Episode 0002 · November 29, 2022

The podcast about what to do next.

Line Goes Everywhere: Matt Levine and Aaron Lammer Explain FTX, Exchanges, and Everything Else Crypto

Crypto exchange FTX has melted down, whatever that means—and it turns out nothing means what it seems to mean, especially the word “exchange.” Paul and Rich invite two friends to guide us through the latest crypto maelstrom, finance journalist and crypto chronicler Matt Levine and polymath crypto advisor/journalist Aaron Lammer. Can they explain what’s happening? Can Aaron convince Paul that crypto is just getting started? Why is our first podcast about crypto?



Paul Ford: Hey Rich, do you have any money in crypto?

Rich Ziade: I do not.

Paul Ford: But I notice that you like to look at the website, coinmarketcap.com a lot when we’re working together. Why is that?

Rich Ziade: I can’t explain it. I, I, it’s, uh, first off, I take off my pants every time before I look@coinmarketcap.com.

Paul Ford: and that’s something we’re gonna discuss.

Rich Ziade: It is, um, I’m fascinated by how the movie ends. That’s really the best way I can put it.

Paul Ford: Boy, it’s a long movie. So far though.

Rich Ziade: Do you own crypto?

Paul Ford: No, I, I don’t understand it . I’m Irish, so I, I put all of my savings into lottery tickets. 

So did you read the big article on crypto?

Rich Ziade: I did,

Paul Ford: It’s by Matt Levine from Bloomberg. It’s a whole issue of Bloomberg Business Week. It was pretty cool. It [00:01:00] explained how it all worked. And so we were, lucky enough to book Matt Levine on this podcast. And we also reached out to a good old friend of ours, Aaron Lammer, who is a true crypto expert. That guy’s done everything. He’s, he’s had podcasts and now he’s, um, involved in, in crypto on a professional level. And we asked him to just come on in the world, the chaotic world of crypto, just tell us what’s going on. So, uh, we’ve got Matt Levine from Bloomberg. Matt, hello. Welcome to the show.

Matt Levine: Hello. Thanks for having me.

Paul Ford: And we’ve got Aaron Lammer from

Rich Ziade: Many places.

Paul Ford: Yeah, it’s hard to put Lammer in a box man, but,

Rich Ziade: A true Renaissance man.

Paul Ford: but, Lammer, you have a job. Where are you right now?

Aaron Lammer: I work for a cryptocurrency, uh, trading firm, but I also host podcasts and do other stuff.

Paul Ford: Matt Levine is a great finance journalist and he writes Money stuff, which is the newsletter about what, in my god, what happened in finance. Aaron, [00:02:00] what are we allowed to say about your new professional context? You have been a podcaster, crypto expert, crypto podcaster, podcasting, crypto podcaster, 

Rich Ziade: weed expert. Mu musician. I mean, there’s a lot here.

Aaron Lammer: Well, I’ll, I’ll give a little bit of context that I came to this stuff, uh, not with an intention of being involved in crypto in a professional context. And I, I would even shy away from calling myself for a trader. I work for a trading firm, but not everything I do there is trading. But the way I came to this was doing a podcast about crypto with j Kang many years ago called Coin Talk, which was largely about this kind of stuff about frauds, scams, polarity coming outta the crypto industry.

Uh, somehow actually got to be a believer while doing that podcast. Later made a podcast called Exit Scam, which was about the collapse of an exchange quote called Quadriga, which at the time was a massive deal and now seems to be quaint and [00:03:00] firmly Canadian compared to the events of the last few weeks.

But I would consider myself an aficionado of insolvent exchanges. 

Matt Levine: I, I don’t, I don’t wanna get ahead of us, but I really, I wanted, I want a reality television show where, so like I think you come down on the, the Quadriga guy probably being dead, but like the mystery there not to spoil anything is like he may or may not be dead. Um, and like there are, there’s like a, like right now there’s a high number of very much on the run or like their bags are packed, they’re ready to be on the run Crypto exchange founders and I kind of want them to all find their way to one, like Penthouse in Dhabi and live together and fight with each other about whose exchange blow up, blew up, who else’s exchange. And I feel like the Quadriga guys in some ways the original of that, 

Aaron Lammer: I will say that Exit Scam was acquired for TV rights and Matt’s pitch is like, not way off. Some the writer’s room

Rich Ziade: is how it 

Paul Ford: this is great. No, [00:04:00] but what I want is I want the crypto Odd Couple narrative, right? I want the do, do, do, 

Matt Levine: Right, but it’s like an, it’s like an odd octuple, right? It’s like they all hate each other and they’re all like, they all blew up their exchanges in their 

own ways. Yeah, yeah, exactly.

Rich Ziade: Yeah. Yeah. 

Aaron Lammer: person I would put into that reality show is that there’s a North Korean unit that’s probably the most prolific hackers in cryptocurrency. So you have these sketchy founders versus sketchy North Koreans, who I think are living in China and run this extremely elite hacking unit. So lot of good characters in this,

Paul Ford: . Cool. Everything’s great. 

Aaron Lammer: I, but on the other hand, if crypto was not attracting these kind of people, I think it would show that there was no money, no upside, no future in this stuff.

I think there’s a baby in bathwater element probably with like sketchy stuff and crypto, maybe more less baby, more bathwater in the future. You hope it’s tilting in, in the right direction, [00:05:00] but,

The Big Issue

Rich Ziade: Let’s talk about that issue. Why, uh, by the way, it feel, it, as I was reading it, I was like, where were you Matt, seven years ago? 

Matt Levine: Interesting, right? Like the timing is in some ways bad, but I actually think like there’s a really good micro timing, which is that I think we closed, stopped making substantive changes to it in probably like the end of August or like early September. 

And uh, it published in in like October and I was like, this is really dangerous.

Like there’s gonna be a lot of news coming out between when I stop tinkering with it and when it publishes and we’re gonna look foolish and like actually no news happened in that month. And then two weeks later, so

Rich Ziade: Yeah. Yeah, 

Matt Levine: great. it was great. 

Rich Ziade: Just to clarify for the listeners who don’t know what we’re talking about sum up what, what you, what you wrote. Uh, It’s 

not an article, it’s an entire issue of a magazine, but go

Matt Levine: business Week came to me and they were like, would you 

like to write an entire issue about crypto like Paul Ford [00:06:00] did about code

Paul Ford: I cant remember that guy. What 

Matt Levine: that guy. They were like that that worked out fine. He 

did, what is code? Can you do what is crypto? And our working title for it for a while was What was crypto?

Which I wish we had actually 

titled it that because it would’ve, like, that would’ve made it look really pressured. But, um, instead we ended up calling it like the crypto story, but it was a whole issue of business week trying to explain crypto and um, uh, you know, let’s say not make any predictions, explain crypto where we are so far, and then get you set up so you’re caught up for two weeks later when everything changes. 

Startups are to blame

Aaron Lammer: I have a question for you guys. So I think that a lot of this stuff where you’re like, ah, this is jargony. Who gets this? The original of this was the world of startups and the normalization of startup culture in America where you start talking about seed rounds and valuations. And this company’s worth $8 [00:07:00] billion, though we lost $2 million last year.

So my question to you is, when Elizabeth Holmes was revealed as a fraud, did it change your view on doing a startup in America?

Paul Ford: No. No.

Rich Ziade: It didn’t, mainly because I’ve always had, I, Paul and I are East coast, blue collar, and we’ve always founded all outlandish. She happened to do things to actually harm actual human beings with bad medical information, right? Like, it was 

bad that a very particular line was crossed there.

Let me actually bounce back a question because you guys know this world much more intimately than we do. Did, did you feel like as you’re interacting and, and Matt, you’ve directly interacted with, with FTX and the leadership there, did you feel like.

“Oh boy, this is gonna freaking stumble on its face in the next 12 months”?

Matt Levine: No, I mean, I, I like, [00:08:00] you know, actually, Jay Kang read a nice thing about what Sam Bankman-Fried and FTX were trading on and it was this sort of like image of being people from traditional finance who knew what they were doing and were, he wore shorts and was very young.

But there was a sense in which like, they felt like the adults in the room, because they weren’t like crypto evangelists, they weren’t

” The world is going to change because of web 3 They were like, these lines go up and down and we can make money by selling and buying. And like they had came from places on Wall Street where like people were good at that in a sort of like really rigorous and scientific way.

They all came from Jane Street Capital, which is this trading firm that just makes tiny pennies trading stocks back and forth. And there was this impression that they brought over good practices from the financial industry where like people knew what they were doing and were applying it in a world that uh, Issues, but was very lucrative, right?

Where you can make a penny trading stocks, you can make $40 trading [00:09:00] crypto. And that was my impression. There’s a Bloomberg Odd Lots podcast that I did with Sam Bankman-Fried. I asked him about yield farming, and he described like a magic box that produced money.

And I was like, you’re describing a Ponzi scheme. He’s like, yeah, you know, it’s fine. Uh, And at the time I was like well, you know, that’s like, he’s not like, like there’s, he’s making no claims about crypto here. He’s just he sees the box that produces money and he’s extracting money from it.

And so I don’t know, that sounded like a good business to me. Clearly I was wrong, but 

Rich Ziade: Oh, okay. So you walked away from that thinking, okay, this guy seems to self-police pretty well. He’s got good financial concepts under his belt. So this, you can do this 

Understanding Exchanges

Matt Levine: And also, he was in a business of, he, he started trading firm that was a market maker where he was making money on lines going up and down. But then he like moved into starting an exchange, which like, like the thing about the Elizabeth Homes comparison like those blood tests didn’t work.

Like the exchange worked, like people used it and like [00:10:00] people liked the technology and found it a good exchange to trade on. 

So it wasn’t like a fake

Aaron Lammer: excellent user experience like you guys as software developers. If I showed you Binance and FTX, you would go, that guy’s gonna win far and away. You would’ve been like, this is like low latency. This is a high quality website where if I was trading large amounts of money, it would be valuable to me.

Rich Ziade: Let me dive in here as a layman, because you can help us explain it. I’m gonna make some assumptions and tell me what’s wrong. It’s an exchange, so I guess they’re, the way they make their money or their business model is they take a little bit of a fee on transactions that happen on the exchange. So they are not really holding anything on their books on behalf of anyone. Correct. Because they are in exchange. Help me understand how we got from Exchange. That’s really good. UI to, “I’m really sorry, customer.”

Matt Levine: yeah. Exchange in crypto means something different from what it means in traditional finance and [00:11:00] exchange is like both a brokerage 

Rich Ziade: comes the six paragraphs, Matt.

Matt Levine: No, it’s just that, 

Aaron Lammer: it a shadow bank

Matt Levine: It’s a broker and an exchange. It’s they hold your money for you and they do the trades for you. and so when you wanna buy crypto, like it’s a broker and an exchange in a bank, right? When you wanna buy crypto, the thing that you do is you send a check to a crypto company, to an exchange, and they send you back some crypto, right? And and when you do that, then they get your money

Aaron Lammer: Well actually, they don’t give you crypto. They give you US dollars on your account, which means even without owning crypto, you might have a significant amount of money on it.

They don’t give you crypto. They give you US dollars on your account.

Aaron Lammer

Matt Levine: Right. So like you, like the first thing you do is you deposit money at the brokerage slash exchange, which is called an exchange for no reason. And the second thing you do is that you have money in your account and you say, I’m gonna move, I’m gonna exchange that, those dollars for Bitcoin or whatever. And then when you do that, like in theory and sometimes in practice, they could be like, we’re gonna send you Bitcoin on the blockchain and then you’ll own them on the blockchain and you’ll have all of your like crypto -ey like self [00:12:00] custody stuff. But mostly they don’t. Mostly they’re just like, okay, we’re gonna make a little notation in your account saying that you own some Bitcoin and then they hold the Bitcoin for you and they hold whatever for you

Paul Ford: And that’s in like an old school database, like we’ve been using from the seventies. Not on the blockchain.

Rich Ziade: Yeah,

Matt Levine: or, or not even turns out at 

Aaron Lammer: Yeah. Um, maybe 

in a database. 

Rich Ziade: file? 

Aaron Lammer: Yeah. Maybe nowhere. But, but a lot of the stuff when you guys, when we were talking earlier about crypto and trustless. That is the stuff that happens on the blockchain, and that’s what I’m interested in. That’s what decentralized finance is. That is a very specific path. Everything that was happening on FTX was not on the blockchain and therefore was not visible, and therefore was not particularly different than any Caribbean shadow bank other than it serviced a heavily crypto audience 

Rich Ziade: I just wanna ask Aaron if he knew this 60 days ago. Did you know this 60 days ago? About

Aaron Lammer: that FTX was gonna implode.[00:13:00]

Rich Ziade: Yeah.

Aaron Lammer: Uh, no, I did not know that

Rich Ziade: Did you know that it was a shadow bank and not really an

Aaron Lammer: Oh yeah, yeah, 

Rich Ziade: they weren’t properly

Matt Levine: Oh yeah, that this is, this is widely known this, this is in my article. 

Aaron Lammer: Well, I’m gonna go even crazier hair. You guys had that party for the opening of your company how long ago?

Paul Ford: Couple weeks?

Aaron Lammer: A couple weeks ago before this happened, I was talking to Brady Dale who works for CoinDesk at your party, and we discussed Sam Bankman-Fried at your party.

This can be fact Check Brady, and he was like I said, “I think Sam is either gonna become the richest man in the world or go to jail.” That was something I’ve said to multiple people over the last year. So I didn’t know this was gonna happen, but looking at all the possibilities, I was like, this is one end of the spectrum of what, what could, how this could end.

Matt Levine: No, to your question, this is like the fact that crypto exchanges are like this, that they hold your money for you and keep a database and sometimes lose it is widely known. It’s [00:14:00] the reason that they’re keep being, Podcasts, like errands where, you know like this is not the first exchange or the second or the 10th to lose people’s money.

This is like for a while I used to write the fate of every crypto exchange is to lose its customer’s money. And then that stopped being true for I don’t know, four years and now it’s back with vengeance. Like it’s not hard. It’s not that hard. It’s like a little hard. It’s not that hard to have customers give you the money and you keep it right. That’s a thing that exists in the world and can be done.

Aaron Lammer: And I would also say there are exchanges that operate completely differently. I can’t believe I’m gonna come on a podcast and like shill Brian Armstrong. But like, that is not how Coinbase operates. Coinbase

Matt Levine: No, it is,

it is, 

Aaron Lammer: but like 

Matt Levine: is in the sense that they, take your money and they keep it. It’s not on the blockchain, but like, but they’re, yeah, they’re publicly traded. They’re audited. 


Aaron Lammer: They’re audited. So you had a choice as a consumer in this to go to a audited, publicly traded American Exchange or a Caribbean shadow bank. Now the Caribbean Shadow Bank offered products that the [00:15:00] regulated American Exchange did not offer. And part of what Sam Bankman-Fried was lobbying for was for him to be able to bring some of those Caribbean shadow bank types of financial products to American.

That’s right, Matt, like that’s, he wanted FTX International to be available to Americans. Is that part of the lobbying? I don’t totally

Matt Levine: I’m not sure they would’ve said it that way, but yeah, that’s the basic idea, is like they had a much broader product offering in the Caribbean and they wanted to bring more of those products to the US.

Aaron Lammer: Including “perpetual futures,” which are like the most widely traded crypto product. Most people who are trading like big crypto aren’t like buying and selling like actual Bitcoin and Ethereum. They’re buying these futures that are, you can longer short them.

Rich Ziade: So is I guess just to close the loop on the other big, big guy that’s out. I mean, Binance is out there. Are, do they have, are they holding on to the money that got deposited?

Matt Levine: All of the Shadow Bank stuff we knew a month ago. And if you had asked me does FTX have the money, I would’ve been like, probably right. [00:16:00] So if you asked me now does probably, but like what use is me saying that, right?

Aaron Lammer: I would say you guys are thinking about this from the perspective of being savers or HODLers. A lot of the people who are at FDX are traders. They needed it to be at FTX to do the trades that made the money for their business. So they weren’t there cuz they were like, “yo, these shadow banks are sick. Cool place to put your money.” They were there because it was necessary. And really the only alternative to FTX for this is Binance. Choose your poison. 

Paul Ford: Well now we don’t have to. Now there’s just one

Aaron Lammer: if I had asked you, Matt, two months ago, who was more likely to go down in flames, Binance or FTX, I think you might have said, we might have said Binance. I would’ve said Binance.

Matt Levine: , I don’t wanna like, endorse that too strongly cuz I just don’t know that much about Binance, but but Right. Ftx definitely sort of put out the signals of we hired Tom Brady and we lobby a lot and were trying to be regulated and good citizens and they’re just like, although they were in the Caribbean, they were more like legible to reg like, like the Binance, like [00:17:00] regulatory and entity structure is much weirder than the FTX one, where no one knows what the company is that runs Binance because they don’t want one target for regulation. So like, Binance is a website and what company owns it? Nobody knows. 

What needs to change?

Rich Ziade: What needs to change? So we don’t have, how do we avert the next big bomb dropping in crypto? 

Matt Levine: I don’t have a lot of money at offshore crypto exchanges. Know, like it’s a little bit like casinos being robbed. It’s okay, it’s bad that the casino got robbed, but there are worse places that get robbed. 

Rich Ziade: yeah. 

Matt Levine: uh, what needs to change? I don’t know. I feel like, uh, if you’re Aaron, you’d say something like custody your own coins and use defi.

Is that about right?

Aaron Lammer: Yeah, I mean, I think we’ve revealed the central . That’s literally almost exactly what I “

Paul Ford: Yep, 

Aaron Lammer: Well,

Matt Levine: that’s like widespread view in

Aaron Lammer: yeah, we found the weak link in crypto’s, Achilles heel and crypto’s Achilles heel is

Matt Levine: the exchange is [00:18:00] always steal the money. 

Aaron Lammer: Yes, to change your bank account dollars into crypto, you have to go through a centralized exchange. The centralized exchange is like in Lord of the Rings. When you’ve got the ring right above your finger and you’re deciding whether you’re gonna put it on, it attracts the guy who’s gonna put the ring on. It attracts thieves and scoundrels. Historically, people who’ve gotten access to billions of dollars of other people’s money, take it.

We can dig into the human psychology behind this. My guess is this has existed for a thousand to 5,000 years. That the guy who you let, who the guy who you choose to give all the money to is the guy who takes the money. So my belief is that we have to take centralized actors out of the system. And various people can find dystopian reasons not to do that. But my belief is that that system will be safer, more transparent, and will really like allow the promise that people, if you believe in this stuff at all, [00:19:00] that is the 

Paul Ford: Okay, so back to the an, is there a name for the blockchain Nativist movement. Do you, what do you

call yourselves? 

Aaron Lammer: I would say, I mean people call it defi, but I would say it’s “on chain.” You’re on chain or off chain. FTX 

Paul Ford: So if you’re on

Rich Ziade: is off chain. 

Aaron Lammer: Off chain. All centralized

Matt Levine: Yeah. Any company you’ve heard of is off chain. Rich, my answer to your question, how did this happen? Like the main answer is that like the user experience you get from a centralized exchange is just gonna be easier than so far. The other user experience like, like to get crypto, the thing you do is you take a credit card or check and you exchange your dollars for crypto, and you can do that without a centralized exchange.

Rich Ziade: Mm-hmm.

Matt Levine: I’ve done it without a centralized exchange, is that I Venmo like a friend of mine and he sent me crypto on the blockchain, right? And then I’m like, oh, I venmo myself some crypto. But that’s not like scalable, that’s not a friendly user experience. It doesn’t make you feel like you’re, doing your retirement savings. The thing that’s user friendly is a centralized exchange, but there’s like a website and you type in your credit [00:20:00] card and maybe they even have public financial statements. So I think that’s a big part of the answer. And I think that it is harder for the decentralized, it’s like Twitter and Mastodon, right?

It’s like there’s there is there is some sort of you can cobble together your own server to do it, but then you’re like, the audience for that is small. The other thing I’ll say is that like, how do we get this way? Like, you know, As Aaron said, FTX was for traders.

I’m. Like, I see there, like in crypto, there’s like an initial real like philosophical, decentralization, like libertarian vibe and like the early Bitcoin people. And then people at Jane Street discovered it and were like, oh, we can make so much money trading this. And then they wanted to have all the stuff that you could, have access to in traditional finance.

And we want, like we want leverage, we want a, an exchange that will allow us to borrow, 10 times our investment and all that stuff works. Again, it can be done in Defi, but has a better and more like finance friendly user experience in like the centralized exchanges.

And so there’s this wave of crypto people who are not like crypto, decentralization, like true believers. They’re just like guys from hedge funds who wanna make money.

Aaron Lammer: [00:21:00] Just further, like I’ve literally watched almost every video that Sam Bankman-Fried put on the internet in the last week. And if you look really closely at his plans, they were really pushing the presidential betting markets. They had a $7 billion, a $7 million short Trump position, and they were interested in getting into sports.

Clearly the next step for FTX was going take over the Fanduel Caesar sports book market and these things like that. So if you zoom out, looks a little less crypto E and a little bit more like our desire is to own all markets.

And this and in addition to sports 

and elections, they were very interested in tokenizing stock trading and like 

bringing the 

Paul Ford: so just more 

Rich Ziade: Question to build on what you’re saying Matt, great UX means the barrier is way lower and there’s a lot more people who are frankly more ignorant, more naive about the risks involved and what it attracts. Like it, there [00:22:00] it is. It is. There, there are, I’m gonna say, you know, uh, innocent people who think, okay, I should probably put some money in this.

And some people go too far and they blow their life savings and pension funds and whatnot because usability, the usability actually lower the barrier so dramatically, and there’s a lot they don’t know. There’s a lot of knowledge that is not there. And they go in when the UX lowers the barrier, should something else kick in that protects people from making terrible decisions, do you think?

Matt Levine: I, yeah, like I’m, you guys asked what, what needs to change? And I said, I can give you Aaron’s answer. And we talked about defi. I mean, like, like, I don’t have a great answer, but to me, like I’m a traditional finance guy and I don’t know if Coinbase is stealing the money, but I don’t think they are because like they have audited public financial statements and they are, they’re in the US steal the money, they will get arrested in a way that doesn’t [00:23:00]necessarily happen in The Bahamas.

and so I think that like, you know, and like Aaron talks about the the, like the temptation of the ring. If you hold the money, you steal the money. Jamie Dimon doesn’t steal the money. JP Morgan just keeps your money. And there are risks in traditional banking, right?

Because it is a leveraged business and it’s not always keep the money on the vault, but like they mostly don’t steal the money and for various reasons, including they can get, they can make plenty of money by doing stuff with the money, which is also true of crypto exchanges, right? And then someone else comes along with a won or website who’s I’ll give you 20% returns. And like people go to that one and then they steal the money. Cause like the 20% returns are fake. And so there is, I think and I realize crypto people don’t like this, but I imagine that there is a, like a potential regulatory solution where it’s you have the easier to use centralized experience and it’s run by a set of people who are subject to regulation.

And if they just steal the money, they like very much go to prison. And like I think that, that’s like to me that’s intuitive, but it’s hard to see how we get there. In part because crypto is so international where if [00:24:00] you want to use an exchange, you can go to Binance, which has like better the US 

Aaron Lammer: It’s legally in Dubai, but I believe one of Matt’s colleagues tried to visit their office and it’s just an empty floor of an office Dubai. So that’s about

where it is, 

Rich Ziade: And 

Matt Levine: I even legally based on Dubai. I think it’s like there no 

one knows legal entity runs. It’s like It’s nowhere. Yeah. Right. 

Rich Ziade: Got 


Matt Levine: And like I think it’s hard for like the US to say we’re gonna regulate crypto, we’re gonna be pretty strict about it, and then all the crypto exchanges will be here and all the US people will use US Crypto exchanges like this is not true, right?

I Like us people in fact trade FTX and Binance in various ways and it’s not really supposed to happen, but like it can happen in a lot of ways. And uh, and um, it’s just hard to have a sort of, like the crypto is so international, it’s hard to have a really contained regulatory regime that, that you can rely on.

But obviously there are [00:25:00] companies like Coinbase that are making a bet. Being subject to US regulation is going to be a good marketing move. They’re gonna be like, you can put your money here and we probably won’t steal it. Whereas if you put your money in The Bahamas, they’ll probably steal it and that’s a 

Paul Ford: Sure. And you know, Pricewaterhouse Coopers will come look at the spreadsheet and say that they didn’t steal your money. 

Matt Levine: And like, and publish an audit on the SEC website.

Aaron Lammer: And some of this is moot. Like if, if your desire is to hold, let’s say Bitcoin and Ethereum. That’s gonna be on Fidelity in a year or two. So if you don’t wanna be involved in banking in the Caribbean, there’s gonna be great 

Paul Ford: Just walk into the branch. Just go in. 

Federated and Ready to Decentralize 

Paul Ford: I want to do something new with crypto. I want to build something. Everything is so dodgy. Like everything is so vague

Aaron Lammer: gonna give you three words, Paul, initial coin offering. That was a, I was joking for people at home. I’m joking. There was a very [00:26:00] sketchy period of crypto history that potentially we’re still in where people who had an idea like, Hey, I’m gonna make a decentralized Twitter before they actually made it, would say, and I’m selling off the coins for this, for governance of this decentralized network.

Paul Ford: And, 

Aaron Lammer: And then I’m gonna fund development by selling those coins off. 

Rich Ziade: By selling the coins?

Aaron Lammer: Now that has a lot of problems because after you’ve sold the coins, what is your real incentive to actually deliver the on chain Twitter, you’ve already become a billionaire from selling your decentralized Twitter coins, and therefore you have very little incentive to run 

Paul Ford: So it got financialized too early.

Aaron Lammer: A lot of things I think got financial, I mean the whole idea of yield farming is basically things getting financialized too early. There are things that basically are buying audience or buying development money by printing tokens and so on.

Paul Ford: All All right, so let me, I’m taking you both out for drinks I’m sitting with you and you know, we’re not on a podcast. You can [00:27:00] speak, speak your heart. I wanna start this crypto company. Do you think I should do it? Like, I want to create my own version? I, I ER’s okay, but I want do my own thing and I want, I want to build it. Uh, but I don’t even 

Matt Levine: And and then your question is like, how do I start that? And the first thing is you are like a really big crypto guy, right? And you’re like on the blockchain all the time and you’re like, I’ve got a metamask wallet. Like the first step is that you assume that your audience is entirely crypto people, which is problematic if you wanna have the, you know, and this is again the question of the UX where the centralized exchanges, like they have a website the, like we’re gonna do it on chain with a token.

It’s like, you’ve gotta code up everything. And so I think it’s a harder 

pitch to 

Even Metamask 

Rich Ziade: is reelly hard. It’s just 

Aaron Lammer: so you guys introduced me as working for a trading firm, but a large portion of what I actually do for a living is explain how metamask works to people who are extremely, uh, advanced in 

Paul Ford: Please do it. That’s a great way to 

Aaron Lammer: So, so basically I, a lot of this is like, hey, you guys are thinking we’re building a [00:28:00] modern web stack, and I’m gonna tell you that we’re, we have a bulletin board system, and this is how you call it with your 14.4 modem. Now, here’s some errors you normally get when you’re connecting to this bull board system. And so the question is, you’re describing modern web apps, and I’m describing an era of technological history that has kind of more in common with the era I think that like we came up in, you know, where you had to be able to use DOS, you had to be able to know what, what to do, right?

And so I see some of the products that I think are truly profound, like maybe I only see them because I’m like spending my whole life in this, but like, I’m gonna take an example. ENS domains, right? These are domains that are held as an NFT on the blockchain so I can prove I own this domain. I can buy and sell this domain.

I can literally own this domain as long as the Ethereum blockchain goes on, which is a powerful idea. You don’t ever have to go back to GoDaddy’s website again, [00:29:00] right? You don’t have to rely on this centralized institution, but that’s just like the lowest, tiniest building block of a stack that would build the experiences that you’re describing in a completely decentralized manner.

Paul Ford: DNS, like the fundamental registration building block of the Internet is kind of coming online now.

Aaron Lammer: Kind of coming online now. So I would be like, slow your roll. It could be another 15 years cuz it’s infinitely harder to build all this stuff in this manner. But it also, in my opinion, totally changes the products you make when you, when you build on chain in that manner. So I’m, I think you’re gonna be disappointed in the short term, but you might be excited in the mid long term.

Cause a lot of this has been like, “Why does my shit not work? This stuff is too primitive.” And I’m like, and you’re like, “Who’s gonna build this shit?” And I’m like, you, I’m talking to the two people who would be building this stuff. About a year ago, maybe a year and a half [00:30:00] ago, I sent both of you a dm, and I said, you guys should become a web 3 shop. You’re gonna have a ton of business doing it. And Rich said, what’s Web 3? And I’ve realized that I was living in an ideological bubble cuz two people who would be the most likely to understand what I was talking about didn’t understand what I was talking about.

So I wanna clarify what I meant and what I meant is that It’s just like the web. You’ve gotta build the thing you want. No one’s gonna build it for you. It’s a canvas for you. It’s not a movie for you to watch. 

Day Trader, Day Trader, Make Me a Coin 

Paul Ford: Can I make my own coin for the group chat? 

Aaron Lammer: . Sure. It’s easy. It’s super easy to make your own coin. I’ll make you a coin.

Paul Ford: All right, let’s start there. Make me a coin. Can we give something to Matt too?

Aaron Lammer: You gotta 

Matt Levine: not sure am I allowed to accept that? 

Aaron Lammer: If Matt will give up his wallet, we can get, we can can give some to Matt [00:31:00] too, but I 

Matt Levine: I feel like I’m not supposed to accept coins.

Aaron Lammer: They’re.

Paul Ford: Man. Journalistic ethics again.

Matt Levine: Uh, maybe I can accept value. This one I’ll

Paul Ford: All right, let’s do that. Make us a coin and I’m gonna suck it up. I’m gonna stop complaining about ye old in the web and accept that the new, the new, you know, something is slouching towards Bethlehem struggling to be born, and that’s crypto. And, uh, I’m gonna accept it into my heart. I’m ready. 

Matt Levine: you. 

Rich Ziade: You can’t 

Matt Levine: you. I think that’s how you have to

Rich Ziade: big 

Paul Ford: I’m coming 

Rich Ziade: That’s

Paul Ford: Jesus. I’m coming to crypto. Jesus.


Aaron Lammer: I think I convinced Paul during this podcast. Every time I talked to Paul, he becomes slightly more receptive. Of all the people in this chat. I can see Rich and Matt are like, I’ve gone as far as we want. I can kind of see just in the back of Paul’s mind, there’s gears running and he’s [00:32:00] but what if I made it my own?

Paul Ford: Like, I don’t like Bitcoin stuff, but I love the idea of like, the computer is decentralized and so yeah, I’m a total sucker for that. Total sucker for that.

Aaron Lammer: My work. Here’s done

Paul Ford: Ah, damn it. God damn it, 

Rich Ziade: Matt, Aaron, thank you so much for 

Aaron Lammer: I look forward my fourth or fifth appearance on this 

Paul Ford: is great. Everybody come 

back on. Yeah. Once we get that, once we get that chain set up, we can start to pay you in the coin that you created, and then we’ll set up an exchange or as you like to call it, a, a, a shadow bank, and then we can, then we’ll really be doing crypto

Aaron Lammer: I’ll be on an island in the Gowanus Canal. 

Paul Ford: In a boat, All right. Thank you friends. Good luck everyone. Bye.

What We Learned 

Paul Ford: So, well, R ich, what did they tell us? What did they tell us? What did you learn?[00:33:00]

Rich Ziade: Um, I learned that it’s a, i I learned about humans. I, I’ve said this quote in the past. Many, many times. Uh, but I’ll say it again here. The right thing is easy. Unfortunately, people are involved and when get in the mix and people see opportunity and people see inefficiency, uh, things get kind of bananas. 

Paul Ford: I see the tech industry as this ongoing eternal battle as to which transactions matter. Here’s what I mean. 1999, it was e-commerce. I can buy something through the web 2006, it’s social media. I can connect to a friend and follow them.

And now we’re in this brand new battle. Is it metaverse? Is it web three? Is it crypto? Is it blockchain? No one knows what the big new transaction will be. And it’s driving everybody crazy because when you don’t know, that’s, that’s instability. And you can’t plan your venture fund you don’t know how to invest and so on. [00:34:00] Um, and so I think that, you know, Aaron did convince me in. I did go, you know, he’s right. 15 years from now, will this still be around? Computers will be faster, blockchains will be more robust. People will still be transacting in some of these coins. Yeah, absolutely. There’s something, 15 years of continued creativity and weirdness will produce things out of this. I don’t know if there’ll be things I really want to use, but it’ll, it’ll happen.

Rich Ziade: Yeah. Yeah. I, I, I, think you’re right. I think it’s also just real early in the movie and it’s causing a lot of damage along the way because there are some bad actors out there. 

Something Good

Paul Ford: You got anything good for me? 

Rich Ziade: I do. I do. Uh, I really recommend you listen to the song Moving Out by Billy Joel

Paul Ford: Oh, the one that’s, is that the one with trading in a Chevy for Cadillac?

Rich Ziade: Yes. But this was a bait and switch. I care about that [00:35:00] song. It’s actually a terrible song. And Billy Joel, there’s just that weird period in his life where he sounded like a 1950s doo-wop singer kind of. Anyway, moving out is a video game. 

Paul Ford: Why Why are you talking about video games? When we could be talking about Billy Joel’s “The Stranger”? An absolute classic.

Rich Ziade: Are very good. And that’s.

Paul Ford: Good. 

Rich Ziade: Actually a classic album.

Paul Ford: We’ll talk about that.

Rich Ziade: On all the platforms. There’s this fun, fun video game called Moving Out. Uh, if I like playing games with my kids and family and friends and whatever, it’s really ridiculous. You’re kind of moving furniture out of a house and onto a truck. Um, but you have to cooperate. Like, I can’t pick up one side of the couch without you helping me on the other. And it, it has a weird, there’s a weird social dynamic to it. Um, that’s really, really fun. Moving out on every platform you can imagine, uh, is out there. I like games where I play with other people.

Paul Ford: You play with your kids?

Rich Ziade: It’s great. It’s great. You’ll scream at each other. Uh, that’s kind of the, [00:36:00] the thing.

Paul Ford: Frankly, unfortunately when it comes to my parenting style, um, there’s 

Rich Ziade: screaming anyway. 

Paul Ford: might as well scream about a video game.

Rich Ziade: Exactly. Fun game. Check it out. Stay off the, uh, the, the, uh, crypto, uh, pricing charts, Paul, and go play Moving Out.

Paul Ford: That’s all I’m gonna do, right? Rich, let’s get outta here. talk to you 

Rich Ziade: Have a lovely week everyone.


Paul Ford: Hello, at ZiadeFord.com. We’re here to advise you. 

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