👁️ Crypto Trading, Dark Forests, and Magic Circles

What does market-making have in common with demonology?

Welcome to the rare Monday drop of a preview from Stealing the Future, my forthcoming book. I’m experimenting with the timing of the newsletter - I’ve always assumed Sunday was when people were most likely to sit around reading long-form essays, but let’s find out! On a similar note, keep an eye out this week for a reader survey as part of the weekly news roundup. With the book drawing bit by bit to a close, my focus will be shifting back towards growing Dark Markets, and that entails learning more about who my readers are, and what they want.

In the meantime, enjoy this meditation on trading, speculation … and witchcraft.

“Lines, circles, signs, letters, and characters - ay, these are those that Faustus most desires.”

- Christopher Marlowe, “The Tragicall History of the Life and Death of Doctor Faustus.”

In late 2017, Bankman-Fried took a leave of absence from Jane Street, moving from New York to San Francisco to work at the Center for Effective Altruism - another lavishly-funded nonprofit advancing the ethos of MacAskill, Singer, et al. But SBF quickly found his enthusiasm for EA couldn’t compete with the passion for trading he had developed at Jane Street.

“My quote-unquote night job was trading crypto,” he told Brady Dale, “but in fact I was spending most of my time on my night job.” (Dale 42)

Trading was one of a very few things that Sam truly loved, along with the games that he played compulsively. Though he didn’t know much about crypto at first, he discovered that trading it could be particularly lucrative, largely thanks to inefficiencies of the then-nascent market. And so he launched his next venture - the trading firm Alameda Research.

This is also the dynamic of the trader’s life: symbols of certainty and control constantly ringed around by the terrifying unknown. Operating in this semi-occlusion is one of the most important skills of a trader, the ability to make a decision based on half-knowledge or intuition.

In 2020, Bankman-Fried reflected on the motivation for the shift: “If I really think I should be trying to maximize expected values, then that implies substantially riskier strategies than what seems intuitively right.” He was by this time earning more than a million dollars a year as a trader at Jane Street (despite losing the firm $300 million), but he wanted more.