In the beginning was Satoshi Nakamoto, the pseudonymous programmer who created Bitcoin and promised an entirely new way of thinking about money and, by extension, power and politics. But, after it became clear that Nakamoto wasn’t going to appear on some mountain to pass his tablets to the masses, the cryptocurrency world began to yearn for a true evangelist. The people who have tried to fill that role have mostly been self-professed, like Roger Ver, the loud and passionate ex-CEO of Bitcoin.com and the man behind Bitcoin Cash; Vitalik Buterin, the enigmatic and perpetually amused creator of Ethereum; and the Winklevoss twins, the Facebook-involved duo immortalized in the movie “The Social Network,” who started the Gemini exchange and pushed for years for a Bitcoin exchange-traded fund, which they said would spread the gospel to every brokerage account in America. The reason the crypto community felt it needed someone in this role was relatively simple: Internet money requires a leap of faith in a new company. What that particular new world might look like has always been a bit vague, with some hinting at the Austrian School of Economics, or seamless economies that are run entirely on smart contracts. But the tone for you, the consumer, has always remained the same: in the future of cryptocurrencies, whatever it is, you will be incredibly wealthy.
In its infancy in the early 1920s, Bitcoin, which came from anarchist and cypherpunk communities, did not require mass proselytism. Everyone who had heard of it had already converted, and the point was to prove that there could be a functional, deflationary currency that could disrupt everything from financial markets to geopolitics. But then some people got quite rich thanks to Bitcoin, which then led to more people also wanting to get rich. The problem was, not everyone could get rich, as long as some hackers, some speculators, and libertarians just traded the same dollars. New money was needed, especially deep-pocketed institutional money. This period, I’d say around 2014, is when the cryptocurrency world effectively split in two (although many people have moved seamlessly between the two sides). One side was still committed to Bitcoin’s revolutionary potential as a way to break the power of governments who, they believed, arbitrarily control the supply and value of money. The other side was looking to revamp the cryptocurrency to make it attractive to Wall Street, private equity funds, private asset managers, or anyone else who could pump money into the system and drive up the price.
Sam Bankman-Fried, the disgraced founder of cryptocurrency exchange FTX—which failed this month in one of the most spectacular financial implosions since the Bernie Madoff scandal—was the latest and most effective crypto-messiah, precisely because he didn’t seem really take cryptocurrencies seriously. His creation myth has it that after a much credited early childhood in which he, the son of two Stanford law professors, excelled at his private school, went to MIT, and then went to work on Wall Street, Bankman-Fried became enamored of effective altruism (EA), a somewhat scattered philanthropic philosophy that seeks to maximize the good that can be done through charity, but whose members also spend an unusual amount of time worrying about threats from sentient AI. Bankman-Fried decided that he would try to earn as much money as possible in order to distribute it in a way optimized for EA. He claims he didn’t know what a blockchain was when he started with cryptocurrencies, which, he also said, was a field made up of projects that were mostly “bullshit.” But it was also a means to an end. The world would be better off if he, the smartest guy in the room, had more money to hand out and cryptocurrencies were the fastest way to get rich. All it took, it seems, was a series of massively leveraged bets, some hilariously inventive accounting, and an abiding belief that faith in his credentials and philanthropic outlook on him would keep people from even peeping underneath. the hood.
What Bankman-Fried stumbled upon, perhaps unknowingly, was the secret of effective crypto evangelism that would convert everyone from venture capital firms to the media. To be the cryptocurrency evangelist, you can’t sell people a decentralized, libertarian future, because most people with lots of money have incentives to maintain the status quo. Instead, you had to convince people that you hated cryptocurrencies for all the same reasons that they did, but that they should still invest in them.
I’ve dabbled in cryptocurrencies since 2017. My friend Aaron Lammer and I did a podcast called “Coin Talk,” where we took a sports-radio approach to all the industry scams, pumps and dumps, but also what we saw how the technological and economic potential of Bitcoin, Ethereum and any off-brand coins we had invested in that week. Back then, the crypto space wasn’t as crowded with content as it is today, so we were able to label “Coin Talk” as the show for dumb and crypto-curious people who wanted to learn (and hopefully get rich) together to us. Our general ethos at the time was something along the lines of “Almost all of this is a money laundering scam; a small percentage of it is not. But, hey, a lot of people have made their fortunes off money laundering scams, so why not us?
Which is to say, we would have been the perfect brands for Sam Bankman-Fried’s easygoing crypto gospel, because it aligned perfectly with both our prior beliefs and our greed. We shouldn’t have wanted the world imagined by the libertarian maximalists of Bitcoin, with its deflationary currency and social Darwinian perspective. We may just revel in making fun of scammers as well, who definitely weren’t like us in any way.
Cryptocurrency investors then also followed a number of vague rules, one of which was to always look at the credentials of the “team” behind a particular cryptocurrency project. Some people have taken this much more seriously than others, but, for many of us, what it involved was simply going to a new token’s website and scanning through the founders and engineers list and looking for associations that would give us a little comfort, whether it was “Google,” “Apple,” or “Stanford.”
I imagine many accredited people — tech titans, philosophers, or my colleagues in the media — felt something similar when they decided Bankman-Fried was somehow different. The last two weeks have seen a parade of journalists and The EA luminaries come forward, hat in hand, to apologize and reflect. The list of publications that fueled the Bankman-Fried legend, based largely on his parents’ Stanford Law School credentials and his status as an MIT alumnus, included Vox, Bloomberg, the Financial Timesand many others.
Consider this credentialed passage from a relatively level-headed skeptic Times story published in May of this year:
For anyone watching “the team,” the full mix of Bankman-Fried’s appeal can be found here: the litany of prestigious universities, association with serious thinkers, and a belief in a philosophy that doesn’t set off any ideological alarms. Among the people who wanted to turn Bankman-Fried into an ATM, the details added up to the story of a new kind of smart kid who believed the same things they believed about cryptocurrencies and that he would change the world.
If that narrative sounds familiar, it’s because it has become the standard bildungsroman in journalism that covers business, technology and, in some ways, sports. That’s how many reporters spoke of Mark Zuckerberg and Paul DePodesta, the Harvard grad who convinced Oakland A’s general manager Billy Beane to build his team around analytics and “Moneyball.” In these stories, some young man who went to Harvard always outsmarts the stupid establishment, all of whose members also went to Harvard. The addendum is that the world will somehow be a better place if they win.