Bedazzle Your Elliptical

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S1: Hello. Welcome to the Bedazzle, your elliptical episode of Slate Money, your guide to the business and finance and bedazzling news of the week. This is going to be a Crypto episode. I am Felix Salmon of Axios. I’m here with Emily Peck, also of Axios.

S2: Hello. Hi.

S1: And we have The New York Times is best Crypto mind on the case to explain everything to us. Kevin Roose my my former Fusione colleague. Welcome to Slate Money.

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S3: Thanks for having me. Long time. No. See?

S1: It’s been a minute. How long have you been on the Crypto beat?

S3: Well, I’ve been writing about Crypto for like a decade. But, you know, I took a little break in there, so I would say pretty intensely since since last year when I accidentally sold an NFT for like half a million dollars.

S1: That’s right, you NFT, the New York Times article. Has it changed hands since then? Do you know what it’s worth now?

S3: Well, the price of Ethereum, the cryptocurrency that it was purchased in, has has spiked. So I think today it’s worth more than a million dollars, which I did not get to keep. I gave to charity. Oh man. You know, I, you know, I know

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S1: we are going to talk to you about the hipster grifters, the latest failed attempt to launder a bunch of bitcoin. Well, we’re going to talk about your article, which is which is an amazing article about how bitcoin can or Crypto can actually make the world a better place. Sesay We’re going to talk about the richest man in the world, quite possibly, who was putting $200 million into trying to buy a stake in Forbes. It’s all coming up on slate money, but Kevin because we love you here on this show. Before we get into all of that, please to plug your book.

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S3: Thank you. Just came out in paperback a couple of days ago called Future-Proof nine Rules for Humans in the Age of Automation. It’s about A.I. and automation and the weird future by

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S1: your local independent bookstore. So let’s jump in because I think it’s been a minute since we’ve talked about hipster grifters on this show. And boy, do we have a hipster grifter story Kevin on a scale of one to grifter. How where does this land? Oh, it’s

S3: off the charts. We’ve never seen grifter energy like this before. I am frankly obsessed

S2: with Dutch and razzle con

S1: razzle con. So OK, so Emily. Bring us up to speed on who is WrestleCon and Ishaya multibillionaire.

S2: WrestleCon is Heather Morgan, who is a badass CEO female rapper who’s ready to take on Wall Street, Silicon Valley and any other place that oppresses individual uniqueness and self-expression. Well, that is how she describes herself, but she’s also the perpetrator of a big Crypto scam, along with her partner, Ilya Lichtenstein, who’s called Dutch Dutch.

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S1: We should remember that the hipster grifters are innocent in the eyes of the law. They have not been convicted of anything. They have only been charged. And the one thing I will say about WrestleCon like she she had, there’s a lot of cringe on her socials. But her ability to emulate the winking tongue out emoji is kind of amazing.

S2: So I guess we should say a little bit more, right? They basically got caught in a Crypto laundering scheme, the largest financial seizure ever, something the largest Crypto seizure ever

S1: like to read between the lines. They have been charged with trying to launder $4 billion of Crypto. It seems that the government doesn’t have an open and shut case when it comes to charging them with stealing the $4 billion of Crypto. But if you stole $4 billion of Crypto, you wouldn’t just give it to these guys and let them sit on it for like five years. It wasn’t worth $4 billion when they stole it. It was worth like, what, $50 million when they stole it. And then it went up,

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S3: I think $70 million. Yeah.

S1: And this is one of the very interesting things is they lived a relatively modest lifestyle in New York. They were in a kind of like, you know, fair to middling two bedroom apartment in the financial district. She was, you know, bedazzling her elliptical and upcycling her clothes. And they weren’t rich because the way the bitcoin works is that it’s very traceable. And everyone was keeping an eye on this wallet and saying what’s happened, including the FBI. And it turns out that even though everyone thinks of bitcoin as a great way to launder money, it’s quite hard to launder money.

S3: It’s really striking because for a long time, the sort of skeptical talking point about crypto was that it was like very good for doing crimes. And I guess for some genre of crimes, that’s probably true. It’s it’s probably better than fiat currency. But for this specific kind of crime, like taking the proceeds from a giant hack of a crypto exchange and, you know, spending them in a way that doesn’t attract the attention of the authorities, it actually seems like they had a pretty hard time with it because of its Crypto ness, because it’s like an indelible, you know, ledger on the blockchain. You know, they did successfully launder a tiny bit of it, but nowhere near the full report, like a

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S1: $500 Wal-Mart gift card. I mean, that was what they managed to successfully do. It was. It was kind of amazing. They the complaint goes into details about like five or six different what’s known in the crypto world as off-ramps. If you have bitcoin, do you want to convert it into any kind of currency? It needs to go through an and you convert your bitcoin to dollars or whatever. And everyone who does on ramping off ramping needs to go through AML, KYC, you know, anti-money laundering, know your customer things. And so they would try and open up these accounts and these exchanges would do what they have to do under the law set, which is like go through the New York customer processing. Who are you? Why do you have all these bitcoin illegitimate? And they’d be like, Oh shit! And it would fail.

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S2: So I mean, that’s what bitcoin boosters proponents, I’m sure there’s a much cooler word to say and Kevin will tell me what it is, but that’s what they’ve been saying all along, right?

S1: Like laser eyes.

S2: Yeah, like there is, it’s harder to scam with this with bitcoin than with dollars. Obviously, if you steal a bunch of dollars, I’ve seen all the movies like it’s pretty easy, get you, put them in your suitcase and you start spending them and it’s fine. But with bitcoin, it’s far trickier and maybe impossible.

S3: It’s yeah, it certainly seems like they had a very hard time with their, you know, presumably ill gotten gains here, actually converting it into anything useful.

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S1: I mean, so this is the big question, which I have for you. Kevin since you actually cover this stuff, I actually did some reporting this week, weirdly, which is, Oh, I’m on, I’m on book leave and I’m not meant to be doing that kind of thing. But I thought you OK. I talked to a guy who was like into the whole like criminal underworld thing, and he was like, What guys? The if they like had some friends in the Mexican cartels, they could have Longer. There’s no problem. They just didn’t know the right people.

S3: Felix. I have so many more questions about your criminal underworld sources. Yes.

S2: Are they a criminal doer or a criminal watcher or a little both?

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S1: Oh, maybe I maybe. Maybe a little both.

S3: Kevin OK, Felix is going to federal prison. Felix is definitely in on some schemes. Maybe he’s part of the The WrestleCon Syndicate.

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S1: IRA Yeah. No. It’s like Wrath of Khan was like she lived like, you know what? Like a half a mile from my apartment. You just come over with some, you know, bitcoin’s on cold storage and USB drives, and I have no idea what I would do with that. Like, I literally I am not in with the Mexican criminal underworld, but apparently the Mexican criminal underworld is the is the people you want to hang out with if you want to launder bitcoin. This is this is the not investment advice in like flashing all caps that we failed to give out on slate money.

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S2: What I’m hearing is it Felix came across some stolen bitcoin. He would know who to call to launder it, and it would be OK and he would not wind up in an FBI press release.

S1: I know, I know zero Mexican drug lords, but

S2: I feel like you’re like two degrees separate from them now. That is the thing I’ve learned so far from this conversation.

S3: Kevin’s not. I feel like this is a stunt journalism piece waiting to happen. I think you need to try to launder some stolen Crypto through a cartel.

S1: I tried to launder some stolen Crypto. What could possibly go wrong? Yes, I think that’s a great idea. So the big question I have for you, Kevin, it’s just it’s just that’s one light. Is it legitimately difficult to launder bitcoin?

S3: Yes. Like, I think from what we know, it’s like it is difficult to launder Crypto and there are services. There are these things called tumblers that you can basically send Crypto to. And it will kind of obscure the origin and like, spit it out to a different wallet and sort of sort of make it untraceable. But like, people are watching those services closely in law enforcement because that’s the obvious thing that you would do if you were trying to launder a bunch of Crypto. There are also these so-called privacy coins coins like Monero that people talk about as being useful for sort of as an off ramp. So it appears that it is both, like, legitimately kind of tricky to obscure the sort of source and the flow of crypto assets, but also like these do not appear to have been criminal masterminds, and I cannot wait for the like, you know, Ocean’s Eleven style heist movies that will be coming out based on this whole saga a few years from now.

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S1: I really want to talk Kevin to you about your piece this week, which was awesome where you kind of like pulled back on the snark and found a. A crypto currency that is not terrible.

S3: Well, I’ll let people judge whether or not it’s terrible, but I for years I’ve been reporting on crypto and every time like the criticism, I get back that the thing that skeptics say is like, it’s not good for anything. You can’t use it for anything. There’s nothing that you could do in crypto that you can’t do with dollars. Everything is just slower and less efficient and worse. And, you know, they sort of are looking for this kind of use case that so far, like really hasn’t been there in any obvious way. So I’ve been going in search of just like, what is a useful Crypto thing that is useful for what I call the Naumi utility test like, which I think has basically three prongs to it. It’s like first, like, does this Crypto thing like solve a problem outside of Crypto? Like, you know, there are lots of things that are crypto exchanges or like sort of intra Crypto problems that are created by Crypto, and then you need to build something to solve that problem. So but I was looking for stuff that was like outside of Crypto, and the second piece is like, does this thing actually require Crypto? Could you do it another way? And the third piece is like, Is this primarily for financial speculation? Like, is there anything sort of non speculative about this? And for a long time, I couldn’t really find anything that that sort of passed that test. And then I came across this thing called helium, which I don’t know how familiar folks are with helium, but I was not that familiar with an inert

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S1: gas

S3: as it goes in children’s balloons and and makes your voice really high. No helium is a is a decentralized wireless network for Internet of Things devices, so that sounds incredibly boring. Let’s break that down a little bit. So, you know, there are millions and millions of these kind of so-called Internet of Things devices out there, everything from like parking meters to connected ovens and refrigerators to like, you know, lime scooters. You know, they’re even I learned in the course of reporting this story that they now sell internet connected mouse traps that will actually, you know, send you a push alert when you’re when you’re trapped, catches a mouse. So there are millions of these devices out there, and they all need some way to talk to the internet. But it’s pretty expensive and kind of clunky to buy an individual cellular data plan for each of those devices. So what Helium tried to do, and it started sort of back in 2013, it’s not a new company, but they started trying to build out this kind of wireless network for these devices. That could be sort of that could reach anywhere that could power these devices that could allow them all to connect to the internet. And they failed at that. They were not successful. The company was running out of money, and then they kind of hit on this idea as kind of a last ditch, save the company effort to apply sort of Crypto economics to their model to turn these like hotspots, these long range wireless hotspots that people plug into their routers that powers the network to have them double as Crypto miners and to have them produce this token called H.A. Helium Network Token, that would basically reward people for providing bits of their home Wi-Fi to this network for Internet of Things devices in their neighborhood.

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S1: So basically, if my if I have one of these boxes and I plug it into my internet router and I’m serving up this, this Wi-Fi network to my neighborhood and my neighbor buys an internet connected mousetrap, and the mousetrap sends a ping alert to my neighbor saying, You’ve just caught a mouse then and it goes via my via the router that it’s plugged into via the box and it’s plugged into my router. Then I like earn one H.A. or whatever for that and then I can. And the more pings that come through my books, the more H.A. I earn. And eventually, if all goes according to plan, the value of the H.A. that I earn will pay for the amount of dollars that I needed to spend in fiat currency to buy the box in the first place.

S3: Exactly. So I have a little helium device that I’ve been testing in reporting the story. It’s about the size of a deck of cards. It sits on my floor right beside me, and it takes some fragment of my unused bandwidth from my home network, and it sort of broadcasts it out to any nearby devices that need to use it. And I get a fraction of an H.A., you know, every day or every other day. And I think so far I’ve made like $9, like, it’s not a lucrative thing. But if I left it running for long enough, it would eventually pay back the cost of the device and then be pure profit. After that, so some people, especially those who got in on it early, made like thousands of dollars a month just by installing these little boxes in their homes and offices.

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S2: I guess I still don’t really understand. Kevin, I I know, like throughout time, marketers have used incentives to get people to use their products, like if you send someone a newsletter, if you refer ten people to the newsletter, you get free stuff or Uber pays you to take Ubers because it’s trying to build get customers. Whatever Coles gives me, Coles bucks like how is this actually different than that? Because it seems like it’s just a marketing incentive with like a Crypto spin to me.

S1: What was the ex ante model? How did they persuade people to plug these things in before they pivoted to Crypto? Were they giving away the the devices and and like, yeah, how did it work before?

S3: Well, they were trying to like, make deals with companies to like, you know, install these in your, you know, your your offices or just they were sort of trying to like bootstrap this network by like going door to door and like asking people if they wanted to, like, install these little things and like, it just didn’t work. People weren’t that into it. They didn’t really see the utility in it. And it’s kind of a weird, esoteric thing like a wireless network that’s not for people, it’s for devices and. And the reason I think this is actually somewhat instructive as sort of a lesson in what Crypto economics can do is that essentially it’s solved in helium case what’s called the cold start problem. So in technology, you have these things called network effects like basically, it’s the reason why I like you. You don’t want to be like the first user of Twitter. Well, I guess you do, because that would mean you’re extremely rich now. But like being user 100 of a service like Twitter or Facebook or YouTube is not all that valuable because no one has really showed up yet. It’s not really a network yet, but being the millionth user of a service like those is kind of valuable. Like you get the affects of the network it’s built out, there’s stuff to look at and, you know, retweet and there’s content. It the sort of gains go to the late adopters if you want to put it that way. But with the Crypto model and what you’re trying to build it in helium case is a network. So if you’re the second node on the helium network, you’re not being very useful to people in a network with only two nodes on. It is not very useful for these devices, but a network with hundreds of thousands of nodes is. So then the question is how do you get from zero to hundreds of thousands? And one way you could do that is you could be Comcast, and you could just spend a billion dollars to build, you know, hundreds of thousands of nodes. Or you could go door to door and try to convince people to set these up on their own, which didn’t really work for them. They tried that. But what they did with Crypto is that they basically incentivized the early users. They basically solved the cold start problem by giving away these tokens. So they would say, you know, if you install 10 of these machines and they’re very, very useful, you put them in, you know, high on your roof where they can broadcast good signal and you get a great antenna for them. You are going to make the most money. And so they basically inverted the sort of network model and made the network very useful for people who showed up early. And so that’s how they ended up getting this thing to the size that it actually was a viable network.

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S1: And the thing that jumped out to me being, you know, a finance nerd is that what they what they’re effectively giving away with these tokens is something which looks and smells a little bit like equity. It’s something that is a function of the revenues of the company. And in theory, you could tell people like, you know, if you buy this device and use it, we will give you a certain number of shares if you know people use your node. And of course, there are a million scc related reasons why that wouldn’t work and you would be issuing securities and you would have to be a securities issue and you’d have to jump through a bunch of hoops and it would just never get off the ground. And so in a weird way, this feels to me like a little bit of a regulatory arbitrage that they’re taking advantage of the fact that this token is not regulated as a security to be able to do something that just wouldn’t be possible if it was regulated as a security.

S3: Yeah, that’s I would say that’s partially true, I agree with that, and there certainly are people at the FCC who think that, you know, tokens like these should be regulated as as securities, and that could really blow up the model that Helium has built. And there’s there’s other problems with helium. Like, for example, it definitely violates the terms of service of your internet service provider who you know does not want you reselling slivers of your bandwidth over a long range Wi-Fi network for smart devices. So one of several problems with the helium model is that, you know, the regulatory status of these tokens is still uncertain. But I think it’s a it’s a really useful example of kind of what, you know, people who are into Web3, Crypto, Ilya now, whatever you want to call it, see is being sort of the differentiating quality of this, which is that it basically provides another path to achieving a network effect rather than sort of slow organic growth or spending a lot of money up front instead with a traditional network that you sort of get the users first and then you figure out how to make money from the users in this kind of project, the money comes first and then that money sort of incentivizes people to chase after it and then maybe build something useful in the process. Does that make sense?

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S2: I still don’t really understand. Just to be honest, like so. Instead of paying people to use helium, helium has them mining Crypto and getting money that way.

S1: Well, mining, I think mining is a little bit of a weird word that they just don’t

S2: understand where that money comes from.

S1: So the money comes from companies like Lime or the manufacturer of the mousetrap, or basically anyone who’s making Internet of Things devices, they pay helium to be able to use their network. And then helium turns around this. Think of helium a bit like Spotify, you know, and you’re like the artists on Spotify, basically. And so you get a, you know, you have one stream on Spotify, you get like one H.A. in return and they’re just they’re just paying out in Crypto rather than paying $8.

S2: Why? Why not pay out and dollars? Like if someone told me, if you use this device, I’ll give you $10 a month. I buy it right? But if they told me, like, if you use this device, you have to mine. Maybe I’m just old, but I’d rather just have the dollars.

S3: No, it’s a great question. And I asked the CEO of Helium that question. And what he basically said was that there are two things. One is, you know, people, you know, $10 a month is is a static number. It’s never going to go up. It’s never going to go down. Helium can sort of change that. You know, could change the payout at any time. And with a token like you could make $10 one month and $700 the next month if the token price goes up. So it introduces some volatility that people, you know, some of them might like. Also, it’s it’s still not that easy to do what are called micropayments in dollars. So charging someone you know or paying someone a fraction of a cent isn’t really viable in, you know, in our sort of traditional financial system with, you know, credit card payment processing fees and things like that. So helium is able to do kind of micropayments in a way that it might not be able to do if it was just, you know, doing this through dollars.

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S1: So the question which I have for you is great. I have my H.A. and there is a market in Asia. And as you say, it’s a cryptocurrency. It’s volatile, it goes up and down and people are willing to pay dollars for H.A.. So and I guess part of that is just people speculating like they would on any cryptocurrency. They think it’s going up, so they buy it in the hope that they can sell that profit. But is there any fundamental utility to the H.A. token? Is there anything I can do with H.A. tokens beyond like just try and find the greater fool to sell them for even more dollars than they paid for them?

S3: Yes, because H.A. tokens are how you purchase data credits on the. So if you’re lime, if the mousetrap company, if you’re so, there’s a

S1: constant demand for H.A. tokens from people from mousetrap companies want to basically

S3: have to spend this H.A. to purchase the ability to use this wireless network.

S1: I see I think this is clever.

S2: So it’s Crypto to buy a better mousetrap.

S3: Yeah, literally a better, literally, really

S1: a better mousetrap. But the thing which I like about this the most actually has nothing to do with Crypto. It’s just that every time up until now that you’ve bought any kind of smart device. There has always been an incredibly painful thing where you have to download an app on your phone and connect it to your local Wi-Fi, and it doesn’t. Emily works and never connects, and it’s a 5G network and that doesn’t. You know, whatever. And suddenly, that whole desperate palaver of having to connect your light bulb to your home Wi-Fi, you don’t need to do that anymore. It just connects automagically to helium, and everything just becomes easy. Am I right?

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S3: In theory, yes. In theory, I should say, like, that’s one use of this. They’re also imagining that this will be used as kind of a a roaming network. So if you are like, you know, cell phone customer and you’re going somewhere where your, you know, coverage doesn’t work, you wouldn’t where you don’t have coverage. You could. Instead of roaming onto another cell carrier’s network and paying the roaming fee, you could roam onto the helium network and pay helium in helium tokens to use that network. So they have all kinds of plans that go beyond just like mousetraps and scooters and parking meters. But that’s where they’ve started.

S1: OK, I think we should talk about Binance, we kind of talked about Bitfinex, not really. Bitfinex was the slightly weird, shadowy company from which the hipster grifters stole their 100000 bitcoins back in the day. And it’s very big and it’s got it owns this slightly weird, shadowy stablecoin called Tether, and everyone’s a little bit unsure what to make of Bitfinex. And then the other really enormous, probably the single biggest Crypto company in the world is this company called Binance, which is based in question mark. No one knows where it’s based. We know who owns it. This guy who lives in Singapore, he very friendly chat, been very open and happy to talk to anyone, but like won’t is it seems to have a. Let’s say an arm’s length relationship with a lot of regulators. I want to be regulated, but all the regulators late, but you’re not cooperating. And there are people saying that he’s probably the richest person in the world and now he seems to have done that. Hash tag, billionaire whimsy thing, which is. Buy a magazine.

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S2: Yes, he bought. While he didn’t fully buy it, but he and he’s going to invest $200 and

S1: he’s buying a minority interest in Forbes magazine for 200 million dollars, which none of this makes any sense. I mean, no one, why would he want any stake in Forbes magazine? If you do want to seek involve magazine, don’t you want to just buy the thing? Why would you want to buy a third of it?

S2: There’s this intrigue that Sarah Fisher has an Axios today saying, I don’t know. I mean, I’m not saying. I’m just saying, Isn’t that how people do this? OK, so apparently. In late 2020, Binance sued Forbes for defamation over some documents or something, and then the lawsuit went away. And I’m not saying, but that’s interesting that they were at odds with each other. And now Binance is sort of coming to Forbes’s rescue because it has a spark on deck and like SPACs aren’t are bad now. And I guess Binance is money is kind of edging out the money of the other Cheyna of the Chinese investment firm that does have money. I’m getting all tied up here because it’s so confusing, but the Binance many kind of edges out the Chinese investment firms money in Forbes ahead of the SPAC, which is weird. I’m running out of steam. I don’t understand.

S1: Kevin understands. So Kevin is going to explain it.

S2: Oh, good. Okay.

S3: Well, I don’t know what the financial rationale of Binance investing 200 million dollars in Forbes is. You’d have to ask and see. All I know is what he has said publicly, which is, you know, this is a storied media brand and we want, you know, to investors or media brands. And he tweeted this sort of cryptic sentence about the deal, saying invest in both new and old and bridge them with Crypto. So it’s like it’s possible that what he’s trying to do here, what Binance is trying to do here is just to like, basically acquire a stake in the outlet that it hopes will be friendly to Crypto and to the kind of Binance business interests. And really, this is like kind of an interesting moment in sort of Crypto media. There are these sort of Crypto specific outlets, you know, you’ve got your CoinDesk’s and and and you know, such and generally they’re kind of operating as trade publications. You know, for people in the crypto industry who who already know quite a lot about crypto. But I think there’s been a lot of frustration in the crypto community at how they’ve been covered by the quote unquote mainstream media. Forbes, I would say, is sort of a mainstream publication. It’s got this contributer network. It also, you know, has still puts out a magazine. And so there’s a universe in which this is sort of the first of many Crypto kind of media acquisitions in which companies and very wealthy individuals in Crypto try to kind of bend the media more to their liking by taking a financial stake in it. I don’t think this is the last media acquisition we will see by a Crypto mogul.

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S2: I think it’s also, I mean, historically, upstart companies, tech startups, they buy a stake in sort of a traditional media company as like a legitimate a legitimizing move, right? I mean, you Binance this shady company based in who knows where, but now it has this very storied brand. It can point to Forbes. And like, no, I think we all have gone to the website and been horrified. I think some people still feel like this is a legitimate media company, like someone not in media messaged me and was like, Do you know Heather Morgan from Forbes? You know, she’s the Crypto scammer and is not actually a journalist who works at Forbes, but like to the, you know, to someone not paying that much attention. They’re like, Forbes is legit. Oh my gosh. It has

S1: no it. It does still have a brand name, that’s for sure. But the interesting thing to your thesis is that when this weird Chinese company called Integrated Whale, I am not making this up. Bought bought Forbes a few years ago, there was zero legitimizing impact on an integrated way. That’s true no matter what you think of Forbes. No one’s like, Oh yeah, integrated whale. Those guys are great, you know?

S2: Yeah, I mean that a fine. But there are plenty of other examples where buying a media company buys you a little bit more legitimacy, and it definitely gets you marketing right? I mean, I guess Jeff Bezos buying The Washington Post gave him a great marketing lever to pull, which we talked about. I don’t know when that was a while ago. Marc Benioff buying time got him a lot of credit. I don’t know. It’s it works most of the time, doesn’t it?

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S3: It’s also just like so little money to someone like CC. I mean, I think we have to like keep in perspective that while $200 million is objectively a big chunk of change, I mean, this is someone. Who is reportedly worth some somewhere in the neighborhood of $100 billion and has gotten that wealthy very, very quickly, like basically in the last five years. And so this is not like this is not a huge amount of money to to him or to Binance. This is, you know, the equivalent of like one of us, you know, like picking up a, you know, a nice copy of The New Yorker or something.

S1: And that’s true. What you often find in the art world is that when an artist strikes it rich, what they do is they start like buying up old masters because they’re selling paintings for, you know, a million dollars. And you can find, like, really amazing, you know, Dutch portraits in the 17th century for a quarter of a million dollars. And for most people, a quarter of a million dollars is a crazy amount of money to spend on the painting. But if you were being able to churn out your own paintings for $2 million, then suddenly the arbitrage makes sense. And you know, it’s almost a little bit like AOL buying Time Warner. You know, it’s like he has this currency of which is just worth an insane amount of money. Why not spend it on the kind of toys that you could never normally afford it makes? And plus on top, I think beyond that kind of billionaire whimsy thing, there is a thesis here in the minds of Kesey and the people who believe in Crypto, which is that eventually, somehow it’s not going to just be helium that bridges the world between like the real world and Crypto, that the Crypto is going to infiltrate everything in the real world, including media. And that something something Forbes, something metaverse, something Web3. We don’t entirely understand it, but that there is a way that media is going to become part of the metaverse and that if you want to have if you want to be a force in Web three in the Metaverse and Crypto, then you want to have you all want to be a force in media as well. And I don’t understand that, but like maybe Emily does.

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S2: Well, I just thought of something. Remember, back in like the 90s and the 2000s, there were mainstream media did not understand the internet. Remember that there’s that clip they always play where they’re on the Today show and they’re like, What is internet? But meanwhile, there are all these journalists, mostly where Kevin is like working, what would become wired and all these places that did understand the internet. And they won like they eventually infiltrated traditional media. They started there. They’re everywhere now. Steven Levy, there’s wired whatever right now. If you look at traditional media’s coverage of Crypto, it’s like, I think it’s pretty bad. I don’t know. I still don’t understand Crypto. So that would legitimize what I just said. It is pretty bad. All the mainstream media outlets right now are like scrambling to catch up and like if you look at like every traditional outlet they have, like a job listing for a Crypto reporter or Crypto bureau chief or whatever, like their behinds. And so it’s time to like, do that thing of like integrating. And maybe it’s kind of like what Kevin was saying before, and maybe this is like a sign that that’s starting to happen. Or another sign?

S3: I think it’s absolutely important to understand, like the scale of Crypto wealth and the speed at which it is like moving into every corner of American life. Like it’s not just, you know, Binance buying a stake in forums like the L.A. Lakers Play and Crypto.com Arena. Now, like there are Crypto superPACs, there are Crypto candidates. Crypto dark money is about to become like a real force in American politics. The amount of wealth that has been generated in the last five years from Crypto is unfathomable. I mean, the closest thing to compare it to would be like the discovery of oil in the Middle East. Like, it’s like it’s like that big and something like half of millennial millionaires have significant cryptocurrency holdings. So like, it’s not just the whales, like, it’s like all these people who have money, either from Crypto or from something sort of adjacent to Crypto, but then have invested it in Crypto like they are going to be the next generation of sort of influential sort of not just tastemakers, but big, big time donors and media moguls. And like this mindset is seeping rapidly into every facet of American life, which is why, like even if you think the whole thing’s a scam, I think it’s really important to understand Crypto. And I would agree with you, Emily, that I don’t think the mainstream media’s coverage of Crypto has been anywhere near sufficient. And I think there’s going to be a lot of efforts to correct that. And I hope they work because I think it’s really crucial for people to understand this, even if they’re not investing in it themselves, even if they’re very skeptical.

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S1: Kevin what do you think is the the big thing that. Crypto people understand that non people, non Crypto people don’t understand that the mainstream media has been doing a bad job of explaining where what, what is it? They’re like, yeah, Emily doesn’t know but should know if she wants to get her brain around this.

S2: Yeah, what don’t? I know.

S3: I think a lot about kind of the psychology of Crypto investing, which I think is sort of has some commonalities with like the psychology of meme stocks and sports gambling and all this kind of thing. And I think the media is generally sort of risk averse in its approach to covering the markets. It assumes that like risk is a bad thing. You know, people taking on risks is a bad thing. There’s a kind of consumer protection mindset that I think comes from a very genuine place, like a lot of people lost a lot of money in the dot com, you know, collapse in the financial crisis in 2008. I think there’s a strain of mainstream media coverage of Crypto that assumes that like people don’t know what risks they’re taking on and they need to be aware. And when you talk to people in Crypto, recover Crypto like they are totally aware they are. Their eyes are wide open to the risk that they’re taking and they want that risk like. I think that is the biggest disconnect. I wrote something last year where I talked about this sort of theory I have about trampolines versus ladders where, like, for a long time, the way to get ahead economically in America was to climb the ladder. It was to like, you know, go to the right school, get the right job, work your way up, get a raise every year, sock money away in your 401k, you know, retire at a comfortable age and like that for various reasons. That model has not worked for a while for for young people today, especially people who are younger than me, people in their, you know, in their 20s. And so they are looking for trampolines. They are looking for these kind of windfalls, these these moments where they can make a big lump sum all at once in order to say buy a house in a market where housing costs are rising very, very rapidly. They they don’t trust that the ladder is there for them. And so they are looking for things that are risky. They are looking for gambles. They are looking for things that if they pay off, they won’t just raise 10 percent. They’ll get, you know, 100, you know, 100 percent or a thousand percent or 10000 percent returns on that initial investment. And I think that’s a big sort of philosophical disconnect

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S2: that is honestly the nice version of Squid game.

S3: Essentially, that is squid game. I mean, there’s a reason squid game was very popular. See, seems like a trenchant portrait of life under, you know, modern capitalism.

S1: I 100 percent agree with everything that Kevin just said. But the the crucial thing that distinguishes Crypto from squid game because, like a lot of a lot of talking heads on CNBC will be like, Oh, you know, this is horribly risky, it’s all going to end in tears. And the really important difference is that the stakes are so much lower in Crypto. If you throw a thousand dollars into Crypto and it becomes a million dollars, then you’ve got a million dollars. If you throw a thousand dollars script into Crypto and it goes to zero, you’ve lost $1000. And if you’re in your 20s, you know you can find another thousand dollars and it’s, you know, you might technically have spent your entire life savings, but most people in their 20s don’t have life savings. It doesn’t matter that much. So it’s like, why not take the risk?

S3: Totally. I’ve spent a lot of time last year hanging out in like subreddits, you know, Wall Street bets and Crypto of subreddits and things like that. And this one sort of comment sticks with me. There was someone who had just made like a hilariously risky trade and was explaining their decision to YOLO is what they were calling it into this trade and said, like, look. Best case scenario. I’m rich. Worst case scenario. I have to live with my parents, but I already left. So it’s like, it’s like the the risk in that person’s mind is like totally asymmetric. It’s like a gamble. And I have money or or I gamble and I lose and I don’t have money, but I already kind of don’t have money.

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S1: I think we should have a numbers round Emily what’s going on?

S2: But my number is three hundred and fifty. That is the number of hours a guy named Alex Paterson at Media Matters spent listening to the Joe Rogan podcast last year.

S3: Wow, wow. Which is like four or five episodes of that podcast. Is that

S2: right? Exactly. He he put together a report, you know, for Media Matters. Unlike the stuff you heard, that was Misinformation or whatever. And it was it was a little part. I was a part of this interesting piece in the Atlantic about how you can’t just say whatever you want on podcast anymore. I’m not advocating that you should say stuff like Joe Rogan says or anything like that, but it was a story about how. Costs are being more closely monitored now as they get bigger, as as we see with the Joe Rogan situation, and I was like, Oh no, I don’t want anyone listening to this. I mean, I want all you guys to listen to it that are listening right now. But like, I don’t want to be monitored, that’s the fear of being

S1: blamed for something you said on state money. Yeah.

S2: Like, I don’t want to someone to tweet, Emily admits not knowing anything about cryptocurrency on Slate Money Emily.

S3: If someone gets from this podcast gets cancelled, it’s not going to be you, I promise.

S2: Thank you. I’ll put a link in the show notes.

S1: My my number is 40. It’s 40 percent and Emily. Maybe you know this. Are you familiar with if I was to say the word Genie Plus or Lightning Lane, what I was talking about?

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S2: No, I don’t know what you’re talking about. I thought maybe it had to do with inequality, but

S1: so 40 percent is the increase in per capita spending at the American Disney theme parks at Disneyland and Disney World. People who are visiting Disneyland and Disney World are spending 40 percent more per person than they were in 2019 pre-pandemic. Why is that? Because of Genie Plus and Lightning Lane, they have these new products they have. They’re selling food for more. They’re selling drinks. The more they’re selling merchandise, the more and that they’ve managed to create ways to get people to pay to jump the line, basically. And it is just they are minting money. And that is my inflation figure of the week basically is the actual price that people spend when they go to Disneyland or Disney World is up 40 percent since the pre-pandemic.

S2: Wow. Well, that’s wow. That’s not like oil and gas inflation, like if you want to pay more to go to Disney Disneyland. Who cares, right? Am I wrong here?

S3: Maybe this is actually the case for the Metaverse is that it’s just going to be so much cheaper than going to Disney.

S1: And it was not exactly cheap in 2019. And they say, You

S2: know, why have you been to Disneyland Felix? I can’t see Felix and Disneyland, can you Kevin?

S3: I can’t just write writing the teacups KitKat.

S1: Yes, totally. I just I just stay on the TV, got the don’t go anywhere else. I just enjoy the

S2: good up

S1: my speed right there. The Kevin. What’s your number?

S3: My number is point zero two eight eight four dollars.

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S1: Is that a cryptocurrency worth it?

S3: It is. I decided to stick with the Crypto theme that is the current price of something called Smooth Love Potion. Smooth Love Potion is the in-game currency in game cryptocurrency of a video game called Axie Infinity, which is a very popular Crypto video game. It’s what you get when you play Axie Infinity, and it has soared about 70 percent in the last day because Axie Infinity updated its game in a way that is is going to make these tokens. This smooth love potion tokens more valuable by by reducing the supply of them. And what I find interesting about this, I mean, this is obviously crazy and the fact that we’re talking about something called Smooth Love Potion, but it is this world of kind of play to earn video games that are powered by Crypto is really heating up there, billions of dollars being invested in them. And for a while, Smooth Love Potion was actually seeing more trading action than Ethereum last year. But but it basically forces these video game developers to kind of behave like central bankers like because they are not only trying to make a game that people want to play and keep it fun for people, but they are also trying to manage the money supply within that game because this is people’s real livelihood. There are people in the Philippines who play Axie Infinity full time as their job and are, you know, undergoing an economic crisis because the price of Smooth Love Potion has been tanking. So this is a big deal in the game of Axie Infinity, and it’s going to be fascinating to see, you know how they set up their own Federal Reserve for every video game.

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S1: This is this is a phenomenon that predates Crypto. I remember when people were doing this with Q Q tokens, there was this game like a bunch of Chinese play and gamers were buying Kuku tokens and turning them into renminbi and. But I guess it’s just like with Crypto, everything just becomes, as we said, like a securities arbitrage, and so it just becomes easier to set these things that,

S3: yeah, I am sort of amazed that Rasool Khan was not in on the smooth love potion grift because it seems like a match made in heaven.

S1: Kevin I want to talk to you about CryptoPunks. We’re going to do that in a minute when we have a little slate plus segment. But for those of our listeners who don’t subscribe to Slate Plus, that is it for us this week that has been like the most Crypto heavy episode of Slate Money in a while. I’m so glad we had Kevin on to do it because it’s been awesome. Thanks so much for being here. Thanks so much to Shane. A raft of producing. Thanks so much to all of you guys. The writing in Slate Money at Slate.com. And we will be back next week with another slate money. Kevin Sotheby’s is doing a special auction of 104 CryptoPunks and the person selling the CryptoPunks is saying that this is going to cement the status of CryptoPunks as art. Does any of this make any sense to you?

S3: No, this this is a phenomenon you see a lot in Crypto circles because among the really hardcore NFT crowd, it’s considered very taboo to sell right there. $hO, they are in this for the long haul, and it’s it’s seen as sort of a vote of no confidence if you actually turn around and like, sell your Crypto punk NFT. So you can’t just say I’m selling because I own a lot of crypto punks. They’re very valuable and I want to make my money back that I invested in them. You have to say I’m trying to elevate crypto punks within the international art community, and and that’s that’s what this anonymous person said. And then they got pounced on by another bunch of other CryptoPunks people who, you know, accused him or her of. Just like trying to, you know, get rich and, you know, leave this community.

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S1: So it’s not. It’s not not the only. I mean, so I feel like there really is a bait aboard ape community. These people that know each other, they hang out. There’s, you know, they trade, they think there is a community that is there really. And you wrote a whole article about the penguin community. Is there a Crypto punk community? These people know each other and hang out.

S3: It’s unclear to me, I mean, you’re right that the board apes are a much tighter knit community, they have offline parties and they, you know, have, I don’t know. They rent yachts and drive them around Manhattan and and they seem to all have a good time together. I’ve actually I don’t know whether the CryptoPunks have events. I think they are mostly sort of internet friends, but they’re extremely wealthy internet friends because CryptoPunks are sort of the that they’re the they’re kind of Mona Lisas of the NFT world. And so they have bonded over that if nothing else.

S1: CryptoPunks are the Mona Lisa’s of the NFT world. Wow, that that is. I’m not going to forget that one for a while.

S3: Listen, I I can’t believe I do this for a job either.

S1: Thank you.

S3: Kevin, thanks so much for having me.

S2: Bye, sleepless.