Episode 382: Zeke Faux
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The Crypto Craze: Unveiling the Hype, Scams, and Ethics
What happened when El Salvador made Bitcoin an official currency? Who uses cryptocurrency the most? How does the blockchain both help and hinder would-be scam artists and criminals?
Zeke Faux is a reporter for Bloomberg Businessweek and Bloomberg News, a National Fellow at New America, and author of the book Number Go Up: Inside Crypto's Wild Rise and Staggering Fall.
Zeke and Greg discuss crypto bubbles, the crypto space, and the memorable characters Zeke encountered, such as Sam Bankman Fried. Zeke explains his investigations into Tether, the mass scamming compounds in Southeast Asia, and his personal experiences within this fluctuating industry when he bought his own Mutant Ape NFT.
*unSILOed Podcast is produced by University FM.*
Episode Quotes:
Why crypto investors overcome risks
18:25: If you are making a crypto investment and your money is on some DeFi exchange or some centralized exchange, that seems pretty good. What kind of yield would you want just to let them hold your money? It'd have to be a pretty high-yield investment just to get over the risk that something unforeseen will happen, right? There's some chance that even if it seems great, that's something you didn't think is wrong with this because it keeps happening again and again in crypto. And I think what makes these people overcome is that they're not dumb. They know that these risks are there, the crypto investors. But they think, okay, maybe there's a 10% chance that something goes wrong here…[19:22] That's what makes people overcome everything: this desire to get rich quick, in this sense that it's possible because they've seen a lot of other people do it and get rich.
The difference between internet and crypto bubble
07:29: In crypto, the crypto guys do use crypto, but only to buy it. It's not serving any purpose other than just buying it, trading it, and doing things within this crypto world. Whereas with the internet, it was clearly a lot of fun, and it was affecting a lot of parts of real life. The internet bubble got way ahead of what could be justified by how much money these companies were making. But to me, there was never any doubt that the internet was a powerful innovation that was going to change our lives.
Exploring 'Number Go Up' psychology in blockchain
03:29: The key to it is psychology, and the title "Number Go Up" comes from this saying that I heard at my first crypto conference in 2021. I flew down to Miami. I thought I would hear more about technology. I thought I'd see bankers or fintech entrepreneurs who had ideas about how they're going to disrupt the financial system with this new technology, replace intermediaries, and make global transfers faster and cheaper. And instead, I heard this guy on stage saying, "Our technology is called number go up, and number go up technology means the price goes up, and that makes people excited, and they buy more, and the price goes up more, and then more people get excited, and pretty soon, Bitcoin is going to be at a million." And I just couldn't believe it. I was like, "Is that what it's really all about?"
The treatment of crypto wallet transactions vs. traditional banking in stablecoins
37:25: I can open a PayPal account, and I send money to PayPal. And now I have PayPal dollars that I can zap to your account. And that's not so different from a stablecoin. However, PayPal wants to know who I am. They follow all the banking rules and regulations about knowing your customer. They want to know who you are. You can't hold PayPal dollars without disclosing your identity. However, if I have a crypto wallet on my phone, like Metamask or any of the tons of other options, I can hold tethers on my phone and send them to your phone without disclosing any identifying information. And it seems like it's a very similar transaction that's treated very differently by regulators right now. And I just wonder if that will continue, especially if stablecoins keep growing.