This review follows my recent review of the latest book by Michael Lewis called "Going Infinite" about the rise and fall of former crypto billionaire turned bankrupt, Sam Bankman-Fried (SBF), and the saga of the collapsed FTX crypto exchange. The earlier review is on this link –
"Numbers Go Up" by Zeke Faux, was recommended to me by my philosopher brother David, who happened to stumble across the above review, and was somewhat surprised I was able to turn out something vaguely literate.
"Numbers Go Up" is also about the world of crypto-currency but has a much wider focus, considering the whole crypto ecosystem, from the seemingly now well-established Bitcoin, to disparagingly named s**tcoin, and everything in between, plus the bizarre and bonkers world of non-fungible tokens (NFTs).
Comparisons between the two books are interesting. Michael Lewis is something of a literary superstar after his numerous books, some of which have been made into hugely successful films, such as "The Big Short" and "Moneyball". His approach to SBF comes across in his usual style that I love reading, of introducing characters as though meeting his friends. Lewis has a genius for these pen portraits. Due to the success of Lewis, when he interviews SBF it feels like two celebrities meeting each other.
While Lewis clearly still researched his book well, I have to say that Zeke's book seems to have involved much more investigative journalism and original research, including trips to El Salvador, which made Bitcoin its official currency, and Cambodia, where he investigated organised crime, people trafficking, and modern slavery allegedly associated with crypto, and one named "Tether" in particular.
The status and stability of Tether is seen as particularly important to the whole stack of cards, since it is linked on a 1:1 ratio to the US Dollar, and in theory, provides some stability and credibility to other cryptocurrencies. Faux has grave doubts about the background of its owners, and whether it is properly capitalised.
In Cambodia he witnesses people apparently being kept prisoners or slaves, and forced by their captors to participate in "pig butchering" schemes, where the lure of romance is used to trick the vulnerable and susceptible into parting with real currency in exchange for monopoly money, with the deceptive lure of easy profits. While not suggesting the owners of Tether have involvement in these schemes, Faux claims that Tether is being used to move money by criminal sources, since unlike normal bank transfers, Tether cannot be properly traced.
The story that emerges from Faux's book is a remarkable one. It would appear that a very large percentage of cryptocurrencies are simply outright scams, Ponzi schemes, or completely lacking in normal financial controls and safeguards.
Of course, a minority of people have made extraordinary gains that have made them millionaires or even multi-billionaires. However many more have lost savings, pensions, or borrowed money, scammed by "pump and dump" frauds. In these schemes, influencers who are paid or in on the racket, use social media and bulletin boards to artificially boost the coins while those behind the fraud ride the upward wave, only to cash in at the peak, causing the coin to crash.
Others like the fraudulent "One Coin" relied on multi-level marketing, people selling coins to friends and family, with a founder who mysteriously disappeared. It turned out that One Coin never actually had any blockchain behind it — a remarkable story itself and the subject of the equally fascinating "Missing Cryptoqueen" BBC Sounds podcast series.
Some exchanges have crashed like Quadriga FX, whose deceased owner Gerry Cotton was the only one who knew the vital codes needed to access crypto currency wallets, losing investors millions. Similarly SBF's FTX exchange "lost" around 8 billion of investor's money. Quite why this happened is going to trial, the possibilities being incompetence, excessive risk-taking, or downright fraud.
Equally remarkable is that the whole crypto sphere is almost completely unregulated, a casino without proper rules, gambling phenomenal amounts of money, where the whole farrago is rigged by those on the inside. Normal financial organisations have rules and regulations for a reason, to prevent insider dealing, and to ensure that they remain properly capitalised, and able to cover any potential losses and protect investors.
It also seems that relatively few people fully understand blockchain. Faux does explain some of the complexity of this world. Buying and selling crypto clearly requires some technical confidence in using apps, and the risks of moving money through the ether, along with the loss of value from commission taken by the handlers, at each stage of multiple transactions.
Bitcoin
Then there is Bitcoin, the most established cryptocurrency. Some places have even announced its use as an official currency, such as El Salvador, or Lugano in Switzerland, though the complexity of actually using it, and its volatility, appear to have prevented it from gaining traction outside of its acolytes. These believers give it so much credibility that they refer to entering its parallel world as "taking the orange pill", an allusion to the red and blue pill choice in "The Matrix" film.
To be fair to genuine advocates of cryptocurrencies, there are some idealists who want a better world. The 2008 financial crash revealed massive gambling, risk-taking and deception using obscure products called collateralised debt obligations (CDOs) and the like, by many traditional bankers and financial advisors. Similarly, Lewis exposed the world of insider dealing by high-frequency traders in "Flash Boys", who fleeced genuine investors and pension funds by front-running orders. If there is a partial explanation for the rise of crypto, it is a loss of faith in those in the established system in whom we placed our trust.
At times one feels that Faux is badly tempted to enter this world of gambling himself, with the outside chance of making "f**k you" money, envious of a friend who made enough for a trip to Disneyland without the work normally needed to save enough. It is these stories of the few people who make easy money that tempts others in.
Faux also covers the frankly bizarre world of non-fungible tokens (NFTs), items of absolutely no intrinsic value, which are boosted by influencers and celebrities, and exchange hands for thousands of pounds. Sometimes these are cartoons or a range of frivolous items. Some of their appeal seems to be gambling, kudos, viral memes, in-jokes or a sort of mass hysteria. One comes away from Faux's description of this world both perplexed, but also rather sad that people put large amounts of money into pointless schemes, when the world is crying out for investment in worthwhile projects.
It is perhaps unfair to compare the books by Lewis and Faux. They are in my view of equal quality, excellent in different ways. Both lift the lid on a fascinating world that few of us fully understand or know about. Having read both books, my advice to anyone thinking of investing in cryptocurrency of any kind, or even more so NFTs, would be don't touch them with a bargepole.
As always, thank you for reading.
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