Lessons of “Number Go Up”


Tyler Cowen and his colleague Alex Tabarrok write some interesting posts over at Marginal Revolution. Sometimes I agree with them, sometimes I disagree with them.

Then there are the times when they utterly perplex me — like this post on Zeke Faux’s book:

“One doesn’t get a favorable impression of crypto from Number Go Up but in fact one doesn’t learn much about crypto at all. Indeed, Faux’s book isn’t really about crypto it’s about the rise and collapse of a bubble and the consequent madness of crowds. It’s an old and familiar story. Not that different from the tulip mania (see the picture below), the dot-com boom, or the house flippers and mortgage boom of 2006-2008 (see the Big Short for similar stories of excess). The madness of crowds is fascinating, fun, and good for a morality tale but it doesn’t really tell us much about the underling asset. Tulips never amounted to much, the internet did great, house prices are back up. Crypto? Jury is still out. Thus, I was entertained by Number Go Up, but didn’t learn much.” (emphasis added)

I interviewed Zeke Faux on Masters in Business to discuss his foray into the world of stablecoins.1 Sure, all the usual aspects of investor psychology were on full display. But that’s almost a given, and not what I — or most other reviewers — focused on. I was most taken aback by the wild and lawless free-for-all the book presents.

To be blunt, it is astonishing anyone could read Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall and not come away learning something fascinating and new about Crypto. Here are a few items I picked up from Zeke’s book:

No Regulation: DeFi’s most glaring issue is the lawlessness of its coin backers, exchange managers and promoters. The utter lack of regulatory oversight in the entirety of the crypto industry is a glaring factor.

The book uses the meteoric rise and catastrophic collapse of Sam Bankman-Fried and his cryptocurrency exchange FTX as a large demonstrative plot point. Post-publication, the collapse of Binance, the largest crypto exchange in the world, with the plea deal cut by its former CEO Changpeng Zhao with the US government only serves to confirm that thesis.

But it wasn’t just the FTX and Binance collapse; the book highlighted Axie Infinity’s Ronin Bridge hack, the TerraUSD/LUNA collapse, the Three Arrows Capital bankruptcy, Voyager Digital’s fall, Celsius crash and liquidity crisis, and BlockFi’s bankruptcy – and of course, SBF’s crypto hedge fund, Alameda Research’s bankruptcy.

These are not bit players failing; this is akin to the NYSE, Nasdaq, ISE and CBOE getting liquidated, along with Goldman Sachs and Blackrock, Vanguard and JPM, Millenium and Citadel, Bridgewater and Oaktree, all crashing and burning at once.

Criminality, Scams & Fraud: The sheer number of thefts going on in the crypto world – see the way Faux explains “pig butchering” scams and the arrest of “Razzlekhan” in the world’s largest heist — as further examples.

Global: Zeke is a talented and dogged investigative journalist, who traveled around the world looking into crypto:.El Salvador, the Bahamas, Hong Kong, and Cambodia. This isn’t a localized issue.

Players: The seedy underbelly of the crypto industry, is a cast of con artists and misfits. Not in the amusing Michael Lewis way, but more in the “Holy Shit, this is mostly organized crime and terror state actors” kind of way.

The Business Model: Literally said from the stage at a conference: “Why buy crypto? Because Number Go Up technology means it’s going higher!

“Number Go Up” is not, as was advocated, a technology; rather, it has all of the features of a bubble psychology, fueled by hype, greed, and a “get rich quick” mentality.

A solution in search of a problem: What is the actual utility and intrinsic value of Crypto? Faux points out that Crypto has been around for the same length of time as in between the first commercial website and the launch of the iPhone.

Psychology never changes:  OK, I’ll give Tabarrok this one: Human nature is unchanging (remember these geniuses?) and Crypto reveals our worst instincts and foibles — but that has nothing to do with bitcoin.

Didn’t learn much” means you are either an expert in the space, have poor reading comprehension skills, or are engaging in motivated reasoning.

There are lots of legitimate debates around Crypto, stablecoins, DeFi, etc. Whether this book is a revealing foray into crypto that will inform you is decidedly not one of those debates.

There is much to be learned from this insightful, infuriating book. It was one of my favorite reads of 2023, and if you haven’t devoured it yet, you should…



Number Go Up
by Alex Tabarrok
Marginal Revolution, December 11, 2023


Cancelling Michael Lewis (October 5, 2023)

One-Sided Markets (September 29, 2021)




1. This was a few weeks after Michael Lewis (his SBF/FTX book is Going Infinite).


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