Inside Bitcoin’s Early Days | Pete Rizzo & Jason Yanowitz

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Wayfair, every style, every home. Back then, the idea of disrupting money was still, you'd be laughed out of the room. There was only the incumbents which were PayPal basically, and then you had the banks. So that picture that you see there was the first Money 2020 conference, which took place in May 2012. That room was all incumbents. It was— no one knew you couldn't disrupt money at all. There was no— the concept of sending money from person to person didn't exist.

All right everyone, welcome back to another episode of Empire. Uh, this is, uh, This is not your typical Empire pod talking about, you know, parallelizing the EVM and the news of the topic du jour, I would say, of the week. And this is actually a look into kind of the earlier days of crypto. And actually, when I started to get into the industry, it wasn't really even called crypto. It was just Bitcoin. I was just interested in Bitcoin and that was really it. And so we have 2 close friends who have been in the industry for a while. We have Pete Rizzo, who helped build CoinDesk in the early days. I think you could say did build CoinDesk, came into the industry in 2013. Rizzo, controversial topic, I know there, but that's all right.

And then I don't know which lawyers you ask for sure.

Yeah, exactly. Exactly. And then we have Charlie Shrem, and Charlie came into the industry in, I don't know, either 2010 or 2011, built BitInstant, which we're going to hear about and as he went off to jail, which we will eventually hear about. If you're okay talking about it, Charlie, then RZA will step in and talk about the kind of 2013, 2014 to 2017 days. So yeah, welcome, guys.

It's good to be here.

Oh, and we have Court. Court, Charlie, can you put the camera on Court? What's up?

Hi. Hi, everybody. She's been through it all since day one as well. So it's been 2013. A lot of times, like we were just sitting in a story the other day and, uh, forgot where we were. And Courtney goes, remember when we were sitting there in the park and Vitalik was eating grass? And I totally forgot that whole story. And I was like, thank you for being there, because like for the book and everything, I forgot to write that, uh, that story down and everything like that. So I don't know. Yeah, so when—

like literally eating grass?

Yeah.

What happened? Do you remember that situation? Uh, we were at Ulysses for the, um, for crabs. Oh, you were getting lobster? We were hanging out with, um, Nick Spanos from the Bitcoin Center when the Bitcoin Center was around. And, and we were sitting on the ground and waiting for the food or something, and he was just like sitting there eating grass and convincing us that— but yeah, he was like telling us the whole story that it's good for you. Yeah, it's like all this protein, like that we used to have the ability to digest grass, and if humans could— like, this is— he got in this whole thing If humans can digest grass, then we could be superpower. Grass is all— grass is right there, it's everywhere. And then cows can— cows can completely— it can live off of grass.

This is a great Vitalik story, by the way. Um, and there are many there. My favorite thing about Vitalik is there's phases of Vitalik. There's like different eras of Vitalik. But yeah, his— this was the nice schoolboy kind of Bitcoin Magazine writer who was just like really chipper and happy to be there. I think I'm correctly, right? He was, he was a good student.

So maybe we can, maybe we can start there. We can start with like what the space looked like in— Charlie, I'll throw this one to you— like 2011 to 2013. Like, I just— paint, paint a picture for us. Like, who are the players? Like, who are the people? Where were they located? Was it San Francisco? Was it New York? Was it New Hampshire? Because the talk show— like, paint a picture for us of like what the industry looked like in 2011 and 2012.

A lot of these Satoshi emails just came out actually, which is really interesting. And I know Pete has dissected them a lot more than I have. I just read a kind of a few off of your thread. So thank you for constantly putting that out there. And so starting with those, with the Satoshi email days, this was like the era of 2009 to 2000, I would say. I think he disappeared in April or like March or something like that of 2011. He disappeared in April.

There you go.

April 2011. And so to give context, I joined the forum. I was around lurking, but I joined the forum May of 2011, like one month after Satoshi disappeared.

So this is the BitcoinTalk forum. And how many people were— so you joined two weeks—

and that would have been the top of the 2011 bubble too. That would have been like—

he would have been following in. That's where I lost all my money originally because I bought Bitcoin at like $30 and it went up to $36 and I was like, I found gold. And it dumped to like $2, and I'm like, all right, I need to work in this industry and figure out a way to make this price go up again.

So I found this great, great, uh, thing that you posted December 28th, 2011, Charlie. You said, with digital currency like Bitcoin, being broke is merely a technical issue. December 28th, 2011. So what was, um, yeah, what— take me into the mind of like December 2011.

You had the pre-Satoshi. So you had those, like, that's kind of like the era, like, pause point of when Satoshi disappeared. Everything pre-that, Satoshi was kind of like running the community. Everyone can— everyone was on, uh, forum.bitcoin.org, and it was a website that him and Thamos started. And, and, uh, there was, um, an IRC network which was like Bitcoin, #Bitcoin on Freenode, #BitcoinDev, #BitcoinOTC. And then a couple of other ones. And that's kind of like where more the technical discussion started, and that's where they still actually take place. And that's where I originally connected with Bitcoin, was in the IRC, because I was hanging out in some different IRC rooms at the time. And that's how I originally connected to Bitcoin. But, um, once Satoshi disappeared, uh, it was a very— it was a society based on What contribution— the, the, the, the— what people respect you had within the community on the forums of Bitcoin was what contribution are you, uh, giving. It like was very anti-rent seekers. So it was like, what contribution are you giving towards larger Bitcoin community? People who are like buying and selling things on the forums, only taking money, you know, pro for products in Bitcoin. You have people running little websites. Like there was a little GLBSC, which was like a website where you can go public, uh, Bitcoin only, which is how Shapeshift and Eric Voorhees took— he made a lot of money, like, dude, thousands of Bitcoin. And some other ones, like, this guy actually passed away, was this Romanian guy, he kind of ran that too. And there's a lot of these little, like, historical connection points, but it was a lot of, like, misfits. There was a lot of people who were kind of, like, on the fringes of society in some way or another, but who are highly technical. And, um, there's a word— is it meritocracy?

Meritocracy.

Was it very like— was that the right, like, accurate way of describing it? Where like—

yeah, I mean, I can add mostly from my recollection. Well, I was in, you know, I joined in 2013, so I've kind of mostly know this era from doing archival research and things. But yeah, it's very different than today, right? Today you have the idea that Bitcoin is this like secure investment, it's where you'll keep like long-term savings. And back then it was the opposite, right? Bitcoin was just, as Charlie's tweet showed, it was like a funny internet money. And people sort of believed that their value that they were giving to the network was actually supporting it, right? Like, they thought that the value of Bitcoin was based on the users, the number of people accepting it. So there's this huge cultural, uh, you know, pressure— or not for, but force— to, you know, reward people who are doing good for the network, expanding the number of merchants, convincing people to accept Bitcoin, spending Bitcoin, right? It was about going forth and spreading the message, right? And that was the tone, I think, you know, post-Satoshi leaving, as Gavin Andresen kind of takes over as lead developer, and, you know, he was the one who— he invented this website program where you could go and you could just claim Bitcoin for free, right? So he was even just giving away Bitcoin. So, you know, the culture is very different from what you think of today, where it's more like, oh, you don't want to spend your Bitcoin, Bitcoin's super valuable. Back then it was, hey, like, no, we need to build and get more people into this industry by any means necessary. And that, you know, came and kind of incubated a wave of startup businesses that, you know, by 2013, when I, when I kind of joined and started reporting, you know, it felt like a maturing industry, right? It felt like a zeitgeist thing that was happening because in the early days of, you know, the 2010s, you know, Facebook had just gone from a frat house to a billion-dollar company, uh, you know, Skype had gone from a protocol that like was kind of niche to like people were using for conversations. You had Google Hangouts, right? So there's this whole like tech explosion, right? Tech was kind of like eating the whole world, and Bitcoin was a part of that story. And so like you asked, like, well, it was just a 4-year-old currency, you know, why did everyone have such sky-high expectations? It's because, well, that was the mode of the times, right? Like, that's like, that was really the era where in like the late-stage social media you could be like a dorm room company that then was on the S&P 500 in like 2 years, right? So there was this, you know, when Bitcoin really kind of crystallized in early 2013, early startups like Charlie's, I mean, they were like a rock band, right? Like BitInstant was like, you know, I remember seeing the early pictures of like Charlie, uh, and Eric Voorhees and Roger Ver and the people, Ira Miller, who was also involved, right? But they looked like t-shirts, scraggly guys, you know, product that's like eating, you know, hundreds of users, making millions of dollars off of nothing. Um, so it felt really just like something that was happening. Like, by the time I joined in mid-2013, you know, you really have Bitcoin as several hundred dollars. Um, Cyprus, this country that was, uh, yeah, they, they stole a bunch of people— well, they conducted a bail-in, so the government, you know, sort of seized money from the populace. This was kind of like a big macro moment of the time, right? So you really had this idea that Bitcoin was going mainstream.

They haircut like the whole country's assets. Like everyone had money in a Cypriot bank account, like lost like 10 or 20% of all their money. They like did a bail-in, like you said, it was crazy. And Argentina was going through hyperinflation.

So it was mainstream like in the way like where you think about today, like, you know, CNN was talking about, like Charlie was on CNN, I remember seeing like Bloomberg was talking about it. Like it was, you know, it mainstream in the way Bitcoin today is like mainstream. It's, you know, people on Wall Street are talking about it, but it was very much— it went from like the fringes, kind of the early days where Charlie kind of joined, to being a part of this internet story, you know, in the 2013 era.

It definitely like fell into the internet, part of the internet history by, by that time, 2013, 2014, for sure.

Charlie, what about 2012? So when I, I think about 2013 as a very defining year because you have a lot of like these YC companies. The first, I think, is Blockchain.com. You have Coinbase, you have the whole Peter Smith and Brian Armstrong and Fred, and like they come into the scene in like 2013. But there's like this 2011, 2012 where there's still like— I found this, um, fundraise announcement: Brooklyn-based Bitcoin startup BitInstant raises seed round. A startup that provides temporary credit in order to make Bitcoin transactions faster raised an undisclosed sum of seed funding from an angel investor. We sold 15% of our company to Roger Ver, CEO of Memory Dealers, which is probably the largest used computer parts site on the West Coast. Co-founder Charlie Shrem.

Yeah, that's crazy. That's when things got real for the first time because I met Roger and he basically forced Erik Voorhees to join the company too.

What was BitInstant? Let's start. Let's start there. Tell me about founding BitInstant. Like, what was this company?

So prior to this, to this article, BitInstant was a company that I founded in my basement with a co-investor, like this guy I met on the BitcoinTalk forums, Gareth Nelson, uh, who was this autistic guy, spoke with a very heavy Welsh accent, never met him in real life. And he came up with this idea— buying Bitcoin at the time was very hard. You have to like wire money into one of these very few exchanges. You have these exchanges modern day that we know now, you can connect your ACH, or you can— your debit card, your credit card, or Apple Pay. But you couldn't do any of that back then. You had to wire money. You'd register for an account and they'd give you like wire details and you'd have to wire money to there and then place like a market order. And it wasn't like retail friendly. So we saw a way to connect all the Bitcoin companies and all these exchanges to retail users and started a company called BitInstant. And it allowed people to like walk into their local bank, whether it was like a Bank of America, Wells Fargo, Chase, or walk into like a 7-Eleven, a Walmart, a CVS. You're in the US and the UK, um, and a couple of other countries. And the process was a little bit like cumbersome. You had to go to the website first. We didn't have an app. There was no web app. Like, this was early internet time still. It was like 2011.

Yeah, it was pre-real smartphone saturation.

There is no smartphone saturation. You go to the website, you'd, you'd type in your information, you'd, you'd get like a barcode, not even a QR code, like a barcode. And you'd go to the location and they'd scan it, you give them the money, but you'd have like— this was pretty quick. That's what it looked like. You'd have the money, or you can choose to actually buy Bitcoin from the website directly, like Bitcoin sent to your email address. So you'd get in 20 minutes, you'd get an email saying you have 1.3 Bitcoin for your $20 purchase or whatever it was. Or some people bought 2,000 Bitcoin for a couple hundred dollars. Yeah. And we also offered arbitrage between all the exchanges, which I'm surprised isn't a business today. No one offers that, like be able to hold balances on all the crypto exchanges at once and do some sort of arbitrage. Like, no one—

I feel like that's Tether's business, isn't it?

Yeah, I guess you can tether in and out of it, but there's still like, you know, it takes time to send transactions and get it confirmed in an exchange. You can front run. A lot of different type of trades if you can have instant balances.

So, Charlie, anyone, anyone watching on YouTube, I guess, can see this, and podcast people are just gonna have to listen. But we've got the BitInstant website pulled up here. So you basically go to the site, you've got pay from: Mt. Gox coupon, Vouchex coupon, or BTC-e coupon. Pay to: Mt. Gox, Bitcoin to email, PayPal is on here, Bitstamp, Verwoks— I don't know what that is— or Bitcoin address. So this was basically— BitInstant was essentially the best and easiest way to get bit— to get Bitcoin back then.

Yeah, most people did the cash deposit option and would go to like a physical location and famously use like a red phone, and they'd, uh, be able to buy Bitcoin. It would go into their wallet within like 20 minutes, and that was a good deal.

I would just add that it was super hard even when I joined. By May 2013, people were like, oh, you know, why didn't you buy Bitcoin? It was $50. Uh, it was, it was difficult. I mean, you know, the only other options like I think other than BitInstant was like people you would meet people on the street. You go to local Bitcoins, you know, you could find some local dealer. I remember going like Bitcoin meetups. These were like local meetups where people would sell you coins. Coinbase was a wallet then, right? Like they weren't even selling Bitcoin until late in 2013. They had a waitlist, you know. So, and then if you were using one of these exchanges, like the alternative to BitInstant would have been like, you know, I remember funding BTC-e. So like I would have gone on to this website, had this like sketchy third-party Russian payment processor, and it's like, I'm gonna send $5,000 to like a website that I can't even read and like hope that it ends up on a financial exchange in Japan so I can buy this internet money. Like, there's just, you know, you're lucky you didn't lose money on BTC.

It was a crazy exchange that came back from that. That's another story.

That's a whole other thing. But yeah, that was literally an exchange where like on the main home page there was just a chat box where people were just like, yeah, the troll box.

That's another thing that all exchanges had. And I really truly miss the troll box because you can get really good trading alpha from the troll box. Every exchange had it. You had to have an account there and people would just post and it would just be like a rolling chat of like, yeah, tens of thousands.

I mean, it seems janky as all hell, like right now, like, like saying it or calling it.

But so what were people— okay, so you get the Bitcoin. What were people doing with the Bitcoin? Did people want to, um, I would assume there's kind of two buckets of people with the Bitcoin or maybe three buckets. There's the like, um, there's the very technophile people who just like want to participate in this like funky network that's kind of taking off. That's one bucket. There's another bucket maybe who could, who wanted to do this for an investment purpose. And then there's another bucket who wanted to actually spend it on, um, uh, that's a whole nother bucket of what they want to spend it on.

Well, there was a big narrative at the time. Uh, maybe this digs a little bit into the Satoshi emails, right? Where like, essentially because of the network was small, it was, it was free to send transactions or basically free, right?

Right?

So this idea really kind of took off. Payments were free, right?

I never took fees seriously till later on.

Well, yeah, it's funny actually, from the emails that came out, the new Satoshi emails, you know, you can kind of see him in the background, and he actually even takes steps to like reduce, you know, the presence of fees within the app. So, you know, we have this idea now that fees are super important for Bitcoin, that they're super important for the health of the network. I think that's all well-reasoned, won't rehash that. But, you know, essentially people thought the network was free, and, you know, there was this idea that Bitcoin would be competitive against credit cards. So, you know, essentially, uh, you know, whether it was industries like porn or gambling, this idea that like, you know, Bitcoin could be electronic cash, right? You could go to these websites.

Every speech I gave pushed that narrative. I went to all, all the conferences. You asked what 2012 was— traveling to Europe, to China, gambling conferences, constantly traveling with Eric and Roger and all these different people. Like you said, Pete, the narrative was like we were going to compete with the alternative financial system.

Visa and Mastercard was free.

Bitcoin was free. It always was free. It's still— for the value that you get, it's still kind of free because now you get a crazy secure network.

Yeah, it's just a different mode of thought, right? So like, the— this is like something that I talk a lot about and like why I write about the history is I think people who come in, as you were saying, like who are new to Bitcoin or new to crypto, you know, every era sort of has a different flavor, you know. And I think like as we're learning about Bitcoin and cryptocurrencies as a whole what you'll find is that every era sort of like has their own thesis and like they're kind of right about some things and they're kind of off about other things, right? And so the 2013 era was really this idea that like, you know, people thought Bitcoin was a payments network. They viewed it as essentially being a decentralized PayPal. That's kind of how it was colloquially referred to. That wasn't really how Satoshi referred to it. But again, this was sort of came from people using it that way, right? That is how people were using it. And so the culture really was focused on merchant adoption. Was focused on people buying and selling goods. And so the bullish things, like if you think about today, like people would retweet like ETFs being bought, right? Like that's bullish today. Oh yeah. You know, bullish back then would have been like Charlie standing in his Bitcoin booth next to the PayPal booth and like kind of giving them the finger because, you know, they were being the disruptive thing, right? So like there was a whole kind of culture around we're going to outcompete the banks, we're going to outcompete PayPal, we're going to be the way commerce is conducted on the internet. And there was a huge other element to that would miss, which was like the Silk Road, where essentially like, you know, not even like, you know, gray market payments, but straight up black market payments in a lot of respects of, you know, people selling guns and weed and psychedelics. You know, this was really also the era of the internet with like WikiLeaks and, you know, the Arab Spring. And there was this idea the internet was really kind of like a political force. And I think Silk Road was like, oh, that was a big narrative too.

Great point. So there was the Arab Spring happened in like It started in 2012, I think, and that was a big part of the narrative too, because the internet was being targeted by these countries and being shut down. And bloggers were— back then, bloggers were the only way to, you know, bloggers and early version of Twitter was the only way to get things out from what was happening in some of these places with the protests. So we're shutting down the internet. The idea that Bitcoin couldn't be differentiated from any other type of traffic. And Pete, it's really good that you brought that up because that was the first time we thought, hey, could Bitcoin be used for other things? Maybe data. Like, maybe if you can't differentiate Bitcoin traffic, maybe you can differentiate block Bitcoin data, BitMessage, something. There was like things that were being worked on that were trying to like already start to use Bitcoin for other things other than money. It was still very early.

Yeah, I think like you have to remember, like, I always like to think about like the number of people in the network, right? So like in 2010, 2009, if you're reading the Satoshi emails, like there's like 100 people there, right? So by the time Charlie's in, like, you know, there's basically Bitcoin's like $30 or some businesses, it's maybe like 10,000 people. 2013, now we're talking about, you know, that doubles and triples and you're at probably somewhere in the hundreds of thousands of Bitcoin users around the globe, right? Whereas today we're in the millions. So there is this interesting kind of effect that I think we still see in Bitcoin and crypto where it's like the number of new participants come in, and it, it increases above the level, you know. So the, the new people outnumber the old people, and they come with like a different idea. And sometimes they're given a certain message about what Bitcoin or cryptocurrency should be, and they sort of kind of define the narrative. So there's this interesting kind of yin and yang between the cultures. And I do think there's always like a friction, right? Like, there are like things that we've learned in different eras, and it's, uh, you know, that becomes messaging, and then certain people get stuck on the messaging, and they don't want to kind of learn about how things are progressing. So that's the danger.

It's definitely a minority now, like what, what mattered in the history. A lot of people don't care as much as they used to.

I think it's still so early though, man. I still think that we're still learning like foundational stuff about what's happening. I feel like we're only like 3 or 4 years in really, when you think about like the halving cycle sort of being like, you know, epochs like are 1 year. I don't know, sometimes I think that like How much have we really learned cumulatively?

Charlie, take me into, um, I want to bring it back to BitInstant. So Rizzo said, uh, you know, the exciting thing would be Charlie kind of giving the, giving the bird to the, to the PayPal booth. And I found this picture of you, I think this is Eric Voorhees, and, um, and Roger Ver with your BitInstant booth right next to a PayPal booth. So maybe use this picture to tee off a conversation around like Okay, so BitInstant, you started with this guy who you've never met on the internet, and then somehow there's the Winklevoss twins get involved.

Back then, the idea of disrupting money was still— you'd be laughed out of the room. There was only the incumbents, which were PayPal, basically, and then you had the banks. So that picture that you see there was the first Money 2020 conference, which took place in May 2012. And the idea was like, okay, we're going to talk about what money is going to look like in 2020 and call it Money 2020. And it was just that room was all incumbents. It was no one knew you couldn't disrupt money at all. There was no— the concept of sending money from person to person didn't exist. It was so new. Even sending wire transfers, sending your friends money, you had to register for a PayPal account. Add money to that, and then your other friends did too. And it was like a week to get money on and off that. You guys remember? So it was like, no one, no one else was disrupting money, and I don't even know what PayPal was doing there. And, um, the idea was PayPal, I think, had just canceled our relationship with them at the time. They were allowing us to let people sell Bitcoin and withdraw into PayPal, and, uh, we were really pissed off. So Roger wrote an email. He said, look at this big money conference going on in Las Vegas. Let's, let's get a booth. Like, let's tell them we want a booth right next to PayPal. And I was like, we look at the prices and it was like ridiculously expensive. And I was like, no way can we afford this. Roger, you're my only investor. So I don't think the Winklevoss twins were involved yet at that time. I don't remember.

That would have been like October 2012, probably. So maybe they would have just been in the conversation.

Yeah, and so we could kind of like— we're more advocating for, for Bitcoin, like you said, all the positive narratives that we were advocating for. And, um, all we could afford was that little like lamppost, as you see. It had no chairs, no behind area. It was just that little like desk. It was like a, like an information desk. And it had our logo. BitInstant was super small, but it was all about Bitcoin. But what was cool about it is I remember that day I met Jesse Powell came over, who created Kraken. He came over. Jed McCaleb came over in his sweatpants. I met him for the first time. And there were some other people. I actually met this famous lawyer. She's very well known and hired all over the Bitcoin community now. She came over me for the first time because I was on stage there and I was very firebrand. Like Bitcoin's gonna take over the world and Bitcoin's gonna like end, you know, end the Fed and we're gonna like completely take monetary policy out of the hands of the government and put it back in the hands of the people, you know. And there are obvious like government people on that stage and she came over to me and she's like, you know, you need to tone down your rhetoric, young man, you're gonna go to jail.

Your rhetoric.

And she was right, like I got arrested maybe like a year later or something.

So, so, um, okay, so tell me how Eric Voorhees got involved with BitInstant. Roger, uh, wasn't Eric a real estate sales guy in Dubai?

Yeah, Eric was selling real estate in Dubai. He was like this brilliant person that just was doing the wrong thing because what he was brilliant in wasn't— there was no money in it. There's no money in libertarianism, you know, uh, writing back before Bitcoin. There were no— there was no influencers. There were no followers, you know, you couldn't really monetize that. Podcasts didn't exist yet. So Eric was kind of like just, uh, out there, and Roger met him. Roger had this knack of meeting of, of some really brilliant people and bringing them all together. And Roger, um, told me, you need, you need some help, hire this guy Eric. And I was like, you can't tell me what I can do with my company's budget. And he's like, well, I'm gonna pay for him and I'm gonna He's going to be the chief marketing officer of BitInstant. So we ended up hiring. So he flew to New York and we instantly became best friends. Like instantly. We were more than just people that we worked together. We were— we became best friends. He got an apartment in New York City. He introduced me to another one of his friends, Ira Miller, who became like another developer at BitInstant, like a number 2 we badly needed. So Roger was really instrumental in that. But Eric started that pull away from me. Eric and Roger used to joke that I was a statist. You know, because I grew up in a very conservative type of Jewish community.

And, uh, your family was— you guys grew up Orthodox, right?

Very Orthodox. Very like, like, and, you know, like, and that means kind of like, like they, they believe that their way of thinking or they— their way of, of following the religion is the only way. Anyone who doesn't follow their way is kind of like not on their level. It's not really a good way to live. Bitcoin, the community, was like the anti-that. It was, again, going back to like, your contribution to the Bitcoin community is what your, what your status is in the Bitcoin community. And, uh, so it was very easy to weed out the fake people and stuff like that. Uh, there's actually kind of around the same months that I, that I met Courtney at EVR. So, um, going back to New York City, so now we're in New York City, 2013, at the BitInstant offices. It was the only place that, that Bitcoin You could hang out. Eric was there. We had like Bitcoin poker stuff going on.

You guys started this club, right, Charlie?

Yeah, my friends from high school started this nightclub and Eric and I, and I think the guy that got— what, my friend from high school, Alex, who started it, was looking to buy some Bitcoin. So I told him, I'll trade you some Bitcoin for like equity in the club. And then I made— I struck a good deal. And Eric Voorhees was like, well, I'll join in on that deal. And Yifu Guo, who founded the first ASIC, was like, well, I'll join in on that deal too. So we all became nightclub owners, like, overnight of EVR. And the cool thing about it was that we got EVR to accept Bitcoin. That's, that's probably like in the one other— if there's another picture you have of the New York Post, uh, there's a picture of the New York Post Bitcoin accepting at EVR. And that's actually Courtney doing the transaction. She did the first ever transaction at the— and that's how we met. Uh, she was doing that transaction at EVR right there. There it is.

Is this you, Court? Oh my God. Yeah, I— so my— no, I, I know I never went to EVR. I heard EVR was like all the Bitcoiners were hanging out there. Fred Wilson from Union Square Ventures.

David Waxman in that picture. It does look—

is that, is that David Waxman?

And that's Pinzi. Pinzi is the one that was doing the transaction.

Wow.

So, so the blockchain.info wallet, that was the wallet back then. It was the only wallet. Roger was like an owner in that wallet and And those were kind of like, Peter, like you were saying, it was transactional. Like people would come in and spend like 10,000 Bitcoin on like a glass of, you know, like a bottle of champagne. And it was beautiful because BitPay facilitated that transaction. BitPay took almost no fees, like less than 1%. And then they instantly converted into dollars. But we, you know, the club kept the Bitcoin. And there were no chargebacks.

Yeah, this says the fluctuations don't concern us because we're not holding it anyways, we're just using it as currency. I still get the same amount of money either way. Staff at EVR use tablets to pull up a service called BitPay, which functions like a credit card processor.

So all these people mentioned in this article, like, like, you, you just— everyone's converted. That guy Gabe Sukhenik, I don't know if you know Gabe, he works— still works for, for IRAC Coinapult, which It's a Bitcoin company. You know, there are so many of these Bitcoin companies that are dormant now. They just have Bitcoin on their balance sheet. That's how they survive over the years. Like BitPay still does a lot of business.

So Roger Ver invested, he gets Erik Voorhees to come in. Um, did Barry Silbert— did you guys ever talk to Barry? Because I know Barry was also kind of getting things off the ground then. Did Barry ever invest? Did you ever talk to him?

Yeah, so if like, if you were to imagine like Erik was the the, the Jesus. Well, Roger was the Jesus, but Eric was more, was the more on the ground in New York. And then I was the, this is how you're gonna make money from it person. And we would just go and orange pill these people, uh, Barry Silbert, the Winklevoss twins. And we would hand each other off, like in the email threads, like they would write these long-winded questions and I would be like, Eric, you handle these, like, and he would say, Charlie, you handle these. And we would kind of tag team it. And, um, and there were all sorts of questions from technology questions, which— and then more, he handled more the economic questions. And, um, we, you know, we had the guys like Matthew Mellon, who passed away, who was an early investor in Ripple and board member, um, and, uh, and Barry Silbert. Never forget, there was a coffee shop downstairs from our office in Flatiron District, and we would meet them, meet him there every week. And Barry doesn't, you know, for whatever, like, let's put everything that happened is happening now completely aside because that's crazy stuff. But what Barry did back then was really legitimize Bitcoin as an investment, an asset class to a lot of VCs like FirstMark Capital and a lot of these early, like, people. He, you know, he had SecondMarket. And he was the first one doing this, like, you know, token—

like, yeah, Barry would have been a big deal, right? Like, Barry would have been someone who was already on the COVID of Bloomberg. Yeah, he was already like a well-known guy because SecondMarket was essentially— talk— going back to like that internet narrative, right? Like, his claim to fame was he, you know, Facebook was an illiquid stock for a long time. He created a market where people could essentially sell, like employees could sell stock on a secondary market. So yeah, he was already like, you he had his Bloomberg cover, he had made his millions, established person, right? Very different than like kind of some of the other folks.

And then the, and then the Winklevoss twins come into this. And my, my understanding is, Charlie, that, uh, they're on the beach in Ibiza. You have like a friend or family friend who's a dentist. He sees them on the beach in Ibiza and he— this is the rumor story, I don't know if it's true or not—

but he, he, his dad was my dentist.

He gives them his chairs, basically. He gives them his chairs and says, but wait, I'll give you my chairs in Ibiza if you take this call with my buddy back in New York who's going to tell you about this thing called Bitcoin. And the Winklevoss twins are like, I'll take the call because I want the chairs in Ibiza, because you can't get chairs in Ibiza. Is that—

Ben Mezrich did not have to elaborate on that story one bit. That is— it is exactly the truth.

Wow.

David literally just called me out of the blue one day, and I knew he was— he was already— David was committed to investing. Like, as the $1.5 million already, along with Roger. Roger's gonna put a little more money in. David's dad was my dentist. We met at some, like, New York City tech fair, so there was already, like, a relationship there. We were part of the same, like, Jewish community. And, like, a couple of weeks later— and he was on his honeymoon in Ibiza, like, he got married, went on his honeymoon— called me. It's like, why is David calling me? He's like, Charlie, I have— remember the Winklevoss, like, talk slow. Remember the, remember the Winklevoss twins from, from Facebook movie? I'm like, yeah. He goes, they're here with me right now. Convince them Bitcoin is the future. I was like, all right. It's like, Eric, get the fuck in the office. And like, I had them on speaker and Eric was right there and we like fielded. They came with very good questions. I think they may have heard about Bitcoin already, to be honest, or maybe I don't remember, but they didn't they were very smart.

And then you, and then you partied with them in New York and then they invested.

They came to New York, they came to New York, they came to the office one night. I like, I was like, I'll never— I don't know if we'll ever meet them ever again. So let's just like strategically have them meet us on like a Friday night at the office at like 5:00. So maybe we'll like, what are they doing on a Friday night? We'll hang out with them because they were celebrities.

Yeah, they would have been in a different position than, than Barry though, because I think like Barry was someone who had legitimacy as well, whereas the Winklevoss were really trying to break in, right? Like Facebook was a big black eye for them in a lot of respects. Like they were, you know, trying— they were looking for a way to get back into the, you know, glitz and glamour of the VC world, right? Because Mark— they were kind of the villains in Mark Zuckerberg's story.

The rift, the rift between Barry and Cameron and Tyler really started then, actually. Like in the early days. It's going on right now, but it's— that rift started over BitInstant actually, because Barry and those guys wanted to invest and Cameron and Tyler just kind of came in at the last minute and it was a whole thing.

So the Winklevoss-Barry rift started around BitInstant.

Yeah, it started over BitInstant probably.

Yeah. Yeah. So what— maybe switching gears for a second from BitInstant, what was the like kind of state of mining here? Like, was there, was there a mining industry? Like, were there institute— was there, were there any companies doing mining? Like, were you guys mining? What did, what did this—

can you— Pete knows better. You know better.

Yeah, mining then was very much like a home affair, right? Like, most people were mining with— they hadn't really made the jump to ASICs yet, so this would be the specialized hardware that you have now. So people were mining with GPUs, and like, there was essentially, you know, you have people within their garages, people who had like extra rooms in their apartments. There's a great video of like Marshall Long, like showing you how to make milk crate miners. Uh, there's actually a post that I dug up recently where like some guy, he had so many miners in his room that his mom found him because like he fainted. He had a heat stroke, like he had to go to the hospital. This was so hot in his room, there were so many miners. And then he quit, he sold all of his equipment on the internet. Uh, so yeah, it was very much like a hobbyist effort. So Yifu Guo, who I think, you know, I'm glad Charlie brought up, because I think he's an unfortunately kind of forgotten kind of, uh, you know, mythic figure from that era. You know, he's the first one who commercializes the ASIC, right? And so I think Satoshi has some writings on this. I think there was always foreseen that someone would make a chip that was just actually specialized for Bitcoin hash count.

Really? What did Satoshi say about it? I didn't—

so there's a post where, uh, if you're, you know, so now we're getting into the lore of like the Laszlo emails where essentially, um You know, Satoshi— Laszlo was the first one to mine with a GPU, right? So he figured out that rather than mine with his PC, he can actually take a graphics card, which is a bit of a higher processing capability, and then actually retrofit it to mine Bitcoin. And at that point, Satoshi reached out to Laszlo and said, hey, you know, glad you're doing this, but you know, there's this gentleman's agreement now for people that like, you know, we should have as many people be able to join the network. So You know, Satoshi kind of put the kibosh on that a little bit, or at least like chided him. But yeah, that was the first real step advance in mining. And then this would have been the next step advance, right? So you would have had— now you had a dedicated machine. I think I tweeted about this machine recently where it was the first ASIC ever. And, you know, at that point, that single machine probably could have mined 1 Bitcoin a day. So sorry, 1 Bitcoin block. So you would have had 25 Bitcoin per day that that machine was minting when it was added to the network because that's how powerful it was. Comparable to the GPUs, right? Because GPUs are essentially chips that were made for video gaming, they weren't made for hash calculations. Uh, and so, you know, Yifu found himself in an interesting scenario. I'm actually wondering what color Charlie has on this because, you know, essentially he has the most powerful machine in the world for like mining, and then he had to figure out what to do with it. Uh, because, you know, he could have just sat there with his one machine and just dominated the network, but he, he— I think from what I recall from talking to him, like, he wanted to decentralize Bitcoin. He kind of felt this pressure to get these out there before the bad guys get them. Because, you know, essentially, like, had there been some malicious, you know, force that found it, there could have been something that happened.

Yeah, Yufu sat in that corner in the office every day. He grew up like a couple blocks away from me in Brooklyn. Like, just so crazy coincidence that we shared, you know, instead of taking— we should— we would take the train to the city to the office every other day, but sometimes we would share it. Like, I would drive him. And that's the only reason I had that first ASIC that he's showing in that video there is because I had a car. And, uh, he— I know, what a crazy—

is this Yifu in this video, Charlie?

Yeah, he's right there in the beginning of it holding up his—

and you guys were young, he was like 23 at this time.

Yeah, my age, exactly the same.

He would have been dropped out of college, I think, too. He was at NYU maybe.

And what— and what happened to him now?

So he—

or, or we skip.

Uh, well, no, he did the right thing. Like, I think Yifu was one of those guys who, like, um, I don't know, Charlie, do you want to tell the story or I can?

No, no, go for it, because I A lot of things happened and a lot of ends got closed while I was sitting in prison in like 2014, 2015.

Yeah, Yifu stayed around and contributed for a long time. I'd say probably until like '18 or '19, you know, he helped host the Bitcoin mailing list for a long time. Like he was a, you know, great—

he worked for a while, right, too?

What'd you say? Didn't he work for a while? Yeah, yeah. Uh, but yeah, his— so, you know, he basically, again, he found— he created this miner, right? It was super powerful and he had to figure out how to commercialize it, right? So we didn't know— we didn't have the mining model you have now where essentially there's companies that make machines. Yeah, they sell to other large vendors or they mine with themselves. So what you had in 2013, and Yifu really started this, was the direct-to-consumer mining rig model where you could like go to his website, you would pre-order like 1 to 10 rigs, like how many you wanted. And there was this idea that like there would be like home mining or garage-based mining, right? So his goal was to decentralize the network and to make a business off of that. The model proved absolutely horrible, and basically anyone who did was totally destroyed. Because what would happen, you'd have people, you know, when the ASIC went on sale, they spent like 75 to 90 Bitcoin like on the ASIC, and then— but they're just pre-ordering it. And so now like 2013 happens, the price goes from like $10 like up to $1,000, and you have people waiting for months, like, you know, 6 months, 7 months.

We're pre-mining on the machines too. After companies were getting the machines in and fucking setting up warehouses.

And like, the forums were just, you know, the forums were just— you talk about like, you know, people want crazy scams today. Yeah, like people were livid. Like you had class action lawsuits.

And this is when it really started to get crazy.

Scams were amok. Like, you, you're— if you just stuck around, you had credibility. If you just didn't scam people and just had a, like, a— were involved in a circular economy of Bitcoin, you were a good person.

Because, well, but here's the thing is, Yifu, like, I would just add like an addendum on him is like, so where the other miner sort of failed and they went to bankruptcy court because they basically tried to like, you know, when this— once they were failing, spread it out for as long as possible. Yifu saw it a bit early and he ensured that customers refunded. They were actually refunded. And it was like such a controversial thing that he basically pressed his other founders like, we need to get people back their Bitcoin, like not their dollars, we need to give them their Bitcoin. He refunded the customers, but through that he was basically kicked out of Avalon. So like, you know, Kanaan is now a public company and he doesn't— he never got like his share of that story. Yeah, that's the sad part of the story. But like, you know, and I think it's interesting where it's like he really did the right thing. If you think about people who like manage that situation, like 23-year-old kid, huge company, you know, tons of irate customers.

Breaks my fucking heart because— breaks my heart because he used to sit in the corner of that office and shake his head every VC meeting I had. The Winklevoss twins, David Barry would come in, all these people, you know, our eventual investors, even like everyone except for Roger. He loved Roger, he loved Eric. But anyone who wasn't a true Bitcoiner, he could tell the difference. He vehemently hated and he was like, never take money from VCs. He's like, never take money from VCs. We never do it. We should never do it. We do it all on our own. And he loved, like Eric, you know, doing the GLBSC with Satoshi Dice. And it was such an unfortunate thing that, like, doing the good thing by refunding people in their Bitcoin, he would have to be forced out of the company and ended up public. And he has no credit for that. It's like the saddest story because he saw it happen. That's the tragedy. He saw it happening.

And he was the most powerful Bitcoin miner in the world at that point that the photo was taken. Like, he would have been single-handedly representing at least, you know, 5% of the network, like, in terms of hashing capacity. Like, that one—

he gave these things away for free. The first dozen machines, he, he let us mine in the office, right? He didn't charge us for— he— okay, actually, he did. He— I have a— I just found this email the other day. I was saving it for my book, but, uh, he charged us 608 Bitcoin, and it just covered the shipping costs. Oh my God.

From China.

I hear that. So, okay, so I guess— take us maybe a little— Rizzo, maybe you can pull us into— that's like 2011, 2012, 2013. So we've got like Peter Smith, and I still don't fully understand the story where like Brian starts Coinbase looking for a co-founder. Originally it's Peter Smith.

Free Speech covers this.

So now that's— so that would have been a different founder. Yeah, Peter Smith was blockchain, which was later. This would have been Ben Reeves is the name you're looking for.

I thought you were talking about Peter Thiel. Sorry.

No.

So, okay, so take us into 2013, because when I take it— when I think about 2013, then you've got like, okay, Bitstamp was like already there for like a year. Kraken was kind of already there for a year. Then you've got Coinbase comes on the market. Yeah, BitPay was already there.

Memory Dealers was also kind of selling some Bitcoin.

Yeah, I think you have your first big wave of—

I'm sorry, it's the first wave of like venture-backed companies as I think of it, because YC does these deals with I think Coinbase and maybe Blockchain.com.

He was like the first YC guy. He did the first Bitcoin ATM. They'd access—

yeah, so you really have Silicon Valley come in in 2013. And I would say like this around MIT Bitcoin Club, you know, this would have been like Bitcoin 2013, the conference in San Jose. There's this kind of big mainstream moment where like Bitcoin really crosses over into like Silicon Valley, and it's the hot Silicon Valley secret. So you have like Bilagi, Srinivasan, Marc Andreessen, Chris Dixon, you know, people who are now associated more with like kind of the general crypto movement today, who kind of like, you know, uh, start getting interested in Bitcoin and start funding startups pretty aggressively, right? So BitInstant would have been funded at that point, but then CoinGecko comes out and makes a $5 million round, and then Ripple Labs comes out and gets $5 million to do, you know, to take Bitcoin's invention even further, quote unquote. I'm using quotes there, you can't see. But yeah, there would have been essentially this culture clash, right? And it's interesting because like I would have joined CoinDesk in 2013. CoinDesk was itself like a Silicon Valley-backed startup and essentially it was the first, you know, news outlet for— we were then calling digital currency. And, you know, the mode of the time really was— and like this, I don't think I've ever really maybe talked about this, but there was like a tacit like, hey, you should cover these new like Silicon Valley folks and like kind of the old guard libertarian type people. Uh, you know, were sort of kind of quieted down a bit, right? Like, there was kind of this idea that, uh, oh, the ecosystem was like moving past, you know, this kind of early stage of like very heavy libertarianism, very heavy on like the anti-war stuff, very heavy on Silk Road. And like, the VCs were sort of coming in, but there was like a bit of a tacit sort of like, oh, well, let's— we're gonna clean this up, right? Like, that we're now here and we're gonna take everything.

The anarchist-like VC, like, started to hit buttheads right there.

And it's funny, yeah, I was just showing this video of, um, this, uh, of Bitcoin 2013, and it's, it's a lot of— it's what's striking to me is there's a lot of button-down shirts in the room. And it's— okay, so this is the Coinbase booth, and then the camera's gonna turn a little. So get—

those are the CoinDesk, those are the CoinDesk lanyards. Because that was the, that was the launch of CoinDesk. Yeah.

And so Brian's— but Brian's in a suit here, like, right? This is—

so you see Stefan, who started WeUseCoins, he's at the, he's at the Ripple booth right now, manning that. That's who that guy is right there.

Yep. Oh yeah, yeah, Stefan.

Yeah. So this is the sort of— so that's kind of marks the start of like CoinDesk, Coinbase, Ripple. There's this kind of like—

that incident was there and, um, Cameron and Tyler were manning my booth, so they were like the celebrities of the conference. And like for 6 months, my single life task was putting on that conference. What you don't see is how small it was. We only took up like a corner of that whole fucking room. It was like the size of a gymnasium. So it was just a large swath. It was just like empty.

Well, I would add one point to that that's interesting now, given like the historical revisionism, like is that there wasn't like a Bitcoin and crypto. Like there wasn't enough people for there to be like different cultures. Like there wasn't enough people to like hang out.

Sorry.

Yeah, look at the tagline.

Sorry, I, I just found a tweet that I posted in 2021 that said, yeah, there was no Bitcoin or crypto because everything that you can build on Bitcoin that no one really talked about yet— none of those companies, even CoinLab was kind of talking about Buttercoin— it was all, it was all like building with the blockchain.

I think I don't even know if I would say that yet, but there was this like idea that there was people doing other experiments. Like, I think like peak blockchain mania was like '15, like late '14, where I'm at. Because I remember the first time I heard someone give a speech about blockchain was Vitalik Buterin in '14 when he launched Ethereum. And he was like, no, like, it's all about the blockchain. And I was like, blockchain? Like, what is like— you know, because we were writing about Bitcoin for payments, like companies like writing things. Like, the original model for CoinDesk was just like, oh, we're gonna be TechCrunch for Bitcoin. That's it. There wasn't like a greater, you know, we're gonna like analyze all these like scientific proposals. You know, by 2017 I was like knee-deep in like, you know, reading 10 research, uh, dissertations every fucking week. But like back then it was like, no, we're gonna have a simple model. We're gonna be TechCrunch for Bitcoin. We should cover Bitcoin startups. And that sort of like complexity to the industry I think like really came later, right? Like I think 2013 it was still you know, Bitcoin was mainstreaming for payments, and then some other people had interesting, like, experiments, but they weren't, like, maligned. Like, you weren't, like, an outcast for, like, sort of experimenting with something else. It was just like that they were around, but they were, like, you know, like Ripple.

Yeah, they were— yeah, they weren't commercial.

They hadn't launched. Yeah, there wasn't really an idea that there would be this kind of, like, cryptocurrency ecosystem, like this, this whole kind of expansion. I think there's two more phases from that. It's like the '15 to '16 private blockchain era And then there's the like 2017, like crypto explosion where like everything is a cryptocurrency and everybody and a dog has like an ICO.

Yeah, I'm trying to remember.

Well, so I'm going to, I'm going to guide us back into this, into this, into the story for a second. So take us into— okay, so 2013 market runs up from like $60 to like $1,000.

$1,300. It was actually—

you're right. Like even Mastercoin and Omni. Wasn't until late 2013. Yeah, right after that conference. So like, forget Tether, but like the first protocol that were colored coins, the idea of colored coins wasn't even proposed till after that, that video that you showed. Like, that's how early that stuff kind of was.

Yeah. So then 2014— so 2013 is a great year, right? Bitcoin rips from like—

yeah, well, there's a tremendous amount of pressure on the industry because, you know, essentially like this is where like the regulatory conversation really enters the 4, like, so there was a little bit in 2011 where you really have like the first kind of lawmakers come out and say like, we need to regulate this, like Silk Road is bad.

Well, it coincides with the, with the price going up, right? Because so the Bitcoin price starts January 2013 at like $13 and runs up to $1,300.

But I would say at that point, like, the industry is sort of like overwhelmed and ultimately kind of fails with Mt. Gox. Like, yeah, everybody's offline, right?

Industry is overwhelmed, like the boat capsizes, right?

Like, because what happened was Mt. Gox was the, was the 99% source of liquidity. Every exchange was also getting their liquidity from Mt. Gox. I was getting my liquidity from Mt. Gox, and we were failing. And we were— our website broke down. We shut down in, in May of, or June of 2013, because what happened was the— a couple of things happened. FinCEN came out with this guidance. It was the first time the federal government, a couple of months after that conference, said Bitcoin is now not like airline miles or gift cards that you guys think it is. It's now money, and you're going to be governed on your money transmission, money service businesses. This is real now. All you Coinbase, you can't— you're not selling airline miles, BitInstant. You're, you're selling money. And that fundamentally, like, overnight, my lawyers emailed and were like, like, you got to shut down BitInstant. Because we were trying to like get the states at that point to give us these no-action letters based on that we were selling gift card-type airline miles. So we were trying to like get the opposite of like a money transmitter license, like a no-action letter, like you're kosher. And, uh, so not only that, but Mt. Gox was rehypothecating their Bitcoin. They were always running at a fractional reserve. So as demand was growing, Mt. Gox didn't have enough real Bitcoin as people want. People start to realize that Mt. Gox was having withdrawal delays and people couldn't get Bitcoin. They started to withdraw.

Yeah. And the whole thing imploded by, I would say, like, yeah, mid-2014, like April or February 2014.

Mt. Gox. Yeah.

Well, I would say like that one adding thing, like, that's kind of been scrubbed out is like there would have been like an extreme, like, lack of confidence even in the Bitcoin price high. So you went up to $1,300, but then Mt. Gox Mt. Gox crashed. And the real question, I think, of the time was like, how much of that trading volume was even real? Because what we learned was essentially that Mt. Gox was like manipulating their own exchange in order to— so essentially the story of Mt. Gox is like, you know, they were really hacked back in like 2011. They essentially ran this fractional reserve exchange for years, kind of hid this and obfuscated it from users, and then eventually like, you know, they basically were called on this, they had to shut down. Um, so yeah, I think it's interesting. Um, uh, that was really the moment where I think like the infrastructure was like so overwhelmed, but the question was like is Bitcoin even legit? Because like, how can you trust this price history? How do you trust this price discovery? Or was it all fake, right? Was it all— was it really, you know, 10 people and a dog like using—

there was a bot in Mt. Gox that was buying Bitcoin, buying Bitcoin on behalf of the company to try to slowly recover the gap.

So as that was like $400,000.

Yeah, it was like a significant amount. So as like the price of Bitcoin was going up, it was also buying up more Bitcoin.

Bitcoin. And this was the— this was the WillyBot, right?

It's called the WillyBot or something. Yeah.

And who uncovered— was it— did Selkis uncover this?

Yeah.

No, that's, uh, so the guy who uncovered WillyBot would have been the guy out of Japan. What was the guy who did like the background research on it?

Yeah, okay.

Yeah, Ryan. Yeah, Ryan, uh, that's a— he did break the Mt. Gox story. That is a thing that Ryan did.

Ryan tweeted—

why do you— why do you laugh at that, RZA?

Uh, because the way that that story was released, it has also been like kind of like scrubbed out, but it's like very important to understand because like Ryan didn't break the news, right? Like, so what Ryan really did is that— and again, we worked—

I was one of the, uh, I was one of his, um, certifiers or whatever. Okay. Yeah, I remember.

I think I talked to you that night. I think—

yeah, yeah, we did talk that. That was a crazy night.

But anyway, like, so what— hold on, this is important to understand because I also, I often say that like crash was like Ryan's fault. So like, so I'm just gonna push this out there. Yeah, in this situation, like at 6 PM, he writes a blog and then he's— and what that blog says is like, he's like, I have evidence to like a document involvement and I have sold all my Bitcoins. So like, so he doesn't publish, he doesn't publish the actual evidence. What he does is he just blogs about it. So it's like 6 PM, I'm like trying to leave for work and I'm like, oh my God, like, lost all my faith in Bitcoin, I sold all my Bitcoins. Yeah, he's done. And then so then the market just starts like teetering and like crashing and people are like, what's going on? Is like this real? Whatever. And it isn't up until like, I want to say that I was up until like 1 in the morning, where then he posted the real documents, and then the documents, and then there was the reporting. So there wasn't like— there was this like 7 hours of just like market in free fall because there wasn't any information. Like, it was just like, he's like, yeah, I found something bad, I've sold everything, fuck all you, like, I'm out.

He wanted to confirm the documents, I think, I mean, and that they were real. And no one can get anyone in Mt. Mt. Gox. I saw that post. I sent him a tweet because he was anonymous at the time under 2BitIdiot.

Yeah, he was 2BitIdiot.

Yeah.

I messaged him. And he was publishing under Ryan Gault, I think.

Ryan Gault.

Maybe. But he was just 2BitIdiot. And he was, um, that was his name, 2BitIdiot. And he, I sent him a message. I said, send me this document. And I have some money in Mt. Gox. He sent me the document. And I, I knew this guy, Gonzague Guebouchery.

Guebouchery. Yeah.

Was like, like Mark's number 2, and he sent me like 2 words. He goes, it's real.

Yeah. And then basically the market just cratered. I mean, I think it went back to like $400, and then that maybe it bounced up to like $600, but it was just— yeah, it was pretty much carnage from then. And '14 was basically just like, you know, regulators basically coming out. You had like, you know, Karpeles is arrested, and he's like paraded in front of Japanese authorities, and he's just like—

he had to publicly apologize on national TV, and that was like rebroadcasted, and it was like the only news.

But then the VCs basically at that point like dropped Bitcoin. Like, it was like, you know, the overnight, like, the air was just sucked out of the room. There was like no institutional support. Like, you know, you have guys like Chamath who before, like, you know, they're in CoinDesk DMs on Twitter every day, just gone, ghosts, like never heard from again.

Ross got arrested around that time.

Yeah, Ross was arrested.

Perfect trifecta.

Silk Road And weren't, Charlie, weren't you arrested around that time for—

months later?

6 months later. So January 1st, are you comfortable sharing that story?

Yeah, absolutely. But I want to— by the time I got like the same day I got arrested was also the day that Vitalik got on stage and announced Ethereum for the first time.

So to give like kind of historical context, the day you get arrested is when Ethereum announces.

Yeah, now there's no launch yet. It's just like a theoretical announcement. This is what we're going to build over the next couple of years. My name is Vitalik. I'm a writer for Bitcoin Magazine. This is what we're going to do type of thing. But that, like what Pete's talking about, that was kind of the start, like Ross getting arrested, Silk Road, the implosion of Mt. Gox, the government FinCEN thing, which basically effectively was a blanket ban on all American global Bitcoin businesses. And then you had China banning Bitcoin, which was happening at the time, a couple months. So that started the bear market. That was the official start of the bear market. I shut down BitInstant too, so there was no way to support the Bitcoin price.

I think it's funny when people ask you, like, how big was it back then? Like, you know, were they— like, there's this kind of idea that the new markets are somehow bigger. But like, like, think about some of these things. You had like geopolitical entry with like Bitcoin and Cyprus in the conversation. You had, you know, the all-time high that was like very obscene, $1,000. You had, you know, major market failures. Like, Mt. Gox would have been on the par of something like a Luna, you know. Just like unthinkable, unheard of. Yeah. So there's a lot of analogies here and especially the backlash is like, you know, very similar to like maybe how people were feeling like after FTX, right? Like I think after Mt.

Gox and after that was the same feeling. Yeah, there's burnout, right?

And you have like a mysterious kind of goofy, like, I don't know, shit-healy CEO guy who like doesn't seem like he should be doing this as a job, you know? And like, and there's sort of like the, you know, negative effects that take hold in the industry. But it was all consolidated, right? Because there was only one there was only Bitcoin really. That was the story, right?

And so what it did was it reset Bitcoin a little bit back into— it threw Bitcoin back into the crypto anarchy era again. I remember traveling to like Buenos Aires for La Bitcoin, La BitConf, which was a huge thing. It kind of pushed Bitcoin outside of the US in a way.

Yeah, you would have had like Amir Taki and like Peter Stoll would have been like a big force at that time.

Yeah, London. Amir Taki, I saw him in London. It's a great example. There was a lot more like Bitcoin positive, like it was a hangover. It was a hangover. There was a lot like, what went wrong? What did we do wrong? There was a lot of like—

Well, and that really starts the block size wars really start at the end of 2014 with, you know, sort of Gavin kind of trying to, you know, Gavin really, I think, tries to start like a new forward direction for Bitcoin around this idea that we'll scale Bitcoin and we're working We'll work collaboratively to improve the technology. And that, that sort of really, I think, is the opening gun to like the next era.

Wait, before we go, because that's a really crucial part of this. So before we go there, maybe close out this last year with Charlie. You're— I'd love to hear like, yes, I mean, would someone show up at your house and they knock on your door and they're like, Charlie Shrem, Bitcoin guy going to jail?

So Bitcoin, Bitcoin was, was starting to like— the price was going down, but there was still a lot of like leftover positive media attention. It was growing. There were some good metrics. I got paid a lot of money to travel to Amsterdam for a Bitcoin conference. Traveling around, man, it was great. Just doing Bitcoin Foundation stuff full-time. I shut down BitInstant because the government made me, but we were trying to get some money transmitter licenses and trying to get things going again. I felt like there was some positivity week, maybe. There was that first Bitcoin, like, 2014 conference that was taking place in early January 2014. So, like, to start off 2014 just right, we're in this big Bitcoin conference, the first major Bitcoin conference after— in the US after Bitcoin 2013. So we were going to travel to that event and everything. And, um, we were traveling home from Amsterdam speaking. Courtney and I were just dating actually at the time. And I got home I was at a— I was, uh, doing my customs with my passport when you come back into the US at JFK Airport, right? When I came back, like, as they were doing my passport, like, tons of federal agents, like, all surrounded me and everything, and they, like, all escorted me over to, uh, both of us to, um, like, a back kind of jail within the airport. And they put me in, like, a holding cell, and they read me, like, you know, my rights and everything. And then they gave me my arrest warrant and I read what I was being arrested for and it was like crazy, like 5 charges. It was really crazy stuff, like a lot of like money laundering, failure to file, like all these crazy suspicious activity reports and not having a money transmitter license, all these things. They asked Courtney to like check, go, go get my bags for me and I had to claim his luggage off the conveyor belt. Yeah, they did that. It was crazy. And then, um, so I got arrested, I went through like a couple of days in the same place that Sam Bankman-Fried was in. So I saw that picture, kind of gave me the heebie-jeebies. And then I did house arrest for a couple of months, actually, a couple of months, like a year, right? Like solid 8 months. It was, it was almost of house arrest from like a time to get arrested to time that I could actually go to prison. I pled guilty. Um, but during the year of house arrest, New York City was like a Bitcoin mecca. It was still awesome. There were so many proof-of-stake dinners. There were like things happening. Like, the bear market was still happening, but there were still things going on. There were still, you know, like businesses being built and investments happening. And Ripple had launched. Like, by this time When I was going to prison, I really thought that the Bitcoin markets would come back. But from the time of my arrest and even before, from the time of Mt. Gox imploding to the day I walked into jail, all the price did was just go down from a high of $1,200 or $1,300 to when I walked in, it was like $158. It was going to zero. When I walked in. I, I just about gave up on Bitcoin as a future for me walking in there. I was like, all right, Charlie, just get through. That actually made life easier in prison because I was just like, I don't have to think about Bitcoin on the outside. And, um, unless I'm telling you it's $200. So yeah, so later on as I'm in, Courtney's like telling me what the Bitcoin price, keeping updated with all the news. A lot of people are like printing out the front page of like r/bitcoin, which was on Reddit, the place where everyone hung out on Bitcoin pre-block size war. The block size war kind of broke that up. But there was this guy, Max Raskin, who worked for the Wall Street Journal. Thankfully for him, he would mail me copies of the Wall Street Journal once a month, like every past 30-day copies of every magazine.

I didn't know that story.

Yeah, because a lot of people would send me money. You know, because in prison you have to live on donations. So I, contrary to popular belief, I, when I left prison, I had almost no money to my name. I had like $16,000 worth of Bitcoin the day I walked out, you know. So I had to restart from scratch. I had no money between my lawyers and the $950,000 civil forfeiture that I had to pay back to the government, which I paid, by the way, within the first 2 years of getting out because thanks to the 2017 bull market. But I had to restart from scratch everything again. But prison was a complete bear market. But what was interesting was it was like, I still have a box of stuff and I haven't reopened the box. We call it my prison box. When Pete helps me write my book, finish this thing, then maybe we could open the box. But there's like letters of white papers in there. People wrote like handwritten stuff.

Like, I remember when you came out, we did the first interview at CoinDesk. It was the upstairs loft.

Oh, so that was— so let's go back to you and Ryan. So you and Ryan were like the first people that really took me seriously and gave me a platform to reestablish myself.

And recently— Charlie, when was this?

In like March 2017, maybe?

I think it was earlier than that. I think it was 2015.

Really?

I think it was like late '20s. It was like I was just out, so it was like 2016, maybe. 2016. 2016. We moved here.

So yeah, oh yeah, that would have been like New York CoinDesk office. So '16 maybe, actually.

You went through a CoinDesk bear market too. You were driving around the van for 2 years during that time when I was— you went to your own proverbial prison, kind of.

Uh, not a prison, but, uh, yeah, I mean, I was, uh, well, that was more of like a work remotely, you know. I was taking advantage of that. Me and my buddy bought an RV, we drove around.

You were keeping CoinDesk running.

Rizzo, how did, um, Rizzo, can we hear that story? Like, how did So everyone, okay, everyone thinks of today there's a big media space in crypto and there's all these podcasts and Blockworks and CoinDesk and everyone else. But, you know, back then it was really just our Bitcoin channel. And then you guys were—

yeah, CoinDesk. I mean, basically the whole industry like whittled down to nothing. Like, I mean, as Charlie was sort of saying, I would say by '15, it was—

everyone died. Like, yeah, everybody was out of business.

Everybody left or they like did something else. So, you know, if you were in Bitcoin in 2016, I always say like the real bear market was like '15 and '16. Yeah, like if you stuck through that, that was the worst of it because it was like you couldn't even say Bitcoin publicly. Like I remember going to like blockchain events in like New York and like Patrick Byrne would be the one— the CEO of Overstock would be like the one guy who said Bitcoin. It would be like hushed in the room. And like if you were still involved in Bitcoin or crypto stuff, it was like you had to wonder like what you were doing with your life. Like, you know, it's like there people were there because like maybe you were still getting paid, but it's like like, you know, the primary like kind of narrative of the industry was really just like, you know, you had the block size war start. So like Bitcoin is just contention, it's just like, you know, it's like all these debates and they're like super esoteric. So you go from like covering, you know, fun stuff like about startups raising money and it's like parties, and then like, you know, nerds in a room like fighting over like whether, you know, the latest over the firewall in China means that the network will be less decentralized. And like the other thing is that like there's been this like post-'17 era whitewashing around the block size wars that it was this great like moral controversy. But like at the time it was not fought on moral grounds. So like the Bitcoin Core developers again were making arguments about like, oh, well, internet bandwidth like isn't going to be enough. And we have to think about bandwidth and nodes have to be small. There wasn't any of this like stuff that we saw in '17 where there really is kind of like you know, the UASF and like people running nodes and they're anti-startups. There's all these sort of like political things that are grafting on it. Like back then it's like a boring technical debate. Like, you know, you're in a room with like 30 neckbeards that look like James.

Yeah, there was no, there was no fanaticism. There was no like sides. I remember like reading about in prison, in a prison email, Roger Ver, who's keeping me updated, was like telling me, yeah, I'm going to Hong Kong about this this New York agreement that we're gonna have about, like, I'm like, sounds great. I didn't know we had a problem with the tech of Bitcoin. The Bitcoin wasn't even growing. There was no issue yet. It was like a foreseeable, you know, issue that ended up coming, but it didn't come yet.

Yeah, it was pretty tough. And like, for me at CoinDesk, like, you know, like, CoinDesk would have been like me and another guy. Like I said, like the entire state of like journalism. It was me and, uh, Stan, Mike McSweeney, was editor of the Block, Blockworks, fine publication. Uh, but yeah, so yeah, it was me and him, and like essentially like I had moved out of New York. I moved down to like the Caribbean basically. Like I, I had spent most of 2014 driving around. I ended up moving down to like St. Thomas, like just rented an apartment. I remember like being like, you know, uh, like essentially like the old CoinDesk entity was shutting down. We had done Consensus, which was a very famous conference. We went all in on this conference. We were going to make this big conference. It was going to be like the blockchain thing. We were going to like bring the businesses back together. We're going to restart things. We did it in New York. Junian Wang, like, you know, who's the architect of that, like forced the company to like, you know, do this big event. We all went pot committed on it. It was a huge success. And then we turned around and we're like, oh fuck, we don't have the money to keep running CoinDesk. We have to shut down. So like our original founder was this guy named Shaq Khan. He was this UK like VC investor. He was the one who kind of orange-pilled Silicon Valley, got everybody in. And he's like, look, I don't want to run it anymore. I'll give it to you guys if you want to run it, or we can find a buyer. He's like, if you don't want to continue it, I'll just shut it down. And I remember market selling, like, like with my CEO, we like market sold 300 Bitcoin at like $200, like just like a disgustingly low price. Like I liquidated the rest of the Bitcoin that the company had. And like, yeah, basically, like I remember being in, you know, and being in St. Thomas, like I was going out swimming in the ocean every morning. I was looking out at this amazing beach.

Beach.

And I remember, you know, I was writing about like Ripple white papers and Lightning white papers, and I was like, I can't do this, I gotta do something with my life. And Ryan Selkis calls me up and he's like, hey bud, how you doing? And I was like, well, not sure about my life. And he's like, well, look, DCG wants to buy CoinDesk, we're gonna do it legit, you're gonna come back to New York. I'm like, I'm looking at this like beautiful vista and I'm like, all right. It's like, it was sort of like one of those, are you in or out? Or like, do you just fade away and you just end up like on a, you know, being a rum runner on some like sort of weird Caribbean island. That was the fork in the road. So then of course I went back to New York, you know, I met with Barry and those guys, and like, you know, they essentially, you know, they wanted to take over CoinDesk. They were going to do it legit, you know. Uh, we had a few other offers. There were other, you know, suitors at the time, Trace Mayer as well. Uh, but you know, essentially this was like the recapitalization of CoinDesk into something that, you know, is to the name.

I was just gonna say, that's a name that I haven't heard in a while. Yeah, Trace was there a year or two ago.

He's kind of dropped off. But yeah, that was— and now, you know, like the cryptocurrency journalism space is, you know, vibrant and thriving and pretty necessary. But I think back then it was, you know, kept alive by just the will of a couple of people that continue.

CoinDesk almost died because of the bear market, because of the event.

I mean, effectively was insolvent, right? So it did— it did formally fail as a business. And has failed since, right? And it was recently acquired by bullish, right? So I think, um, oh, let's—

I remember that. Yeah, yeah.

So, you know, it's been interesting to see it pass through the ages. But yeah, back then, I mean, CoinDesk was super necessary, right? I mean, we were like during the block size wars, one of the focal points for coverage. Like, we were kind of— I remember being in the meeting where like we had to decide whether we were going to cover Ethereum. I actually made the argument that we had—

people were mailing CoinDesk articles to me in prison. I probably have some printed out in that box.

So I think there might be some for me in there.

Yeah, let's get into the block size wars, Rizzo.

You kind of tee up this, um, I have to use the restroom when you tee that up really quick. I'm sorry.

If we're going to talk, it'll be a, it'll be a nice analogous to what really happened where Charlie was away for the— yeah, so I mean, again, like the industry just kind of collapses and then Silicon Valley just kind of tunes out, right? Like Bitcoin is in, it's this hot thing, and then it's out, and it's out in the way that Silicon Valley things are out, where it's like you're like the segue, you know, you're not a thing that people talk about anymore. Uh, so you know, I think that the block size wars are really essentially, I think, the defining moments of Bitcoin history. And I think like to the extent that they've pretty much shaped— like, the extent that you have a novel opinion about Bitcoin or cryptocurrencies as technologies, it was pretty much shaped by 2017. And 2017 is like probably the pivotal year, I would say, in the whole story, where essentially Bitcoin goes through this great schism. There's this like intense clash about, you know, what Bitcoin should be, how should development should be prioritized, like what is the point and ethos of Bitcoin, uh, and how should that be expressed in technology. And then the other side, you have really the free-for-all kind of cryptocurrency explosion where like it is literally like if you have a cat and a white paper, you could have raised $100 million. Like, you know, money really just is falling from the skies for like every two-bit stupid project that you could even imagine. Uh, and like that era, I think, is like— it's hard to condense into any like meaningful, um, you know, uh, you know, summary other than to say like two pretty expressly different cultures emerged. There was like a group of people who rallied around Bitcoin who basically, you know, had this idea that Bitcoin was launched in a certain way, it had certain properties by virtue of the way it was created, and those properties were unlikely to be recreated in any other cryptocurrencies. And then there was this other group that just wanted the freedom of expression and experimentation. And I said something recently, I don't know if it'll resonate with anybody, but I'll say it here, it's I think it's interesting that like the cryptocurrency culture, I view them more as a culture, but they're often like misunderstood as like a technology sort of revolution. Whereas I think Bitcoin is like more inherently a technology revolution that is like misunderstood as like a cultural group. Like there's a, there's a disconnect there. Like where I think that the genesis of a lot of cryptocurrency projects, like I'd say Ethereum, like pretty much in particular, it's like they really just wanted the space to do new things and they didn't really much care about what those things were.

Right.

So like a good example would be that like, you know, why is Ethereum proof of stake? Well, Bitcoin was proof of work, so they picked something else to like experiment on it, right? There wasn't like a grand hierarchy of like, you know, sophisticated ideas. Like they were a culture that wanted separation.

It wasn't until later that they even said like proof of stake, right? It was originally even proof of work for a long time.

I mean, it was in the roadmap that there would be a switch. But I think my point was essentially that like like the genesis of the crypto— if you can think of the modern crypto movement as essentially this idea to like recreate or improve Bitcoin, you know, they essentially first established like a cultural separation that happened, and then those two groups like began working on different technologies. So I don't know, I, I think that if there is a Bitcoin and crypto currently, and though I have serious questions about that because I think they're probably going to converge again in the not too distant future, like that was the genesis of the hands, right? Like Bitcoin went one direction, crypto went the other direction, uh, and I think since then you've really had a Balkanization. You have entirely two entirely different groups that don't understand each other in any real significant way.

They are converging in a really big way. It's faster than you thought because there's a huge identity crisis happening with the Bitcoin VC funds. I work with a lot of them and they don't even know how— like, they don't even know what their line is anymore because there's no such thing as a Bitcoin-only company now. Every— all these Bitcoin L2s are building for ways to like scale and do different things and connect with other EVMs. And I look at dozens of pitches a day. And so the only Bitcoin-only— if you look at some of these Bitcoin-only VC funds, I mean, Blockstream doesn't do anything. All these companies just hold Bitcoin on their balance sheet. That's really the only Bitcoin-only—

I would take the other side of that, Charlie. We're going to talk more about this with Ordinals, which will come at the end.

That's not Bitcoin only, though, because every Ordinal project, BRC-20, No, no, no.

I think there's actually a crisis happening with, um, there's a crisis happening with crypto, what I'd call crypto VCs, because a lot of them refuse to invest in Bitcoin things. They're basically, yeah, a lot of them are basically saying like, I work with dozens of these VC funds.

I don't know.

I'm gonna, I'm gonna punt. We're just gonna save this conversation until the, till the end of this. Um, Rizzo, can you just like one more piece of info about the block size wars? Like who versus who, what was the argument, what was like the argument on both sides, like why did the team, the team, I put quotes around the team, the team that won, why did they win?

I don't know, that's tough. I don't think you can do that, and I think attempts to do that are pretty unhelpful. I think that there, uh, is a lot of historical revisionism around that.

Why can't you say like big blockers or small blockers?

Because the end result of the block size war was that the block size was increased. Like, so they calling the big blockers like the enemies of Bitcoin is like rather bizarre. There's a lot of these like very stupid like things that have like metastasized.

So whose are you? So what were the two arguments?

There was nothing to do with even the block, like even the word block size war came from like Jonathan Beer's book, maybe from—

All right. So if you— okay, if you are an employee, like wrote the history of Blockworks, you've never heard of the block size war. No idea what we're talking about. Rizzo, give us the context here.

Well, the context is that, you know, since the invention of Bitcoin in 2009, it's been unclear how Bitcoin would scale to handle a significant transaction volume, and therefore it's unclear that any, that any cryptocurrency can reach the sufficient scale to essentially handle like the entire global populace of transactions, right? So initially, like Bitcoin, you go back to reading the first responses to Satoshi, like some of the people are saying like, look, interesting that it works on a small scale, but we actually can't scale this up to handle millions and millions of participants. And I would say like very loosely, there was this one group that kind of wanted to scale the and change and continue tinkering with the base layer of the Bitcoin protocol. And there was this other group that wanted to, quote, build extensive technologies that extend Bitcoin in other ways, like the Lightning Network, layer 2s that would be built on top of Bitcoin. Loosely, that was the schism. And I think it's interesting that you've, you've kind of seen a lot of the other cryptocurrency projects like pivot to the same kind of nomenclature. Like, I went to ethereum.org the other day and I was like, I read a sentence that like honestly shocked shocked me. Like, I hadn't been on Ethereum in like, you know, 5 years, and it was like, we need to like keep the block size, you know, or keep our, our network bandwidth small so that the network can be sufficiently decentralized. And I honestly, I was, I was shocked to actually even hear that because everything, every technology choice that they have made should have made that abundantly clear that like that discussion was had 5 years ago by another group of people. Anyways, so yeah, there's this idea that essentially like we as a holistic group, and this is what I think makes makes the unity, right? It's like everyone is working on the same problem. The problem is that none of these things in their current form scale the adequate size. Bitcoin has different properties than these other cryptocurrencies, Solana, Ethereum especially. That doesn't mean it can't have those properties. Right now it doesn't, and maybe it won't ever. And that's essentially the current— that is the current, uh, debate is like how those things will play out. I don't know how to summarize it other than—

and who was arguing for So basically, okay, so you have the big blockers who wanted to modify Bitcoin to— tell me what I get right and what I get wrong here. You have the big blockers who wanted to kind of modify the Bitcoin protocol to increase block capacity, which would then allow you to process more transactions. And the theory here is that they believed that you could essentially have cheaper and faster transactions, which would make Bitcoin more scalable, and which would, um, it would basically allow Bitcoin to compete on a global stage as maybe like an alternative payment system. And it was like, again, this payments narrative and stuff like that. So that was the big blocker. Small blockers wanted to kind of fight to keep the 1— is it 1 megabyte size limit to kind of prioritize fundamental principles, right?

But that, that, that categorization implies that both sides wanted the same thing, the same end result, like Pete was saying. And also there's a lot more to it, multiple layers.

Yeah, I think there was actually 3 groups. I actually don't think there was really 2 groups.

So wait, the story is starts like you were, you were saying with Gavin. The story starts with Gavin.

He's the one who runs it.

Satoshi, when he left, there was this alert key that doesn't have any power over anything, but it allows people to like send an alert over the Bitcoin software if there was a problem.

Push a message to every client.

And also the GitHub, which was the the place where all the code was kept at the time Satoshi maintained all the Bitcoin code and allowed—

I actually never used GitHub. That wasn't GitHub when I migrated it.

And so Satoshi allowed Gavin to be this maintainer and passed over. So kind of handed the keys to Gavin. But that should have never been the way it was really formulated. And Gavin was like this accidental leader.

Maybe I'll offer something else. Like open source, like open source development has certain like cultural mores and expectations. And one of them is essentially that like if you're the leader of an open source project, you can be like the benevolent dictator, right? So Linux was like kind of the original big open source project and it's led by a single guy and he directs other developers who like manage other repos. But essentially what he says goes and that's how the project moves forward.

We modeled it after that. Huh? We modeled it after that. We modeled like the way Bitcoin— Right.

And I would say the interesting— the question that I think the block size war is really asked is like, is could you be a non-government currency if there was some form of formal governance around Bitcoin, up to and including any previous form of governance that has been established for an open source project? But that is like probably the closest I could get to distilling like what the block size wars were actually about. Uh, they were less about anything with technology and more about how would this thing be governed and how can you create a non-government money without creating a government. And I think this is still the big narrative with the other cryptocurrencies where a lot of them are functioning governments. Like, they obfuscate it in a lot of ways, but like, yeah, Solana and Ethereum are, for all intents and purposes, functioning non-state governmental entities, you know, that have their own cross-nation states.

Yeah, but the— so go— so Gavin, he— going back to that, there were all these proposals to like increase— well, going back to that, so There was also Craig Wright starting to come into the mix at this point, trying to convince everyone that he was Satoshi, and he convinced Gavin that he was Satoshi falsely, which is another story for another time. And so Gavin then came out saying that he was convinced wrong. But at the time, people were scared that Gavin was compromised, and they used that as an ex— as a reason to remove Gavin's ability to work on Bitcoin altogether. So Gavin, who was handed off the keys, was effectively kicked out. This happened. Kicked out of Bitcoin.

He started the Bitcoin Foundation. I'll probably dispute that, but I'll let you—

He was the chief scientist of the foundation, like, started the foundation, set up the whole system in which, like, BIPs were done and, like, how Bitcoin is run today. Whatever. That all happened. But the more layers to that was there were the the, the miners in China that wanted to put ASIC Boost and some other softwares to give themselves an edge. And they wanted to— what they saw is, was they— if they took the tap off and if they increased—

I don't even know if I believe that story. Do you believe that story?

I don't know. Oh yeah, I wouldn't. I was— I spoke to Jian Wu himself. I was in the mix.

Weren't they just— weren't they just commercializing like a product where you could just essentially pay to get like an extra efficiency from the miner? Like, wasn't that—

they were running running ASICBoost and making sure they wanted to prevent an update that allowed anyone to see which miners were running ASICBoost. They were trying to run ASICBoost covertly. All we were trying to do was say we want to make ASICBoost overt, and you can research that part. That's where Bitmain and Jihan, it all fell apart with them. And he was the leader of the big blockers. There was a point where Jihan, Bitmain, Roger, uh, Craig Wright, Bitcoin Cash, Bitcoin as he was one unit running Bitcoin Cash subreddit as the team on one side and everyone else on the other side. And that's where like, and then you had like, and their fundamental, there was like a whole battle of like removing who's running the access of Bitcoin. And then it came down to like miners versus nodes. That's what really the argument was about. Who's more in charge, miners versus nodes? And it came down to like signaling for SegWit, which was this whole technology And there was all this crazy signaling done. Like miners started to signal where they would go, big block or this new technology that allowed for an increase in block weight instead of block size. And again, it was all technology like arguments, but it became political. And I remember Greg Maxwell perfectly said to me, Charlie, they're creating a political problem out of a tech, political solution out of a technical problem. And he was so right. It was, it was all politics, and it was about the future of the governance and perceived power and control of Bitcoin with miners versus nodes. Because what happened was everyone had to plant a flag. Every single person, every exchange said they're going to support this Bitcoin or they're going to support that Bitcoin software. And there was a coming fork in the Bitcoin software that people were signaling for, and it almost like completely split Bitcoin. But thankfully at the last minute everyone came together and it was a whole thing. It's crazy stuff. There's so much to that story.

I think there might be— there might be too much for this one episode, but that's—

yeah, no, it's so many layers.

I think it's a good summation. I think it really cuts to just how wild that time was and why the cryptocurrency industry—

I would encourage people to go read about the block size. I think— is there a book about the block size?

There is.

Johnny Beer has written a book called The Block Size Wars.

Yeah, I would encourage people to go if to go read about the Block Size Wars if they haven't. All right. So Rizzo, I'm going to— we're going to skip— we're going to skip 2017 until 2023, because I think a lot of people in the industry have lived through this. And actually, I want Rizzo, you to take us into the future, starting with basically your take around Ordinals and Ordinals in the context of like this division between the Bitcoin crowd and the crypto crowd. And there's like two, there's like two divisions here. There's the Bitcoin crowd and the crypto crowd. Then there's the old Bitcoin crowd and the new Bitcoin crowd. And you gave this, I thought, beautiful summation of what's happening on, uh, on the What Bitcoin Did podcast. I'd love to hear your—

I mean, not to make you repeat another tough one. Yeah, I mean, I think for all intents and purposes, there's currently a divide between Bitcoin and cryptocurrency currency, Bitcoin and crypto, that is somewhat artificial, uh, and it somewhat rests on somewhat fictitious premises, right? And I think that, you know, the big thing that Ordinals— and why it was so significant— and this was a protocol that was released last January by this developer named Casey Rodemar, but essentially allowed you to kind of embed arbitrary data, uh, on Bitcoin in different ways. Um, essentially this multi-million dollar NFT market springing up on the Bitcoin base chain. Uh, I think that You know, essentially that exposed, uh, you know, something that I think the cryptocurrency post-2017 people really hadn't been exposed to, which is that Bitcoin, you know, is an emergent software system. Uh, while it does have rules, uh, and those rules are enforced in a certain way, there's nothing that prohibits you as an individual from inventing something new that would basically invalidate how those rules are perceived, right? So I think that we saw this again late last year, and now there's been like kind of a string of these advances where people people who maybe are familiar with what's going on in cryptocurrency land, and they're finding new creative ways to do previously thought impossible things on Bitcoin. And one of those were, the first one is Ordinals, and the second one would be BitVM, which is a pretty new whitepaper that basically proved that Turing-complete smart contracts are possible on the Bitcoin base layer. And then from that, the commercial application seems to be that we're headed towards this wave of second layer other type rollups that are going to be built on Bitcoin. So that's kind of the big VC chase right now is to commercialize that. But I think the broader thing here is essentially like we've kind of schismed into two cultures working on two different things. And I think Ordinals and BitVM combined have sort of ruptured that. And essentially the disturbance in the force here is that it is really true that, you know, anything is possible on Bitcoin provided that you have enough inventiveness in order to actually achieve it. That seems to be the new reality that people are pricing in. And I think there's still a good amount of people in crypto land that have their head in the sand on this, and there's a good amount of people in the Bitcoin land, uh, that want to pretend that it hasn't happened. I think that's kind of the new—

they're gonna get left behind.

I— we'll see, right?

I think that you both are in the camp of Ordinals, L2s on Bitcoin, put it— putting, putting things on Bitcoin is a good idea.

Yeah, my VC fund has made—

we don't have any say, right? So this is the thing, is like Bitcoin is a permissionless system, so it is immaterial, like what my view on it is. All I'm saying is this, this is happening, this is act— this is reality, it is actually true.

That's the most Rizzo take I have ever—

I'm really bullish on it. I've made like 17 investments in the last year and a half. We started in the, in day one bear market, realizing that this was the, the next narrative was going to be people building things to connect Bitcoin and crypto back together, very simply. And super bullish on it, and I think it's really happening in a positive way.

I remember this hike that we went on. So for listeners' context, when we were, um, when we were, uh, so, so COVID hits, block— 80% of Blockworks' revenue came from events, and we, you know, we basically just had to figure out like how to pivot and what, and what to do. And We realized that there was this like missing need in the market for better news. Um, there was CoinDesk and The Block and Decrypt, but we thought we could do it better than any of them were doing. And, um, so I called Rizzo. We didn't really know each other then, and we went on this, this like great hike in upstate New York and walked me through how to build a media company in crypto. Um, and, uh, you kind of— yeah, you kind of laid out the whole model and you laid out how it works. But one of the takeaways from that conversation was because you were into all of it. You were very, like, when you were building CoinDesk, you were into all of it and you got super burned out from the kind of VC chase for something new.

And you had like, I mean, if there was anyone who left like, uh, not disgusted with 2017, like 2017 was just like a disgusting thing to be a part of. Like, I think if you were in the industry prior to that, you just watched people who like, you know, priorly had approached this like like, you know, I say— I said this this summer, it's like, uh, you know, Bitcoin was a science back then. It was a science. It was something we were doing, we were trying to learn about. And then it was just like you had this great rush of like people who came in and just like totally used that to exploit, you know, thousands of retail investors, like on a level that like, you know, I think was gross. Like it was an objectively gross thing. Uh, and I think that there is a lot of things that are objectively gross about the crypto apparatus like that has sprung out of that, which is essentially, you know, you have VCs that kind of invest in projects for quick liquidity on, on exits and that they aren't really interested in actually adding to, as I said, like, what is the great mystery here, which is like, how do we create a financial system that can scale to 8 billion people out of the tools that Satoshi left us? And I do think that there are people within the crypto space who can add to that. It's just that like, you know, post-2017, it was like the culture was like, I mean, again, you had people who like—

you need to be a VC because you've been telling me that also for a couple of years. And so what I did was I went out and like, out of those 17 investments, only 3 are tokens. The rest of them are pick and shovels, building out the applications that will further this technology, the Satoshi roots.

Like, what are the investments?

Building out like tons of different— like, uh, well, you go to druidventures.com and check out the portfolio. There's like they're all, they're all listed there and everyone can check them all out. Only 3, 3 token decentralized, like, like hacker networks that allow people to do like real-time pen testing. Every question we ask is, are like, for example, you're seeing like this huge AI narrative and they're saying like, you know, how do we build out technologies using the Satoshi tools to prevent AI from getting too centralized and not being able to like have, uh, for example, proof of brain verification, which Satoshi talked about, proof of human verification. How do I know that I'm even talking to a human right now? I could be talking— you could be my— an AI bot. So there's, there's great applications we ask ourselves. But you're right, the only people that can do that are the purists, people like you and me. So we have to get back into the saddle and try to like help making sure the narratives are being run the right way. So like writing that, writing books, being a they are doing everything to make sure things are being run.

I mean, I think there is something like about the token— arbitrary token creation though, that like we went too far down that path. Like, yeah, that was a big scam, I think that. And then what you're seeing on the Ethereum, Solana side now, I think, and a bit of their directionless is like— and this is like, how do you move forward when, you know, essentially they aren't constrained by the same things that Bitcoin are— that is, right? Bitcoin's constraints, I think, have been some of its biggest like, you know, its biggest advantages in many ways, right? You have this base layer that, you know, is sound, and now we know is incorruptible despite, you know, gross amounts of like human efforts to change it. Uh, you don't have that level of assurance with other things. So I think when you talk about Ordinals or BitVM, like, it's like, okay, if you can build on Ethereum or you can build on Bitcoin, and now it's possible to build on Bitcoin, well, which, which foundation are you going to choose? Are you going to build on something that you sure as shit is going to be there in 1,000 years, or are you going to build on something that that, uh, you know, maybe in 2 years from now they decide to change how the model works and it, you know, invalidates what you're doing or whatever, right? Like, Bitcoin has this— these certain qualities that I think are now appealing to the people in the crypto space, and I think that's exciting. I don't— again, I don't know what percentage of the stuff that they're working on that can be ported over, right? Like, there's certainly probably a lot of bad ideas that are going to get ported over, but I think we're— again, if you look at it as like, this is science, we're learning about it, I think this is like important, like, thing to happen, which is these two groups coming together again. Um, I would maybe take a little bit of a different tack than Charlie, where I'd say, like, I would like to see, like, you know, I would not like to see arbitrary token creation come back in large volumes, like, on Bitcoin. I don't know if I can prevent that. That might actually just happen.

It's not gonna be— you're not gonna see, like, token creation on Bitcoin. That's too—

they already are.

Like, you will. Yeah.

Are already here.

You're seeing that. You're seeing like app crazy token projects that are launching, connecting those things. You're definitely seeing a lot of that, but a lot of that is like short-term token crap. The stuff that's being built like with long-term VC investment, I think really is better than that. A lot of that, that like short-term token crap, it's still there. You're going to see that crap like BRC tokens that make no matter, no difference. Different. But there's some really cool things that allow for like revenue sharing tokens out there, security token potentially. Like there, I think there'll be a huge, uh, if you look at rwa.xyz, realworldassets.xyz, already like a couple of billion dollars is already locked up in these, like, you know, between bonds, private credit, uh, and, uh, and real estate being tokenized on the blockchain and there's a huge amount of that, especially private credit. We've invested in a few different companies that are facilitating like private credit token issuance for accredited investor type things. There's a lot that you can do there when it's— you're right, when it's not like token V— you're talking about that time when like— and it still happens. Have you seen Bob?

I mean, it's still— I don't know, the grift is alive and well.

If you go to CryptoRank, you can see It's crazy how many dog coins, like, you know, are still getting—

so zooming out, zooming out from this, and we'll start to kind of tie this whole conversation together and wrap this up, is, um, when you guys think about, you know, 10— Rizzo, you've been in the industry for 11 years, it sounds like, and Charlie, 4— 13 years. Um, I guess, what, like, what are you guys happiest about? And what do you got— like, when you look at how far we've come, it must feel good. To just see how far we've come and to have played a role in that. Um, and then what do you like, man, like this industry really, really whiffed on this, on this bucket?

You want to go first or should I go?

No, go for it. I don't even know my answer. I'm going to think about my answer.

I mean, I think we really whiffed on the cultural divide. I think that's like something that I'm pretty adamant about. Um, you know, it's probably outlived its usefulness, especially at a time I think where a lot of people are discovering Bitcoin.

Maximalist did that. Though? It sucks.

Uh, I don't know, that's a tough one. Um, what was the first question? What do I think? What am I proud of? I mean, I think I'm glad that we, uh, well, I don't know, I don't know how much I feel like a participant in it, right? Like, because I was essentially like on the sidelines as a journalist, right? I think that, um, I'm glad that we didn't ruin what Satoshi gave us, and I'm hopeful that we will somehow figure out a way to you know, uh, ensure that like the people of the world can access the system in the way that he intended. I think that's, that's something we have to kind of take forward with a good degree of, uh, humility and like aspiration. Um, but I don't know, I don't think that we're essentially guaranteed that, right? I think we've done a lot, we've done a lot of very stupid things with what he gave us. So I don't know, expect more of that.

The ETF is definitely scary with the ability to amass all the Bitcoin in the world and be able to just shut off liquidity overnight.

Certainly eating a lot of stuff. Yeah, and I do think that that's, that's an interesting schism, right? I think that the interest in the Bitcoin community, like, in some of the stuff, the crypto-esque stuff that is self-custody, that is outside the state apparatus— there is, you know, I think if there was a critique of Bitcoin maximalism that I would allow is I think it became overly concerned with using the state to enforce its own ideology at some point, and I think that was unhelpful. And I'm glad we're moving past that.

I don't think Satoshi predicted the Bitcoin price going up as fast as it did in a short period of time. Do you think that's the case?

You know, I mean, one of the things with Satoshi is just that he was a project founder, and I think project founders oftentimes are just trying to iterate towards success. Like, I think the emails that came out last week are a great example of like how much Satoshi was willing to like kind of reposition or find different ways to get people interested in Bitcoin. I kind of wonder how much he was really concerned with like the bigger picture stuff. Stuff, though. It's, you know, as we look back, it's like there's so much he did in order to ensure that foundation. Um, but yeah, he had to act in order to like kind of get it launched. And I think that like, you know, what did he foresee? I mean, he says it pretty explicitly in the first, you know, email from the P2P Foundation where he says, you know, all other ways of government currency operate this way. This is a new system, right? Like, so I think he foresaw that the system could be that large for sure, because, you know, his text suggests that, right? He didn't, you know, it's like not like he, you know, the chancellor on the bailout for banks, right? He could have just put like a, you know, advertisement for McDonald's in the blockchain, you know?

Yeah, true story.

Yeah, guys, good chat. Um, Rizzo, I appreciate all the guidance over the years. And Charlie, we didn't even talk about, uh, the— our, our whole story working together with—

I know, thank you for helping me start Rank for Bit actually starting my podcasts. Uh, I've been doing it now for 6 years, I guess almost 6 years this May.

I gotta tell Reed that we, uh, that you came on.

Oh, how's he doing?

He's doing great. He's our head of creative. He's been here, he's the longest-running employee of Lockworks.

He's a good man. Yeah, he's amazing. All right, but thank you so much for doing this show. It was a long one. Thank you guys, it was good to see both of you.

Yeah, it was fun, and hopefully, uh, we'll toast at 100K soon, maybe.

Indeed.

Thanks for the— thanks, Charlie. Court, good to see you.

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