Nolan Bauerle, Director of Research at CoinDesk: Cryptography's 90s-esque Boom

Nolan Bauerle is the Director of Research at CoinDesk, an early proponent of Bitcoin. In this conversation, Nolan and Anthony Pompliano discuss Canada's past investigations into the global financial crisis, how Ethereum's ERC standards shook the world, and why humans will use math to talk with Aliens. ----- This show is sponsored by The Grove: thegrove.co/pomp Your branding and website are the first things your customers will see. You never get a second chance at a first impression, which is why it's so important that your website is sending the right message to the world. Luckily, you have The Grove to help you with that. The Grove is a full service creative and design agency that helps new and established companies tell their stories. The Grove firmly believes that a brand is more than just a logo - it is the entire essence of who a company is. That's why The Grove works with companies on every aspect of their marketing, from brand identity, to web development and design, to SEO, to specialized graphic design projects. The Grove has helped grow companies like Tiffany and Co, Bloq, AAA, The Red Cross, and the Chamber of Digital Commerce by amplifying their branding and web presence. Get big results today, and visit thegrove.co/pomp. ----- Join the Off the Chain newsletter. Pomp's daily email analyzes the crypto market for institutional investors. Simply, it’s the best crypto newsletter delivered to your inbox every morning. No frills. No bullsh*t. Just everything you need to know in a 3-minute read. https://offthechain.substack.com/ ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:13Anthony Pompliano?

  Nolan Bowerley is the Director of Research at CoinDesk and an early proponent of Bitcoin. In this conversation, we cover Canada's past investigations into the global financial crisis, how Ethereum's ERC 20 standard shook the world, and why humans will use math to talk with aliens. Seriously, he said that. This episode was a lot of fun, and I hope you enjoy it. Before we get started, I want to talk about one of our sponsors, The Grove. As many of you know, branding and online presence is crucial to the crypto space. With so many damn scams out there, it's tough to tell who's legit. The Grove, however, is a full-service creative and design agency that will help you amplify your brand with the perfect website, logo,

• 0:54Anthony Pompliano?

  collateral, or custom design project. Branding isn't just about looking pretty, though. Like me. The Grove understands it's about driving revenue. If you want to check out what they're doing, you can go to thegrove.co/pomp. Again, that's thegrove.co, not .com. C-O, new age stuff. thegrove.co/pomp. Let's crash their servers and light up the webpage. Let me know when you do it, and I'll shoot you some fire emojis on Twitter. thegrove.co/pomp.

• 1:27Anthony Pompliano?

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 1:54Anthony Pompliano?

  All right, guys. Super excited to have Nolan here. Welcome, sir.

• 1:58Speaker 01

  Happy to be here.

• 1:59Anthony Pompliano?

  Awesome. We got a lot to cover, so let's jump right in. What is your background?

• 2:05Speaker 01

  So, trained as a lawyer, but didn't really practice. Did a bit of time in Japan. I was actually there for when the White Paper was written.

• 2:12Anthony Pompliano?

  Did you go take the bar?

• 2:13Speaker 01

  No, I didn't, actually. I got the first job out of college, basically. You know, I graduated right into the meltdown, so that was a real fun time. And, but I got lucky. I got this gig on a, on a deal in, in Japan and went there for a few months. And then when I came back to Canada, I'm Canadian, when I came back to Canada.

• 2:34Speaker 01

  We're, we're, we have an oversized influence in this industry, so I understand why everyone's against it. So, when I came back to Canada, I became a long-form, long-study researcher for the Senate Banking Committee in Canada. And we looked into, first, the meltdown. So, we brought in central bankers and why Canada was insulated from it. But really, you know, tackling macroeconomic issues as they related to banking law.

• 2:58Anthony Pompliano?

  All right, before we go on, hold on. Tell me more about this, this investigation or research that you guys did into the meltdown.

• 3:05Speaker 01

  Ah, well, I mean, it was basically, it was a bit Canada-centric, I'll say. It was, why were we insulated? So, Canada, as a federation, is divided, almost the same as America, entirely inspired by the American distribution of federalism to the states and, and federal government. Except for one major difference. Banking law is all federal. Done on purpose because we were having trouble financing the railway projects and canals and etc. So, it was really looking at why our banking law was different, why were we insulated? You know, the conservatism we were known for in banking in the 90s and early 2000s ended up being in our advantage. We weren't mortgaged, obviously. We didn't have subprime. It was, you know, mortgage insurance was a much more important aspect of our economy.

• 3:49Speaker 01

  But then just looking at the contagion as well, how it, how it all came about, and then why Canada was successful. You saw a buying spree of Canadian banks immediately after. I mean, it's TD Bank is all over New York City now. And you see these Canadian brand names that did quite well acquiring, destroying. stressed American banks. But we definitely did look at the Basel Accords and everything else that went on with with the reaction to the meltdown. Um, and we definitely got into, um, you know, the decisions central bankers made. So we had the central bankers, we had Mark Carney in to testify several times. Um, um, Carney, of course, was the governor of the Canadian bank before he went to England. And at that time, you know, he had a lot of interesting things to say and was not pulling any punches.

• 4:31Speaker 01

  So everyone was sort of, um, happy to finally criticize some of the policies that that central bankers were operating under. So we kind of contained that all into a narrative and it was focused on Canada for sure. But, you know, global, global moves and global changes and why that all happened.

• 4:47Anthony Pompliano?

  Did you guys like shit on the Americans when you're doing it?

• 4:50Speaker 01

  Uh, no, I don't think it was, we weren't really after anyone in particular. It, it was, I think the Deutsche Bank guys got the worst of it. It was, it was the people who jumped in feet first. I don't think it was, uh, it, it didn't really focus on that part. The reaction was a part of it, like how much quantitative easing was induced by that was an issue. Um, we didn't have to do it in Canada, so we were definitely looking at what are the effects of, of this quantitative easing being, um, you know, it's not just Japan and Europe anymore. It was coming everywhere. So what does that mean for us? Um, so that, that was kind of how we looked at it. Um, a year after that, when that one was done, we did one on money laundering and terrorism finance.

• 5:30Speaker 01

  So basically the FinCEN regime in America, we, we came down to Washington and met the FinCEN folks and had some insight. But that's where I learned about Bitcoin. It was just in one of these passing conversations where someone said, look, we have this regime to, you know, um, catch people if they're using the, the $10,000 transactions and this and that.

• 5:51Speaker 01

  And one, you know, it was, um, um, either from RCMP or FBI, or I'm not sure who. They said, and where do you get a load of this, this Bitcoin thing like it's here?

• 6:01Anthony Pompliano?

  Oh, people were using it.

• 6:02Speaker 01

  They had known about it and were mentioning that the things they were talking about might even be, their solutions might even be obsolete in the short term was kind of the lead in.

• 6:09Anthony Pompliano?

  Because this, this is coming down the pipe.

• 6:11Speaker 01

  Yeah, yeah, yeah. And they meant it like as a joke, you know? Ah, this Bitcoin thing. And I said, Bitcoin, what is this? And and so I started learning.

• 6:19Speaker 01

  And in 2013, when it came time for the sort of selection of a new year-long study,

• 6:27Speaker 01

  I was right in there to push Bitcoin and we got it. They gave us a

• 6:31Anthony Pompliano?

  Really?

• 6:31Speaker 01

  Yeah, they gave us a nice, large budget and and we got to fly everyone in and we brought Andreas Antonopoulos. We brought all kinds of luminaries. I happened to be living in Toronto for most of that time, too. So, you know, I would go up when the committee was in session to Ottawa, our capital. But I was in I was in Toronto a lot, not far from Decentral.

• 6:50Anthony Pompliano?

  I was gonna say, there was a ton of stuff going on in Toronto at the time.

• 6:52Speaker 01

  Yeah, I was I was there. I would go all the time and get sort of advice from these people because I was still trying to figure stuff out. I'd come at it from law and sort of macroeconomic policy. I didn't really know much about cryptography or anything like this, so I had a ton of questions. And although I found it really, you know, interesting at first and knew how to attack it from from tackle it from what I knew. I knew there was so much I didn't know.

• 7:14Anthony Pompliano?

  Yep.

• 7:15Speaker 01

  So I became sort of a student of cryptography at that time and realized that that was the most important thing for me anyway to learn about. So I started reading all the textbooks and major advancements in cryptography and and just learning the history of what it was. So I developed a bit of a thesis around around what was going on at the time. And we actually did a really neat thing with the study, Block 3600, whatever. We actually hashed it into Bitcoin's blockchain as we tabled it in Parliament with the lines, "Senate Banking Committee believes Satoshi's invention deserves a light regulatory touch." So you can go and see that anytime. And we actually got, you know, we drafted all of the recommendations, which were like, you know, leave them alone.

• 7:57Speaker 01

  This is a really empowering technology. Don't regulate. We met with the New York superintendent at the time, Ben Losky, and told him he was way too far ahead and being entrepreneurial even with with regulations. We said, from our, you know, view, this is not, this is really premature to sort of

• 8:18Anthony Pompliano?

  This is all the bit license stuff?

• 8:19Speaker 01

  This is all the bit license stuff because it was the 2014, 2015 time. And, you know, we met the Australian Senate Banking Committee. They came up and visited us for guidance and advice on what we were doing. And from there, the moment that study was done, I said, what am I? I think they asked me to study pensions or something next. And I said, well, that's not going to happen. Don't worry. We all know they suck. Exactly. It's only getting worse. The virus was in me. I had been infected and there was no doing anything else, obviously. So I started going on my own a little bit, doing some consultations and working with a bit of those, the Toronto set at the time. And then CoinDesk was bought and was moved to America. It had started in London. A lot of people don't know that.

• 9:04Speaker 01

  Yeah, it had started in London. And, I mean, they had journalists in America, but they had started in London. And so they were bought in 2015. And when they moved to America, I was doing it remotely, but doing some more long form research. And then I had a kind of a hack at the time where I would go to not Bitcoin conferences around the world. So I would never go to a normal Bitcoin conference, but I would go to the incumbent industries which might be disrupted by the technology. So I would go to supply chain conferences and insurance conferences. And I would do sort of 101s. And then I would stay in that city for a few weeks and get consulting jobs where I was just sort of, you know, walking people through. And then part of the lesson was for them to pay me

• 9:46Speaker 01

  in Bitcoin at the end. That was sort of a major part of what we were doing. So I did that in Europe and I did that in Asia. And I did that for a little while, but then a lot of travel. And I could see in 2017, the market was changing. And, you know, what I was doing for 101 and introductions and sort of evangelism was going to be a little different. And I wanted to do something a little different. So, you know, CoinDesk folks said, why don't you come to New York City, run our research department, and you can live here and change your, you know, career a bit and do something a little more focused. And so that's what I did. I came in 2017, right in time for the crazy bull run. I was gonna say, 2017 feels like just yesterday when people were pumping stuff on the internet. Everything was 100 X-ing.

• 10:30Speaker 01

  You got it. And it was really neat to come to New York. New York City, you know, New York City is a tough town, of course, and you can come here and

• 10:37Anthony Pompliano?

  Only to outsiders.

• 10:38Speaker 01

  Only to outsiders, but it can grind people right to the ground. And and what was neat was to come into this amazing market where the knowledge that I had was really useful and valuable to a lot of people. So I walked into the city and it was just a fun time. I got to do a lot of, you know,

• 10:56Speaker 01

  interesting meetings with interesting people. And and so I haven't looked back. It's been a great time and I've loved the city and enjoyed it.

• 11:04Anthony Pompliano?

  Awesome. What exactly do you do as the head of research?

• 11:08Speaker 01

  A bunch of stuff, a bunch of stuff, a bunch of stuff.

• 11:11Anthony Pompliano?

  Right, like I feel Coinbase has this unique spot in the market where they're owned by one of the most active investors, right? They obviously have a kind of sister companies, but there's also this kind of Chinese firewall is my understanding with the media and some of that. But then also you guys know all the players, you know, all the the projects and companies. And so just really integral, you know, part or centerpiece to almost the industry. So it's gotta give you a lot of resources.

• 11:39Speaker 01

  It's amazing, actually, that that's sort of what I've always really appreciated is to be at the center of the whole industry and to have a real bird's eye view, a real bird's eye view. So the firewall is real. I mean, our journalists have zero contact in there. I mean, not even Christmas parties type of thing. I think maybe Christmas party, but that's about it, right? They don't talk.

• 11:57Anthony Pompliano?

  Wait, wait, CoinDesk shares the Christmas party with Michael Moro?

• 12:00Speaker 01

  I think they've been invited, I think they've been invited. But I mean, but it's not a joke. It is very serious internally. I mean, they really, really police it. There's just no conduct because we have to write about these people too. And in order for us to do that, they've got to be critical. So I'm not on the editorial side of the company, so I don't make those decisions. But it is, you know, it's it's it's unfortunate. There is a perception, I'm not going to try and change it here today. But if you saw internally the the lengths to which editorial went to to make sure that isn't a reality, it would surprise a lot of people.

• 12:34Anthony Pompliano?

  I promise you, somebody's going to tweet at us about the Christmas party now.

• 12:38Speaker 01

  But even that is like, maybe they can go. That's how serious it is.

• 12:43Anthony Pompliano?

  So as you're kind of in the day job, right, there's a couple of different aspects of what you guys have done. There's what I would consider like more traditional research, right? Then you guys have built this, this new product that we can talk about. Maybe just start at like a really high level. What is kind of the goal or the mandate, right? Is it to educate internally, educate externally? Is it to create content and drive views? Kind of what, what, what do you view as, hey, here's why, here's why we exist?

• 13:09Speaker 01

  So educated and informed is a major part of it. But I'd say to put this in the larger historical narrative, we're not trying to just say this person made some money and they did well. And this company didn't do well. I mean, there's a larger narrative here and I guess I would, I'd break it down to, um, you know, what, what I learned in cryptography. This is my own take, but, but I think is, is sort of infused and in line with the way the company would see it. You know, cryptography started as a, as a tool that only state actors used. It was for war. After World War Two, we saw that was really the case because it was made illegal for any other person to get involved with cryptography. Because they realized what the powers were with World War Two and the Turing machine and, and Enigma and everything they did.

• 13:53Speaker 01

  So when they, when they stopped all, uh, there was no education. You couldn't go to university for this stuff. It was, it was just stopped. The first private sector innovations happened in the 1970s when public key cryptography was invented by Whitfield Diffie, who was one of our keynotes last year at consensus. So, you know, it went from the state actor to companies that did cryptography for you. If you told them your dog's name and your mother's maiden name and all this crazy stuff. And then they traded that information because you were too stupid to run your, you know, to satisfy your cryptographic needs. Bitcoin, of course, was the original and most widely distributed, um, example of public key cryptography put in the hands of the individual.

• 14:35Speaker 01

  So the meta narrative for us is to really show people that they are being empowered by this new technology, that, that cryptography, that the power of using a cryptographic key to express consent is really what we're talking about. That individuals can Now do this, that it that it is taken away lots of discretion from other people that we've trusted until now to do these things and put them in the hands of individuals. So the narrative that we're trying to tell is much larger and and we're really anchored in in telling the biggest story here that that people can use historically to look back on what happened.

• 15:06Anthony Pompliano?

  Yeah, people are drastically underestimating how much work, right, both regulatory, technology, socially have gone into pre two thousand eight, two thousand nine. Any of this being possible, right? And that's, I think, applicable not only in just kind of electronic cash, if you will, right, and kind of all the different variations that people tried over the last thirty years or so. Cryptography is obviously a whole nother one. And I remember, and I've talked about this before, but Zuko told me one time, he said, look, you know, this encryption and all that stuff used to be fought by the government. They used to say, you cannot do this, you cannot do this. And, you know, what are you hiding? Why do you need encryption? Right? And it finally came to a head and obviously there was a bunch of hearings and things like that. But today it's best practice.

• 15:51Speaker 01

  Yep.

• 15:52Anthony Pompliano?

  Right? And so this world where, you know, you would never imagine using a product where certain communication wasn't encrypted, etc. That's not the normal state.

• 16:01Speaker 01

  And you see it even today. I mean, this was done inadvertently, but that GDPR people are always going on about, right? They're all GDPR this and GDPR that. They put an exclusion in GDPR. They didn't mean to put an exclusion that helped us as an industry, but they did say privacy by design, which is the best practice. If you if the users keep their keys with them, it is privacy by design and therefore exempt from GDPR.

• 16:23Anthony Pompliano?

  Yep.

• 16:23Speaker 01

  Well, that's what we're doing here. We're trying to build a system where everyone can use these cryptographic keys with their person to express consent.

• 16:29Anthony Pompliano?

  I think most Americans, the only thing they know about GDPR is that it made a bunch of emails got sent and told them to like reauthorize. Or websites, but other than that, most people are completely lost in the US.

• 16:41Speaker 01

  It was hilarious that the the the tool that was designed to keep us from getting spam and, you know, became the greatest spam and.

• 16:48Anthony Pompliano?

  Do you remember for like two weeks, it was like every day you get multiple emails?

• 16:51Speaker 01

  Every day, every day. But the good news is a real robust decentralized public chain.

• 16:58Speaker 01

  Theoretically is a hundred percent exempt from this law. Yep. And so you can start to see the implications of what that means, you know? You look at cyber insurance, right now it's a terrible product, I mean, just the worst. And they don't really get much, they get a little bit of value if a network goes down, the insurance will pay. It doesn't really help reputationally. You can start to imagine a day where cyber insurance premiums are lowered if a company chooses one of our platforms. You know, it's like putting a sprinkler system into a, you know, if you do it, then your premiums come down. It's a better practice. So you don't need to regulate that people do it this way, but they'll do it because they'll save money. And that's part of what we're hoping to see happen here. And so that's a major part of what's driving it.

• 17:37Anthony Pompliano?

  Got it. And so let's talk about, you know, obviously you guys have this really big vision of where do we come from? What work did it take and where we are today? And even into, hey, here's where we think the world's going in the future. And one thing you guys recently created is this crypto economic explorer.

• 17:52Speaker 01

  Yeah.

• 17:52Anthony Pompliano?

  So maybe tell us a little bit about what that is and kind of why you guys created that.

• 17:55Speaker 01

  So I'd say that with the, you know, 2017, the major story, the major takeaway in the end is that people had gone over that psychological hump. And they have now accepted something digital as property, right? That that was one of the big things that had to happen. People would say a lot of time Bitcoin's not real, I don't trust it before that. But now all of a sudden that people started to see, well, it's limited in supply, it is property. And they started to trust that that they had actually had a piece of natively digital property. It sort of changed people's minds about what it meant. And that was really important. But what we saw was one of the important pillars of the industry, Wall Street and speculation being the only real use case that we've actually been able to establish as a, as a solid thing.

• 18:40Speaker 01

  You know, that happened, but everyone started organizing their analysis of the industry around Wall Street metrics and around how Wall Street saw it. We definitely recognize the importance of Wall Street. And when I say Wall Street, I mean, you know, sort of the idea of Wall Street. This could be anyone interested in trading and speculating and finance and all that stuff. It's a pillar, but it isn't the organizing principle. We see it as one of the pillars, you know, it was the most advanced, we saw the, the most important human.

• 19:07Speaker 01

  Capital peel offs already in 2012, 2013, you look at the choose, you know, leaving Goldman already to build Ledger X at that time, there are, you know, Michael Moro and all these, Michael Sun and Shine, all these really smart people already gravitating towards this industry. So they were already getting is the most advanced, they were getting the most quality participants of the human capital flight, but it wasn't the organizing principle. When you look at it, you know, crypto economics, what are they? It's economics like we all know. It's, it's not a fancy word. It's still incentives. It's still choice. It's still options. Anytime you put the word crypto in front of something, it's just the root word. It's the exact same, right? Crypto economics, crypto securities, crypto incentives. It's just. It's the same thing. Exact same. And we put crypto there to make ourselves feel smart.

• 19:51Speaker 01

  It is. Well, you know, there isn't actually use to it as far as I can tell. And the use is this, is that it's not a subcategory of economics. It's not a derivative economics. It's actually a subcategory of cryptography and engineering. Okay. That's what makes the crypto. So, so the organizing principle of this, a way to do it is to think of the forces that would shape a decentralized network. How do we harness these forces to build a system? So it's really about system design and the economic forces that go into motivating people to build these systems. So that's what you're measuring. You're measuring the growth of the network. You're not measuring, you know.

• 20:27Speaker 01

  So even, even pulling back a bit, when CoinDesk came out the BPI, which was the reference price of Bitcoin for a very long time, we were the first to do an indexed price in 2013. It was about 70 bucks at the time and no one had done it. That was great because it was able to benchmark everyone's incentives. If you backed out, a miner can understand what their cost was and what their return was. So that was really important. But as other assets joined, it kind of took away from that easy benchmark. A bunch of other speculation came in, other networks. Bitcoin was kind of behaving as a reserve or gold currency of a financial system, not just Bitcoin itself. It was tied into the speculation of everything else.

• 21:06Speaker 01

  And it became really difficult to untangle and understand where the growth and value was really happening. We're not going to be able to do it out of a simple accounts and it's not profits and loss and all that stuff. So. What are we really measuring here? So we said crypto economics, what's needed to build one of these decentralized networks is the organizing principle, just an organizing principle. So we saw sort of five axes, price still being important, exchange, activity being important, the actual network itself being important. So that can be the miners and the merchants using on-chain transactions. Social media plays a huge role in this industry. Everyone knows the industry lives on Twitter. And then the developers themselves, like who's showing up to build these things? Who's motivated?

• 21:49Speaker 01

  And then we made one other choice where we said, okay, well, you know, what does 55 trade pairs for Litecoin mean? It means nothing, it's abstract. So we said, well, Bitcoin is behaving as the reserve currency of this industry. We can use Bitcoin like water was used in the metric system. You know, we just said water freezes at zero, sure, and it boils at 100, sure, great. And we'll just divide it evenly between that. What we said is we can understand using Bitcoin as a ruler, we can understand the size and interest in other networks. So the Crypto Economic Explorer doesn't measure the way, the way Wall Street would measure an asset in dollars. We're looking to measure networks and interest.

• 22:27Anthony Pompliano?

  Okay.

• 22:27Speaker 01

  Price is interesting, exchanges are interested in a coin to list them. Social media is interested in a coin in order to argue about it, push it and all that stuff. Merchants should be interested in various networks and developers who are giving up their time should be interested in the platform they're, they want to work in. So that should be a motivating factor. So we're measuring interest, interest in networks. It's nothing more complicated than that.

• 22:50Anthony Pompliano?

  And so what does this look like in application, right? If somebody goes to use the tool, describe kind of what that user experience is like and kind of what you were thinking, whatever they get out, what that output is, what are they going to use it for?

• 23:03Speaker 01

  So what we wanted to do was make sure that we can, we can show the level of growth in all five of these axes, right? Price is easy, that one's already taken care of. Lot of data providers that do exchange, some other ones that do networks. So the block explorers, a few that have begun to specialize in GitHub stuff. And you hear some social media stuff all around. We combined that all into one platform. We took data sources from all over. And then we also wanted to surface a data viz that would make it easy to consume this information because, you know, if the future is that everyone who's interested in these networks needs to get a Series 7 license and be able to read these huge Bloomberg terminal, terminal spreadsheets, I don't think we've been successful.

• 23:46Anthony Pompliano?

  Like, and I think I'm the only person who's anywhere near the finance world who thinks this, the Bloomberg terminal looks like a casino to me.

• 23:54Speaker 01

  Yeah.

• 23:55Anthony Pompliano?

  It's like blinking lights.

• 23:56Speaker 01

  Yeah, yeah, yeah.

• 23:58Anthony Pompliano?

  All these people are just sitting here at this casino and you can make money, you could lose money, right? It all comes out of the same place.

• 24:03Speaker 01

  And it has that same sort of, I'm surprised they don't put the sound on the audio of people winning gambling. I've noticed that in some casinos where it's like, but it's the audio, you know, it's not even the machines ringing up victories. So, yeah, it's, you know, it's neat. They show who's, you know, on the indexes, who's making money and things flash and it's pretty funny.

• 24:22Anthony Pompliano?

  Absolutely.

• 24:23Speaker 01

  So, yeah, the conclusion of the tool is simple. I mean, if you come in, you can see the surface area of the shapes that are drawn. So, we used a radar map, a pentagon, along these five axes. And if a coin, you know, has a lot of development in social, a lot of development in exchange, but nothing happening on developers, nothing happening on the network, that, you know, that should be an indication that this, this coin needs some serious second looks and to find out if anyone's actually building. What you want to see is something growing along the lines of Bitcoin. We know Bitcoin was shaped by those cryptoeconomic forces. It worked and therefore we can use that to see what a healthy network looks like. So, that's really what the tool is about.

• 25:07Speaker 01

  It's about showing, is it, is it growing in every way? Because if it grows crooked, a little like a plant, you know, it's, it's not what you're looking for. You're looking for a robust, healthy network on all these levels.

• 25:19Anthony Pompliano?

  Yeah. It is, you know, I think a lot about like Bitcoin is beautiful and this idea of everything from the system design to the initial distribution to the way that people have described it. It's kind of hit its stride at multiple points in its lifetime, according to different economic, you know, components, different. States that are doing things and people have really taken an asset and they've made it what they need it to be. Right? So sometimes store value, sometimes medium exchange, sometimes it's literally just for speculation. Right? But, but I do think it's one of these assets that we full, you know, we really understand, yet we don't understand at all.

• 25:58Speaker 01

  Absolutely.

• 25:58Anthony Pompliano?

  And, you know, what you're describing in terms of the growth and a lot of the network effects and kind of that interest is very, very different than a majority of what we've seen kind of launched in the last two, three years.

• 26:12Speaker 01

  Yeah. Yeah. And, and that's the way we approached it. We said, if we're gonna, if we're gonna make a useful tool for people, we can't just do what's out there already because that, I mean, it's fine. You know, it was, it was great to show that these things were, were real. They were happening. People were trading them. That was that sort of psychological thing that I mentioned earlier. It was very useful to market cap to understand that there's people interested and buying it. Okay, great. What are they interested? Who else is interested? Is it just speculators? Is it just people trying to pump a bag on social? Or, or what else is going on here? Yeah. And so that's really what we're trying to uncover.

• 26:45Anthony Pompliano?

  I, speaking of pumping bags, one thing that just fascinates me is imagine if like the boiler room crowd, right? You know, from the, what is it 90s or whatever, if they had social media, like, like everything we know that they were doing now, imagine if they had the tools that we have today.

• 27:01Speaker 01

  It is amazing. I mean, it is, it is, it's created that tribalism, but that's kind of what these coins need. I mean, if there is, if we're inventing the, the, the future of, of these networks, there's no room for sentimentality. And that, that's one of the great things that, that I think the, the whole Wall Street pillar of the industry has brought. These are not sentimental people. They're not coming because they want the same things that the early Bitcoin people wanted for, for macroeconomic and central bank change. They came because they said, okay, this is a new asset. People are making money. I want to find out how to make money. And they, if this thing doesn't work, or if they don't like that community, they're able to call it out really easily. And that's important. You know, that's the sort of anti fragility of these networks. If they're not capable

• 27:46Speaker 01

  of taking criticism. Then what's going on here? I've often done that, you know, I've done a lot of the event work for CoinDesk as well to make sure that the people we have speaking at our events are top quality, speaking about really relevant things and interesting things. And I've often said to the critics that we go out and get, look, Bitcoin's a big kid. It can take whatever you have to say because people are very nervous to come and criticize. And I said, we want to hear everything.

• 28:10Anthony Pompliano?

  Yeah. Ben Horowitz talks a lot about like a peacetime CEOs and wartime CEOs, right? And this idea that usually somebody is one or the other, right? So they're really, really good at running the company when everything's going well, when things, you know, shit the bed, they absolutely fail. Or vice versa, you've got kind of the fixers, the people can come in, they can fix problems and they get really bored when the company is doing well. And the kind of unicorn or the holy grail of a founder, somebody who can operate in a peacetime and wartime. And, you know, as you kind of think of it, most crypto assets live perpetually in wartime, right? There's somebody who's trying to attack them, there's somebody who's trying to beat them, there's somebody who's always, you know, criticizing them, whether it's both, you know, technically or some of the social aspects and design.

• 28:53Anthony Pompliano?

  And so we've just never seen this before, right? Where every single project, every single asset in an entire industry is at wartime 24/7/365 on a global basis, right? And so the ones that have persisted or thrived like Bitcoin, it's pretty amazing to see that happen in such a short period of time to have withstood all of this.

• 29:15Speaker 01

  And that's really the most important thing. I mean, every day that Bitcoin survives, it is more like what gold is supposed to be in our economy. It behaves more and more like gold. And that's, that's really what we want to see. We want to see it take all of this abuse and criticism. And of course, there's the joy of getting to throw it in people's face again because, you know, we're pretty convinced that we're right about this. But yeah, it's, it's a neat part of the industry and I think keeps the fires stoked.

• 29:43Anthony Pompliano?

  Absolutely. All right. So you've got this really interesting theory about Ethereum and ERC20 standard and how it has shook the world, right? Talk a little bit more about why you think that and what that impact means moving forward.

• 30:00Speaker 01

  Well, it was a contract, you know, this is what I would often, as everything was going crazy in 2017 and we're looking to help people and guide them and so they don't just get swept up in everything. And then as things came down, they said, oh, you, you know, you guys are wrong about this and that. And I said, look, this was one contract. It was one simple contract and it shook early-stage finance. The whole world found out about it and, and, you know, a lot of the pretzels and mental gymnastics to make the utility tokens because of the whole regulatory stuff, I think made things come out pretty crooked. And because it was so novel, it really ended up creating a situation where.

• 30:44Anthony Pompliano?

  I mean, it's pretty crazy to think about, you know, this one smart contract, one protocol, whatever you want to call it. And not only the, the real impact, right? Meaning that, look, there's billions of dollars put into companies, right? Global investor base, all this stuff. But even bigger than that was the fear that it drove into so many different industries, right? And you saw incumbents in finance, incumbents in supply chain, right? All the way through, you know, transportation, saying, oh my God, this thing is coming, right? And it was like the writing was on the wall and they literally started making decisions out of fear. I mean, you just saw.

• 31:20Speaker 01

  Absolutely. Well, I mean, they saw the truth. The, the, the way it had worked before was you, you went with your hand out with a great idea to the VCs and begged them. And, and, you know, it was, it was kind of a clique. They knew who was great. And, and if you got an interview one place, they couldn't wait to give you money. And if you didn't, then, you know, you were on the outside.

• 31:39Anthony Pompliano?

  It was, it was a power pendulum, right? So I was talking about this thing where the pendulum had swung in the favor of investors and investors were able to dictate terms. They, you know, come, you come pitch me while I sit on my throne. And what we saw in 16 and really in 17 was the pendulum swung back in the favor of founders. And there was no rules and they could raise money from anybody. And all of a sudden, if you sat on a throne or not, it didn't matter. Your dollar was good, right? Or your Ethereum or Bitcoin was good.

• 32:05Speaker 01

  And, and, you know, like anything that happens at one time, the ambitions were wildly outstripped what was possible. And we had these huge raises that were probably unnecessary. I mean, I don't know how many people need $4 billion to build a network. It's, you know, I hope everything works out, but. It had shrunk the distance between idea and market more than it has ever been shrunk in the history of the world, more than the internet itself could have done. This was a really remarkable shrinkage of that distance so that anyone in the world with a great idea now theoretically had the opportunity to get that idea financed. Of course, the whole thing kind of went sideways, right? We had a lot of rent seekers along the way. The ability to sort of launch a token had all kinds of lawyers and none of the things we really wanted.

• 32:49Anthony Pompliano?

  Yeah.

• 32:50Speaker 01

  The things that we were trying to get rid of. So for a brief period, it shrunk that distance and then all of a sudden it grew it more. So from that, you know, you start to say, okay, well, what were the problems and how can we fix these? We see already with the Jobs Act in America, you know, the $1 million crowdfunding rates. Don't forget the Dow failed two tests. The Dow failed the Howey test as well as is this an exempt market offering? You know, it was a simple test to determine it wasn't, it raised too much money.

• 33:18Anthony Pompliano?

  So we talked a ton about the Howey test on the podcast, but maybe explain a little bit about the exempt market.

• 33:23Speaker 01

  So in the Jobs Act, when it came out, was really designed with the idea in mind that small enterprises would become major employers and that the ability to launch a small enterprise and raise money to get it going was going to be the driving force. So they created the crowdfunding exemptions, which were pretty simple. So they go back to the 32, 33, 34 Acts. You don't need to be an accredited investor, but you can't invest more than $10,000 a year and the companies that are raising only need, can only raise a million dollars. And it's a pretty simple process. You file and it's done. It's just, you know, unless they get back to you and say, this is not, this is not compliant, otherwise just let them know, just notice them that you're doing this

• 34:08Speaker 01

  and then show them that you didn't raise too much and continue with your Edgar filings and all that stuff. So they created this vehicle, which has been kind of used here and there. This is, it's not really caught fire because the $1 million raise is pretty low. One of the great things that could happen that the SEC could do is just to put a zero On to that raise. And I think a lot of troubles would go away for both the crypto industry and for the SEC. They're not going to have to look into these small projects all the time that are being maybe clearly, you know, in violation of rules and ripping people off. But $10 million raise is not a systemic threat to the economy.

• 34:51Speaker 01

  You're, I mean, that's really what the the acts were all about, right? Those old acts were really about making sure that the Great Depression didn't happen again and the Wall Street crash of 29 didn't happen again. That's why they put them in in the first place. You know, the the twenties, you know, people compare crypto often to the 1990s. I compare to two different eras. It's sort of wider internet revolution, which is kind of like what Niall Ferguson talks about. This is the Reformation. It's, it's, you know, it's the 15, 1600s. It's nothing to do with with the 90s. And the other one is the 1920s. What we saw with ERC 20 in 2017 was a lot like Wall Street in the 1920s, when it was really new and exciting and all kinds of projects were being launched and tons of them were scams. And but everyone was participating, everyone had their chance at making money.

• 35:37Speaker 01

  And then when those laws came in, they basically said to, you know, 90 something percent of the world, forget it. You, you know, don't look here. You're too stupid. You have no business around here. So that's one of the really neat things the ERC 20 did is it said to the world again, here you go. Like you can participate in this. You do have the access to this stuff. And so I'm really keen and excited and would love to see that at zero added to the exempt market. And I think it would be a great thing for a lot of crypto projects. $10 million is enough to get your thing going.

• 36:05Anthony Pompliano?

  For sure. Do you think there will be similar shockwaves that go through at the scale they did from ERC 20 with new protocols, new standards? And can there be multiple ones that happen in the future? Or do you think it's kind of episodic, if you will, one at a time?

• 36:22Speaker 01

  So, you know, the, the, the, the good news is some important infrastructure was built with what happened in 2017 stuff before, for sure. So it's not all 2017 stuff. These ideas were around for a while. But there are now opportunities to use what's already been built to do things that are similar to the ERC 20 boom. So personally, for example, I've got a science fiction book that I've worked on since 2015 Bitcoin themed and all that stuff. I'm doing a royalty contract. So I'm going to

• 36:53Anthony Pompliano?

  You're launching a coin.

• 36:54Speaker 01

  Yeah, basically. I mean, I don't want it to, I'm not keen on it, trading on exchanges and all that stuff. It's not a second market thing. But the infrastructure is there for me to do the following. I can offer a contract for 30% of future earnings to investors and it's just paid out when I sell it for dollars on Amazon and iTunes and all that stuff. That infrastructure is there to empower me individually. So one can imagine that while the ERC 20 was really good for teams to build stuff, the stuff that's already been built can help individuals use this stuff to help themselves. I mean, one of the worst financial contracts which exists in the world today is the royalty contract. It's abysmal. It's terrible. You get nothing if you're a writer

• 37:36Speaker 01

  or a musician or an artist. But the infrastructure is there now to do this in crypto. And so there is an opportunity for that, once again, that distance between idea and market to shrink and for people to be individually empowered. So that could be one of the next big booms where people start using this stuff and start building on it. So I don't want, I'm not building a coin to get transactions off other writers doing, I don't care, right? If I do it and I'm successful, other people can copy it. And that's, that would be the good news.

• 38:04Anthony Pompliano?

  Yeah, I mean, what you're talking about is an experimentation that, you know, some people would be in the camp of, oh, this is dumb. You know, I don't want to use it. And so you should never even try. There's a second camp and probably the camp that I'm in where experimentation of every form should be encouraged because we don't know, right?

• 38:20Speaker 01

  Exactly.

• 38:20Anthony Pompliano?

  And so, you know, I have my personal opinions about certain tokens or networks or even, you know, designs and the people behind them, right? But I think that we've got to, as an overall industry, get much more serious about saying, I can disagree with you and still want you to be experimenting and still trying to figure things out. Because there's, there's a non-zero chance that you actually do figure something out that I can then incorporate into what I'm doing.

• 38:47Speaker 01

  Absolutely. And, and, and that's, I guess, another part of the industry that needs to be further communicated to the wider world. Because at the base, we are talking about cryptography. We're talking about cryptography here. Cryptography is not the same as a computer game. It's not the same as just Your normal consumer internet. It works in a very different environment and and you know if it if it is like video games, right? Then it would be, you know, you have Pong, which Bitcoin is Pong, right? We can move value from here to there. It works perfectly and it actually works. It's a real video game. It does what it's supposed to do and probably doesn't even need to change. It's perfect and elegant the way it is, right? It does its job. Pong didn't need to be changed. Pong is still a great game.

• 39:32Speaker 01

  There's a bit of the experience in Pong and every single other game and it is used as this guide. But this, you know, experimentation side of crypto, because there is an adversarial environment, because it must, we only know it works if it lasts for years and no adversaries break it. It's not an overnight thing. It's not like, can you get to the end of Mario? You know, does the game, do the animations and graphics work for you to get to the end? You know, if there's a bug in Zelda, like a bomb doesn't blow up a wall, it's no big deal. You send a patch and you're good. In crypto, it's not the same. It's either bulletproof or zero. There isn't a middle ground. So experimentation is hard in this industry. It really is. And so it must be encouraged because we need it. But there is a conservatism which is important, too.

• 40:15Anthony Pompliano?

  And so, you know, one aspect that people probably don't give enough credit to in crypto is the methodical, kind of very slow, intentional, safe software development of Bitcoin, for example, is to avoid any issues. The contrary to that, or the opposite, is that a ton of these projects were racing. Right? They were trying to build like a startup. They were racing to get code written and out into people's hands and iterate, right? And then we've taught founders to do that when building companies. But what you're describing is actually that mentality of kind of agile software development is a detriment when you're trying to build a store of value. We're trying to build a medium exchange, right?

• 40:56Speaker 01

  The Silicon Valley fail fast and break things does not work here. It just doesn't.

• 41:00Anthony Pompliano?

  It doesn't work in very specific use cases. It works if you're building, you know, the next supply chain.

• 41:07Speaker 01

  What I'm doing it works for, right? I'm not threatening protocol. I'm not creating a protocol. I'm not doing ERC 20, by the way, because my. My book is Bitcoin themed, so I must connect it to Bitcoin. So it'll be a Bitcoin offering.

• 41:18Anthony Pompliano?

  What are you going to use?

• 41:19Speaker 01

  RSK. RSK, yeah. So that's not going to hurt Bitcoin at all. It's me seeing if I can use Bitcoin to do this. And I think I can. But yeah, I mean, I never really had skin in the game as far as the big debates for scaling went for Bitcoin. But I will say is that to see the consumer facing people get into dialogue with the actual cryptographers and core devs. And then that the outcome was that prudence and security won the day. I think was really encouraging, really, really good news for the industry. Because if it had been the other way around, then we don't know what the answers are. Right now, the important thing is to preserve Bitcoin and make sure it keeps being Pong.

• 42:03Speaker 01

  It keeps doing what it's supposed to do. We don't need to turn Pong overnight into a role playing game with shooter capacity. And none of that's important. Like, we don't need to back coffee today. It's not important.

• 42:14Anthony Pompliano?

  It's funny because everything that the detractors use to negate the importance of Bitcoin are actually the core strengths of Bitcoin.

• 42:23Speaker 01

  Absolutely.

• 42:23Anthony Pompliano?

  Right? And what it does is it very, very quickly illuminates those who understand it and those who don't. Now, we've got a lot of work to do to help everyone understand it. But it is pretty funny to me to, you know, when you hear people say, oh, it's slow.

• 42:39Anthony Pompliano?

  Okay, do you know why it's slow? Do you understand the advantage of it being slow?

• 42:42Speaker 01

  And it goes even more fundamental to that. It's, you know, there is a conference called RSA.

• 42:49Anthony Pompliano?

  Okay.

• 42:50Speaker 01

  It's the largest cryptographers conference in the world. And at the end, they have a panel called the Cryptographers. And that's where they have Shamir and all of the great cryptographers, Whitfield, Diffie. They all come for this last sort of really prestigious panel session, 50,000 people in Las Vegas, massive, massive conference. So they had last year, because

• 43:11Speaker 01

  Our crypto had sort of usurped the word crypto. They call their industry crypto, right?

• 43:15Anthony Pompliano?

  Yep.

• 43:15Speaker 01

  And so that was the big joke at the start. Oh, crypto, you know,

• 43:18Anthony Pompliano?

  The new crypto.

• 43:19Speaker 01

  Yeah, the new crypto. It's not crypto. So they had all these really smart people, right? Really smart. The pioneers of Rivet, Shamir, the RSA guys, everyone, right?

• 43:31Speaker 01

  And they went on about how, oh, the hash rate's too high. Why does anyone need that hash rate? They kind of, you know, poo-pooed on everything to do with crypto for quite a while in the one-hour panel. And then they followed it up immediately after with a talk about Cambridge Analytica and Facebook, right? And then they sat there and moaned and cried their eyes out that their work is not a priority to the C-suite in their company, that privacy and cryptographer security work is never going to be taken seriously by the CEO of Facebook and this and that. And I'm sitting there really frustrated watching this. The only guy to stand up for crypto was Whitfield Diffy in the end, for our crypto. They're sitting there saying,

• 44:14Speaker 01

  okay, Bitcoin does all these things, but it's stupid. And then why aren't we taken seriously by CEOs of companies? You know, what we're saying is you're actually in charge in our industry. Like, you guys now, privacy and security are the premium. They're what we need to be guided by. That's the advantage of the industry. And so your ideas are the selling points. Your talents and skills that you bring to make these networks robust and anti-fragile and secure are exactly our advantage and why we can win.

• 44:47Anthony Pompliano?

  Absolutely.

• 44:48Speaker 01

  So to see these people complain about not being taken seriously while at the same time poo-pooing on crypto made me have a whole new respect for the cryptographers that are in our industry, who are finally bosses. You know what I mean? Like, that Zuko is the boss of his company. And then, you know, the protocol itself is another story, but that there is this person out there who can say, I think this and I think that, and he's focused on privacy and security first, means something else totally different.

• 45:15Anthony Pompliano?

  So I can't say who told me this. And they said it joking, but what they said was, the internet allowed the nerds to have real revenge, right? Unlike all the business people. But they said crypto allows the real nerds to actually have the revenge on everyone who is pretending. And I think what you're talking about is very similar here where

• 45:36Speaker 01

  It's that.

• 45:37Anthony Pompliano?

  You know, the difference between a, you know, a front end or an app developer, right? Their software engineer, et cetera, but the people who are working on deep cryptography, just they're different. Right. And it's different training, it's different kind of ethos, it's different. You know, I think just a perspective on the world.

• 45:56Speaker 01

  Well, it's, it's, it's a little bit like, you know, it's, it's, it's different because it's an unfair fight. The, the, the, the software people are just ship software that people will use if they like it or not. It's like an aesthetic thing. Does it look good? Does it feel good?

• 46:10Anthony Pompliano?

  Can we get you digitally addicted?

• 46:12Speaker 01

  Yeah, yeah, yeah. With cryptographers, it is, how is the person who's trying to screw me thinking? Cause if there's one weakness in what they do, it can be exploited. They can have a perfect system, one weakness, it's over. So it's an unfair fight in the sense that the adversary needs to find one weakness and they can topple the Jenga. Whereas the person building the structure has to think of every possible one. And it's very easy. That's why you hear all the new Bitcoin, the better Bitcoin, blah, blah, blah, blah, blah. Come on, you know, Bitcoin, you run for 10 years and see how it goes. You see if no one, the daily attacks finds a way to get in. And, and that, that's an amazing thing. That Bitcoin works is still almost a miracle. It's beautiful that you could coordinate this elegant system and that it works.

• 46:57Speaker 01

  You know, I often tell people, do you know how much we pay for security in Bitcoin? Zero. It's an incentive model and people pay to do it. They pay to do it, right? And then they win money and all this stuff. It's amazing, you know, it's amazing.

• 47:08Anthony Pompliano?

  Absolutely.

• 47:09Speaker 01

  Beautiful and amazing.

• 47:10Anthony Pompliano?

  All right. Before we finish up, let's do a rapid fire, which newsflash is really not that rapid. No, no one's ever done it rapid, but what do you think is your most controversial thought in crypto? Like the one thing that you believe that the highest degree of other people would disagree.

• 47:24Speaker 01

  Oh, hmm.

• 47:27Anthony Pompliano?

  I'm going to call you out if you don't say something controversial.

• 47:28Speaker 01

  I'm trying, I'm trying. I'm trying to think of one thing.

• 47:33Speaker 01

  That it's not Wall Street first, that it's not Wall Street first. And I'm not, I'm not saying that I'm arguing against the rehypothecation of, or the financialization of Bitcoin. That's not what I'm saying. That things like CryptoKitties are probably more important. I don't mean CryptoKitties itself, but the idea that people can play and do things. You know, I fully imagine a day, I know Brian Armstrong was talking about it yesterday with, with the Reddit going crypto.

• 48:02Anthony Pompliano?

  Yeah, Reddit gold.

• 48:03Speaker 01

  Yeah, I mean, I've been talking about this for a long time and, and I do believe it'll be a job one day to like stuff on Twitter and share it and all that stuff. I mean, I really believe that and, and I think that'll be empowering for a lot of people. And that eventually we're not talking about a bunch of people who are, you know, sort of slaves to protocols and any of that stuff, but a lot of people just using this to make their life better.

• 48:29Anthony Pompliano?

  Yeah.

• 48:29Speaker 01

  Which I don't think is controversial.

• 48:30Anthony Pompliano?

  It's funny because I saw an article that said, you know, the government shutdown, a bunch of these workers are turning to Uber, Lyft, Airbnb, et cetera, to, to get income, right? And what you're describing is another type of activity that creates value, right? And if you're able to actually get economic benefit for that value you're creating, it changes the way that people think about work, it changes the way people think about the output in which they create.

• 48:56Speaker 01

  And I think it flattens things. I mean, the, the old expression, time is money is really true, but it hasn't been an equal. Like if you really got into the formula, you couldn't say time equals money until now. You'd have to say time equals money plus the inflation that is targeted by a central bank, plus all the other policies that add cost onto the money. So your time is not converting equally to money. In the end, what is Bitcoin? It's time. It's a record of time. What happened when, at what time? And, and here we have this sort of flattening of time becoming money again. And, and that's a really important thing.

• 49:29Anthony Pompliano?

  For sure.

• 49:29Speaker 01

  Because the most finite resource we have in the end is our time. So how do we spend it, right? If you can spend it in an industry that pays you for your time, that's, that's a great thing.

• 49:41Anthony Pompliano?

  Have you ever seen the movie?

• 49:44Anthony Pompliano?

  Oh man, I'm gonna forget the name, but Justin Timberlake and he's got the time in his arm.

• 49:49Speaker 01

  Yeah, I think it was like.

• 49:51Anthony Pompliano?

  I think it was literally called like Time or something, right? But I remember watching that movie and for those that don't know, basically everyone, it's a sci fi type movie and everyone walks around with a clock on their forearm. And for, you get paid in time, so when you go to work, you basically, your time gets extended. And if you ever go to zero, you end up dying. And if you wanna, you know, pay a toll, take some time off and so the time is really the currency. And I remember watching that and being like, whoa, right? Like, we have life so backwards. Cause it was this, it was this huge metaphor, right? And when you kind of watched it that way, it just was so, um, just kind of smashing the face.

• 50:31Speaker 01

  Yeah, it does. It does. Yeah. It's, if you, if you're forced to give up your time, it does feel like that, that kind of oppressive, um, not free environment.

• 50:41Anthony Pompliano?

  For sure. What, uh, what's the most important company in crypto other than a DCG company?

• 50:45Speaker 01

  Hmm, most important company in crypto.

• 50:50Speaker 01

  Look, I mean, I, I really believe CoinDesk plays a vital role in this industry. I don't wanna, it's a DCG company, but.

• 50:58Anthony Pompliano?

  You're literally the first person to just ignore the rules.

• 51:02Speaker 01

  I'll think of another one, the most important. I mean, I don't, look, the, the, the one that I've actually used, um, I don't know if it's the most important in the long run.

• 51:12Anthony Pompliano?

  Okay.

• 51:13Speaker 01

  But something that I used that I think articulated what was going on well to people in the early days with Zappo, that we had this mountain top and that there were people guarding the Bitcoin, uh, up there. Somehow made people think that it was, um, it really got through. I always saw people click, um, when I mentioned that.

• 51:30Anthony Pompliano?

  It's pretty badass.

• 51:31Speaker 01

  It's pretty neat. Yeah, it's pretty neat. You know, a lot of those exchange, exchanges, you know, I, I love the, the sort of, um, privacy focus that Kraken has as well. Um, I'm a big fan of Shapeshift.

• 51:46Speaker 01

  Happy to read the way they had sort of taken account of their last year and said, "Let's focus on what we do best." And I look forward to seeing what that is because I do believe that Eric is one of the smartest and sees it comprehensively. That's really what I look for. People who can see it, the biggest possible story. Because we're not dealing in, like I said, this Wall Street thing is great. It's fun and will always be there. We're going to eat Wall Street. That's going to happen. But it is not the end of the story. It's a pass. It's a stop along the way. Yeah, long Bitcoin, short bankers, only for a while. Yeah, exactly. All right. What one regulation would you change or improve if you could? Absolutely. The crowdfunding, and I'd put that zero and... Go from a million dollar limit to ten million.

• 52:31Speaker 01

  Yeah, 10 million. I think 10 million is all companies need to get going in this space. I don't imagine why you'd need that much more. I mean, maybe. But for the, like, the only way this thing is going to scale, I'm a big believer that we're going to live in a multi-token, multi-chain, and that's how it scales. It doesn't scale through just on-chain transaction. I think it scales through the number of chains and coins that are there, and interoperability being a major part of how that can help coordinate all this stuff. So if that is all possible, then, you know, a lot of these things are pretty bespoke. What we're trying to do, what do these things do? They authenticate really well because possession equals identity, right? You have the key, you are who you say you are by sheer virtue of having the key, which is that sort of light touch that we want from a point

• 53:15Speaker 01

  of view of privacy and security in a completely connected digital world. And then that you can sort of extend that to the types of bespoke, so it's authentication and authorization, what transaction type. In Bitcoin, it's simple, just send. But we do want to sort of can and bottle all kinds of transaction types. And that's when we eat the regulator, right? When we can start turning the compliance of a regulation into an authorization on a chain, then we've done their job and they can just go back and sit in Congress only, which is the way it should be in the first place. We got to get everyone who's not in Congress in the Senate sort of, you know, turned into some sort of protocol, if we

• 53:59Speaker 01

  can, right? Save everyone money. Tokenize the regulators? Tokenize them. Just get them. What's the most important book you've ever read? Um, I mean, I always go on. I'm a huge Mark Twain fan.

• 54:11Anthony Pompliano?

  Okay.

• 54:11Speaker 01

  And I think if you go to Mark Twain's, um, you know, Mark Twain got a start as a writer of the Gold Rush. Uh, he was out there sort of immortalizing and mythologizing some of the early Wild West Gold Rush people. He became a travel writer after, and that's what invented stand-up comedy and all that stuff. So I'd say roughing it, uh, which was his experience, uh, in the Gold Rush was important. Um, for sci-fi, I'm a huge Aldous Huxley fan, so Brave New World for sure.

• 54:42Anthony Pompliano?

  Got it. All right. One, uh, non-crypto question, and then I'll let you ask me a question. Uh, you're smiling, so you already know what's coming.

• 54:48Speaker 01

  I don't. I don't.

• 54:50Anthony Pompliano?

  I'm not gonna ask about alien pets, but, uh, what do you think the probability is that aliens exist?

• 54:56Speaker 01

  Pretty low, man.

• 54:57Anthony Pompliano?

  You think it's pretty low?

• 54:57Speaker 01

  Yeah, it's pretty low, yeah.

• 54:58Anthony Pompliano?

  Wow. Okay, wait, explain.

• 55:00Speaker 01

  Well, we

• 55:01Anthony Pompliano?

  I vehemently disagree, but go ahead.

• 55:03Speaker 01

  Um, look, I, I hope, I hope so. Um,

• 55:07Anthony Pompliano?

  You hope that they exist or don't exist?

• 55:09Speaker 01

  They do. Yeah, I'm a big sci-fi person, and I don't think it's against us, but, um, we have a pretty long reach out there. We can hear and see a lot. Um, and there are anomalies and weird stuff that happens, but, uh, at this point, I would imagine we would get some kind of sign. Now, now, uh, it's possible, right?

• 55:29Anthony Pompliano?

  Yeah.

• 55:29Speaker 01

  I just haven't, I would have to see a bit right now.

• 55:31Anthony Pompliano?

  What, uh, we've talked about a couple of people, we've talked to a couple of people about this. What about the Harvard, uh, professor who swears that the, uh, the thing that entered the solar system was a spaceship?

• 55:43Speaker 01

  Yeah, I mean, if

• 55:44Anthony Pompliano?

  Like, he's swear, he's like, I don't care if you believe me or not, I swear.

• 55:47Speaker 01

  Yeah, I saw that. Um, yeah, I'm, I'm, I'm open to the idea. I'm not, I'm not saying, I'm not, uh, discredulous of the idea. I just would have to see something, you know? See something.

• 55:58Anthony Pompliano?

  If they do exist, how do we interact? Like, like, what, the first interaction or the first interaction that we have with them?

• 56:03Speaker 01

  Crypto, man. It's all math. It's all math. Though you can actually use the so that's what's so neat about some of the algorithms that have been found like Shaw 256. This is a this is a jewel, right? This is a this is a rare piece of math that is able to do pretty magic things. It does the same. It produces the same characters, the same number of characters each time. You know, because these are little mathematical jewels that you find in the rough, they become easy to use to, let's say, reverse engineer a communication. And so in that way, they're great. We would probably use Bitcoin

• 56:45Speaker 01

  and say, look, we did this. It's probably a step of evolution in every culture, in every world, right? To come up with a Bitcoin.

• 56:51Anthony Pompliano?

  I'm blown away right now that we would communicate with them with math. I did not expect you to go there.

• 56:56Speaker 01

  That's the only way. If you take math, you can you can sort of abstract language not far after.

• 57:02Anthony Pompliano?

  Yeah, that's fair.

• 57:03Speaker 01

  And you can use it to sort of reverse engineer how we would communicate. So I'm not sure exactly how, but you know, some really smart people could figure that out.

• 57:11Anthony Pompliano?

  Hopefully, they come in one plus one equals two to them as well.

• 57:13Speaker 01

  Yeah, that's the start. That's the start. That's the start.

• 57:16Anthony Pompliano?

  All right. What one question do you have for me?

• 57:18Speaker 01

  Hmm, let's come up with one.

• 57:26Anthony Pompliano?

  You're way smarter than me, which scares me that you're gonna ask me something.

• 57:29Speaker 01

  No, no, no, I'm not. I'm trying to come up with something interesting and fun.

• 57:40Speaker 01

  Is I'll make it a Twitter centric question.

• 57:44Anthony Pompliano?

  Of course.

• 57:46Speaker 01

  Is crypto has to be crypto related?

• 57:48Anthony Pompliano?

  No, it could be anything.

• 57:55Speaker 01

  Where would your business be without Twitter?

• 57:59Anthony Pompliano?

  Oh, that's a good question.

• 58:04Speaker 01

  I have no clue.

• 58:06Anthony Pompliano?

  So on the investing side, I've never thought about Twitter specifically helping sourcing deals, investing, etc. And only recently, probably the last like six months, have founders like started verbalizing this idea of, oh, man, if you're an investor, like you can, you know, go and you can basically drive awareness, you can drive acquisition, you can do all the stuff. And it's interesting to think about. One of the things that I've spent a lot of time on over the, since I started looking at this is, so do the asset management businesses today, I mean, they're really antiquated, right? And there's all kinds of people who are doing some interesting things, you know, everyone from like, who's Shaughnessy Asset

• 58:50Anthony Pompliano?

  Management, right? What Jim and Patrick are doing to guys like CoVenture, and they've got some, you know, really unique things. But the one thing that I don't see a lot of people going after is this idea of how does the asset management business change if you have huge distribution channels, right?

• 59:06Speaker 01

  And a huge participation base that didn't exist before.

• 59:09Anthony Pompliano?

  Exactly. And so I don't know what the answer to that is yet, where this is kind of like a live experiment, frankly. But, but we definitely see some, some pretty interesting things. And I'll tell you one anecdote that absolutely blew my mind. I won't say who it is, but I walked into a university endowment with, with one of my partners, Mark Yusko, and Mark comes from the endowment world. He's a legend in that whole space. And then we walked in, everyone greeted him, and then the CIO walked in. CIO is probably, I'd guess, like, early 40s, and he walks right over to me, goes, what's up, Pomp? And I was like, what? How do you know who I am? Why did you just use that nickname, whatever? And he's

• 59:51Anthony Pompliano?

  like, oh, I listen to the podcast, read, blah, blah, whatever. And it was really fascinating for somebody that I'd never met, who, you know, I think of as somebody that I could learn from and all that stuff, to already know so much about the way that we think, the way that we're approaching things, things that we've done when we walk in the door, right? And so I think that, you know, those aspects are obviously very positive. Helpful. There's a downside, though, right? Like, you know, we make an investment and it goes to zero. In venture, it's not a big deal. Like, we expect a lot of the investments we do to go to zero. Well, when you get thrown to the Twitter trolls, right, they'll hold it over your head, right? Yeah, you invested in this company and it went to zero. And so you've got to kind of detach the benefits from the negative side.

• 1:00:36Anthony Pompliano?

  And a lot of it's just managing the psychology of, you know, I'm probably not so worried about the anonymous person on Twitter who's, you know, there's one who literally has the name troll in their name. You kind of know why they're there, right?

• 1:00:49Speaker 01

  No, but I've watched it from a distance and I think what you guys have done is pretty neat. For that very reason, exactly what you said, that it, you know, this is, it is an antiquity business. We saw downtown Josh Brown do a lot of stuff, but this is still a little different.

• 1:01:02Anthony Pompliano?

  Yeah, he's awesome, man.

• 1:01:04Speaker 01

  He's great. I mean, we love, you know, he's always been a big help to CoinDesk and has come to our events. And I think he's a really smart and interesting person.

• 1:01:13Anthony Pompliano?

  You know, but you know what? I'm going to call him out right now because he recorded with us before. Josh, I hope you're listening to this. This guy told me he believes in ghosts more than aliens.

• 1:01:22Anthony Pompliano?

  I'll never forget that.

• 1:01:22Speaker 01

  I've seen those ghost pictures, though. He's on to something. I saw one the other day that got me, too. I saw the, you know, those personal cameras are catching people's ghosts all the time.

• 1:01:31Anthony Pompliano?

  Listen, he was adamant about it.

• 1:01:35Anthony Pompliano?

  No, man, listen, this has been awesome. Thank you so much for coming and we're big fans of everything guys are doing at CoinDesk. So we'll have to do it again in the future.

• 1:01:41Speaker 01

  Great. Awesome.

• 1:01:43Anthony Pompliano?

  All right, guys. I appreciate you listening to that episode. I enjoyed it and I hope you did, too. Before we go, I want to remind you that it was brought to us by The Grove, a full-service creative and design agency that has worked with companies like Block, Chamber of Digital Commerce, AAA, and the American Red Cross. You can check out more of their work at thegrove.co/pomp. Again, that's dot co and not dot com. Thegrove.co/pomp. Go check it out and let me know what you think.

• 1:02:15Anthony Pompliano?

  Hey everyone, Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.