#450: Jed McCaleb on Building Payment Technologies

Jed McCaleb is the co-founder and the CTO of Stellar. Prior to co-founding Stellar, McCaleb founded and served as the CTO of the company Ripple until 2013. McCaleb is also known for creating the infamous Mt. Gox. In this conversation, we discuss payment technologies, how Stellar works, the STABLE Act, financial inclusion, and the future of money. ======================= Smart investors know being early is critical to success in crypto. CoinList is where early adopters invest in, earn, and trade the best new crypto assets before they list on other exchanges. Try CoinList Pro and be first to trade on network launch. Sign up via coinlist.co/pomp and earn $10 in BTC after you trade $100. ======================= Crypto.com is the only all-in-one platform that allows you to BUY / SELL / STORE / EARN / LOAN / INVEST crypto all from one place. Join over 1 million users currently using the Crypto.com app. Download and earn $50 USD using my code ‘pomp2020’, or use the link https://platinum.crypto.com/r/pomp2020 when you sign up for one of their metal cards today. ======================= Pomp writes a daily letter to over 90,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at https://www.pompletter.com

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

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Jed McHale is the co-founder and CTO of Stellar. Prior to co-founding Stellar, McHale founded and served as a CTO of the company Ripple until 2013. McHale is also known for creating the infamous Mt. Gox. In this conversation, we discuss payment technologies, how Stellar works, the stable act, financial inclusion, and the future of money. I really enjoyed this conversation with Jed, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Coinlist. Smart crypto investors know that being early is critical to success. Coinlist is built

• 0:45Anthony Pompliano?

  for early adopters. Since 2017, Coinlist has been providing early access to the highest quality projects before exchanges. Look no further than Coinlist's most recent offerings. If you want to use Coinlist Pro, they have all of the features you've come to expect from a professional crypto exchange, including advanced order types, APIs, secure wallets, and low fees. But you'll also get first access to all of the Coinlist-supported projects. In crypto, it pays to be early, and Coinlist is where early adopters invest, earn, and trade the best crypto projects before other exchanges. You can sign up for Coinlist today

• 1:21Anthony Pompliano?

  with coinlist.co/pomp. Again, coinlist.co/pomp, and you'll earn $10 in Bitcoin after you trade your first 100. Again, you can go to coinlist.co/pomp, and you'll get $10 in Bitcoin after you trade your first $100. On Coinlist, you'll never be late to the party. Go check them out. Next up is Crypto.com. They're an all-in-one platform that allows you to buy, sell, store, earn, loan, or invest crypto, all from one place. You can join over 1 million users currently using the Crypto.com app. You can download and earn $50 US dollars when you use my code Pomp2020. Again, Crypto.com, not only do they have a fantastic URL, but that's the

• 2:05Anthony Pompliano?

  place where mass adoption is occurring. Crypto.com, that all-in-one platform that allows you to buy, sell, store, earn, loan, or invest crypto, all from one place. Lastly, don't forget that I write a daily letter to over 90,000 investors about business technology and finance. I break down complex topics into easy to understand language while sharing my personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. All right, let's get into this episode with Jed. I hope you guys enjoy this one.

• 2:35Speaker 01

  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.

• 3:01Anthony Pompliano?

  All right, guys. Bang, bang. I've got Jed here. Thank you so much for doing this, sir.

• 3:05Speaker 03

  Yeah, thanks for having me.

• 3:07Anthony Pompliano?

  For sure. Let's just get started with your background. You've got this kind of very extensive technology driven background. Where did you get started in the business and technology world? And how do we eventually get to stellar?

• 3:18Speaker 03

  Yeah, I mean, I've been programming for a really long time, probably since, you know, third or fourth grade. Yeah. And I've always been interested in kind of like distributed systems. Like the first kind of successful thing I did was this program called eDonkey 2000, which was sort of like BitTorrent. It was like a file sharing thing, this peer to peer network. That was pretty popular in like 2000, around there, 2001. And then kind of after that was winding down. You know, I was like working on some other project and then I came across Bitcoin and got super excited about it. So got really into crypto because it was kind of in line with stuff I've already was working on and, you know, my general ethos.

• 3:59Anthony Pompliano?

  Got it. And do you remember the first time that you ever heard about Bitcoin or like what your thought was when you saw it?

• 4:04Speaker 03

  Yeah, it was summer of 2010. There was like the first article, like there was a slash start article about it. And, you know, I haven't, I hadn't even read slash out in years. But, but I was just kind of looking for another project and kind of like looking around and I came across it. And I was like, really surprised that somebody had was able to solve this problem because it didn't seem possible before, before I learned about Bitcoin. I think a lot of people had a similar reaction. And got super excited about it. And that's kind of all I thought about for the next, you know, well, really years. But, but, but yeah, definitely, definitely there's like you like that month after, which that's all I kind of spent my time working on.

• 4:43Anthony Pompliano?

  And where does Mt. Gox come from? Because you basically acquired Mt. Gox, I think, the URL, but it was really for Magic Cars. Like, tell us that story.

• 4:52Speaker 03

  Oh, yes. So I had, so basically, I read about Bitcoin in, like, you know, summer of 2010. Kind of immediately, I was like, well, I gotta wanna play around with this. I wanna buy some of these things. And there wasn't really a good way to do that at the time. So then I just said, okay, fine, I'll just build an exchange. Like, it was pretty clear that it needed that kind of thing. And built that over the course of like, two weeks. And I, you know, this is so early in Bitcoin's history. It was like very, there was like maybe 2,000 people on Bitcoin Talk, which is like the extent of people that knew about it at all. So it was just very unclear what it was gonna happen with it, or what it was gonna do. So I didn't wanna like, I, so I had a domain sitting around, this Mt. Gox domain, which I'd used for a project years ago. You know, it was just kind of idle. So I was like, okay, fine, let's call it this, and do this thing. So

• 5:37Speaker 03

  that's where the name came from, and how that came together.

• 5:40Anthony Pompliano?

  Got it. And so when you're building, you know, kind of the exchange, you're looking at Bitcoin, you can't stop thinking about it. What was your thought process? Was it like, hey, maybe this thing grows into, you know, a couple million dollars of volume? Or was it like, this is gonna be the next global reserve currency? Like, kind of how bullish were you? Or what was your thought process at the time?

• 5:58Speaker 03

  Um, so I thought, like, I thought it was an awesome idea, and would have loved to see it, like, take off into the world, and like, be huge. It seemed kind of like a long shot that that would happen, just because it was so small. And like, the, the, the idea, like, audacity of, like, saying, hey, we're gonna make this new currency that everyone's gonna adopt over the world is pretty huge, right? And so, so, uh, you know, I thought, you know, these things only kind of worked to the extent that other people kind of buy into them, and like, then like, also agree that this would be a cool thing. And it just seemed like it was one, gonna be like this kind of niche internet thing, that maybe it would grow over like, years and years. But I had no idea it would grow this quickly, right? So, um, although I wanted it to, but, but, but it just seemed like it would take a lot longer for people to kind of wrap their heads around

• 6:43Speaker 03

  it, understand that this is a good concept. Like, there was obviously like, this group of people that, that kind of got it, and understood why the world needed this, like, alternative to fiat currency, but... But it was just unclear to me that that was as widespread as it actually turned out to be, right? So, so I think me and I think most people like were hopeful, but but kind of like cautiously optimistic, I guess. Like they just thought this would take a lot longer and, and you know, it was, you know, uh, it was, it was cool to see like how how fast it got adopted like widely, so.

• 7:14Anthony Pompliano?

  Absolutely. And so basically you end up selling Mt. Gox, Ripple, Stellar, kind of how do we get to from Mt. Gox to Stellar?

• 7:24Speaker 03

  Yeah, so like I said, I kind of just did, I kind of made Mt. Gox just to learn Bitcoin essentially, just like play around with it and you know, I wanted, it was something that the ecosystem clearly needed and it would be a cool project to have it. But I never really intended to run it long term. So like as it kind of started to get traction, I realized it was starting to take up more and more of my time. Like it's not something that I really wanted to think about all the time. Like it's, it's, you know, it's not, uh, it's not, well, I mean, I just generally like to work on like harder like, um, you know, problems, I guess. So, so yeah, so I sold it to that guy in Japan. Unfortunately, he ended up being pretty incompetent and you know, that you guys can all look up that history if you don't already know. But, um, uh, and then I was thinking about other, like, basically, I, I've always thought Bitcoin is this awesome idea,

• 8:07Speaker 03

  but I was kind of bothered by the mining aspect of it. Like it's, it uses, obviously uses like a ton of resources. There's a way to solve this consensus problem without doing that, uh, it would be, it would be great, right? So I kind of like started thinking about other ways to like solve like the double spin problem, which is what mining and Bitcoin does is like solve this consensus issue. Um, and came up with the idea that kind of led to Ripple. So, um, so I moved to California and with the intention of like starting Ripple and, and like, you know, found some people to work on it with me. Uh, you know, we were working it for a while, then I brought in, uh, someone to be CEO. And then that ended up, we ended up not seeing eye to eye and there was like some drama there. And so I eventually left Ripple with the intent of kind of just doing something else entirely.

• 8:51Speaker 03

  Uh, but the, the original idea and premise and like the, the reason why I wanted to do Ripple in the first place or like what like crypto in the first place was still there. And it's like kind of hard to get away from. And so then I, I set up Stellar with kind of like the intent to just kind of make this network the way that, that, that, uh, I think is most beneficial to the world. So.

• 9:10Anthony Pompliano?

  Got it. So let's start with just kind of a 101 of what is Stellar? How does it work? And when you describe it to people who know nothing about cryptocurrencies or anything like, like what's that description?

• 9:22Speaker 03

  Yeah. So, well, so the basic problem that we're trying to solve is if you know anything about like the financial infrastructure today, the way the way money moves around the planet, it's very much pre-internet, right? There's all these different financial networks, you know, there's like, you know, ACH and SEPA and SWIFT and like mobile money things and, you know, IMPESA and all these kind of things. And they don't interoperate, right? They, they all have their different standards. And if you want to send money from PayPal to, you know, some mobile money thing in Southeast Asia, you just can't do it, right? They're just not, they just don't communicate. And this is all, this situation is like, very much like the way that the, the way the world was before the internet. And, and the idea behind, behind Stellar is just how do you make this interoperable layer where all these

• 10:06Speaker 03

  things can communicate with each other, right? So not just in different financial networks with different currencies, right? So if you're holding, you know, pesos in Mexico and you want to send, you know, $5 to somebody in, in like, you know, Italy, like that's really not even possible today, right? In the affordable way, right? So, so Stellar's a way to do that, right? It just, it just allows you to use any currency with any financial institution and seamlessly and effortlessly send to anybody else in the world, right? So that's, that's kind of the goal. And the way we do that is by leveraging this, this innovation that Bitcoin came up with, which is like this distributed ledger that everyone can see, but no one can change arbitrarily, right? There's like certain rules that have to be

• 10:46Speaker 03

  followed. And there's this consensus mechanism that, that, that is adhered to. And then, and this ledger is updated over time, right? And so the beauty of that is that there's no central party. I mean, maybe your listeners all know all this stuff, but, but, but, but there's no, there's no person that you have to like, absolutely trust. So like, if you have two financial institutions that don't necessarily know each other, now they can go through this distributed ledger to be able to transact, even though they, they maybe not trust each other and maybe just don't have a formal relationship with each other. And it's, so it's, it's kind of the, the The core like blockchain idea is what kind of unlocks this ability to be able to make this

• 11:25Speaker 03

  this internet level protocol for for payments, right? And so so that's what seller is. So like basically to be kind of less abstract about it. So it what it allows you to do is hold any kind of currency. You can hold like dollars, euros, you know, Bitcoin, anything, anything you want can be tokenized onto the network. And it's sort of, you know, you know, Stellar was launched like, I think, over six years ago now, or maybe about six years ago. And then that was like the premise of the idea. And like now we're kind of seeing now, oh, it's like stable coins. Like people have kind of got the point that that it's useful to have, you know, representations of money that you're used to using in these same digital networks, right? You want to be able to have your, you know, US dollars operate with your Ethereum, operate with your like yen or whatever. Like these things all need to kind of be in the same

• 12:10Speaker 03

  ecosystem. And that unlocks all this kind of power, right? And so that's the idea behind sellers, that you can represent any kind of value and you can trade this value amongst each other. So.

• 12:20Anthony Pompliano?

  It's almost like what you're doing is you're basically making the technology interoperable. And then where the competition plays out is that like the monetary policy layer, let's say for currencies, right? Is the differentiation is no longer in like, hey, I have dollars in my wallet. I have to physically go to like a currency exchange or at the airport to exchange it for some other currency. Now I just, everything's interoperable. Click of a button, I can move in in between these, reduce the friction. But at that monetary policy layer, there's obviously differences. And so I can make my decisions based on non technological barriers to some degree.

• 12:50Speaker 03

  Yeah, I mean, yeah, I mean, you could imagine a world where, you know, it's not even currency, but maybe like, you know, if regulations start to allow, it's like you could have like shares of Apple or shares of stock. And then like when you go to spend, they just get seamlessly converted into whatever, right? So, you know, like it allows you to just do very different things than what what's done today and gives people like a lot more flexibility. Like right now, we're one of the things, one of the big things we're working on is this dollar savings project where it's basically like a mobile consumer app. It allows people in places with really high inflation, like say Argentina, to be able to save their money in dollars, right? And so that, that, that's like this really awesome use of this technology that, that wasn't really possible before. So, so things like that are just like super exciting.

• 13:33Anthony Pompliano?

  Got it. And so basically, like, how's it going, right? Like, how do you think about the adoption, kind of the development and evolution of Stellar to where we are today? Is this going well, going better than you expected, not going so well? How do you kind of measure that?

• 13:48Speaker 03

  Sure. Yeah, I mean, it's going really well. I mean, it's a, it's a really hard problem, and I think we see this with all, throughout all of crypto, is that, you know, there's a lot of interest and a lot of hype around it, and a lot of people like it, but if, when you go and look like how people are actually using this in the real world, that's pretty still very nascent, right? There's still not a lot of like, you know, you don't have like a million users using it every day for like actual transactions, things like that, right? And I think it's because all of these things depend really heavily on network effects. Like you need lots of people in the world to be kind of on board before they're useful, right? So particularly something like, like Stellar, where it's all about payments, right? So if you can only pay to a certain number of people in the world, then your payment system isn't that useful. So, so you kind of have to get over this network effect hurdle, and, and, and that's

• 14:33Speaker 03

  what's kind of made it take so long for, I think, all of crypto in general, right? So, but, but where we are now is, you know, we have a pretty good idea and route for like how to like get a beachhead into these network effects, how to make things useful for people before there is a big network. And so that's the main thing we're working on. We've seen, we've seen adoption go up quite a bit over the last year, like this has been a really big year for us. The team has grown a lot. You know, I think, you know, there's more, more accounts on the network, there's way more transactions we've had. I, I think, I don't figure what the stats are, but I think like 90% of our operations over the lifetime of history have been in this last year. Like it's just, the popularity is just increasing like quite a bit. So, but, so, so all those things, things are going great.

• 15:17Speaker 03

  I mean, I think there's still, obviously we're not done, there's still a lot of work to do, but, but yeah, we're definitely in the right direction.

• 15:23Anthony Pompliano?

  Got it. And how do you look at yourself and kind of all these other smart contract platforms? You know, mentioned stablecoins earlier. Let's take Ethereum, for example. There's lots of activity there. Is this a world where there's coexistence kind of at the end? Is it, there's got to be a winner take all? Just how do you look at competitive landscape or just other platforms that people can use?

• 15:43Speaker 03

  Yeah. So I mean, I think in general, a lot of these, you know, crypto all kind of gets lumped into this one bucket. But, but it's, I don't, I don't think it's like winner take all at all. I mean, it's probably winner take all in like certain niches, but, but these things are all solving very different problems. Like the problem Bitcoin is solving is very different than Ethereum is solving, which is very different than what Stellar is solving, right? So like, like Ethereum is basically like this kind of generic universal like computation thing that, that isn't, isn't tailored for payments specifically. We do obviously using it for that, whereas Stellar is, is designed to fill this like very kind of narrow niche. I mean, it's not narrow because everyone sends payments, but, but it's a specific one, right?

• 16:23Speaker 03

  So it's like, it's, it's a like, definitely in the future, multiple of these things will exist. I think, I think the hope is that Stellar will be very good for like cross border payments and like sending, you know, representing other kinds of value, like, like the whole stablecoin thing works way, way better on Stellar just because it's designed to do that. Whereas Ethereum will be like, you know, like you're never going to make like a prediction market on Stellar, right? Whereas you can do that on Ethereum, right? There's just different things that they could be done on different platforms.

• 16:52Anthony Pompliano?

  Got it. And so when we kind of fast forward here, we say, okay, we're basically giving people the tools to build all kinds of stuff that they want to build. And you're really focused, I think, on making sure those tools work and, and operate correctly. How do you think about where we're headed, right? You know, 10 years from now, is this a world where every stock, bond, currency, commodity is digitized? And it's on these networks and like, it's kind of the, you know, Bitcoinization of the world and tokenization of the world? Or is it something that maybe isn't as audacious in terms of, you know, kind of that final state or next decade or so?

• 17:27Speaker 03

  Yeah. So I mean, I do think like, Yeah, that most things will have like some digital representation. I mean, it just makes it just makes so much more sense and it's easier and like, you know, if you've ever sent payments with cryptocurrency, you know, pay for something online, then you have to go use a credit card. It's just so annoying. You have to know all the details and all this kind of stuff. Like, it's just so much nicer, right? So, so I, I, I do think that, that, uh, that we're going to move that direction and, um, you know, I think, uh, there is some limit to it and there will still like people, like the general like population probably doesn't want to deal with their own secret key. And it's probably not safe for them to think that. So there will have to be like

• 18:07Speaker 03

  solutions around that that'll end up looking, uh, not that different than what we have. Like, you know, there'll probably be things like a global Venmo, things like that. But, but, but, uh, but the user experience will be very similar to what they're used to now. It'll just be, it'll just have more capabilities than, than what they can do today. Right? And so I think all of that is, it's really good. But, but, um, but yeah, I mean, I think, I think it will be, we're still a long way to go. Like I said, for, for it to be like, or there's like millions of people using crypto every day for their everyday lives. But, but, uh, I, I think we will get there in the next years.

• 18:40Anthony Pompliano?

  And what do you think the response from the incumbents are, right? So like basically what you're building, what, you know, folks are building with stablecoins on Ethereum, what Bitcoin is being built. Everyone is kind of under attack. If you're an incumbent from all of these technological upstarts or really challengers, right? And so, uh, put aside for a second, who wins, who doesn't win, you know, kind of how, how it plays out from the challenger side. Just if you're an incumbent, you've got to feel like, you know, the technology industry is coming for us. What do you think is kind of the rational response from them? And is it something where, you know, some of them adopt and, or adapt and end up surviving? While some die? Or are we looking at potentially like a full blown disruption of the entire industry? And basically none of them can keep up and there's entirely new players?

• 19:26Speaker 03

  Yeah, I mean, I mean, anytime there's like some large technological change, there is this, you know, there are some companies that can handle it, there's some that can't, right? Like, you know, even if you look at like the internet coming along, you know, now there, there used to be tons of bookstores, now there's just Amazon, right? So like, you know, I think, I think it'll be some, something in between, uh, just like, you know, in 10 years, we will, we will, like, none of the companies today will be around or anything like that. But I think, I think some of them will adapt and like you see that already, like you see like, you know, like PayPal is now accepting Bitcoin, like Square is obviously very like crypto forward, things like this. So, so some companies are, are realizing that this is the way that things are going to be in the future and they're moving in that direction. Uh, so I, I, I think, you know, and some are just moving much more slowly,

• 20:10Speaker 03

  but, but, uh, but I, but I think it is inevitable and just like any big change, like there's going to be, like, there's going to be some people that get it and there's just going to be some that, that, that don't, right? So, um, you know, I mean, like PayPal, for instance, they, uh, they banned, like I used to take PayPal on Mt. Gox and they like, they banned me for life for having a PayPal account and now they're, they're accepting Bitcoin. So, so I don't know, they've obviously have changed some, some point in the, in 10 years.

• 20:37Anthony Pompliano?

  Are you trying to get your account back? Or is that a focus of yours?

• 20:41Speaker 03

  Uh, no, not really. I don't need a PayPal account at this point.

• 20:46Anthony Pompliano?

  Absolutely. And so when you think about kind of the, the world as we're evolving here, a lot of times I just think about like where you spend your time. And obviously you're spending majority, if not all of your time on Stellar. What do you think about some of the other things that are going on? Is this a world where you're like, hey, look, you know, Bitcoin, Stellar, and then tokenization of assets? Or like, how do you kind of just think about the things that you're personally interested in? And where you spend your time?

• 21:11Speaker 03

  Yeah. I mean, obviously there's just a ton going on in crypto space in general. And it's just very hard to like keep track of it all. And, you know, frankly, I don't spend that much time thinking about projects outside of Stellar. Like, I mean, there's, there's so much to do with, with the Stellar network that, that, uh, that, that just kind of takes up all my, all my bandwidth. I mean, there's So yeah, so I mean, I think, I think the things that are interesting for me are just again, this idea that, that, that, that the world needs this interoperable layer between all these things and like, how do we make that possible and how do you bootstrap that network? And that that's mainly what I spend time thinking about and just in kind of some stuff about like how like, once you, once you start to get scale, like, how do you

• 21:52Speaker 03

  make these networks go much further than they can today? Because, you know, they're, all of these things have pretty bad scaling properties. If you compare them to just like a, you know, a database that you can like shard and all this kind of stuff. So you, you have to come up with like methods for like, how this is going to work long term. And so that's, that's what we're spending a lot of time doing now. It's like, you know, like, what, like, what, like, how does this work in the wind condition? Like, I mean, how, how do you actually get like millions and millions of people on these networks? So, um, yeah, so we have some ideas around that. That's pretty broad.

• 22:25Anthony Pompliano?

  Got it. Uh, there was recently this new piece of legislation that was put forward called the Stable Act. Um, and it essentially, you know, very broad generalization says you can't create a stablecoin unless you've got a federal bank charter, right? And for all intents and purposes. Um, and there's a lot of controversy around this. It feels like, you know, some people in the political sphere, uh, think this is the greatest idea ever, and they're going to, you know, work diligently to get it approved. There's a lot of people, I think, in the crypto community that say this is way off base and kind of exposes their lack of understanding of a lot of this. How do you think about it? And kind of, is there anything that you guys are doing from still? I saw you guys put out an announcement or kind of a statement. Just, just talk through that piece of legislation.

• 23:04Speaker 03

  Sure. Yeah. Um, yeah, we put out a blog post about it that kind of goes into it. I mean, I, I appreciate the, uh, idea behind it. I, what I assume is the idea is that they want to like, uh, you know, protect consumers from, from like, you know, losing all their money, right? Which is, you know, which is something that obviously needs to happen. But, but I mean, this, this particular piece of legislation seems like, like poorly crafted. I mean, it seems like it would ban things like, like Venmo originally. I mean, that's a digital currency that, that, that wasn't a bank. I mean, I think PayPal's a bank now, but, but originally when Venmo started, you know, that would have been disallowed, right? And that's just like terrible for And it all just lets you do is just have these these people that are banks, these old that they there's

• 23:46Speaker 03

  there's no motivation for them to improve their situation for consumers like like the consumers ultimately will hurt by that because like there's not new innovation and and and they just become like this like kind of calcified dinosaurs and there's no there's no there's nothing that they're competing against which which is like what drives all of this improvement for for consumers, right? So it just seems like a very bad approach to me.

• 24:09Anthony Pompliano?

  Yeah. And to me, what was so interesting about when they, you know, announced the legislation or the proposed legislation was basically saying like, hey, we're doing this for financial inclusion. Like the banks have always preyed on everybody. So instead of allowing a kind of free market competition and innovation to take hold, we're basically going to just put a bunch of bureaucracy and regulatory hurdles in the way, which seemed counter to the position they were taking.

• 24:33Speaker 03

  Yeah, for sure. I don't see how this would help financial inclusion at all. I mean, like all of that stuff is going to be done by someone who actually cares about the problem and is not a bank and wants and needs some token that it can, you know, send around to these people and and that's just it's just for him. That's that. So, yeah.

• 24:48Anthony Pompliano?

  Yeah. And how do you think about crypto in light of financial inclusion? Right? I think it's much easier to kind of understand it in the most extreme cases where people have no access to banking in some third world country and like, hey, now with an internet connection. But just maybe in the more developed world, like where do you see that happening? Is it affecting a certain portion of the population, like, you know, the bottom 50% of Americans? Is it something where nope, this is going to be pervasive and everybody, regardless of socioeconomic status, are going to end up using this stuff? Just talk through that financial inclusion component and kind of where you see a lot of this technology fitting.

• 25:20Speaker 03

  Sure. Yeah. I mean, we've spent a lot of time working on financial inclusion at SDF. I mean, that was kind of our one of our original thrusts and like, you know, we've always thought that this is going to take off in the developing world much more quicker than the than the developed world, just because you know, because the financial infrastructure is just so much weaker there, right? And there's it's in the same way that like, you know, cell phone adoption happened first or like much quicker in like places like Philippines and Indonesia where people didn't have landlines already, right? So you can kind of just leapfrog it if you're not if you're not beholden to the old system. But I think I think crypto and like definitely stellar just helped the financial inclusion story tremendously because they make they make it where they just reduce, take out a lot of friction from the system.

• 26:02Speaker 03

  One of the things that was like kind of causing financial like exclusion, I guess, before is because it was just very expensive for banks to actually like serve these people, right? So like if they couldn't make a certain amount per customer, then it just it just wasn't feasible for them to do it because because, you know, their systems were just like old and cumbersome and it was actually expensive for them to to help these people. Whereas, you know, if you if you have like, you know, if you have like, like some mobile wallet that's built on something like stellar, you can have some digital dollar in there. And and you can pay people and you can, you know, you can have it connected to like, you know, like savings and like interest bearing things, stuff like that, right? And all that becomes essentially like this very lightweight bank account and it's like super cheap to service.

• 26:43Speaker 03

  And, you know, can can, you know, connect people to the wider financial world, which is what you want to do to like financially include people. So ultimately, it should be very beneficial for people, not just in like, you know, places like Nigeria, but like places in the US as well, right? So that's.

• 26:58Anthony Pompliano?

  And it's the thought process that eventually, you know, take an average consumer, whether they're in the United States or a developing country. All of their interaction with the financial system will be done through algorithms and networks and kind of decentralized type applications. Or do you think that there still will be this like coexistence hybrid world where maybe I have a traditional bank account at a centralized entity? But then I also use some of these other pieces of technology to earn more interest or kind of, you know, send money at remittances or whatever it is?

• 27:29Speaker 03

  Yeah, I mean, I think I think it will be some sort of hybrid. I mean, like I was saying before, it's like, I think it'll be, I don't think people ever get to the point where they want to secure, people in general want to secure their own private keys. So you always need some institution that's essentially acting like a custodian or at least like, like facilitating you like with these things, right? And so, and then there's also stuff where like for this stablecoin model to work, like usually somebody has to like hold the deposits, right? And so, you know, if you want interest on things, like somebody has to be like, like originating these loans and all that kind of thing. So there's still a lot of like places where traditional financial players need to kind of be in the ecosystem.

• 28:08Speaker 03

  I think what things like like stellar and crypto do is just make it where it's just much more flexible and makes it where it's like a much more even playing field where where. You know, there's just less gatekeepers to the system. Like if, if, if, if you're a new entrant, like say, like someone sets up like a new like user-first bank, like they can, they can easily compete with these like old banks, even though they don't have new customers because they're kind of on the same infrastructure, like the same like meeting, like the, the cryptocurrency layer, right? So, so because it makes everything interoperable, it makes it where there's like more competition, which will make it where there's more, where, where there's more benefit ultimately for the consumers. It's kind of what it is.

• 28:47Anthony Pompliano?

  Got it. And then in terms of Stellar, as you guys kind of build for that world, how many people do you guys have and kind of what is everyone focused on, right? In terms of the, the different bodies of work that you guys are, are actively pursuing right now?

• 29:01Speaker 03

  Sure, yeah. So, we're about 80 people right now. And we, we've, we're focused on like several things. I mean, we kind of have like, so the entity is Stellar Development Foundation, which was kind of the, the nonprofit that was set up to, to shepherd the Stellar network. And so, we do, we do a few things. Like, we, we make sure that the, the core codebase keeps getting maintained and like getting moved forward. And like I said, like work on things like scalability and all that kind of stuff. The things, and then, and then we work on kind of on the policy side, like, you know, like weighing on things like the stable act, like you just mentioned, and just making sure that legislators, like regulators and legislators know, understand what crypto is and understand what Stellar is and like,

• 29:44Speaker 03

  you know, they just need to be educated on it to the most part. And like, because it is this new, complicated technology. And so just like helping that, that, that type of things. And then lastly, like helping on like kind of the ecosystem side with like, with, you know, talking to partners and like introducing partners to each other, facilitating connections between them. One of the big things like that I mentioned earlier is that we're making this dollar savings app. It's called Vibrant. It's mainly focused in Argentina. And the idea there is that, you know, people in Argentina, they suffer like really high inflation, they can like convert their pesos into dollars and hold them in this app and they can send and send it around amongst each other and things like that. So, so efforts like that where we, we spend like trying to make Stellar useful for real people in the world, right?

• 30:27Speaker 03

  So we have another one in between Nigeria and Europe. There's like a big B to B payments corridor going over stellar that we're helping foster and like, you know, like contribute to. So things like that where we're just, we're trying to make this, this technology like one hand, we're like building the technology, but like a big part of the organization is just trying to make this actually useful for people, uh, which I think is, it's kind of that focus. It seems a little bit neglected in the crypto industry in general to me. It's like, people get kind of enamored with the, how cool the technology is and then like lose sight of like, how do we actually make it where this is useful for people? So it's been a lot of time.

• 31:02Anthony Pompliano?

  Everyone wants to show you what shiny thing they can do with the tech, but, uh, but, but the user doesn't necessarily care. Of course. Uh, before I let you go, I always ask the same two questions to everyone and then you'll get to ask me one to finish up. Uh, the first is what is the most important book that you've ever read? Uh, and if you don't read a lot of books, you can say any piece of content.

• 31:19Speaker 03

  Sure. Uh, the most important, but I mean, there's a ton of really good books. Uh, um, I don't know. I mean, one of the ones that I think about a lot is this book, Beginning of Infinity by David Deutsch. Uh, it's, it's essentially, um,

• 31:34Speaker 03

  it's this very positive take on, on, on, on human progress and, and knowledge. Essentially it's, it's essentially like, uh, there's certain, there's certain ways of structuring things where they can kind of go infinite. Like if you look at the way like DNA is, for instance, like it's, it's cool code that allows you to build all these kinds of different organisms. And, uh, there's like similar things that happen with like, like with human language, like it's like a fixed set of letters, but you can make essentially infinite amounts of, of, of content with it. And, uh, it's just, it's just a very interesting book. So yeah, that's, that's one of my favorites.

• 32:08Anthony Pompliano?

  Second question is more fun. Aliens. Are you a believer or a non-believer?

• 32:13Speaker 03

  Uh, I, I don't know. I go back and forth. They used to be pretty convinced that they had to be there somewhere. The fact that we don't see them or haven't seen them in so long, uh, makes me wonder if, if we are in fact alone, at least in kind of our light cone, uh, but. I don't know if they are there, you know, I don't know. There's this other book called Three Body Problem or series of this trilogy. And basically, it's premises that that if there are aliens out in the world, they essentially are all hiding because if any alien civilization sees another alien civilization, it really behooves them to just destroy that other civilization. You kind of have to hide. So maybe that's what's going on too, which would be, which might be really bad for us because we're not hiding. But, but, uh, but yeah, so I don't know. It's, it's weird that we haven't seen them or they're not there.

• 32:57Anthony Pompliano?

  I'm definitely in the camp of, uh, we don't want them to find us. We want to find them for sure. You could ask me one question to wrap up. What do you got for me?

• 33:07Speaker 03

  Well, you have a question. Yeah. Well, so yeah, what is, what's the most interesting thing that you've seen in the last year?

• 33:13Anthony Pompliano?

  Yeah. I mean, I think the easy answer is Bitcoin, right? Just in terms of like that, that kind of has the capture the hearts and minds of not only the retail side and kind of the everyday person, but also the institution. But I changed a little bit in terms of, I had a guy recently come on the podcast. He's from Canada. He literally spent, I don't know, he's like 32 years old or so. He spent the last 10, 12 years of his life laying tile, doing construction, kind of just very, you know, manual type, what I would consider like the everyday person type jobs. And he, I brought him on the podcast because he basically was like, look, you know, in 2016 or 17, he went over to a buddy's house. They were all drinking some beers, watching sports. And usually they're talking about

• 33:56Anthony Pompliano?

  their fantasy football teams and you know, all this nonsense. And somebody says something about crypto. And he was like, oh, you can get rich there? Cool. Like, you know, how do I get an account? And what do I buy? Right? You know, kind of the, the classic story. And he said, what that set him off on though, over the last three or four years was basically went down the rabbit hole. He started to learn about what is money, you know, financial infrastructure, kind of monetary policy, all the financial inclusion stuff, like just all the things that I think, once you've spent a lot of time looking at this stuff, you're like, hey, this stuff's important and I wish more people knew about it.

• 34:26Speaker 03

  Yeah.

• 34:27Anthony Pompliano?

  And so he said this one line to me that was just like really powerful. He was like, I'm not trying to take over the world. I'm just trying to provide a better life for my family. And I think that like, we always forget, because it's so cool to talk about. You know JP Morgan is doing this or you know this exchange just popped up and they're going to take down the New York Stock Exchange or you know this network's going to take out Visa and like sure a lot of that is going to happen but we kind of forget about like that everyday person who literally is just like I now feel better educated and he's even as far as to say like if all this fails and I lose all my money I still feel better off because I got educated during this process and so to me like we're now reaching the point where like you're starting to have enough content in this picture starting to have enough information you're starting to have enough people where you can see like a true impact on society and so it's kind of cool just

• 35:12Anthony Pompliano?

  to think about like if that trend continues you know 20 years from now 10 years from now like yeah actually probably your kind of vision of like you know people in the developing world like yeah actually a lot of them probably do interact with this stuff right even in the developed world and I think that ultimately like that's the interesting part right or the part that I think we all hope happens but it takes you know work every day like you guys are doing and others to to actually build a technology to make it happen

• 35:36Speaker 03

  Yeah no it's pretty cool that I mean one of the one of the good benefits of this whole like crypto revolution I guess is that that people are starting to understand a lot more like basically it's like we're gonna pull back the curtain on how money works like you kind of just took it for granted beforehand but now you're like oh wait this is this is what's going on back here yeah it's been pretty cool

• 35:54Anthony Pompliano?

  In 2020 you know they're basically in the United States running trillion dollar marketing campaigns for hey we could just like edit our bank account like oh okay I can't do that right so like nice that you guys can where can we send people to find you on the internet or find out more about Stellar

• 36:12Speaker 03

  Sure yeah I mean our website is dot org and our Reddit is pretty active our Stellar I mean my Twitter account I never really use Twitter but it's there if you want to occasionally retweet it just at Jed McHale so but yeah

• 36:27Anthony Pompliano?

  Awesome man well listen thank you so much for doing this I think people will learn a lot and I'll have to do it again in the future

• 36:32Speaker 03

  Yeah great talking to you