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

Welcome to Bankless, where today on the episode we explore the frontier of risk. This is Ryan Sean 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 uh Nate Silver. He's on the podcast. You probably heard him in the context of maybe US election predictions. I remember when I'm uh looking at the election results, you know, pulling in from uh CNN or something like this on election night. Nate Silver is generally there as a commentator. Um 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. 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 twenty twenty four 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.

All of this conversation is coming on the heels of Nate Silver's recent book release on The Edge, which uh Ryan just powered through over the last like three or four days. Uh and I was only able to read like a very quick chapter before I zoomed off to uh Argentina. So Ryan Ryan's got the driver's seat on this episode today because he's actually the guy that studied the material. Uh, 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.

Bankless Nation, I'm incredibly excited to introduce you to Knight Silver. He's a statistician, he's a writer, he's a political analyst, and 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 uh 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 encapsulate 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.

Thank you, Ryan. I really appreciate that.

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

I know. Yeah. I didn't I'm not sure I realized either. Um 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. Um, but between an election year, between the COVID stuff, um, between, I don't know, I mean, it was a peak for certain types of progressive leftism, I guess, um, but also for Trumpism and the January 6th events, it was not a great year. And I kind of had always found my happy place in poker, basically. Um, 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 uh kind of banked me into being really interested in politics. I wanted the people who passed that law to be voted out of office. Um, but yeah, I've always the book started with me like flying to a casino in Florida in what's technically still the middle of the pandemic, and it's every bit as much of a shit show as you would expect. Um 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 toward calculator risk taking, sometimes airing on the side of degeneracy, which

in my world we kind of use sometimes as a term of affection if you call somebody a degen. Uh-huh.

World two, yeah, totally.

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

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

I mean, coming into the book, maybe I was skeptical on the one hand. I was also kind of jealous that like um 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. Um, but look, 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,

uh, 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.

Um, and I'm like, there's something happening here, right? 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 um 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 gonna be a journalist and try to like not be a biased journalist, and it's not a hundred percent positive, but I think I think it captures the intellectual origins of Bitcoin and Ethereum, and I think it captures, I think, um, on their own terms, what the what the movement's about.

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 in parts explaining crypto uh to normies in a way that I think sometimes uh the crypto community has a hard time doing. Like you literally go through like blockchain and and Bitcoin and uh you you describe NFTs in some detail, and including, you know, terms like uh mimetic desire and 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.

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, um, because it is going for a fairly mainstream audience. Um, but I hope that the description's at least factually accurate and directionally correct.

Yeah, and I think that that's what I uh loved the most about this book is because it it really appeals to a mainstream audience. Um you're really explaining this weird community. Uh you call it the river, that this weird group of uh tech people, rationalists, uh crypto people, um 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 uh talk about that in the context of the rest of this this this uh episode, how um 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 uh definitions here. So you used a term earlier in this episode, you said you call these people uh the river or people who are in the river, or I think you used in the book the term uh rivarians a couple of times. What what is that? What is somebody who is in the river and how does that contrast with the other group that that you um named earlier, people in the village? So, what's what's a riverian?

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. Um, so the river in poker, poker had its origins on the Mississippi River boats, like literally in like the 19th century. Um, so you're on the kind of frontier of risk, you're gambling a lot, there's a fair amount of degeneracy. Um, but it's also people who are very analytical, kind of taking the money ball skill set and applying it 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. Um, people who it's an applied thing, though, right? It's not.

academic, it's not theoretical. Um it's people who are actually trying to make bets and think there's

honor in winning a bet and that it's a challenge intrinsically to try to beat the market. Um 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 Poly Market, 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 the all in podcast guys, for example. Um people, it's it's a small community. It's not for everybody, it's not for the mainstream ever. Um, but you just see the same

archetypes again and again and again. And it's just like you, you know, I just know that if I

Sit down and play poker with somebody, like we're probably gonna get along. And I can't think of

any other activity for which that's true.

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

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. Um, but also because, like, at first I was gonna call it

the pool,

but yeah, like like as in like a bedding pool, for example, or pooling your resources. Um, and of course, like, you know, people in this world love love water metaphors, fish and whales and things like that. Um, 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, and you might be seated next to the biggest uh 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 Steph Curry and Michael Jordan, for example. Um, you know, crypto, whatever else you say about it, I think um is very kind of lowercase d democratic and decentralized. Um, and that part of it I think I appreciate a lot. Um, so it's just the it's such 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 something a little different down here in the south. And I think it's the same for the river.

Yeah, I t I 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 thing one thing that's uh really interesting is um a lot of people who uh are in crypto uh have poker experience. I always kind of wondered why that is. Um a lot of them, of course, are like um you're 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 subtribes, I would say effective altruists, rationalists, the Eliezer Yudkowski's, and uh even the people like Beth uh Beth Jesus, who are like tech accelerationists, and the crypto people and the Silicon Valley people and Mark Andreessen, all of these are riv rivarians under your lens of things. And like you you have this uh 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 uh 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.

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

And if you talk to certain people, I mean, I most of the people I talk to in the book are like quants of one kind or another. Um, but I also talk to physical risk takers, like to an explorer and an astronaut, um, 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. Um 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? They only invest in, you know, uh mutual funds and things, uh, and or index funds, I should say. And these are people who who really want to

have a chip on their shoulders sometimes and want to compete um and want to win or at least have fun and and gamble a little bit 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 cringy. And it can be weird and occasionally can even be cringy, I suppose. But also, it's people who have had like

a lot of success. In some cases, they are making a lot of money, is by the way, like a pretty big audience. I mean, I think this audience has been.

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 this part of the world that's very important in some ways is winning as tech and finance become more and more a share of the economic picture, and is poorly understood.

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

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, um, 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.