators. How would you characterize the way U.S. regulators have approached Bitcoin over time? I think that probably the biggest surprise to me is the degree to which American regulators have been willing to leave it alone. you know, and let this go.

I mean, there are so many ways in which the regulators could have decided to step in, you know, had the authority to step in, you know, if nothing else, just to shut off banking relationships for Bitcoin companies. And, you know, they have done that to a degree. I mean, they have warned banks about not working with companies, particularly, you know, companies, you know, not working with established companies. So that's certainly happened, but they've let a lot of this go and sort of very consciously let a lot of this go. And that might be more sort of expected in the Trump era, but, you know, the fact that even in the Obama era,

where there was more an interest in regulation, there was a willingness to kind of let this develop was really, you know, fascinating. I do think, you know, there are a lot of signals that even in the Trump era, With what's happening with ICOs, there's an awareness that, oh, wait, we need to do something here. You know, there are a lot of people who are going to lose a lot of money here. And, you know, people are going to look back and ask why we didn't do anything. And so I think you're seeing a lot of signals from the SEC that they are looking at this hard. So you basically think that now we're starting to see a change because more people are getting heard and is getting more popular? Is that kind of?

Well, I think in the ICU realm, because, have only been going up, people haven't gotten hurt yet, you know, for the most part. But I think there's a clear awareness that a lot of people are going to get hurt. A lot of these projects are going to go to zero. And so I think, you know, there's awareness, particularly at the SEC, that, yeah, like, we need to, we need to do something. I mean, we haven't really seen them act yet. I mean, you know, they've basically just issued warning so far. But, you know, it takes a while to build cases. And I would not be surprised at all if in the next few months, you know, we see some big cases against big names, particularly in the ICO space. I also wanted to talk about China's

early role in Bitcoin because that was kind of a big theme in your book. Obviously, you know, they played a major role in the beginning, but now there's been a stand on Bitcoin exchanges and initial coin offerings. So how would you kind of characterize its history in Bitcoin and where in the role might play going forward? Yeah. I mean, I think, look, until 2013, China essentially played no role. And then sort of overnight in 2013, which is when this really kind of burst in the public consciousness, a lot of that was because of this Chinese interest in it and what

that Chinese interest did to the price of Bitcoin. So, you know, it led to that first spike up to $1,200 in late 2013. So much of that was these Chinese exchanges. And that price spike is what got attention, you know, and what got everybody looking at this thing and trying to understand it. You know, you hear so many people in Silicon Valley who say it was 2013 when I first really started looking at this and trying to understand it. And, you know, people sort of poo-poo the price spikes and also, you know, are unhappy that Bitcoin's associated with all the, the Silk Road stuff and the drug stuff, but it's all of that that got people interested in this

and made people want to look at it. And so I think, you know, and then from 2013 until really this year, China was essentially the sort of dominant country and Bitcoin, you know, most of the trading and most of the mining. I mean, not the developers, but trading and mining. And now what we've seen this year, I guess, is sort of trading has largely gone away, you know, because of this crack down. And now mining is still there, but it's going to be, I think the open question is whether the end of the exchanges is going to mean that those miners can't really get rid of their, you know, offload their bitcoins in order to pay their bills. And if they can't do that, can they keep those facilities open there? Does this start to migrate elsewhere? But certainly,

like this year, the fact that you could sort of stamp out trading in China and everything could kind of go on, sort of largely unhindered. I mean, I guess maybe I just mean that the price could keep going up does suggest the way in which there are a lot of different places that are now involved in this. You know, Japan and Korea have become so enormous in this as well as the United States. And so, you know, it's, you know, being a truly international project, it's not, I don't think it's a currency, but it's, it's an international project. And that's pretty, uh, pretty, amazing to see that, you know, it could survive that so easily. Yeah. And one other thing that was so interesting to me was here we are. In 2017, Japan has made Bitcoin in official currency. It's

licensed 11 Bitcoin exchanges. But in your book, and I don't know if you remember this, when Roger Vera first moved there, he found that people were very wary of Bitcoin. Yeah. Yeah. And so why do you think that was their initial reaction? And why do you think it's like completely gone the other way? Well, for fear of being a... a sort of national reductionist. I'm going to tell you what Japanese people have told me with that important caveat. I think that what Japanese people told me is that, and I saw this when I spent time there, you know, Japan is a very like tech for country, but it is still very much a country where where you follow the leader. You don't try to charge ahead and sort of break, you know,

it's not a revolutionary country in that way. You still follow the leader. And so, You know, Bitcoin was this, like, radical new thing that that the government, you know, had nothing to do with. And I think, you know, that scared people away in Japan for many years. And what you essentially got this year was the government gave it a kosher sign, you know, gave it its imprimatur and said, okay, Bitcoin's okay. And it was right after that happened that it took off there. And so, you know, this is another one of these sort of funny ironies in Bitcoin's history where, you know, know, this currency that was supposed to be about evading the government gained its support, gained its traction because of the government, you know, because of government support for it.

That's what, that's, that's, that's why it's taking off in Japan. You know, I think it's something I heard from a number of Japanese exchanges. This isn't my interpretation of it. And so, you know, the degree to which governments still sort of have not control over it, but sort of determine its, its fate is, is fascinating to see. And the other thing about Roger Payer is reading your book again, I realized that Roger played a much bigger role in Bitcoin's early history than I kind of like think about today or really remember. And so how would you characterize the role that he played overall in Bitcoin? And then I also wondered, you know, here he is now evangelizing Bitcoin Cash and he's also in Japan where obviously there's this big Cryptomania.

I don't know if you have any thoughts on what he might do or where that might go. I don't. I don't have a great read on Roger today. I like spent a lot of time with him in the writing of this book, but I have not stayed up with him well enough to have a sense of sort of the specifics of what he's doing and sort of where he's pushing. Well, you know, on his role, I think like, you know, I say this all the time about these projects about Bitcoin, about Ethereum, you know, their social movement. that need marketing, and they're about getting new people to be interested, and new people have to be convinced. And Roger, you know, probably convinced more individual people to get into this project than almost anybody, or at least he tried to. You know, he's kind of like the Mormon proselytizer of the Bitcoin world. Like, he just went out and knocked on every door he could, and every conversation he got in, And every taxi he got in, he would, you know, talk this project up. And, you know, as we've seen with ICOs, marketing is everything.

It doesn't matter the substance if you have good marketing. And Roger was a very good marketer for Bitcoin. And, you know, I think now he's probably going to be a very good marketer for Bitcoin cash. But the other thing that Roger had very early on was if he had money to throw into this market. And, you know, he, he in 2011, 2012, when he got into this, I mean, just him buying alone could push the price up $5. You know, it was very illiquid back then. It's still very illiquid now. You know, you hear this from the big traders in the space that this is why banks won't get into it.

Fine, there's, you know, on a good day, there's $2 billion trading. You know, that's nothing compared to, like, significant, you know, securities. in the United States, currencies, you know, the amount that they're traded is trillions of dollars a day. And it's very, it is still very, maybe not very easy, but it is still quite easy for somebody to move the price of certainly a Bitcoin cash and probably a Bitcoin. So I think, you know, there's a degree of that going on right now that we're probably not aware of. But, you know, somebody like Roger, who has a lot of money, you know, if you pull $5 million out of Bitcoin in an hour, the price is going to drop.

If you do it, even if you don't want the prices drop, it will drop. If you want the prices drop, then you can really make it drop. Yeah. Well, what's interesting is I don't know if you saw, but this morning. So listeners, we're recording this on Friday before the Friday before this episode comes out. But when I woke up, Bitcoin Cash was at like $800. And then right before recording this, I saw it was at $9.63. And then obviously Bitcoin itself is lower than $7,000.

And earlier this week, it was up at like $7,800. So I don't know. Do you have any sense of what is going on or why that might be? No. I mean, I think one thing I learned in writing about the book, when you actually sort of dig into why the price increased at one time or another, you frequently get a different answer than sort of the obvious answer. Like, you know, in 2013, everybody thought the price was going up

because the Cyprus banks were, you know, putting a hold on people's bank accounts. And that did happen at the same time that the price went up. But when I went back and sort of looked at, like, who was buying, you know, when Sis Kiz, who's a main character in my book, that was right after he'd come from a couple of conferences where he'd convinced, like, billionaires that this was worth doing. So there were a bunch of billionaires trying to buy millions of dollars that month. And you could literally see when the price jumped. And, you know, maybe Cyprus gave them a bit more confidence or interest in it, but it wasn't Cyprus.

It was these people who were buying Bitcoins. And right now, you know, it's people buying Bitcoin cash. I think, you know, you can give the kind of outsider explanation, which is, you know, again, there are going to be businesses that want to do payments. You know, BitPay has already said they're going to be looking for other blockchains to do payments on. You know, make sense that Bitcoin cash would be one of those. And so they wouldn't want to hold as many Bitcoin. So, you know, that's like a reasonable answer. But I think, you know, maybe if either of us Doug enough, we would find out that there

were specific people who were buying and selling right now that were probably moving things. Yeah. Maybe Roger himself since obviously I'm sure he's upset. Yeah. Okay. So let's also talk about who Satoshi Nakamoto is. Do you have any theories about this? Have you looked into it, by the way?

I mean, I haven't looked into it. So, you know, when I, my book came out, I. wrote a story, and it's sort of, you know, including material in the book about the person who I take to be the best bet, which is Nick Zobo. And I think I'm still in a position where I think he's probably the best bet. I mean, I'm not saying he is Satoshi, but of the people that we know, I think it's probably not Craig Wright, you know, that seemed to be pretty clear, Unless Craig Wright was trying to purposely do a bad job of proving his case in order to throw people off the trail, it's not Craig Wright. Yeah, but that theory doesn't make sense because then why do all the, you know, the press thing like with the wired and what was the other publication, Q or whatever?

Like, why do that big press thing and then like not follow through it, you know? Yeah. I think probably he's just not Satoshi. maybe he kind of was in touch with people at that point or some of the people. I think like there's a pretty good chance that it was a couple of people working together. Although, you know, when I really think, you know, I just like read every, everything he wrote, every message, every email. And, you know, something about that still makes me think it was a person because it was just a consistent voice. And it was a consistent voice of somebody who kind of had ups and downs emotionally.

Maybe there was just one person who was doing the emails and somebody who was doing the coding. But it just felt like somebody who, you know, occasionally had other projects and got busy. And so something I may still, you know, thinks from the evidence that I looked at that it's probably, it was a person. But I think it's also very plausible that it could have been a group. I mean, again, I think the sort of case I put down for why Nick Zabo was a good candidate still hold. I mean, he's said many times he's not. And I think part of the reason I wrote that story about Nick was because even if he isn't Satoshi, understanding him and his background is really helpful for understanding where this project came from

because a lot of the ideas sort of filtered through him and a couple of other people. And so, you know, even if you don't think he's Satoshi, understanding where he comes from and how he thinks about this is really helpful in understanding the origins of Bitcoin. coin. Okay. Well, I was hoping you were going to like reveal it all on my podcast, but I guess that's not going to happen. So you wrote this great article on how shady some of the ICOs can be, describe what you uncovered in that story and what you think that means overall for crypto going forward. So my, my story was about Centra. And you, you wrote a story about Lydian coin. I think, you know,

both of them were kind of stories about the fact that, you know, These projects were run by people who, if anybody had done even a basic background check, they would have realized these things. And that's where you are with ICOs at this point. It's worth being aware that there is nobody doing basic background checks on this. I mean, you're starting to have a few sites. But, you know, I'm struck by the fact that, you know, there are all these ICO research firms that seem to be making a lot of money.

And yet they have not turned up any of these scams. They haven't turned up, I mean, they seem to be there to write positive stories about ICOs. And I think that right now there are a lot of probably a lot more negative stories that could or should be written. Because, you know, this is a universe in which there's really nobody checking. And like the crowdsourcing of this just, doesn't seem to be cutting it because, you know, in the case of Centra, I mean, there were so many red flags and they raised $35 million. And, you know, just how does how does that, how does that happen? And, you know, I think it happens because, you know, this, at this point, it's all about marketing

and there isn't that kind of layer of people who are sort of looking into these projects. And, you know, that may be starting to evolve, but that's, that's saying, you know, you have to sort of contend with when you talk about ICOs and, you know, how they can change the world. Yeah, I, I had Smith and Crown on podcasts, and they were saying, like, they don't want to give a stamp of approval to anything and stuff like that. And I sort of, I mean, I get that too, because even at Forbes, we had discussed doing certain different things around tokens. And I was just, like, listen to anything where we're, you know,

putting our imprimatur on any of these. But I was going to say was, oh, yeah. And I think, like, for us, like, you and I are, our role is even more important than before. So one of the thing that was funny to me about your book, or I don't know if funny is the word, but one of kind of like the hottest and most secret of companies you describe in your book is 21, which at the time was doing mining and hardware and chips and stuff. And recently now it's changes to earn. It's basically doing, like, paying people in cryptocurrency for doing tasks.

What do you think that this? I wasn't even aware of that latest iteration of their business. I knew the intermediate one where you know, you'd pay somebody to send an email to them, but I didn't. So it's email now. I didn't know about that latest iteration. I mean, called earn.com. You know, Bology who founded this whole thing is like a creature of Silicon Valley and these are like classic Silicon Valley pivots where, you know, one thing doesn't work. You try another thing.

and, you know, it's telling how hard it is to build a real business on this. I mean, you know, today, you know, there really are not very many businesses, you know, ongoing businesses that do that, you know, I found a business model doing anything other than buying and selling Bitcoin. Yeah. Well, Coinbase is obviously, Coinbase and Zopo, I think, are two of the blockchain. They're, they make their money buying and selling Bitcoin. And even circle.

And no one knows, but, you know, they're a big market maker and that's how they make less of their money. Yeah. No. Buying and selling bitcoins is a good business. I think that's one of the things that I have been particularly fascinated with recently. You know, as everybody talks about, you know, how it's going to change this industry and that industry is worth sort of dwelling on the fact or contemplating the fact that at least as far as I can think of, there is no business that. that uses the blockchain other than to buy and sell, like that makes money that pays salaries other than buying and selling Bitcoin.

Now, like, BitPay may be an exception. They process Bitcoin transactions for people. I'm sure there are some other, you know, three-person companies that do it. Maybe, you know, there's certainly consulting firms that make a lot of money. But I'm always out there asking, as a journalist, show me a company that is doing something on the blockchain or on Bitcoin or on Ethereum where they make money.

It's an actual business. They're not just testing something, an actual business doing anything other than buying some Bitcoin. Now, I'm not, it may happen. But at this point, it's worth kind of remembering. It's like, it's all theorizing still. It's all just like hypotheses about what can happen. I mean, do you, can you think of any?

I often challenge people. I'm not saying I know every company, but... So the only one that came to mind was maybe VIM, but I don't remember... I don't even remember if he told me what their revenues are or if they're cash flow positive or anything. And they don't use the Bitcoin blockchain exclusively, but basically they do B2B payments.

Okay. Like between, you know, the U.S. and Canada, or even within the U.S. or whatever. But they do a variety of things. They, yeah, use, I think, multiple blockchains and sometimes even use their own ledger, like if two of the customers are both, on beam, but yeah, I think it's a small business.

So, yeah, there probably are some payments. There's probably some remittance companies that may be doing it. I mean, I'm always interested to hear, like, how much cheaper are you, like, when you include all transactions, how much cheaper are you than using transfer wise for that corridor? Or I had never fully been able to sort of get a read into that and be convinced that that's a, that is a real business that, I mean, it may be some, at some point. But, I mean, I think about this more in relation to ICOs, which is that all these ICOs are saying, you know, these tokens are going to work in this way and do this and have these incentives and create this sort of economy.

And I think that's really where you say, like, the only economy that's been proven to work so far is the Bitcoin economy. You know, like the incentives there are doing something real. They support this currency. but we don't know if this whole sort of system of incentives and this method of organizing can support anything else. And what do you think of Ethereum? Well, I think it's the same. I mean, it's the same thing. It's working to support a currency and people are building on top of it.

So you can build things on top of it. But none of the things that have been built on top of it are sort of functioning businesses at this point. As far as I know, again, I may. not know, you know, there's, you know, things like auger. There are prediction markets that are sort of in testing, but I don't really, maybe they're working, but are they better than the alternative? Are they making money? I mean, that's, that's really like the test for me is, are you running a business that makes

money on this other than buying and selling Bitcoins and facilitating payments is maybe like there's some layer doing that? Ethereum is like working in the same way that I think Bitcoin is working. You know, the incentives are working to encourage miners to participate and to secure the network. That seems to work. But can any other system of incentives work? It could be, I think, at this point. And again, I'm interested in hearing.

Like, I get emails every day and these are the questions I ask to people. Can anything else work? Maybe. I think we have no idea at this point. And I think that's sort of, again, where this whole thing is an experiment, and we don't know where it's going to end up. And, like, you know, theoretically, you can explain your economic system and how it's going to work.

But, you know, one of the things from Bitcoin story is that oftentimes it plays out very differently than you, than even the creators expect. Oh, yeah, definitely. I always say that this is, I feel like I have a front row seat to the moon. a suspenseful movie ever. Right. So one other thing that I want to ask about was, I noticed also in your book that in 2014,

Jamie Diamond was basically saying a lot of the same things he's been saying about Bitcoin recently, like that Bitcoin will never amount to anything real, that basically the government won't allow something like this. Why do you think he hasn't really changed his views? I mean, I think he's kind of like, he's a pretty old-fashioned guy. I think, you know, there's a tendency to read, like,

kind of ulterior motives into people, you know, like he's scared that this is going to threaten J.P. Morgan. I definitely don't think he's scared that it's going to threaten J.P. Morgan. I think he probably legitimately thinks it's stupid. And I don't mean legitimately like he's right in thinking that. I think that's just what he thinks. And I mean, I know I used to cover J.P. Morgan. I used to cover him as a bank. And he's just a guy who speaks his mind. He's also a guy who doesn't always, you know, dig into things so deeply, you know, he's not some intellectual who's trying to understand things. He kind of looks at the basics and draws his conclusions. And I think, you know, he just made that conclusion and he's kind of sticking to it. And, you know, I think the

interesting thing there is just that he has let his bank be one of the leaders in working with blockchain, you know, aside from Bitcoin, sort of, you know, they've created this quorum sort of instance of Ethereum, which is, you know, not not the open source Ethereum, not the open blockchain and all that. But, you know, Quorum is like a real thing that a lot of people are using. And, you know, he has some real sort of, they're leading the way on that. And so it's, it's, it's, I think that irony is, is, is interesting. But I think it's also, there are a lot of people, Jamie, if, if this is Jamie Diamond's position, there are a lot of people who think, like, you know, I'm not going to touch a public blockchain,

but private blockchains could be very interesting. Like he wouldn't be the only place. And right now that's kind of their position as a bank. Private blockchains can be very interesting, but, you know, public blockchains, no thank you. Yeah. They just want to use the blockchains to make their world more efficient. But I think in the, well, I personally think in the end,

those will be much less, quote unquote, interesting. Yes. Backend, like SaaS, enterprise software is not interesting. And for a year there, it seemed like covering this was, going to involve covering enterprise software, and it got very scary, and thankfully, the interesting stuff came back. The radicals and the revolutionaries and the people who want to change the world, and, you know, that's what makes this project interesting. Yeah. Okay, so just one last question. Is there anything I didn't ask you about that you want to mention? Was anything top of mine in the

crypto space? Boy, so much, but none of it's immediately coming to me. I mean, this is just, you know, one of these things that this is not the only thing I cover. You know, I'm responsible for covering sort of the future of money and the intersections of finance and technology more broadly. But it's very hard to stay away from this. This is sort of so much more interesting than so much else of what's going on in Silicon Valley these days. And so it's just, you know, always kind of dominating my thinking. But I think you're doing a good job of sort of following the evolution of this and all the unexpected places it goes. Oh, thanks.

That means a lot coming from you. Thank you. Well, this has been a great discussion. So how can people get in touch with you? Well, on my Twitter handle Nathaniel Popper, I have my email address and, you know, DM me there is probably the easiest way. But I try to be pretty easy to reach. Okay. Well, thanks so much for coming on the show.

Thank you for having me. Thanks to everyone for joining today's episode on the history of Bitcoin and what that means for her today. To learn more about Nathaniel and to find previous episodes of the show with other innovators in the blockchain and crypto space, check out my Forbes stage. Forbes.com slash sites slash Laura Shin. And also be sure to follow me in Twitter at Laura Shin. New episodes of Unchained come out every other Tuesday. If you haven't already, please rate, review, and subscribe on iTunes or wherever you get your podcasts. If you liked this episode, share it with your friends on Facebook, Twitter, or LinkedIn. Unchained is produced by me, Lorishin, with help from Elaine Zelby and Fractal Recording. Thanks for listening.