Nate Silver: SBF, The 2024 Election, & Prediction Markets

Nate Silver is a statistician, writer, and political analyst, widely recognized for his accurate predictions of U. S. presidential elections. He's now released an exceptional new book titled, "On the Edge: The Art of Risking Everything." The book delves into the world of risk, game theory, cryptocurrency, artificial intelligence, and poker—fields where the stakes are high and the outcomes uncertain. One of the central themes of the book is crypto, which is why we were thrilled to have Nate join us. Nate is not just a respected analyst; he's one of us—a fellow degen who shares our passion for the unpredictable and the frontier. But he's also much more. Nate is an avid poker player, a sharp sports bettor, an interviewer of Sam Bankman-Fried, an NFT enthusiast, and an advisor to Polymarket. In today’s episode, he offers keen insights into the brewing battle between the crypto world and its traditional incumbents. ------ 📣DEBRIEF | Ryan & David Unpacking the Episode: https://www.bankless.com/debrief-the-nate-silver-interview ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap ⚡️ CARTESI | LINUX-POWERED ROLLUPS https://bankless.cc/CartesiGovernance 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🌐 OBOL | STAKE ON DVs, SCALE ETHEREUM https://bankless.cc/obol 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/48 ------ TIMESTAMPS 0:00 Intro 5:32 Nate is one of us 7:56 Nate’s POV on crypto 11:07 ‘The River’ 17:35 ‘The Village’ 19:15 Riverian & Villager conflict 25:38 Is the River better? 34:16 Sam Bankman-Fried 52:23 Sam Altman 59:13 Prediction markets & Polymarket 1:06:56 2024 election predictions 1:09:01 Riverian’s betting Trump? 1:10:50 How do we navigate this? 1:15:09 Advice for the crypto industry 1:16:38 Closing & Disclaimers ------ RESOURCES Nate Silver https://x.com/NateSilver538 On the Edge https://www.penguinrandomhouse.com/books/529280/on-the-edge-by-nate-silver/ ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Ryan Sean Adams?

  Welcome to Bankless, where today on the episode, we explore the frontier of risk. This is Ryan John Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Guys, we have an exciting guest today. His name is Nate Silver. He's on the podcast. You've probably heard him in the context of maybe US election predictions. I remember when I'm looking at the election results, you know, pulling in from CNN or something like this on election night. Nate Silver is generally there as a commentator, but he's more than that. He does more than just election predictions. He's a poker player. He's a sports better. He interviewed SBF multiple times, both pre-collapse and then post-collapse. He enjoys NFTs. He is an advisor to Polymarket, the crypto prediction market.

• 0:46Ryan Sean Adams?

  And importantly, in our episode today, he's an observer of the battle that's shaping up between crypto and the incumbents. He has names for these two specific tribes that we'll get into. A few things we talk about today: the river versus the village, why the village is attacking crypto, the theory of mind for SBF, why did he do it? How SBF viewed risk and what we can learn? AI and Sam Altman? Prediction markets and Polymarket? Predictions for the 2024 election that's upon us? This alliance between crypto and Trump? How to navigate this decade, just like in general, where are we going? And advice for crypto.

• 1:21David Hoffman?

  All of this conversation is coming on the heels of Nate Silver's recent book release, On the Edge, which Ryan just powered through over the last like three or four days. And I was only able to read like a very quick chapter before I zoomed off to Argentina. So Ryan's got the driver's seat on this episode today because he's actually the guy that studied the material. But I found it incredibly fascinating, and I've actually got the book waiting for me back, back home when I get back home. So pretty excited to open that up. So let's go ahead and get right into this conversation with Nate Silver, the author. But first, a moment to talk about some of these fantastic sponsors that make this show possible, especially Kraken, our preferred crypto exchange in 2024. If you do not have an account with Kraken, consider clicking the links in the show notes to getting started with Kraken today.

• 2:03Ryan Sean Adams?

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• 2:10David Hoffman?

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• 2:55David Hoffman?

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• 3:38David Hoffman?

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• 4:24David Hoffman?

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• 4:57Ryan Sean Adams?

  Bankless Nation, I'm incredibly excited to introduce you to Nate Silver. He's a statistician, he's a writer, he's a political analyst. He's probably best known, at least in mainstream circles, for accurately predicting US presidential elections, or at least being less wrong about them, maybe in the rational parlance. He's got this incredible book out. It's called On the Edge. It just came out. It's about risk, it's about game theory, it's about crypto, it's about AI, it's about poker, it's about so many things I can't even capsulate it in kind of a brief intro, and it totally nerds my entire weekend, Nate, as I was finished this. Anyway, Nate, welcome to Bankless.

• 5:30Speaker 02

  Thank you, Ryan. I really appreciate that.

• 5:32Ryan Sean Adams?

  Dude, this was a great book, and I want to say at the onset, I didn't realize how much you were like one of us, let's say.

• 5:40Speaker 02

  I know, yeah. I didn't, I'm not sure I realized either. This book, this book came out of feeling really estranged with the political climate. I mean, 2020 was a miserable year for almost every American, I think. But between an election year, between the COVID stuff, between, I don't know, I mean, it was a peak for certain types of progressive leftism, I guess, but also for Trumpism and the January 6 events. It was not a great year, and I kind of had always found my happy place in poker, basically.

• 6:14Speaker 02

  I quit my job as a consultant way back in 2004 in the poker boom years to play poker online for a living. Did that for about three years till the government passed a law that basically banned my livelihood. And kind of that kind of banksed me into being really interested in politics. I wanted the people who passed that law to be voted out of office. But yeah, I've always, the book started with me like flying to a casino in Florida, in which technically still the middle of the pandemic, and it's every bit as much of a shit show as you would expect. And branching out from there, and like, yeah, I think there's You know, I'm not a huge capital C crypto guy, but there's just a like mindedness in the kinds of things people are interested in, in the terminology that they use, in the attitude

• 6:56Speaker 02

  toward calculated risk taking, sometimes erring on the side of degeneracy, which in my world, we kind of use sometimes as a term of affection, if you call somebody a degener.

• 7:05Ryan Sean Adams?

  Our world too. Yeah, totally.

• 7:07Speaker 02

  Yeah. And it's like, so it's like variation to this certain type of nerd who's like very analytical, but also very competitive, right? They're trying to apply this to make smart trades, to combat each other, go into combat on the internet, et cetera.

• 7:21Ryan Sean Adams?

  A hundred percent. And that's exactly what I mean by sort of one of us. And by the way, you're actually like explicitly one of us. You're talking about your poker days. You were literally unbanked. You were literally caused to go bankless, right? And kind of like this poker legislation that the US put forward and choke pointed all of the poker website rails, right? So I mean, that's a use case for crypto right there. And then I also mean it from a like team game theory, team like markets nerd, like team expected value calculation, markets, predictions, trading, it's all of that. That's really what I mean. I'm curious, Nate, what was your perspective on crypto like going into this book? And then I know I didn't expect one of the through lines of the book,

• 8:04Ryan Sean Adams?

  like one of the main characters to actually be crypto, but it but it sort of was. And then it's like, what's your perspective on crypto coming out of this book?

• 8:11Speaker 02

  I mean, coming into the book, maybe I was skeptical on the one hand. I was also kind of jealous that like, because I was in this world, like, you know, in 2015, some friend was gonna sell me $10,000 in Bitcoin and it kind of fell through, right? He got cold feet or something. I'm like, shit, that cost me a lot of expected value. But like people in the world I come from, I mean, I think I come from our world, which I call the river in the book. There's another world, which I call the village, which is politics, media, government, academia, et cetera. And they kind of have like a skeptical attitude toward crypto. But what I found is just like, so I went to NFT Basel in Miami in, I think, December 2021. And I'm like, there's something happening here, right?

• 8:56Speaker 02

  There's a lot of energy. I'm not sure how I describe it. I'm not sure it's 100% positive energy, but there are a lot of people here. There's something going on and people are looking for something interesting. And so, you know, look, I mean, SBF is a major character in the story and is not treated sympathetically. I don't think he deserves to be, but I try to make a point of all the things I'm running about to be fair. Right? I mean, you meet some fun and skilled crypto traders and you meet, I don't know. I just wanted to be fair because I have a lot of friends who are like, you're not going to give a bad name to NFTs. I'm like, I'm just going to be a journalist and try to like, not be a biased journalist. And it's not 100% positive, but I think, I think it captures the intellectual origins of Bitcoin and Ethereum.

• 9:38Speaker 02

  And I think it captures, I think, on their own terms, what the, what the movement's about.

• 9:44Ryan Sean Adams?

  Yeah. If I were to give a, a book review from a crypto native, I would say all of that is accurate. Like I would say you did a great job, actually, even, even in parts explaining crypto to normies in a way that I think sometimes the crypto community has a hard time doing. Like you literally go through like blockchain and Bitcoin and you describe NFTs in some detail and including, you know, terms like memetic desire. And it's like, you know, associating some philosophy with that. So like you did a great job, actually, and this, this is from a crypto native speaking.

• 10:16Speaker 02

  I really appreciate that because that's the stuff you get like a little bit nervous about the more technical stuff about crypto or about AI. I mean, look, I am sometimes guilty of maybe oversimplifying things a half step because it is going for a fairly mainstream audience. But I hope that the description is at least factually accurate and directionally correct.

• 10:36Ryan Sean Adams?

  Yeah. And I think that that's what I loved the most about this book is because it really appeals to a mainstream audience. You're really explaining this weird community. You call it the river, this weird group of tech people, rationalists, crypto people, who they are, why they do the things that they do. And most importantly, how they think about risk. I think that's the on the edge part. And maybe we should talk about. That in the context of the rest of this, this, this episode, how people in this community think about risk. But in order to like see through that lens, I think we have to go back to some definitions here. So you used a term earlier in this episode, you said you call these people the river or people who are in the river.

• 11:20Ryan Sean Adams?

  I think you used in the book, the term of riverians a couple of times. What is that? What is somebody who's in the river? And how does that contrast with the other group that you named earlier, people in the village? So what's, what's a riverian?

• 11:34Speaker 02

  So the river is kind of a metaphorical place, although it's more of a literal place than I thought when I started the book. So the river in poker, poker had its origins on the Mississippi Riverboats, like literally in like the 19th century. So you're on the kind of frontier of risk. You're gambling a lot. There's a fair amount of degeneracy. But it's also people who are very analytical, kind of taking the moneyball skillset and applying it to, to fun things or not fun things or serious things like effective altruism. But it's people who are always trying to think in terms of expected value and maximization is one way to define it. People who it's an applied thing though, right? It's not academic, it's not theoretical. It's people who are actually trying to make bets and think there's honor in winning a bet.

• 12:18Speaker 02

  And that it's a challenge intrinsically to try to beat the market. The more I wrote the book though, the more like these worlds really do cross over a lot, right? Like I'm now an advisor for Polymarket, which is a big prediction market startup. And of course, is very, very, very crypto adjacent, to say the least. You know, these people kind of know one another. I play in hedge fund games with like the all in podcast or poker games with all in podcast guys, for example. People, it's, it's a small community. It's not for everybody. It's not for the mainstream ever. But you just see the same archetypes again and again and again. And it's just like, you know, I just know that if I sit down and play poker with somebody, like we're probably going to get along.

• 13:01Speaker 02

  And I can't think of any other activity for which that's true.

• 13:05Ryan Sean Adams?

  The, the name, the river, why is it called the river? How'd the name come to be specifically?

• 13:10Speaker 02

  So partly because it has this poker origin, right? The river is the last card in Texas Hold'em. It's the last of five shared cards that are dealt. And poker has this Mississippi Riverboat origin. But also because like at first I was going to call it the pool. Like isn't like a betting pool, for example, or pooling your resources. And of course, like, you know, people in this world love, love water metaphors, fish and whales and things like that. The problem with the pool is that that makes it sound like it's some country club or membership club, when in fact, most parts of the river are very participatory. If you want to go and play in the World Series of Poker Main Event, you just have to go up to the window and hand them $10,000 and they'll give you a ticket.

• 13:52Speaker 02

  And you might be seated next to the biggest, best poker players in the world, right? You can't do that in the NBA. You can't voluntarily sign up for like a three on three tournament with, with Steph Curry and Michael Jordan, for example. You know, crypto, whatever else you say about it, I think is very kind of lowercase d democratic and decentralized. And that part of it, I think I appreciate a lot. So it's just the, it's this, the nature of the fact that like, it's a region where people kind of speak the same dialect. It's like being from like the south of the United States or something, right? If you migrate to the north, you're always like, yeah, there's just things a little, similar different down here in the south. And I think it's the same for the river.

• 14:32Ryan Sean Adams?

  Yeah, I totally appreciate the metaphor. I think it works on a number of levels. It was very clarifying for me and it kind of like unites a few sub tribes, I would say. It's like one, one thing that's really interesting is a lot of people who are in crypto have poker experience. I always kind of wondered why that is. A lot of them, of course, are like, you know, like from the VC community as well and they're, they're, you know, Silicon Valley. And so what the river does is, does a good job of kind of uniting several different sub tribes, I would say. Effective altruists, rationalists, the L E Z or Yudkowskis, and even the people like Beth, Beth Jayzos, who are like tech accelerationists and the crypto people and the Silicon Valley people and Mark Andreessen.

• 15:17Ryan Sean Adams?

  All of these are riverians under your lens of things. And like, you have this chart where you talk about a cognitive cluster and like some of the tools that they use. They're, they're analytical, they're abstract, they tend to decouple things. But then there's also this like personality cluster. So they're super competitive. They're highly contrarian. So like they've got this independent mindset and they are incredibly risk tolerant as well. These are the characteristics of people that are in the river and how they think.

• 15:47David Hoffman?

  It sounds like people who are always pushing the frontier. They're on some sort of frontier of risk and knowledge.

• 15:52Speaker 02

  And if you talk to certain people, I mean, I, most of the people I talked to in the book are like quants of one kind or another. But I also talked to physical risk takers, like to an explorer and an astronaut. You know, a guy that will walk up on a perna in Argentina, a tallest mountain in the western hemisphere and be like, yeah, there's a 2% chance that I might die. But it's worth it because it'll be really fun and a big accomplishment. And like, that's a certain, I, I think there has to be some type of genetic component. If you talk to the explorer, he's like, yeah, it's a small fraternity and we all feel like we were born with some of this because often people who are very analytical, you might think of as being very cautious, right? They're calculating, they're an actuary, they're an accountant or something like that, right?

• 16:35Speaker 02

  They only invest in, you know, mutual funds and things and or index funds, I should say. And these are people who, who really want to have a chip on their shoulder sometimes and want to compete. And want to win or at least have fun and gamble a little, a little bit while they're doing it. And like, it's, it's more people than you would think. And kind of, I think a lot of New York DC journalists kind of treat them, give them the cold shoulder and kind of treat this community as, you know, weird or cringey, and it can be weird and occasionally can even be cringey, I suppose. But also it's people who have had like a lot of success. In some cases are making a lot of money. Is by the way, like a, a pretty big audience. I mean, I think this audience has been

• 17:18Speaker 02

  neglected by a lot of mainstream publications. I think that's why you see a lot of crypto native media doing pretty well. But it's a part of the world that's very important in some ways as winning as tech and finance become more and more a share of the economic picture. And is poorly understood.

• 17:35David Hoffman?

  At least in the, in the crypto industry, we have become so in slur about our own like personality types and who we all hang out with. And we start to call people who aren't us normies. And so if all the river people are all kind of just like hanging out, like everyone else who's not us are the normies out there. So, but the river people are the riverians are supposed to be in contrast to the villagers, the people that live in the village. Maybe we can illuminate who these people are. What is this tribe?

• 18:01Speaker 02

  So in some ways, the village is a more familiar term and like similar terms have been used by other authors, but it's the establishment, the professional managerial class. It's the New York Times and Harvard University. It's the US government when a Democrat is in office, maybe less so Republican. And it's conventional thinking. It's risk averse. It's very concerned about reputation and not being canceled. It is good about some things. I mean, it tends to be fairly competent about some things. The Democratic Party tends to nominate less wacky candidates than the GOP, for example. You know, it's college educated. It's kind of the expert class, but it's also become politicized where especially in

• 18:44Speaker 02

  an election year like we're in now, then kind of where where expertise begins and where partisanship ends is kind of a blurry line a little bit. And it's a natural, and we should be clear that like both these tribes are weird, right? They're both people who are who are pretty weird. And it might be 1% of the country each or something like that, although in the river you kind of, you know, sports betting or whatever is a fairly mainstream thing, but like it's people who are who are different types of successful elites and are competing for power and influence.

• 19:15Ryan Sean Adams?

  Well, now this gets to the conflict because I think a major thesis of the book is that the river and the village are kind of at war right now. And this is both a war of ideas and maybe a war in other ways as well. So like, why is there this conflict? There's an entire chapter titled titled The Valley Hates the Village, right? And you're talking about riverians in Silicon Valley and kind of like big tech and, you know, the Marc Andreessen, the 16Zs of the world. And like, why, why are these two tribes at war? And what are they fighting about really?

• 19:49Speaker 02

  I think you can tell two basic stories and they're probably both true in large respects. One has to do with the personality clash that I talked about before where where in the river, we say that we're contrarians. We may or may not be. I think there's a lot of conformity within Silicon Valley, for example. But, you know, you're always suspicious of like group think in the conventional wisdom. I think events like the COVID pandemic precipitated some of this, for example. I think for other people in the river, the notion that Hillary Clinton was going to win the election in 2016 and then she didn't, I think, you know, undermine the credibility of the village a little bit. Such one narrative, I think, is is true. And also the fact that like, You know, let's face it, some people in the river have a big chip on their shoulder.

• 20:34Speaker 02

  It may come from a challenging upbringing. It may come just from being really wired to be competitive, even when you've kind of already won. But, you know, people like Elon Musk or Peter Thiel are very competitive. Peter Thiel tried to destroy the business of Gawker, for example. So that's part of it. The other part of it's a more boring kind of Wall Street Journal version of the story, which is about that they're, they have competing financial interests where if you're in the river, then you don't want Lina Khan regulating you, right? You want better treatment for crypto. You want lower taxes. You know, if you read the backstory and how did Elon Musk kind of become more conservative? I mean, it's partly personality, but also like he thought the Biden administration wasn't fair to Tesla

• 21:18Speaker 02

  because it wasn't unionized, for example. So the fact that like some people, and by the way, if you took a survey of like everybody in the river, who are you going to vote for for president? I, I still think Harris would get more votes than Trump. And then you'd have like a lot of overperformance for third party candidates, libertarians, RFK Junior, et cetera. So to some extent, like the fact that you have these very vocal team kind of red Revarians is, is real and growing, but just a part of it. But still, it's also, you know, they, they are trying to avoid regulatory capture and trying to avoid high taxes. And it's very, there's a very traditional story in some ways, too.

• 21:54Ryan Sean Adams?

  Nate, how much of this do you think is like just power dynamics shifting really? Like, cause I, I would say this is almost, there's almost like a revenge of the nerds type story coming from the, you know, if you go back and look at some of the movies from the 1980s, like it's been a while since I've seen some of these and I haven't seen all of them, but it's very much like this is an era where the, the jock is kind of king, right? And a very much the village class is kind of like the reigning governors. It's their sort of era. And since the, the eighties or so, the Revarians, like the tech, the geek class has been very much on the upswing. And they've accrued a lot of power and we're not just talking about like success stories and unicorns and billions in capital. We're actually talking about now this translated into political power.

• 22:35Ryan Sean Adams?

  And it seems like in the last like 15 years or so, the village has kind of woken up and been like, oh my. God, like, did, I don't know, did Facebook swing an election? Like, you know, can these social media tools be used to actually influence opinion? It's almost translated into some hard power. And it caught the villagers by surprise, and so they lash back against it. And now there's this reaction in kind of the river in Silicon Valley saying, well, now we have to resist it. We don't like politics, but now they're forcing us to actually get involved. So how much of the dynamics are just that? It's just like power shifts and that is recalibrating in some way?

• 23:11Speaker 02

  Yeah, look, I think in some ways, because the village was like, oh, we can like dismiss these weird crypto and AI people, right? And we had our whole Moneyball phase where we embraced the likable nerd. And now we're, and now we're beyond that. It's kind of cringing again. It's like, okay, you can do what you want, but look at which sectors of the economy are growing. And look at how people who become very rich, and maybe it's not the best thing to become very rich. But like, you know, the people who get very rich tend to have this crypto or river mindset. Sometimes crypto, sometimes not, a new money mindset and not kind of the old school world of Harvard and Princeton and Yale and the old kind of East Coast establishment. And they are waking up to that fact a little bit as you have explicit battles.

• 23:54Speaker 02

  I mean, Bill Ackman against the presidents of MIT and Harvard and Penn is an explicit crypto, excuse me, river versus village battle. Or like the New York Times suing OpenAI, right? Those are some of the most important institutions in the respective worlds of the New York Times is, I'd say unusually well run as a business for a riverian institution or for a village institution. You know, the stuff over Google Gemini, where I think people felt like, oh, maybe now Google is getting too woke, I guess is one term for it. And they're supposed to be a part of the river. So yeah, you see more and more explicit and open conflict. You know, look, maybe I wish Scott Alexander, who I'm sure some people on this podcast will know

• 24:38Speaker 02

  from Astral Star Codex, used the term gray tribe, which meant people who are kind of opting out of the red, blue wars and they're kind of aloof and rational and more recently probably lean more anti-Trump than pro-Trump. And in some ways, I like that culture, but I, you know, for better or worse, I think there are people who are getting killed a little bit by politics. It's kind of partly that competitive contrarian instinct. It's partly like, well, you don't like me. Well, I don't like you back. And actually, I'm going to buy a media company and make your life harder. And also, I have a lot of money. So I'm going to put that to use in election campaigns. So yeah, I mean, look, all of these people are flawed human beings. They're very competitive to want to get on that top point 00001% of

• 25:23Speaker 02

  the wealth distribution when you've already like won all these bets in a row is inherently requires a special personality type that founders or that VCs are looking for. And that is often a difficult personality type. But it's not surprising. This has kind of burst into open conflict.

• 25:38Ryan Sean Adams?

  Okay, so what are my like takes reading the book and even going to this episode is I very much resonate with kind of the the River people and the way they think about the world. This ability to be abstract, analytical, decoupling, this basically this drive to kind of start new things. It's like the River people get things done. Do you know what I mean? Like, is my perception? And it takes a little bit of risk, right? In order to move things, I see very much see the village as being kind of managerial, antiquated, like you just slow down, not getting things done. And so I think part of my bias and part of the bias of a lot of people in the River, which if you're listening to Bankless, you probably are, is that just River thinking is better. It's like the

• 26:21Ryan Sean Adams?

  next evolution. It's just like, okay, like now we've discovered expected value and probabilities. So let's just like, apply some rationality to politics and any outcome. We get better results. Like, the river is less wrong, isn't it?

• 26:37Speaker 02

  So the first part I agree with and the second part I don't. I mean, the part I really agree with is the ability to make decisions with incomplete information, right? Like I've done consulting work for financial firms before and where there's some real event happening and they're like, we need an answer, the best that you can give us now or in 10 minutes, right? You don't have enough time to go write a whole academic paper about it. So moving and and taking uncertain opportunities. I mean, I think that's very valuable. I think understanding game theory and expected value is extremely valuable. I do think the track record of riverians when they go into politics is is pretty mixed. Peter Thiel, for better or worse, had

• 27:19Speaker 02

  good instincts kind of bet on Trump in 2016. It's like, okay, this is an undervalued asset, I think he thought. I mean, I think Peter's also pretty conservative. But here's an undervalued asset, and if I back him, then I can have like a lot more influence and anticipated how a lot of the rest of his cohort would move forward eight years later. So you have to give some credit for that. But, you know, SBF's forays into politics were kind of notoriously unsuccessful and inefficient. Some of Peter Thiel's other candidates, I mean, Blake Masters, who co-wrote his book, was a Senate candidate in Arizona, Republican, and underperformed a lot, you know, even a little bit like, it's not quite classic riverian, but like the Michael Bloomberg for president campaign in 2020, like all the finance buddies I have in New York were like, all we need is for

• 28:02Speaker 02

  Michael Bloomberg to get on the race. And then everyone will like this centrist. He won American Samoa, spent a billion bucks to win American Samoa, and that's it. So I, yeah, I look, I think one of the better critiques of the river is that people don't know their own limitations and that some things require more domain knowledge than others and or, you know, in some things, it helps to be a part of the establishment.

• 28:29Speaker 02

  And or or it's too hard to like reorient everyone's thinking. I mean, maybe if you could have like an entire candidacy that was just run by River People, it might do okay. But the village is good at, you know, in some ways, the core mission of the village is to win elections. And even though I think there's sometimes irrational about that, that's kind of the thing they do that they do pretty well. And Democrats, to their credit, I mean, look, they they won the 2020 election. They have salvaged from the jaws of defeat a 50 50 chance or so, maybe slightly higher than that. If you look at prediction markets or our model in 2024, Democrats have a good midterm in 2022. So maybe they're actually okay at the at the election winning thing.

• 29:12David Hoffman?

  My intuition here, Nate, is when these like two archetypes show up, you know, it's liberals versus conservatives, left versus right, Democrats versus Republicans, River People versus the villagers, is that the one is generally a check on the other. Like, these things exist in a balance with each other. They are harmonious with each other, even though that they are both in tension. It's like kind of like Yin and Yang. Is that is that how you kind of interpret these things is like, you can't really have one without the other?

• 29:40Speaker 02

  I mean, that's how it should be, right? Society benefits both from people who take risk and push technological innovation faster, perhaps, or we we orient like kind of social mores, right? Let's say, let's kind of make this world more inclusive in different respects. You can debate if the envelope gets pushed too far or not, but there's been a push toward toward, you know, inclusivity and widening the circle. And I think that's good. But, you know, but you also can have unconstrained risk where you have problems like, like moral hazard, where if I get bailed out, if I take a risk, then that gives me incentive to be, you know, really risk loving in a ways that might not be kind of rational or good for society, generally speaking. You have issues like the prisoner's dilemma, where, you know,

• 30:22Speaker 02

  if you think or an arms race, where if you think that, let's say you think, and I don't think this, but let's say you think that we should halt AI production, you face the problem that China or your competitor across Silicon Valley might say, well, okay, that's great. Now I should have like more of the market to myself. And so, so I, you know, you also need people who are smart. Regulators, I mean, I'm definitely like on the libertarian side relative to most people. But I think a certain amount of regulation helps the industry to grow. A certain amount of trust helps the industry to grow. I know there's a vibe of trying to have trustless banking and maybe it works, maybe it doesn't. I'm not trying to weigh too much on that, but like, but this has kind of gotten, but I think it's gotten too bipolar where you have bimodal, maybe I should say.

• 31:07Speaker 02

  Where the village has gotten like very risk averse, although it's gotten better since I think like 2021, when I started writing the book, which, you know, I kind of started writing it when we were just literally coming out of lockdowns, which I personally thought were an overreaction, especially for younger people. We were in a community where it felt like if you said the wrong thing about the wrong person on this list of like 16 topics, identity, politics, or COVID, or, or, you know, Israel, or whatever else, if you said the wrong thing to the wrong person, you'd be canceled and piled upon. There's been a retreat from that a little bit, but that's kind of a form of a risk aversion, you know, I do, even though I think, for example, Reverians, Elon Musk have like a lot of bad takes.

• 31:51Speaker 02

  I, I, I find some admiration in being willing to say, I have fuck you money, so I'm going to say what I want, right? Even if it's wrong, you combat that. I have some admiration for that, maybe because I do that myself, I guess.

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• 34:17Ryan Sean Adams?

  All right, so this is great, Nate. So talking about, we've got this lens now that we've defined a thing pretty well about the river versus the village. Now I think we want to define it to other areas, maybe crypto and others. Because I think your word balance or what David was getting at with one versus the other is pretty important with respect to risk here. Because they have different pathologies, right? Which is to mean like when they go wrong, they go wrong in different ways. And that's why I want to bring in the conversation of our friend Sam Bankman Fried. Okay, and obviously the crypto world is very familiar with this name, as are you. I was delighted to find out to my surprise in this book, On the Edge, there's like a mini novel all about.

• 35:02Ryan Sean Adams?

  About Sam Bankman Fried and you had the opportunity, kind of a weird twist of fate opportunity, if you ask me, to talk to him both before all of the chaos, while he was upward on his way on the ascent, and then also after, like literally interviewing him at his parents' home somewhere in California, when he had the old ankle bracelet on and he was about to go to trial. So this is a pathology, let's say, of maybe the river. And so as we get into the story of Sam Bankman Fried, and I want to get your take on it in a second, but first of all, do we really have to claim him? All right. So like crypto, we're in the river, totally acknowledged. But is Sam Bankman Fried a riverian? Do we have to claim him? Or can we just say, nah,

• 35:46Ryan Sean Adams?

  he's not like us? Because I really just don't want to fully claim him, Nate.

• 35:51Speaker 02

  The river has to claim him. I don't think crypto alone has to claim him, claim him certainly, but he has too many tentacles. I guess it's an unflattering description, but too many ties, too many parts of the community, right? I mean, look, he was an investor in Anthropic, the big AI company. He was invested in by some of the top venture capital firms. He was very, very active in the effective altruism movement, maybe the most important financier in that movement, which, you know, is kind of like the river thinking without the gambling part of it, basically. They kind of are the same nerds, but I guess for good and not, and not evil, although I don't come down particularly kindly on them in certain ways. But no, you have to claim Sam as like a metaphor for when this thinking goes, goes awry, because it was, yeah.

• 36:34Speaker 02

  And because there are people who vouch for him, too. It's like, you know, oh, it's Sequoia Capital, and it's these Oxford philosophers, and he's up at the stage in the World Economic, I mean, even The Village kind of embraced him, right? He's on the stage at the World Economic Forum in, in shorts and with the fidget spinner or whatever. So I think we have to claim him.

• 36:52Ryan Sean Adams?

  Yeah, I agree, actually. And whether or not we claim him, The Village blames the riverians for Sam Bankman Fried. They're basically the exhibit A for everything that they want to do on tech or in crypto. They're basically like, yeah, give us another Sam Bankman Fried. That's, that's what you're trying to do here, right? So they use it, whether we claim him or not, he's kind of in the discussion. I just want to ask you about kind of the making of this. How surreal was it to actually like witness his epic rise and fall? Because as I said just a minute ago, you were there for both. Like, how bizarre is that?

• 37:29Speaker 02

  It was very surreal being in the Bahamas. I guess, you know, seven days after they declared bankruptcy and five days before they before he got arrested somewhere in that in that vicinity. Um, you know, one reason that it's weird is that like, you thought of the Bahamas and I had been to like, as far as like tropical, I've been to like Hawaii and Costa Rica, right? So I kind of thought, oh, it's gonna be this luxury resort and the whole island's gonna be really nice. And instead, there's a lot of wealth inequality in the Bahamas. So I'm staying in Nassau, which is kind of where the two major casino resorts are and kind of the cruise ships and things like that. So Sam's complex, the Albany is on the other side of the island. It's it's quite remote. It's quite isolated and there's this like giant condo where they're down to like

• 38:12Speaker 02

  five people left. Sam, um, the two remaining FTX employees, because they all fled, and then his parents. And when I got there, they're like, oh, yeah, Sam's asleep currently, but we'll have his mom wake him up. I'm like, that's pretty fucking weird, right?

• 38:28Speaker 02

  And it's like, it's like, starts at like three at night and then but the sun goes, you know, it's a long, long interview, right? And like, it's getting darker. It's very weird. It's like, I don't want to turn the lights on. Because if you're an interviewer, you want to like, put pressure on your subject, right? And I'm like, it's getting very weird. It's like, oh, fucking like pitch black now, right? And like, um, but yeah, look, I think Sam, after the bankruptcy,

• 38:51Speaker 02

  I mean, he has mixed motivations. I think part of it is simply being lonely, even though I think he often had trouble like processing human emotions. I think, it's difficult when, like, don't have your girlfriend run your hedge fund, is one lesson that I have.

• 39:04Ryan Sean Adams?

  There's so many lessons here. Okay, so, so, okay, so you were there after bankruptcy, where he was kind of like panicking, but prior to arrest, you were there in the Bahamas. And that's the, the, I was reading in your book and you were talking about like, you actually didn't know whether like Sam would just like sprint from his chair, wherever you were interviewing, really grab your recorder at some point in time, you know? He's kind of like backed into a corner at the time of your interview, right?

• 39:27Speaker 02

  I mean, look, he was in a pretty desperate desperate situation. He was telling me things that, um,

• 39:34Speaker 02

  you know, would look bad, right? I mean, he told me a lot of things on the condition that we agreed on it like this can be published for the book, but not sooner, right? I couldn't go to New York Times and say, oh, I have a big scoop on Sam. It's newsworthy, therefore publish it. He only said certain things because he thought it was going to be published a year and a half later. It was actually two years later, basically, in some cases. Um, but he said things that I think were

• 39:59Speaker 02

  Somewhat incriminating. He also said a lot of things that were lies, were false, and that was contradicted by lots of court testimony. And I have the advantage of being able to write the book after I could get the court transcripts and things like that. There were times when it pretty explicitly felt like he was also auditioning arguments with me, like, will this work in front of the jury? Will this work in front of the media? And that felt at times a little bit uncomfortable. But at the same time, he has given me these very candid interviews. You have some work in separating out the kind of have truths from the lies from the mostly truths. And so it was a great story that kind of kind of fell into my lap.

• 40:39Ryan Sean Adams?

  It was, it's an incredible story. And of course, so he was, you interviewed him, he was obviously arrested. By the, by the way, bizarre behavior, not just you, also publicly, the fact that he was tweeting all of this. Yeah, we were like, what is that? Why is he doing that? How do you explain that personality?

• 40:56Speaker 02

  Um, I think partly it's just the isolation is hard to understate, especially because he's gone from like, shooting commercials with Tom Brady and being invited to like the Met Gala and being seen as like, you're the next royalty, right? You're the next Elon Musk. And he had dreams of being worth a trillion dollars. And now it's all gone. So part of it just kind of that, that famous tweet storm that would starts out with what? Or whatever, like, I think we shouldn't assume that this is all part of some rational calculation. I think he was desperate. I mean, his mind was kind of literally reeling. You could almost like, hear the proverbial gears turn. But how is there a way I can get out of this? And he had some crazy idea where he would be able to, you know, it would be handed back to him. So FTX could begin trading to occur again. So they could get

• 41:40Speaker 02

  trading fees and therefore, over a long period, get their way out of bankruptcy and things like that. So he just, look, maybe it's, if you're ever in a position where you're stuck in some cave or something, right? In Thailand, and you're like, waiting for the rescue crew, maybe you kind of like, can I have the instinct of like, okay, how can I increase my chances of surviving from 0% to 5% even if it's desperate? Like, maybe you have some weird bizarre admiration for that. But, but he was in a bad spot, you know? And I think as someone who

• 42:12Speaker 02

  Thinks it's dishonorable to, I mean, I think he has trouble feeling emotions and that's part of what causes an issue. But also, I think he has trouble opening up and being vulnerable, although after a long day of interviews, then you could see times when, when he felt let down. Again, I am not trying to dignify this. I'm going to just report what he told me, right? He felt very let down by his community. He felt like the Silicon Valley VCs were useless and never gave any real advice. It was just all boilerplate. He thought the effective altruists were kind of fake. He thought the, you know, he was always pretty cynical about crypto. He's like, yeah, it's just a way to make money and, and flattered himself that way. I think

• 42:54Speaker 02

  that, oh, I'm going to like, I mean, it's kind of a interesting thesis, right? I want to get really into crypto and make these, you know, arbitrage trades between Korea and Japan to then invest in effective altruism. And it's, I, I kind of get it. If you like, kind of map it out, it's like, okay, I can see how if A and B and C and D and E and F are all true, then that makes sense. But like, somewhere along the way, that chain of assumptions might be dubious, I suppose. He clearly also had a competitive streak, as nearly every reverian does, and was interested in politics. I mean, he was making, donating a lot to Democratic candidates, donating a lot behind the scenes to Republicans as well. You can argue it's rational that there's a lot of money on the line based on crypto regulation and probably lobbying pays for itself pretty well. But I think had fairly

• 43:39Speaker 02

  naive ideas about politics. He invested, for example, millions and millions of dollars in one congressional primary in Oregon for a candidate named Karik Flynn, who didn't actually know Sam, but was effective altruist adjacent. It got to the point where when Karik would go around and knock on voters' doors, they'd be like, oh, here are all the flyers you sent me. Here's all the literature. And they were really annoyed that Sam McMenfree, this mysterious PAC, had sent them 33 flyers about Karik Flynn, their nice little, you know, rural household, Willamette Valley, or whatever. So, so not being

• 44:13Speaker 02

  Not being actually a great assessor of risk and being a little bit too...

• 44:18Ryan Sean Adams?

  It was like an overconfidence and that story was an overconfidence. He invested like 12 million dollars in this Democratic primary and because he was like sending out so much spam with all of his money, he actually caused this Democrat to actually lose the election was the story you gave, which I think that's what you're talking about when you say when riverians step into politics, often they do so with such an overconfidence. They're in over their skis. I want to get Nate, kind of your theory on SBF, okay? Because like I think you talked to him before and after and through this lens of risk-taking. I think you have probably the best theory that I've ever read, or at least the most comprehensive in assessing the different modes. And it's basically, you lay this out, there's this nice table.

• 45:01Ryan Sean Adams?

  It's a four quadrant table in your book and I'll just like go through it at the high level, like in terms of what it said to me. You're basically like, okay, so the theory of SBF, here there's four different theories. First of all, you've got this axis is he either knew what he was doing, right? Like it was intentional or it was unintentional. It was negligence. So, and by the way, the moral framework here is at least in a court of law, if it was intentional and he caused all of these people to lose all this money, it would be evil, right? That's the thing, if you're doing this intentionally, you are an evil person, at least according to our morality, ethics and legal code. If it's unintentional, all right, well, you still have culpability, but it would also be sad and tragic, at least it's not as evil.

• 45:44Ryan Sean Adams?

  So you've got this axis of was it intentional or unintentional? Then you have this other axis of his capability. He was either an incredibly capable person or he was an incompetent person, right? This is either, he was either a boy genius or he was kind of like a fake it till you make it nitwit. And so in your book, you've got these four quadrants and like I gave names to these quadrants. He's either, he was either an evil genius, okay? That's if he was doing this intentionally and he was good at it. Or he was a tragic genius if he was doing this unintentionally and he was good at it. Or he was an evil moron, like kind of a fraud. Right? That's if he was doing this intentionally, but he just sucked at it.

• 46:28Ryan Sean Adams?

  Or he was a tragic moron, which would be if he was doing this unintentionally, but like very deficiently. And so what's your take? Like, what do you think he is? Is he the evil genius, tragic genius, evil moron, tragic moron? Where do you fall down on this?

• 46:44Speaker 02

  No, I look, I lean pretty heavily toward the evil moron part. I mean, it's clear that he knew what he was doing. I mean, the court testimony from Carolyn Ellison in particular is very, very, very compelling on this. Enough so that the lawyer I talked to kind of as the case was winding up was like, SBF should not take the witness stand. The government's case is too good. He will only make the jury mad. He will only potentially bring up perjury charges and get a longer sentence. He should not do this. And he did it, of course, and got a 20 year sentence.

• 47:13Ryan Sean Adams?

  He went with the tragic genius defense, didn't he?

• 47:17Speaker 02

  He tried to, right? He tried to say, it was just all, you know, I mean, I mean, I think he overestimates his ability for how effective his bullshit is. Although again, like, I don't know. One problem that I have with the effective altruist community that I bring up in the book is that they kind of think, oh, we're the, we're the moral people here, right? We take this effective value maximization skill set and apply it to make the world better. But the one thing they don't have is they don't have skin in the game, right? They don't know what it's like to make a trade that you feel really great about. And then you get crushed and you're totally on the wrong side of, of the news. Or what it's like to play a poker tournament where you're like, I'm going to win that fucking tournament this time. And then, and then you take a bad beat or, or punt off chips in a hand.

• 48:00Speaker 02

  And they don't have this like hands-on experience where you have to be in the river a little bit wary and cautious of people. We've all seen people who are more hype than reality, who are too good to be true. And Sam, by the way, also like played into this intentionally. I mean, like, look, he's not the world's most charismatic guy naturally, but he figured out that like, if you kind of play. The stereotype of like the spectrumy founder who comes into the meeting in a hoodie or in shorts, right? And oh, you're playing video games while you're in the meeting and you actually let that be known and you're sleeping on a beanbag and like, some of these things are half true. Some of them are less than half true, I suppose. Some are mostly true. But he very deliberately kind of cultivated that image to kind of hack the VC algorithm

• 48:45Speaker 02

  and like, oh, here's the next Mark Zuckerberg. Because the thing I heard over and over again from VCs, and I talked to some of the best in Silicon Valley, is we don't want the next Mark Zuckerberg to head out our door when they could have made us 1,000x or 10,000x our investment. They all have some, some big company they missed, right? They missed Elon, or they missed Google, or they missed Facebook, or you know, or Uber, et cetera. And they all regret it and think about how much money they could have had if they, if this guy they thought was a little weird had been allowed to pursue his idea and given capital. So, so you know, they helped to enable SPF too.

• 49:20Ryan Sean Adams?

  Yeah, they have to, they almost from an EV perspective have to invest in the SPF persona, right? And I want to emphasize that you actually think Sam's way of thinking about this world from a risk perspective is actually evil. Like, like, let's say, just like morally reprehensible. And this is pulled from the court documents, which we've talked about on Bankless, but yeah, I don't think we've ever quoted. Caroline, his girlfriend, of course, Bankless listeners will be familiar with, she talks about in court how SPF really assesses risk. And this is a question did, from the prosecution, did the defendant ever give any example to describe his approach to risk taking? And this is Caroline of replying, "Yeah, he talked about being willing to take large coin flips, like a coin flip where

• 50:03Ryan Sean Adams?

  if it comes up tails, you might lose 10 million, but if it comes up heads, you might make slightly more than 10 million." And the prosecution goes, "Do you have any other coin flip examples?" And here it is. She says, "Yeah, I guess he also talked about this in the context of thinking about what was good for the world, saying that he would be happy to flip a coin if it came up tails and the world was destroyed, as long as if it came up heads, the world would be like more than twice as good." Okay, so a coin flip for the entirety of humanity, a bet on the world, so long as it was positive EV, Sam Bankman-Fried, on behalf of humanity,

• 50:44Ryan Sean Adams?

  is willing to take those odds. And that's the demented part when it comes to risk assessment that the villagers see from revarians, right? Because the thing about Sam is, he's making this bet on behalf of all of his depositors' money, and he hasn't asked them. They bear all of the risk, he gets the upside, and he's making the bet in an undemocratic way. It's just like him deciding for everyone else. And I think the village sees this, and they're like, "You can't make those types of decisions for us."

• 51:17Speaker 02

  Correct. And they should think that. I mean, look, the first time that humankind got the ability to destroy itself was in the atomic tests in New Mexico in 1945, right? And there was a chance at those tests in the Manhattan Project, the physicists were a little bit worried, had like a 1 in 1,000 chance that maybe our calculations are wrong and we'll start a global fireball that will engulf the entire Earth's atmosphere. But at least then, it was in time of war where they felt like the world was an existential threat, and it was a government-run project. But SBF was a big investor in Anthropic. There is a world in which he spins out of FTX and ends running an AI company or something, and some people in our world, I guess, think that if AI is misaligned, it could have very

• 52:02Speaker 02

  bad effects, including the destruction of civilization as we know it. And who the fuck gives Sam Bankman-Fried, or Sam Altman, who the book is more positive on, to be sure, the right to decide that for all of humanity? That just doesn't seem... And also the fact that he always miscalculates, right? It'd be one thing if at least you actually got your 51% odds, but with Sam, they might really be 30 or something like that. And so we're not even making a plus EV bet, even by his framework. But no, he demonstrates that the limitations of utilitarianism taken to the extreme, and I think he was, based on multiple sources, really was willing to push things to the extreme. I mean, he really thought that like...

• 52:42Speaker 02

  His objective when running FTX was like, how could I maximize the chances of being a trillionaire, even if the risk of ruin is incredibly high, right?

• 52:53Ryan Sean Adams?

  Who thinks like that?

• 52:54Speaker 02

  It's so weird. He kept asking me, Nate, do you think if I had played my cards differently, I could have saved off the bankruptcy for a few more months and then kind of figure out another plan? And like, yeah, sooner or later, I think you're probably going to, you know, it's going to, it's not a really sustainable idea. He's like, yeah, it's probably true, right? But like, I wanted to keep playing the game for another few months and maybe you get lucky and there's a big uptick in the market and then your, and then your finances are liquid again and your portfolio looks okay. And so he was very, very, very willing to make this insane bet for, literally for the future of the world.

• 53:27Ryan Sean Adams?

  Okay, so that's what the village sees when they look at crypto, I think. But when they look at the river in general, they see that. So you invoked his name, a second Sam is here. His name is Sam Altman. He's a podcast guest and we'll use him as a representative from the AI community in general. So we have kind of act one, which has been crypto. And we've seen how the village antibodies kind of respond to that, particularly in the wake of SBF. And they say, you guys don't calculate risk in a healthy way. We can't trust you with this. And now, now they're seeing AI, which has the potential to be a more fundamentally world-changing technology, at least in a number of measures, right? There's, there's people like Eliezer Yudkowsky, who's been a podcast guest as well, who say this is basically the end of humanity.

• 54:11Ryan Sean Adams?

  If you call the stakes wrong on this, this could wipe out all of human civilization. And he's, he's very positive that this is the case. But I guess my first question, because you've gotten to know both of them and you see through this lens, is Sam Altman, does he approach risk in the same way as SBF? Is he just kind of like a mini SBF, perhaps a bit more savvy, maybe a bit more competent, but does he think the same way?

• 54:38Speaker 02

  I think, I mean, look, I talked to a lot of sources and asked them that question and the consensus with one dissenter, one person actually said, yeah, he's SBF. Most people saying no, they think he's very risk on relative to most of society, but more of a typical, you know, typical Silicon Valley VC who, who is not to SBF levels of pushing the button for 2X utility in the world. Now, he might push the button if he thinks that. We have a 90-10 bet, right? We have a 90% chance of doubling the man utility in the world and 10% chance of being destroyed because he actually has said in congressional testimony, like, yes, actually, there's a chance this could go really badly. And, you know, when I talked to him for, I talked to him in bits and pieces afterward,

• 55:21Speaker 02

  but the main interview was in August 2022, which was an interesting time because he was more unguarded than he might be right now. And like, look, Sam A. like, always has like good Twitter game and like, he's definitely like a reverian and kind of owns that and it's kind of fun. But it's like, yeah, I think AI is going to solve global poverty very literally. And if we can do that, then how can't we take this bet? And yeah, it might not work out sometimes, but like the upsides outweigh the downsides. But like, like, I think he's a better calculator of risk than SPF. And I think he's also like more, this sounds weird, but like, he's also just more socially connected than SPF. At some level of the day, people want to live to respect themselves and have the admiration

• 56:04Speaker 02

  of their peers and they care about their families and their kids if they have them. Interesting, a lot of the Silicon Valley's VCs actually do have kids while we have like a fertility crisis elsewhere, right? And so like, so I think they care on some level about the future of humanity. I think they maybe overrate the ratio of good to risk that they do potentially, although they are on the right side that like fundamentally speaking, technology has done far more good than ill for society, right? I mean, the amount of people who've been lifted out of poverty, the amount of rights have been extended in different parts of the world. So you can see why they're like, hey, look, we've brought you all the risk takers, inventors, investors, right? We've made the world what it is and had to have these 80 year life expectancies and,

• 56:46Speaker 02

  and, you know, $70,000 per capita incomes and things like that. We gave you that, so maybe you should trust us and the village doesn't like that story. But still, look.

• 56:59Speaker 02

  I think the consensus is that people thought OpenAI is in relatively good hands with Sam A. But like anything else, it's kind of, it's kind of a market. If the engineers that work for Sam think he's being too risk averse, then they'll go work for somebody else. So you do get a little bit of this like prisoner's dilemma issue. I think he's a thoughtful guy. I think, you know, all three of the major labs are less bad than they could be, maybe. Although I'm also not like, I'll use our levels of terrified about P doom. I mean, I look, I defer to some extent in the book. I kind of punt on this question, right? It's like, what's your P doom? Which I think most of your listeners will know, but the probability of like catastrophic events from AI,

• 57:42Speaker 02

  which is defined differently by everybody, by the way, which is one reason why it's hard to answer. But like, I just give a range of 2% to 20%, which means I don't want to weigh in here. You have a book where you kind of hear all sides of the debate. And I'm like, I don't want to like stake my claim. You can decide for yourself. It does seem like we have had a plateau or a gentle up slope in capabilities since like ChatGPT 3.5. To me, that's hitting the point where it's material. It seems like it's not some sudden doom loop forward. That's going a little bit more slowly. It's certainly a very important technology. It's like the technology of the decade, if not the century. But, but I am not quite as convinced that it will be uncontrollably transformational, but we'll see.

• 58:28Ryan Sean Adams?

  Yeah, I get it. There's so much complexity in this, including kind of the, look, we didn't know that SBF was as bad as he was or as risk taking as he was until the aftermath of the catastrophe. And it came out in court documents, right? And so there's an element of like, we really don't know. And there also could be the case of, you talked about the, the three leading AI companies, at least in the US, being like responsible with their leadership, that sort of thing. Well, I mean, the, the, the leading crypto exchanges, Brian Armstrong, Jesse Powell, they were very responsible. And then this upstart who seemed to like move fast and break things, he entered the scene. And it was growing and it was successful. So everyone like, so we don't know what the next gen. Generation might bring about and who knows game theoretically what another country is doing.

• 59:13Ryan Sean Adams?

  But all of this culminates into, I think that the clash of the Titans with respect to the village and the Revarians in the 2024 election. And of course, we've had a number of Revarians kind of weigh in on this. And the village kind of responds. So Trump has said, I'm the pro tech candidate. I'm the pro Silicon Valley candidate. I'm the pro crypto candidate even. And I think that there's a lot of things to talk about when it comes to the 2024 election. But maybe the first actually is prediction markets. So something we've been following pretty closely on bankless since the beginning is what are prediction markets doing in general? What are they doing in crypto? We're familiar with, you know, Robin Hanson's work on this.

• 59:57Ryan Sean Adams?

  And I'm just going to pull up the current polymarket outcome. And I know we'll have disclosed in the intro, Nate, that you are an advisor for the polymarket project. So it seems to have captured your interest. I know prediction markets in general do. Right now, at the time of recording, Kamala Harris, according to polymarket, has a 51% chance. Donald Trump has a 46% and Michelle Obama is coming in with a 1% chance. So I feel like you've got domain expertise here from a number of different vantage points. I just want to ask the basic question. How accurate is this type of prediction market on polymarket?

• 1:00:35Speaker 02

  Um, I guess I'll give you like a slightly longer answer, right? Historically, the election forecast that I made for 538 had been more accurate than prediction markets, which, which kind of shouldn't happen in an efficient market because until recently, now they're behind a paywall, until recently, they were free. So like, if they're accurate, you should like incorporate that model into your own like meta model or whatever else and incorporate subjective information. But I think until recently, these markets were not very mature in the sense that like, sometimes the language of how you could buy and trade created a lot of inefficiencies in the market. There like just wasn't that much liquidity in the market. It wasn't.

• 1:01:18Speaker 02

  Isn't obvious what the focal point was. And now I think, you know, substantially with polymarket, although there are other markets out there too, you have like real money being traded, you have it being reliable enough where, um, where it can set a benchmark. And also you have a lot of political risks that like Wall Street hedge funds, investment banks have to think about. Um, you know, regulation on many things. I mean, the price of Bitcoin might be affected by who wins the election, obviously. And so like, if you're pricing a financial risk in general, then, um, then you're interested in election risk and you'd like to price that. At the very least, just to hedge and look at kind of proxies or things like that. But, but, but you have more and more firms that are like, look, the world's all politics now. Therefore, we have to predict

• 1:02:03Speaker 02

  election outcomes. Therefore, we want a liquid way to do this without having to use some, some, you know, knockoff derivative proxy for it.

• 1:02:10David Hoffman?

  As the, uh, polymarket markets have risen in, in volume and just interest, we've seen both the crypto industry and the broader outside political industry start talking about prediction markets more and more and more. Uh, this election cycle specifically, you're seeing prediction markets just be cited left and right by people who are probably citing polymarket. And maybe they don't even know that it's a crypto app. And there's been a lot of conversations that have kind of spawned out of this. Are prediction markets just glorified betting markets? Are they a threat to democracy? Are they an anti authoritarian truth seeking mechanism? Uh, what do you think of just like the general role that a prediction market like polymarket might be able to like provide society? What, what is the puzzle piece that it's providing society?

• 1:02:56Speaker 02

  Look, one way to put it is that a prediction market is a tax on bullshit. I'm describing that from, copying that from, uh, Alex Tarabak, who's an economist at George Mason, who works at, with Tyler Cowen. Um, but it's like, yeah, look, cause I'll, I look, I got frustrated before Biden dropped out. There was this historian named Alan Lichtman, who has this kind of very subjective model that said Biden's going to win based on what he calls the 13 keys to the election. And my model had Trump at that time as a heavy favorite, three to one. Um, and he kept yapping on, on Twitter. And so I'm like, Alan, do you want to bet $250,000 on the election? Because like, you seem to be really confident and you have a really good bet. And we'll just bet at even odds. It's about the average between us. And it was like, never heard from again, really. Um, so there's some notion of like,

• 1:03:42Speaker 02

  Tax on bullshit and kind of put your money where your mouth is. There's some notion on being able to price like things that otherwise show up in derivatives and make it kind of harder for markets to be efficient. But also like as a somebody who has equity in poly market, I also think the team does like a like a really smart job. It's a little inside. I think they do a really smart job with like their Twitter feed and like their and their social media, right? And they're kind of having like fun with it and they understand their audience and they understand like when they can like poke the bear on politics stuff a little bit to add a new market. They have when I think about like will Biden outlast like a head of lettuce decaying, for example. So they I really like their marketing and I think they I'm a part of it. I suppose they hired me in part to make them

• 1:04:23Speaker 02

  more visible. But I think that I think the the combination of like being the smart brand and then having real liquidity makes them a more interesting player than the the earlier kind of more upstart companies.

• 1:04:36David Hoffman?

  Over the last like two months or so, everybody in crypto has been just like touting the good words of poly market because we're all very, very stoked that one of our crypto products is being just like talked about and referenced. But lately, in the last like week or so, there's been some more contrarian takes about what the role of poly market prediction markets generally provide to specifically elections. Since we're bringing up this conversation in the world of riverians versus villagers, a a very famous villager by the name of Elizabeth Warren wrote a letter calling not poly market, but prediction markets generally a an affront to democracy, a threat to democracy. I'm wondering if you have any like perceptions or takes about like the ways that a prediction

• 1:05:20David Hoffman?

  market and an election might actually interact with each other. Do you have do these does one just respond to the other? Does the poly market respond to the elections? Or is there actually a back and forth conversation here that anything like this that comes to mind?

• 1:05:33Speaker 02

  I mean, look, to me, I mean, you always hear the fear that this will give somebody an incentive to to alter the outcome of the election. It's like, well, there already are a lot of incentives, right? For certain sectors of the economy, you know, for healthcare, Democrats want to be much better than Republicans or vice versa, whatever else. There already are like, people are already making huge bets based on the election, but now they're doing it in a way that's a little bit more centralized and direct and not like a proxy for it. No, look, I think people don't respect if you're on the left than, and again, I'm pretty centrist myself, maybe center left, but like, but I respect markets because I've tried to beat markets, sports betting markets and other types of markets. And in some ways, kind of, the media is a big market itself. And like, I, you know, I think markets are

• 1:06:15Speaker 02

  an amazing innovation because they are collective decision making and they're not, and they're decentralized. And that's like an incredibly powerful tool. And I think, I think she doesn't understand that. I think there's also just some sense in which just people in the river kind of, or in the village, take all these nerds like, oh, they're cringe, right? They're inherently cringe and we shouldn't pay attention to them. By the way, the same people who were getting all in their high horse about democracy were most of the people that were like, oh, we can't replace Biden. That's just not how things are done. And now they have replaced Biden. Now their chances have like, at least doubled. And now they should be thrilled about that. I think that Trump is this big authoritarian danger. And so, clear headed thinking, I think it goes a long way.

• 1:06:56Ryan Sean Adams?

  But while we're on the election, do you have any election predictions? Like, so, so what do you think's gonna happen? What is your model tell you? Do you still put out a model, by the way?

• 1:07:05Speaker 02

  We do. It's if you go to Silver Bulletin, natesilver.net, then you can subscribe to the model. It's $10 a month. Yeah, we have Harris currently as a 54 46 favorite. There were some new polls that came in. I was doing this interview, haven't seen the effect that those might have yet. They look pretty good for her on the surface, but like, it's basically 50 50. If you're a poker player, you're allowed to say that like 54 46 is not 50 50. You know, you'd always rather have like a 54% spot or 52% even instead of 50. But it's basically a toss up. I mean, I think if you had an election today, right now, then Harris would be favored, but not a sure thing. I mean, the polls have been way off and. Well, lots of recent elections. People don't need any reminding of that. And also, we still have three months to go.

• 1:07:52Speaker 02

  You know, I think it would be hard for the Trump campaign to have as bad a three weeks as they've just had, where he is going off the rails a little bit on some things and you know, you think he might recover his footing because you actually have lots of obvious vulnerabilities with Harris, where she inherits some of the problems of the Biden administration, like inflation and immigration. She ran quite far to the left in 2020 and did some unpopular, did and said some unpopular things. So there are like legitimate lines of attack against her, but Trump has gone, you know, and attacked her race and things like that, that if I were advising him, I'd say that's not very tactically smart. And lost the plot a little bit, but, but we'll see. I, I, I think August is likely to be a month that's pretty good for Kamala Harris.

• 1:08:36Speaker 02

  Then we have debates in September. And by the way, at least Trump recognizes that he needs, he needs to add volatility now, right? He needs to add as many debates as he can. They have one confirmed so far. So on some level, at least his campaign recognizes that it's 50 50 or less, which the Biden campaign, I think naively maybe didn't do, although I guess famously did have this debate in June. But the execution's been, I think, quite, quite poor lately.

• 1:09:02Ryan Sean Adams?

  And what do you think of the Riveraian sort of bet on Trump? So A16DZ, Mark Henderson, Ben Horowitz, who came up with a podcast and say, we like, we're doubling down on, on Trump. They kind of brought that into the overton window of acceptability. Certainly in crypto circles, right? You know, the Republicans, Republican Party has come out being very pro crypto and the Democrats and, and Harris White House or the prospective White House has really said nothing about it. So there's definitely a pro crypto Republican bent. Do you think that this is a good bet that the Riveraans are making?

• 1:09:37Speaker 02

  Um, it depends on if it's for ideological reasons or if they're trying to like get in good with the next administration. Look, it certainly looked like a better bet when Joe Biden was Democratic candidate and you had a 75% chance or 80% chance of winning that bet. But it's just for purely cynical reasons. Yeah. To be an early supporter of an incoming administration, especially to an administration that like does not have that much support among traditional, meaning Trump Fortune 500 companies, and you could have like, like a lot of power and influence. I think it probably worked out pretty well for Peter Thiel overall in 2016. But I, you know, I think they underestimated how badly Democrats wanted to win and would be willing to replace Biden

• 1:10:20Speaker 02

  if it increases their expected value. Um, you know, would they make the same bets in a 50 50 election today? I mean, maybe. I mean, there are lots of over determined reasons why they might side Republican and it's like inherently not that surprising for, um, for rich entrepreneurs before kind of the Obama era than generally people with a lot of money would, would vote Republican. Um, but I wonder if they would want to redo if they, if they thought they're going to lose that bet half the time instead of just occasionally when Biden wins by some miracle.

• 1:10:51Ryan Sean Adams?

  Nate, this has been great. You know, thank you so much. I guess maybe as we sort of close things out, I want to close with, uh, with maybe some of your thoughts on, on where we go from here. I think part of the value of your, your book here and injecting it into public discourse has really been about helping, uh, people in the river understand those in the village a little bit and certainly help those in the village understand the river. And, um, we're in like a very weird era, I think for humanity. Maybe it's always been like this, but I don't know, since Harambe died, it feels like, feels like shit got real and like, uh, you know, we've, everything's accelerating and it feels a little bit like we're a ship on the sea and we've got no compass. Like what, what's our North Star?

• 1:11:35Ryan Sean Adams?

  Uh, when it comes to risk assessment, it seems like the people in the village, they want to say breaks, breaks, breaks. Don't do anything. Stop, stop, stop. And then the people on in the river are just like, they react to that and they're like accelerate, accelerate, accelerate. Don't stop, don't stop, don't stop. And is there truth in the middle? Do we need to find balance? And if so, how do we find balance?

• 1:11:55Speaker 02

  I, I hope we find balance by understanding one another better. That's part of the mission of the book. Um, look, I think we're in a very exciting and dynamic time in a lot of ways. Um, one thing I think that the, the river is right about, you know, if you talk to Sam Altman, he's like, these people in the village are too pessimistic, right? And it's become like cool to be pessimistic and that sucks, right? It's a bad way to go about your life. It's certainly a bad way to go about a business where a, you know, early stage business kind of by definition needs optimism to attract. Employee talent to attract further rounds of investment and things like that. I think it's been a good play in the world to lean on the side of optimism in the middle of this pandemic where everyone was telling you that you're supposed to be miserable all

• 1:12:37Speaker 02

  the time and not show any joy in life. And so, look, the election campaign has become more fun than I thought for me personally, but also like, you know, the Kamala Harris campaign is kind of like bratty in some ways. Trump, who I again, I think the January 6 stuff makes it very dangerous. I'm not going to vote for Trump. He is a little bit of a comedian, though. He can be quite funny at times. He can have moments where he's very possessed of himself, the moment after the assassination attempt where I don't care what you think about Trump's politics, you have to give somebody credit where they're just shot at and they have the presence of mind to like raise their fist and pose for this photo that will be one of the, you know, 100 most famous photos in world history,

• 1:13:18Speaker 02

  probably. So I don't know. I think, I think the vibe shift's been good. I agree. It's a very risk on and follow the world. I'm just trying to get through the election year and the book cycle, but, but I'm having fun at least. And I think, I think that attitude is perhaps helpful.

• 1:13:32Ryan Sean Adams?

  Nate, your three words for us at the end is the title, a chapter title called Foundation, but the three words that you picked out are agency, plurality, and reciprocity. Why are those the three words that we should focus on as a kind of North Star?

• 1:13:47Speaker 02

  So it's kind of the parallel to liberty, egalite, fraternity, which was the motto of the French Revolution, which was a triumph of like liberal democracy, basically. So agency means that we want people to be able to make decisions that are real decisions, where they have like real choices and are not being tricked or not being coerced into a decision. It's kind of a higher order version of liberty, basically. Plurality means that I still believe in consensus and group decision making. I do not want any one person, Sam Bickman Freed, with the resources to Destroy the world or make a 50 50 bet. And reciprocity comes from game theory. It means that we assume people are are acting in their own best interests and are smart and are

• 1:14:29Speaker 02

  able to kind of stand up for themselves and and punch back and kind of figuring out like, what's a what's a it's a higher order version of like fairness, basically, and understanding that like the world's dynamic and too many people have non player character syndrome, I call it in the book. It's a video game term, of course, for like, you assume this guy is like some innkeeper who just waddles back and forth and gives you the keys to the inn, right? And has like no agency and like, that's bad. I mean, you know, Trump and then Harris, all politics responds to like, how the electorate changes and like prayer and things that were fashionable before are boring now. And so we live in a complicated adaptive world and having those three traits, I think, are helpful attitudes to keep in mind.

• 1:15:09Ryan Sean Adams?

  And and finally, just any advice for for crypto. And here I want something specific. So it wasn't just Sam Bankman Fried. It was Alex Mashinsky. It was Do Kwon in stable coins. It was Three Arrows Capital. Like, there are a number of these blowups, right? It wasn't that crypto just put their trust into one individual, but we don't want to do that again. So how do we recognize an individual that enters our industry and is either a fraud or is taking like massively irresponsible risks that are going to cost us in the future? How do we detect those earlier on?

• 1:15:42Speaker 02

  It's a great question. I mean, and this is the one thing where it's a little dangerous, right? But like, to lean even further direction of being willing to like, trust your own thinking and come up with your own judgments, because there like were a lot of warning signs from Sam. He gave interviews like to Matt Levine on the Bloomberg Odd Lots podcast, or to Tyler Cowan, or to me, where he kind of said a lot of things before the bankruptcy that were pretty unhinged about his attitude toward risk. People kind of said, oh, haha, isn't that funny? He just has a little bluster. But like, don't, don't trust these focal points that can form within the river, right? The fact that like, these people vouch for him every now and then, every now and then, I mean, most of the time, the market's right. We know that. Every now and then, it's a house of cards, because everyone else believes that everyone

• 1:16:27Speaker 02

  else has done the due diligence and nobody really has. And so, and so, you know, just skepticism about the next hyped up object, I think, is inherently very helpful.

• 1:16:38Ryan Sean Adams?

  Guys, the book is called On the Edge. It is available now. A fantastic nerd snipe. I didn't expect to read all of it. It is a thick book and I ended up reading all of it because it was just that good. Nate Silver, thank you so much for coming on Bankless with us today.

• 1:16:54Speaker 02

  Thank you, Ryan. Thank you, David.

• 1:16:55Ryan Sean Adams?

  Gotta let you know, of course, crypto is risky. None of this has been financial advice. It's on the edge. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.