(2/16) Non-fungible by Nature
(2/) The following post is part 2 of a super long story about how I came around to crypto. Part 1 can be found here. Part 3 can be found here.
The first time the concepts in crypto really hit me, they REALLY hit me. I was in Virginia City, Nevada, with a really old friend…this dude that I spent a couple of years getting to know through my local church when I was ~18 years old…we lost touch but reconnected after 12 years under a strange set of circumstances. We had both been following emerging tech, and it turned out that he was one of the only people that I could talk with about it because he was the only person I actually *knew* in real life that understood it and found it interesting enough to talk about. We sat in his shithole apartment talking about Facebook’s plan for world domination and we sat on my parents’ balcony talking about the possibilities of this tech while also trying our hand at Tor. Taking notes and shit.
The crazy thing is - we were just two dorks geeking out over new tech. And neither of us were developers, we just saw the problems in the (tech) world and saw how these new products could help shape the outcome…we talked about inflation, and how the government often oversteps its reach, we talked about Facebook and how it would be nothing to facilitate the spread of propaganda, and we talked about how you could virtually curate the world in whatever way you wanted to - you could completely ignore the stuff you weren’t interested in and could hone in on precisely what it was you were interested in.
We dipped in on the dark web for a few minutes and my whole mind just about exploded. There were actual postings for hitmen ($10k/hit), trucks full of stolen computers ($15k for a truck full of MacBooks), and every drug imaginable on the Silk Road. And everything was denominated in Bitcoin. I remember the price of Bitcoin at the time being around $11/coin, and we both agreed, ‘once it crashes back down to $1, we’ll buy a hundred each.’ Obviously, that never happened, but I think back on those conversations often.
A few years before Virginia City - in 2006 - in the midst of my (first) stretch at GFI Group (back in NY), I took a step away when I was poached by one of the largest investment banks in the world - Bear Stearns - and made my debut for the ‘Commodities’ group on another fresh March morning at Brooklyn’s Metrotech. ‘Metrotech’ was a bit of a misnomer…I think it was *meant* to be this super new, tech-savvy office park built with the intention of attracting financial companies to downtown Brooklyn, but it was really just an outdated group of really poorly designed buildings. And it was really only the shitty back-office groups of these financial companies that ended up there. These buildings were so poorly designed, in fact, that even though we were only on the 6th floor (of an 8-floor building), the elevators could still take ~15 minutes on any given morning - and there was only ONE that went to our floor. I quickly realized that it was *much* quicker for me to walk the 6 floors than it was for me to wait on the elevator. 24 flights a day if I chose to have lunch outside.
Anyway…my first day. Around lunchtime, I remember I gave my dad a call and he was excited for me: ‘Well?’ (meaning ‘how’s the new job?’). I said: ‘I think I made a mistake coming here…I’m in this massive grey office and I can’t see any (natural) light because there isn’t a single window in the whole space.’ Plus, they made me wear a suit and tie every day. Even though I had a few suits, I got REAL sick of that REAL quick.
A few days went by before I realized that the only reason my boss hired me was that (he had the budget), but he liked me because I was the only one who had the patience to sit and listen to him talk about how dope and clever he was. He was a Bear Stearns lifer and had a great deal of interest in showing me his restricted stock options balance. By my calculation - he was sitting on more than $800k in RSOs and really fancied himself for stacking them over the prior 20 years.
Often, my boss would call me into his office and talk at me incessantly for hours on end…very Michael Scott-ish. I remember thinking ‘how does anyone in this place get anything done?’ One time, after an especially long one-sided conversation, I remember walking back to my desk and seeing a ‘senior’ on my team (of 6) literally asleep behind his computer at around 3 pm in the afternoon. These ‘professionals’ were getting paid 6 figures to sleep WHILE surfing the internet!
To illustrate how ridiculous the Bear Stearns situation was, my boss once told me a story about when he first started working in the same group:
“One time, my boss was out of the office and an emergency came up…I had to clear a trade. And in order to clear this trade, I had to make sure that the lumber that was being traded for was legit so I asked somebody and they said ‘you need go to and take a look at it.’ So they sent a limo for me, and we started driving out to Long Island. After a couple of hours, the driver pulls up to a massive airplane hanger, removes the padlock and says to me ‘the lumber’s inside’. So I slide the door open, step inside and this place is dark and musty and empty, except for this 20’ x 20’ pile of lumber in the center of the hanger. I walked up to it, felt is, smelled it, walked around it. And then I tried to climb onto it. And when I tried to pull myself up, the whole lot of lumber crumpled into a pile of dust and I’m just filthy…covered in sawdust. I was freaking out…did I just ruin this trade? I didn’t know what to do, so I called my boss in a panic ‘I don’t know what’s going on but this whole pile of lumber just disintigrated, all I did was step on it it just turned to dust!’ So my boss says to me: ‘You IDIOT! I told you to LOOK at it, not TEST it out! We’ve been trading futures on that pile of lumber for 30 years!’.”
The thing was, he was gleeful about this whole thing. And it was funny, I suppose, on the surface. But the point I got from it was that all of this stuff was just a sham. Again, his story was funny, but I started to see a bigger picture. Instead of buying and selling lumber for construction, they were buying and selling ‘lumber’ for the sake of trading. It didn’t have to be ‘lumber’, it could have been anything. It didn’t matter what it was as long as traders could speculate on it and derive all kinds of ‘value’ for it a million times over until the actual asset was completely useless. And that’s partially the cause of the economic collapse of 2008 (which actually *started with Bear Stearns). The derivatives of these assets became worth exponentially more than the assets themselves.
The patron saint of the stockjo-bber.
The story continues…check out part 3 here.
sawdust, what a fitting! metaphor