The Man Who Broke The Markets with Benjamin Wallace

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1:30Hello, I'm Anthony Scaramucci, and this is Open Book, where I talk to some of the brightest minds about everything surrounding the written word. That's everything. That's from authors and historians to figures in entertainment, political activists, and of course, Wall Street. Before we dive in, make sure to follow or subscribe wherever you get your podcasts. And don't forget to leave a review. Good or bad, I want to hear from you. I want to hear whether you're enjoying it or where we can improve. And I can take the hits. So let me know. If you don't like something, say it straight. Now let's get into it.

2:14Welcome to Open Book. I am your host, Anthony Scaramucci. Joining us is Benjamin Wallace. Ben Wallace is a New York Times bestselling author, But the book I loved, I mean, I devoured this book in two days, Ben, The Mysterious Mr. Nakamoto, a 15-year quest to unmask the secret genius behind crypto. By the way, the book is fantastic. It reads like a thriller. But before we get there, tell us a little bit about you. And I need a few seconds on another book that I've read of yours, which is called Billionaire's Vinegar, which my law school classmate handed me, Ben. So I was introduced to your first book, my law school classmate.

2:52You got to read this. You're going to love it. So talk a little bit about you. Who are you? What do you do? Thanks for having me. I'm a magazine journalist by trade, and I have always particularly liked narrative nonfiction, especially in books, whether it's authors like Eric Larson or Michael Lewis or Simon Winchester, people like that. And so when I was a bit younger and thinking about what I wanted to write about for a book, I was looking for those types of ideas. And this was, I guess, I don't know, back in the early aughts, I was interested in food and wine. I would go to the bookstore, look at the wine and spirits section.

3:30And they'd have all these books like Wine for Dummies and esoteric things like A History of Weather Patterns in Burgundy and stuff like that. But I wanted there to be one of these narrative nonfiction books for wine, because that's how I kind of like to get information in the context of a good story, where you're just reading along and enjoying yourself. And then at the end, you realize, oh, I just learned about this whole world. So I thought if I could come up with an idea like that or find a true story in the world of wine, that would be the book I would want to read. And so I, you know, set about, I sort of thought, well, maybe I could find one bottle of wine that would be particularly interesting because it doesn't sound very interesting at first blush, like a bottle of wine.

4:10But I thought if it had a really interesting history, I'd seen this movie, The Red Violin, that follows this violin through a thriller. And so I was basically looking for the most interesting bottle of wine in the world. And I learned about this bottle that had been sold for a record price in 1985 to the Forbes family. All these crazy characters had intersected with it. There was a mystery about its provenance. And so that became the billionaire's vinegar. And the same kind of thinking was what led me to write The Mysterious Mr. Nakamoto, which was, again, in the crypto world, tons of books about the technology, some about the libertarian philosophy.

4:49But there weren't a ton of books that fit that narrative nonfiction category. And I had, in 2011, by chance, been assigned by Wired Magazine to write about Bitcoin. And at the time, I'd never heard of it, but it was beginning to make the news as the coin of the realm on Silk Road. So when I started researching that article, I was immediately grabbed by the mystery of its invention. No one knew who this guy Satoshi Nakamoto was, who had created this groundbreaking technology. And at the time, I thought, you know, it's just a normal story and I'm going to crack the mystery and that'll be that. And it obviously proved to not be very easily crackable.

5:26And so all these years later, I decided to revisit it. Do you own any Bitcoin? I do. I do. Not a lot. Not a lot. Okay, if you don't mind me asking, when did you buy your first Bitcoin? I bought my first Bitcoin in 2011. Oh, well, good for you. You got there way ahead of me. I mean, I met Hal. I mean, I was so attracted to your book for so many different reasons because it reads like a great detective novel. I think you know Peter Diamandis. I think we both have a relationship with Peter. I met a gentleman by the name of Hal Finney in 2012 at a Peter Diamandis event. The event was called Singularity University.

5:59It was at the Ames Research Center. And Hal was giving a rendition on Bitcoin. I didn't understand it. My eyes were glazed over. I'm not a technologist. I'm a traditional trade-fi person who read a lot of stuff about Warren Buffett and Charlie Munger over the years. And so I thought it was BS. I think I put out a tweet, Ben, that I don't know what Bitcoin is and don't care. Caveat emptor, I think is the exact thing I put out in 2012. We all have a tweet that we regret. And so you got there in 2011. Congratulations. Who's Satoshi? Well, can I just make one one aside? The Bitcoin I own now is not the same Bitcoin I bought then because I I placed that Bitcoin for storage in a an exchange called Mt.

6:39Gox, which in 2014 imploded. So I lost that Bitcoin. Who is Satoshi Nakamoto? Well, I mean, I assume some of your listeners do not even know what Satoshi Nakamoto's role is. Satoshi Nakamoto is the pseudonym of a person or group who in 2008 posted this paper, the Bitcoin white paper, to an email list articulating this totally new type of money called Bitcoin. So it's a programming group. It's an individual. It's a group of guys that worked on eCash. It's a group of men or women or only a man. I don't know who it was, but somebody made the idea that we got to be anonymous because if we're anonymous, it'll add some level of mystery.

7:19It'll also take out of the central authority. Right. So this is a fairly as cryptocurrencies go. Right. This is a fairly decentralized cryptocurrency, isn't it? It's as decentralized as they come. Right. I mean, anyone can join the network with their computer if they have the processing power to mine Bitcoin. And so I'm not aware of a more decentralized cryptocurrency. So let's go back for a second. OK, because you and I are steeped in this. the gentleman or the programming team or whatever it might be. In October of 2008, they drop a white paper and the white paper explains what they're trying to do.

7:52They're going to create an electronic cash payment system. They explain what it is. They explain how they're going to set it up. They are going to put 21 million of these cryptographs online. They're going to be coins, if you will. They'll start with a few and then every year they'll generate some on a daily basis. And every four or so years, as they get to a certain block number, they'll cut the supply. And they'll do this until 2140. And so we're into, I guess, the fourth halving cycle now. We're spitting out 425 coins a day, down from 900. And this new halving cycle started in April of 2024.

8:28And so this is a system. It's elegant. It's simple. We're going to create something that's immutable. 15 years later, it's unhackable. At least for now, it's not hackable. And so to quote Nakamoto, if you don't understand it, I don't have the time to explain it to you. It's one of the great lines in the white paper. And then one of the other great lines is, I think you should buy some of this in case it catches on. And of course, it starts at fractions of a penny. And today, it's worth, as you and I are speaking, a little over$100 ,000 per coin. And so are you surprised But when you bought your first coin in 2011, are you surprised at where Bitcoin is today?

9:05Yes. You know, the article that I wrote for Wired, I mean, writers don't choose the headlines, but the headline was the rise and fall of Bitcoin. So there was clearly not, it wasn't the rise and future continued rise of Bitcoin. And there's a website called Bitcoin Obituaries that lists like more than 400 articles that prematurely predicted the demise of Bitcoin. And that Wired article is, you know, among the 400. But so, yeah, nobody nobody thought it was going to go. I shouldn't say nobody. Obviously, there were some diehard true believers who thought it was going to go where it's gone. But at the time that Mt.

9:37Gox imploded, I had actually put in a sell order for my seven remaining Bitcoins because I thought at that point it had gone over a thousand. It was, I think, back down to around 450. And I thought, hey, that's pretty good. I paid$17 a coin. You know, they're 450 each now. I'll get rid of them. But so so I had no no no confidence that it would keep growing the way it has. So I obviously didn't. Otherwise, I would have made the investment alongside of you in 2011 or 12. But I do now. Do you have a different opinion today than you did then? Well, I think I, you know, I think there's that term, the Lindy effect, right?

10:10I mean, the longer Bitcoin has survived, the harder it is to to dismiss it. I mean, it's gone through so many boom and bust cycles and come out the other side and then continue to rise that. And as to your point, it's sort of it's been unhackable. And it at this point has what a three trillion dollar bug bounty. Basically, if someone could hack it, they could suddenly take all that money, although it would rapidly decline in value if they it was controlled by one person. But yeah, so I now am much slower to predict anything about its future other than that based on its past, it looks like it will survive.

10:45So is that a computer programming team? Is that one person? Satoshi? Yeah. You want me to give away the ending of my book? That's what you're asking here? Well, I mean, I know the ending because I read your book, but I think it doesn't matter. See, to me, it doesn't matter. The book is so good that it doesn't matter. It's like I know the ending of so many books, but I read that anyway. And I want people to read the book. So I don't think giving away the ending is going to hurt the book because, I mean, it's just an unbelievable detective story. So who's Satoshi been? Well, first of all, I think it could be both in this, both an individual and a group in the sense that the person who communicated with the other programmers in the beginning, right, there's all these, there are all these forum posts and emails that have been made public and that people have analyzed.

11:28And those, according to the, you know, the statistical linguists who analyze this stuff, were all written by a single person. They were not written by a group. But does that mean Satoshi couldn't be a group where one person was the community-facing person, one person was the big idea person, one person was the coder? No. And the fact is, we don't know to this day. That's the spoiler alert. My book ends with some indeterminacy. determinacy. That's what I wanted to say because that's what makes it so fascinating. But Nick Szabo was involved. Seems like he was. Didn't Hal Finney receive the first coin?

12:01He did. It was rendered from the Satoshi wallet. Who controls the Satoshi wallet, Ben? We don't know that either. Okay. And just for everybody that may not know what the Satoshi wallet is, Ben and I know that there's a million coins, which is today's value, $100 billion roughly? Is that what we're talking about? I think so. There's$100 billion of money trapped in something called the Satoshi wallet. No, after Hal Finney received his coin, no coins have left that wallet. And so the question is, is the person still alive that controls that wallet? That is something you and I don't know. And then the question is, will anything ever move from that wallet?

12:41Now, if Bitcoin isn't hacked or there isn't a quantum computer that comes in to unhack it, it may stay there forever. Am I right in saying that? You are. And one of the things that I think is sort of intriguing is if Satoshi is alive but has sort of benevolent wishes for the future of Bitcoin, why wouldn't they send all of those coins to a burn address? Why wouldn't they basically destroy those coins, decrease the Bitcoin money supply even further, give everyone confidence that Satoshi is not going to come out of the woodwork and crash the market by dumping his coins, right? Well, unless the person died.

13:16Unless the person died. Maybe that was a potential goal. Maybe in the advent of Bitcoin, we're going to keep the wallet there and we'll figure out what to do with that wallet. Maybe we'll contribute that wallet to a government, a society, a charity, or maybe we'll burn the coins. But if the person died and no one knows what the password is for the wallet, it's going to stay dormant perhaps until we have a quantum computer crack it. And then that's another big question for everybody. What are we doing the event of that? Because we We not only have that wallet out there, you and I know several million coins have been lost in the advent of Bitcoin.

13:47Not just what you're describing in Mt. Gox, but there could be somebody with a laptop. It's in a landfill right now that has hundreds of millions of dollars of Bitcoin. Am I right in saying that? Absolutely. I mean, there's a bunch of known cases, and in fact, one of them is in a landfill. Yeah, he wants to pay the town. He wants to split it with him. He wants to go into the landfill and get the Bitcoin out of his laptop. Craig Wright, delusional guy? Delusional. Yeah, probably. I mean, definitely not truthful. Not Satoshi. Claims to be Satoshi isn't. Yeah, that was a fascinating drama. There were a lot of people trying to convince me that he was.

14:19Most of the Bitcoin OGs had nothing to do with him. What is Bitcoin today? You read the white paper. It's a payment system. Is it a payment system? It doesn't feel like it evolved 15 years later into a payment system, but it is valuable to people. People see it as a sense of value, a potential store of value. People see in Bitcoin today. I mean, I think it basically has become digital gold. I mean, perhaps in the future, someone could build a payment system on top of it. But as of now, it really is a store of value. It's digital gold. It's not really used as a medium of exchange for practical purposes.

14:56We spend a lot of money in this country. We are 26 % of our GDP now goes into governmental spending. Unfortunately, only about 20 or so percent of our tax revenues go into governmental spending. So we're over our skis anywhere from one to two trillion dollars a year. And Nakamoto writes about this in his white paper. We're a little bit out of control. I feel like the fiat currency community and our central bankers have been drunk driving with our economy, right? Someone wants those keys. Is Nakamoto the right person to take those keys? Is this going to be the final arbiter of value in our society?

15:32Is Michael Saylor right? Is Bitcoin going to be worth$13 million a coin as it becomes the standard place that we assign value to? Well, I'm not an oracle and I'm fairly conventional minded, so I do not think so. I mean, I think, you know, to some degree, you could you could see it as a hedge against, you know, fiat debasement. But I think the world will figure it out. We'll figure it out some way to not disintegrate as a society and suddenly be living in hilltop fortresses, transacting in Bitcoin. Okay. And I believe that too, which is why I'm in the store of value camp. I think in that, the scenario that you're, that's unfolding and what you just said, that still means that Bitcoin, as we continue to advance in the digital world, we could have a digital store of value known as Bitcoin.

16:18Right. And it could trade to the market capitalization of gold and in that scenario, right? Is that fair to say, or is that an overreach? No, I agree with that. I agree with that. I mean, it's sort of it's on that trajectory. Will it ever reach it? We'll see. But I mean, it's what is it today? I think the Bitcoin market cap is something like$3 billion. It's in the 10 most valuable assets. Last time I checked, it was more than silver, more than Tesla, more than SpaceX. So Bitcoin is$2 trillion. The 2-tron market cap of crypto is$3.2 trillion. I think that's where you're getting that number. But Bitcoin itself is just over$2 trillion at$101 ,500 where we are talking today.

16:57That's where it's priced. And yes, it's in the top 10 of assets now in the world. And so it's trading at an asset of like the MAG-7 now,$2 trillion in the Amazon, below Microsoft, Amazon, Apple, camp. But the real question is, is it an investment or is it an asset class? If it's an asset class, it will jump to where gold is, which is about$24 trillion. I'm not saying it gets there overnight, but people like Kathy would say it could probably get there over a decade. And you and I will be a decade. Hopefully, I'll still be here, Ben. You're a lot younger than me. But if I'm still here 10 years from now, that means a 38-year-old will be 48 in their investment prime.

17:34And they're way more versatile in the digital world than I can ever be, which makes me think that there'll be an exponent to this as they accept it more than my generation. I'm still battling it out with the Jamie Diamonds of the world, although we did orange pill Larry Fink. And so we have Larry. As of 2021, Larry told me it was a bunch of bullshit. That was a literal quote from Larry in the lobby of the Four Seasons Hotel in Abu Dhabi. And now he has the largest Bitcoin. And by the way, we were the first investor in that thing. Skybridge put the first 10 million in there. Now he has the largest Bitcoin ETF and considerably one of the most successful launches in the world.

18:10Okay, so I'm at the point in the podcast, Ben, where my producer and I, we picked five words or phrases. And this is where you give me a sentence or two, sort of a Rothschild test. So when I say the word crypto, you say what? Parallel money system. I like that. Okay. I say the word freedom. Interpreted differently by many different groups. Yeah. So I hear money freedom. I hear independent. I hear financial independence for me. But I like that because it could mean something very different from other people, depending on the perspective. When I say the word money, what do you say? We all need it.

18:43We all use it. We all want it. What about Bitcoin? Say the word Bitcoin. The original crypto, the OG, the most solid cryptocurrency, the one that I have the greatest confidence will still exist in 20 years. When I hear money and Bitcoin, I think technology. Money is a technology that we use. And instead of bartering with each other, we have this technology that we use with each other. And so is Bitcoin. It's just a derivation. We're using this digital technology to represent this money for us. Okay, this is the big one, okay? Satoshi Nagamoto. A genius, pioneer, revolutionary inventor. In genius, there comes some level of simplicity though, isn't it?

19:23I mean, when I read and I've read that white paper many times, I'm sure you've read it more than once, Ben. There's simplicity in that white paper, isn't there? Well, when I first read it, I did not find it simple. I mean, it was, you know, it took a lot of time to get my head around it. I mean, it actually, you know, it incorporates deep knowledge in a lot of different areas, but the fact that it is, I think, seven or eight pages roughly, and articulates an entirely new form of money is impressive. I mean, it's... Yeah, so let me rephrase. Perhaps simple is the wrong word. Let me rephrase it.

19:54There's an elegance to the brevity of the idea. Yeah, I think so. I mean, and that's the breakthrough. I mean, the fact that, you know, whoever Satoshi was had this stroke of insight that allowed them to click these components together in a way that worked was the insight. Well, listen, this is a phenomenal conversation for me. I'm a big Bitcoiner today. I don't know. I had people so mad at me, Ben. When I bought the Bitcoin five years ago for my clients as their traditional finance person, I had people firing me. I had wire houses put sell recommendations on my fund. Of course, they've gone up 5X from that day.

20:29Our average cost is 20 ,000. Bitcoin's at 100 ,000. And there are people less mad at me today. I'm going to show you something before you go. These are the wise asses at Skybridge. So this here is me sinking. Okay, so this was made from a picture in the New York Post when Bitcoin, after the FTX blow up, when Bitcoin was at$16 ,000. See, I was sinking in the Bitcoin boat and the New York Post said I was going to die. And they had more or less written my financial obituary. And so we got a bunch of comedians, this guy, which they made this for me. I wish I had that many Bitcoins, by the way, in the boat.

21:05But in any event, it's a story about perseverance because we stayed in our positions. People are less unhappy with us today, Ben, but I hope every person that is happy or unhappy with me reads this book. The title is The Mysterious Mr. Nakamoto, A 15-Year Quest to Unmask the Secret Genius Behind Crypto. And it is a phenomenal story. And what's up next? What do you write next? Done some magazine pieces and hopefully one of them will lead to my next book. All right. Well, good. I look forward to it. Hopefully you'll come back on when you're ready to write another book. I'd love to. All right. Thank you, Anthony.

21:38I am Anthony Scaramucci, and that was Open Book. Thank you so much 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 discussions, it's at Scaramucci on X or Instagram. I'd love to hear from you. I'll see you back here next week

22:12Yo,

22:19this is important man My favorite Lululemon shorts The ones you got me back in the day I think they're pace breakers The ones with all the pockets Well, I just got back from vacation And I think I left them in my hotel room And dude, I need to replace these shorts I wear them like every day with that Lulu hoodie you got me. Could you send me the link to where you got them? Thanks, bro. Talk soon. Looking for your newest go-tos? Shop Lululemon's bestsellers now at lululemon.com.