#583 Bitcoin OG Explains How To Keep An Open Mind - Erik Voorhees

Erik Voorhees is the founder and CEO of ShapeShift, a crypto trading platform that leverages 100% decentralized finance protocols to execute all functionality for users without KYC. In this conversation, we discuss centralization, decentralization, KYC, financial regulation, privacy gains, commoditization of trading, THORchain, Bitcoin, open source software, maximalism, and religious fundamentalism. ======================= Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.com ======================= Exodus is an absolute game changer in the crypto wallet space, and we’ve teamed up to offer an exclusive discount for you, as listeners of the podcast. Sign up for Exodus today using my promo code Exodus.com/pomp. This is a no brainer for both newcomers and crypto heavyweights - go sign up today. =======================

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

• 0:02Anthony 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. Now let's kick this thing off. Eric Voorhees is the founder and CEO of Shapeshift, a crypto trading platform that leverages 100% decentralized finance protocols to execute all functionality for users without KYC. In this conversation, we discuss centralization, decentralization, KYC, financial regulation, privacy gains, commoditization of trading, Thor chain, Bitcoin, open source software, maximalism, and religious fundamentalism. I really enjoyed this conversation with Eric, and I hope you do as well. Before we get into this episode,

• 0:44Anthony Pompliano?

  though, I want to quickly talk about our sponsors. First up is Circle. Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stable coins and public blockchains for payments, commerce, and financial applications worldwide. Circle is also a principal developer of USD Coin, or USDC, which is the fastest-growing, regulated, fully-reserved dollar stablecoin in the world, now standing at more than $15 billion market cap, and is adding nearly $300 million of net new digital dollars in circulation every week. The free Circle account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. You can learn

• 1:26Anthony Pompliano?

  more today at circle.com. Again, circle.com. Go check out the fastest-growing, regulated, fully-reserved dollar stablecoin in the world, circle.com. Next up are my friends over at Exodus. Exodus is leading the world out of the traditional financial system by building beautiful and user-friendly blockchain products. With its focus on design and user experience, Exodus has become one of the most popular and loved cryptocurrency apps. It's supported on both desktop and mobile, allowing you to sync your wallet across multiple devices so you can have access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies straight from your wallet. Interactive charts let you view an asset's price history and your portfolio's performance.

• 2:10Anthony Pompliano?

  Over time. And maybe the best part, Exodus is integrated with the treasure hardware wallet, making advanced security easy for everyone. You can visit exodus.com/pomp for your free download, or search Exodus on the App Store or the Play Store. Again, go to exodus.com/pomp for your free download, or search Exodus on the App Store or the Play Store. They simply have the most beautiful products in all of crypto. All right, let's get into this episode with Eric. I hope that you enjoy this one.

• 2:38Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:07Anthony Pompliano?

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

• 3:11Speaker 02

  Hey, thanks for having me on, Tom.

• 3:13Anthony Pompliano?

  For sure. Let's just jump right into, I think, what's probably one of the most interesting things that you've been spending time on since last time we had you on the podcast, which is Shapeshift has essentially transformed itself. You've completely ripped out all of the centralized infrastructure, and you've really kind of turned into this new model where it's an interface to all these decentralized protocols. Just like, what exactly does that entail? Why'd you do it? And how's it going so far?

• 3:42Speaker 02

  Yeah. So for most of our history, Shapeshift was essentially an exchange where we would take one coin from one person and send a different coin from us. They would trade with us. And it was non-custodial in that we didn't hold any balance, but we were essentially an intermediary to each trade. And in 2018, that's what got us all caught up in all of the financial regulation and in which we had to impose KYC and I would call highly unethical surveillance on people, which we've been fundamentally opposed to. So we've been searching for a way out of that. You know, we can't break laws, but I also don't want to spy on people and I don't want to be

• 4:24Speaker 02

  a branch of the government surveillance apparatus. So how do you, how do you square that? And the way we square it is by integrating decentralized protocols now. So we no longer are an intermediary in any way. We do not trade with customers. We are no longer a financial institution. And that means that we do not need to KYC people. It means that we do not need to act like a bank and we can let users trade directly against these decentralized protocols in a really, really cool way. So we've completed that transition now and as of April 15th, tax day, ironically, we are fully, fully out of that mess.

• 5:07Anthony Pompliano?

  And so when you talk about this idea of a user coming to the platform, using your interface, but they're actually trading against the decentralized protocol, maybe give us an example of like how that works?

• 5:19Speaker 02

  Yeah, so Shapeshift is a mobile app and it's a web app and you can hook up different types of wallets to it, right? So you can use Portis or Keep Key or Ledger or Trezor. And basically you always are in control of your own assets, right? So you stay in control of your keys always. And you interact with the interface. You can see your digital assets in there. You can send and receive like a normal wallet. And you can do trades between different digital assets and those trades occur now between your wallet and a decentralized liquidity pool. So by January, we had the major Ethereum DEXs integrated. And the big asterisk to that is that it only supports like Ethereum assets and the most

• 6:02Speaker 02

  important asset of all Bitcoin was not included. Thorstein came along and we integrated that and launched with them in mid-April. So now even Bitcoin itself, you can trade in a decentralized way with no intermediary, no KYC and full self custody at all, at all ends.

• 6:20Anthony Pompliano?

  Thor Chain is something I think people have heard about. It's got mixed reviews from different communities. I think that the folks that come from kind of the DeFi perspective, or like the Ethereum world, they get super excited about this. Multi-chain world, the ability to kind of flip back and forth between different assets without having to go to a common unit of account. And that, you know, kind of infrastructure that Thor Chain's built really kind of empowers that view of the world. The Bitcoin community seems to be a little bit more skeptical, or not yet quite embracing it in the same way. I know that you think, and have, you know, kind of really bet the company on this idea, but think that this is very beneficial to Bitcoins. So maybe talk a little bit about how does Thor Chain work?

• 7:03Anthony Pompliano?

  And why do you think it's so valuable to Bitcoin and Bitcoiners?

• 7:06Speaker 02

  Yeah, great question. So all of the decentralized exchanges to date, pre-Thor Chain, were essentially built on Ethereum, or more recently on Binance Smart Chain or Solana. And those are all stuck to those ecosystems. So you can only trade the assets that are in those ecosystems. You can only trade Ethereum and ERC20 tokens on an Ethereum DEX. And you can wrap a Bitcoin as an Ethereum ERC20 token, but any Bitcoiner knows that a wrapped Bitcoin is not a Bitcoin. So that whole world is really fascinating and powerful, but it had completely left out chains that were not attached to that ecosystem.

• 7:47Speaker 02

  Thor Chain is the first in the world liquidity pool that works across chains. So it has a similar model to Uniswap, but instead of only being on Ethereum, it can actually work on all chains. So today, you can trade, the only place in the world that you can trade Bitcoin, native unwrapped Bitcoin, to Tether, for example, without any intermediary at all. And for any Bitcoiner who cares about decentralization and immutability, the fact that 99.999% of all Bitcoin trading today happens with a custodian at a KYCed exchange sucks. Like, that is a huge weak point in the entire, the entire growth of this ecosystem.

• 8:30Speaker 02

  So Thor Chain comes along, and now people can actually have immutability in Bitcoin at the exchange level. This is a huge development, and I think Bitcoiners most of all should be excited about that.

• 8:41Anthony Pompliano?

  And so when somebody comes and is using this, they're trading with a decentralized liquidity pool that then that participant, whoever's providing the liquidity, they're basically getting a piece of or all of the transaction,

• 9:00Anthony Pompliano?

  you know, fees that are getting paid by the person that's maybe trading, let's say tether for Bitcoin or vice versa?

• 9:05Speaker 02

  Yeah, so you'd have people, you know, before you go to trade your Bitcoin and tether, there are people who have deposited Bitcoin, native Bitcoin into a pool and native tether into a pool. Those pools themselves are not held at any custodian. They are set up in a threshold signature scheme, which we can get into if you want. But it's essentially a multi-sig apparatus of validators. So those pools hold the assets and when you trade tether for Bitcoin, you are sending in your tether to the tether pool and you're getting out Bitcoin from the Bitcoin pool. So you're trading against a pool, you're not trading against any specific counterparty and certainly not any centralized custodian. And that makes it immutable. It follows the laws of the code.

• 9:48Speaker 02

  It's all open source, obviously, works from anywhere in the world. There are no territory or geographic restrictions. It doesn't care who you are. You don't have to sign up with an account, send in your ID and a blood sample. It is the proper way to do exchange and has just never been possible on native Bitcoin before.

• 10:05Anthony Pompliano?

  Got it. And then when you start to think about kind of that ecosystem, obviously there's what I'll call the shapeshift user, right? The person who comes and uses the shapeshift interface. And then there's the liquidity providers themselves. Are you only participating from that interface standpoint? Are there other things that you would do in that transaction to help facilitate it or make it better for the people trying to do it?

• 10:30Speaker 02

  Right now through shapeshift, you can trade over Thorchain, but you can't provide liquidity yet. So that's one of our next objectives is to allow people to provide liquidity. That will actually allow people to earn interest on Bitcoin in an immutable way for the first time, which is super exciting. But yeah, so far it's just the trading.

• 10:49Anthony Pompliano?

  Got it. And so what's been the response? Like you went from a, you know, kind of traditional centralized exchange KYC, the whole nine yards to now this, what I think people are just starting to wrap their heads around, but what I think is likely to be one of the most interesting and valuable ways to have users interface with you. And so once you got rid of the KYC and kind of moved to the new model, what's been the response from the user base?

• 11:14Speaker 02

  The thing that's made me happiest is hearing customers like exclaiming on Twitter that like Shapeshift is back. Like we had a very dark couple of years and we lost literally more than 99% of our business following KYC. Like it completely decimated the company. And dealing with that, you know, for two years through the bear market was, was pretty miserable. Three, three years really. So to hear people see how Shapeshift works now, where we can give them this frictionless trading across chains with no KYC and in a model in which we're not violating any rules, that is, you know, that's profound. So customers have really loved it and you know, we're just trying to help teach everyone

• 11:58Speaker 02

  that like that model is back now. And it's because the decentralized technology has gotten to a point where that can be offered.

• 12:05Anthony Pompliano?

  And is KYC the only thing that kind of was impacted here? So now you don't have to do the KYC, but are there other things that kind of come out of that financial regulation world that are removed or friction reduced?

• 12:18Speaker 02

  Yeah, I think a lot of people don't realize how much the tip of the iceberg KYC is. Any company that is doing KYC, that's, that's what the user sees, right? They have to give an ID. And at best it's a inconvenience. There is an entire surveillance apparatus that lives below the surface of that nonsense that most people don't see and which companies are often not allowed to tell you is going on. I find it highly unethical and the problem is when companies are coerced into doing that, they don't have much choice, right? So, you know, this is what's so beautiful about decentralized technology is that there's no government that would have allowed Bitcoin to exist unless it can exist in a structure that can't be turned off.

• 13:03Speaker 02

  And that was its magic. Bitcoin arises and cannot be turned off. It is immutable and decentralized. So much of the innovation in the industry right now is about bringing that principle of immutability and decentralization to other areas of finance. That's what all of DeFi is trying to do. That's what decentralized exchanges are trying to do. And so that, that, uh, that principle that Bitcoin started is being applied now in wider areas of finance. And this is super, super fun and exciting.

• 13:31Anthony Pompliano?

  Yeah. And it feels like, uh, this shift has definitely increased the privacy, right? Like, I think that's kind of, uh, not debatable. How much has the product had to change from like a feature standpoint? Is it just as rich, uh, from a feature standpoint? Do you have more features, less features? Like, what was the impact there?

• 13:49Speaker 02

  Yeah, I mean, to a user that used Shapeshift in, in February, uh, to a user that uses it now, the only thing they'll notice is that they don't have to KYC. So they lost nothing. They gained their privacy back and there's less friction to onboard them. So, um, yeah, for them, it only got better.

• 14:08Anthony Pompliano?

  What's been the response? Are there regulators or, you know, others that have, uh, have reached out? Or have you gotten any feedback in terms of, uh, you know, making this transition from , uh, kind of government organizations?

• 14:21Speaker 02

  We told the regulators ahead of time. You know, we obviously are in talks with them and have been for years. So we just went right up and told them what we were doing. And, um, you know, I, my hope is that a lot of the regulators understand that this decentralized technology actually achieves a lot of their aims. Like if a regulator wants...

• 14:42Speaker 02

  Transparency, honest money, lack of fraud,

• 14:48Speaker 02

  open systems that are accountable and that do not hide risk. They should be very encouraged by a lot of these decentralized applications. What they will have to accept is that they are not going to be able to control money in the degree that they did before. And they are not going to be able to have this blanket surveillance network over people's private financial decisions like they've had in the past. I'm sure some of them are going to be okay with that trade off and others will will fight it tooth and nail. So it's incumbent on everyone in the industry, I think, to realize that that struggle is coming. And the more the stuff grows and the more the regulators lose the ability to control people's personal private decisions.

• 15:30Speaker 02

  It's going to be something that we have to be very careful about that narrative and we have to be constantly conveying the benefits of an open, immutable and honest financial system.

• 15:40Anthony Pompliano?

  What's the way you guys make money now? Right? So historically exchanges made money by having trading fees. My understanding is that through this interface, you're not actually adding any fees to what just the decentralized kind of liquidity pools require. So how do you guys make money?

• 15:59Speaker 02

  Yeah, so right now, like we have always been very long crypto. We hold a balance sheet of crypto and we we've made plenty of money on just the crypto market rising itself. We did not raise, we do not make money on trading fees. We think that's a commoditized service that'll tend towards zero with time. So someone who's going through shape shift is getting the exact same rate as if they went directly to Uniswap, directly to Thorchain. You know, in the future, we have different avenues to make some revenue based on staking and lending markets done through a non custodial way. But yeah, right now it's a it's a free service and and people can use it directly like that.

• 16:36Anthony Pompliano?

  Got it. And one of the things I want to spend a lot of time talking about is this idea of maximalism. And, you know, before we we recorded this, I tweeted out and said, hey, I'm having Eric on the podcast. What questions do you have for him? And there's all kinds of crazy stuff. There's some that were really thoughtful, intelligent questions. And then there was things that basically, you know, kind of try to paint you to be an enemy of Bitcoin. I guess maybe let's just start with like, what are your thoughts about Bitcoin and that ecosystem? And then what are your thoughts about everything that's not Bitcoin? You know, do you support kind of both? And then how you think about almost participating in both ecosystems at the same time?

• 17:18Speaker 02

  Yeah, good question. It's good to start with first principles like that. So I have been involved in Bitcoin since 2011. It is, you know, like my first life's passion. It has been my career. It has been my hobby. It has been my passion for a decade. And when I found Bitcoin, I saw in it a solution to what I thought was the biggest problem in the world, which is governments' control over money. So everything I do since then has been to help bring Bitcoin to the world. Now Bitcoin is a complicated technology and society is a complicated thing to bring that technology to.

• 17:57Speaker 02

  And as Bitcoin has grown, I have seen the value in other systems that are built on blockchains also being in partnership with Bitcoin. So I see it as one ecosystem, right? I see the decentralization that Bitcoin promised best expressed when there are other blockchains, when there are other systems. I do not think a monolithic chain that handles everything for everyone and solves all problems is decentralization. I think that's a, that's, that would be a weaker, more brittle structure. Part of the dynamism and part of the strength and resiliency of a decentralized financial world is one built on multiple blockchains that optimize for different things.

• 18:37Speaker 02

  Bitcoin has taken a very conservative approach to optimizing to be the best form of money ever made by mankind. I think it has done better at that than any other project easily. Most of my net worth is and always has been in Bitcoin and will continue to be. And yes, I see Ethereum as an extremely valuable ecosystem. I see Zcash and Monero and Haven and Privacy Coins as extremely important tools for financial privacy. I see this stuff getting built in DeFi and how how much destruction that will rain down on the entire banking system. And all I can do is applaud that. And so when people get mad at me because I'm not only Bitcoin, it saddens me. It's like, you know, what are you?

• 19:21Speaker 02

  What are you actually here for? Are you here for orange coin? Or are you here to actually bring decentralized finance and a new form of money to the entire world? Because the other communities that are building around Bitcoin are have that same mission and they should be seen as allies instead of enemies.

• 19:39Anthony Pompliano?

  This is really interesting because I think that ever since I met you, right? It's never been at question, right? I think your commitment to Bitcoin and wanting to see it be successful. I think throughout history of Bitcoin, there's been all sorts of debates and opportunities and various points in time where people did debate, you know, what's the best way to bring it forward? But I always try to remind people that, you know, everyone is trying to accomplish the same goal. The path to get there is where the debates occur. But I don't think that anyone who has spent as much time as you have or others in Bitcoin want to see it fail, right? Or for some reason, don't believe in it, etc., right?

• 20:24Anthony Pompliano?

  Kind of ridiculous.

• 20:25Speaker 02

  It's such an absurd notion. And it worries me because Bitcoin does have some very serious enemies. And we have only started to awaken those enemies. And so if the Bitcoin community and if the larger crypto community itself is infighting all the time and just tearing each other down, they are going to be missing the actual enemy. Which is the state, which is the banking system. That is what this stuff is in opposition to. Bitcoin is not in opposition to Ethereum. It is no coincidence that the two systems have grown up together and are hitting all time highs together. They are collaborative, they are community together. And that stands in stark contrast to fiat currency, to the banking system, and to states which try to control money from the, from the center.

• 21:09Speaker 02

  So I, I want people to orient their vision outside of those proper enemies because there are many of them.

• 21:16Anthony Pompliano?

  Yeah. And when you think about the technology, it seems like there's a thought process of almost on a kind of horizontal standpoint, all of the technology that is going after true decentralization and is trying to bring some sort of value or functionality to this decentralized digital ecosystem via decentralized open protocols, you're a fan of, right? You're saying, hey, this is all good. It's all moving us in the right direction. But then there's this like social layer, right? And the social layer is everything that doesn't involve the technology. And this is where you get the maximalism, the tribalism, the, the marketing messages, the infighting, all that kind of stuff.

• 22:01Anthony Pompliano?

  And so is that stuff healthy? Is it agnostic? Like, does it actually not matter at all? It's just whatever the technology that works ends up being the most important thing? And, and everything else is just a distraction? Like, how do you think about the social layer maybe different than the technology layer?

• 22:17Speaker 02

  Yeah. And the social layer is really like the most important one, which most people don't recognize. This, this is technology meant to be used by humans and lives to serve humans. I think it's important and, and what a lot of the maximalists do correctly is to have a very high degree of skepticism toward any project, right? Whether it's a Bitcoin company or whether it's some new chain or coin, there's a lot of crap out there. There's a lot of garbage. There are a lot, a lot of scams, absolutely. So I would never want people to just like blanketly accept anything in the, in the ecosystem because it's crypto. Most of the stuff is garbage. And yet, there is a core of projects which are legitimate, run by very smart people that

• 23:01Speaker 02

  that share these ideologies and which are building world-changing technology. And so to just be open-minded to the things which have quality, I think is important. And if everything is called a scam, you get a phenomenon, just like how the, you know, how the government says, like, you should never do drugs, right? Just say no. And you get this whole generation rising up and realizing that, oh, if they smoke a joint with a friend and they didn't die, maybe the government is actually wrong about other things. It's like, don't lose your credibility by calling every project in crypto other than your favorite coin a scam. It does not help anyone, and I think it only, it only perpetuates like an atmosphere of animosity and doesn't actually get to the truth of what these projects are.

• 23:44Anthony Pompliano?

  Yeah. What's your process for evaluating a project? How much of it is technology-based versus social-based versus like the team? Just how do you kind of, somebody tells you something, says, hey, you know, somebody's building something new, what's your process?

• 23:59Speaker 02

  Yeah, so in the, in the last bull market in 2017, in the crazy ICO days, I think it was actually quite a bit harder because everything was a promise. All the new projects were a white paper. And they're like, yeah, gonna raise a bunch of money and someday we're gonna launch something. And so it was actually quite hard to vet what was legitimate and what was not. Today, the biggest difference in this bull market, even though there's still a lot of garbage, everything is actually shipped. So you can go use these things. So you don't have to read a white paper at all today. You can go use a protocol. And if you're an engineer, you can actually read the code and see how it works. I think that's, that's the best way. I mean, the, what, what helped me learn about Bitcoin in 2011 wasn't reading a bunch

• 24:41Speaker 02

  of articles about it, or even perusing the Bitcoin Talk forums. Those were a good start, but what really got me to understand Bitcoin was when I first downloaded the Bitcoin D client and received some and then sent some to a friend and used it. When you use these systems, that is absolutely the best way to learn about them. And when I saw that Bitcoin just worked, that was what really helped me see that it was a legitimate project and it didn't matter what any article was saying about it.

• 25:08Anthony Pompliano?

  Yeah, it's fascinating the difference between kind of marketing messages and what needed to be said or done from a fundraising perspective versus now just shipping the thing and actually seeing, you know, do people use it or not. It's a much healthier kind of mechanism.

• 25:24Speaker 02

  Absolutely. If something is shipped and is usable, that's, that's like a, should be a criteria for anyone to take a project seriously.

• 25:32Anthony Pompliano?

  Yeah. And I'm assuming at Shapeshift, rather than having like listing criteria, right? Where you're not a decentralized exchange, there's almost this like onboarding, right? So how do you choose which protocols to interface with, which ones not to? Is it similar? Hey, if other people are using it and it's got traction and the thing's shipped, then you're looking to add it or add support for it? Or is there some other way to evaluate?

• 25:54Speaker 02

  Yeah. So first, we realized we need to replicate what we're doing as an exchange with a decentralized exchange. So that, that feature we needed to add before we removed it ourselves. So that meant we had to add one of these, these DEXs, you know, Uniswap being the biggest one. We actually ended up using a aggregator from 0X that pulls orders across multiple Ethereum DEXs. So we integrated that and then we integrated Thorchain so that we could add other chains like Bitcoin. Up next, I think we'd really like to get into some of the lending markets like, like Aave or Compound. Those are really cool. I think a lot of people don't realize today that you can like put up crypto into a smart

• 26:34Speaker 02

  contract, borrow stable coins against it and buy a house without any intermediary of any kind. This is something that like you couldn't do a year ago. So we're, we're trying to see which of those systems are getting used and which ones our customers want and then bring those protocols into Shapeshift. But it is a lot to keep up with and like there's no way we can, we can bring it all in. It's kind of overwhelming.

• 26:56Anthony Pompliano?

  Yeah. And the user base, completely global, right? Once you have this interface, you don't have kind of the KYC requirements. You pretty much can serve anyone in the world with an internet connection?

• 27:07Speaker 02

  Yes, we serve anyone in the world with an internet connection with the exception of OFAC countries. So countries that are on the OFAC list, we do not allow through our web or mobile service. Of course, the decentralized protocols themselves, someone can go directly to them. But we do that filter on our own. That is still a rule that as an American-based company, we have to follow, unfortunately.

• 27:31Anthony Pompliano?

  Yeah, and really, that's not so much around the financial regulation or surveillance as much as it is. Or I guess it's not around financial surveillance as much as it is more the law enforcement and criminal side.

• 27:46Speaker 02

  It's both, yeah. A lot of people don't realize that OFAC actually applies to all companies. And you are not permitted to do business with anyone from certain countries. So the reason this is so absurd is like Iran, for example, is on the OFAC list. It's illegal for any American business to do any business with anyone in Iran. Iran is like one of the largest countries in the world in terms of people. It's got like 40 million people. I would bet that 99% of them are great human beings. And yet we are not permitted to work with them because of their government. I think that's horrible, and I'm glad that at least on the protocol level, you know, Bitcoin does not discriminate.

• 28:30Speaker 02

  Bitcoin does not check an OFAC list. Bitcoin does not care where you were born or what color your skin is or what your government does. Bitcoin is just an open immutable money for the world. And I think that's so important. And to see that getting built out to these other layers of finance is really special.

• 28:47Anthony Pompliano?

  How do you think about the state's response to all of this? So we saw El Salvador kind of dot Bitcoin as legal tender. The IMF seems to, I'll quote them, "have concerns," whatever that ends up meaning. And then obviously you have all the decentralized protocols. You've got, you know, kind of what you guys are doing with no KYC and doing it in kind of a legally compliant way. Just what do you think their take is? Or is there really, it doesn't really matter what they kind of socially believe or what their philosophical belief is, they just can't do anything about it?

• 29:22Speaker 02

  I think the governments are generally like three to six years behind the industry. So they, at this point, kind of understand Bitcoin. Uh, they really don't understand DeFi at all yet. They have kind of like a 2013, 2014 view of the crypto landscape. They do not realize what is actually going to happen, which is that Bitcoin is going to continue emerging as the better form of money and is ultimately going to outcompete fiat all over the world. They have too much hubris and too little understanding of how monetary economics actually works to, to be able to acknowledge that fiat is going to decay in front of a sound money that the whole world can use.

• 30:05Speaker 02

  So I'm grateful that they have that ignorance because I think if they recognized the existential threat that Bitcoin poses to all fiat currencies, the hostilities would have been much louder much earlier. Hopefully Bitcoin gets large enough, fast enough, before they realize the existential threat, um, that enough powerful people will actually own it by then. Uh, and the, the inertia to prevent it from growing will, will be diminished, but that's, that's the big experiment. That's what we'll see.

• 30:37Anthony Pompliano?

  How important is it that the banks, the financial institutions themselves are starting to adopt Bitcoin? Is there safety in that? Like the fact that it's not just a bunch of random strangers on the internet that are individuals, but now you've got public companies holding it. You've got, you know, financial institutions, uh, within the United States that are in good standing, that, uh, are generally well-respected by that type of, uh, um, kind of political, you know, class. Does that help Bitcoin?

• 31:05Speaker 02

  I think it helps it hugely. Yeah. Um, the more credible it is in the eyes of people who only look at superficial things to judge credibility, the better. So it is good that it has taken, you know, this decade for Bitcoin to grow to its current size. I think if it grew faster, if it, if all of this development thus far had happened in a year or two, I think the reaction against Bitcoin would have been much stronger, but it is definitely seeping into the financial infrastructure of the world. Um, that's, that's great. Now, will that continue happening as the banks realize that this isn't just a financial asset that people trade, but it is actually coming directly at the heart of the financial system?

• 31:47Speaker 02

  I don't know how commercial banks will feel about that. Certainly, central banks will be completely opposed to it. They will have concerns because it's essentially going to make them all redundant. And not only will they be losing their jobs, but they think that they are doing an important service for the world. They think that that money itself needs to be centrally planned and controlled in a market economy, which is of course bullshit, but they think that that's important. So they will see this as an enemy. They will see this as something diabolical that needs to be put down. But they do not, they do not have any conception that it is actually a legitimate threat to money yet. So hopefully it goes for at least a few more years without them coming to terms with that.

• 32:28Anthony Pompliano?

  Yeah. And then what about the financial institutions and their response to kind of the entire DeFi ecosystem? Is that something where, you know, some percentage start to participate and then they kind of get out, right? They survive, but the ones who thumb their nose, they end up suffering at the feet? Like, how does that work?

• 32:51Speaker 02

  I think the most important point here is that DeFi is happening so fast that even for those of us who are involved in it, we can't keep up. Like a year ago, I was completely ignorant on DeFi and I'm in the crypto industry all day, every day. I'm, I'm starting to catch up. I have an understanding of some of it, but, but even me, like I can't, I can't get it all. There is no way that any financial institution has any conception of what is coming from them. This DeFi stuff is, is as powerful to, to financial tooling as Bitcoin was to money. And they're going to be completely washed over by this stuff. Now, it doesn't mean that like all banks are going away or all financial institutions are going away. But just in the same way that the internet completely

• 33:33Speaker 02

  decimated, then transformed and regrew entire industries around it. Bitcoin, Ethereum, DeFi, cryptocurrency and decentralized finance generally is going to do that to the banking establishment. And obviously these are slow moving institutions, you know, they have to have 15 committee meetings, probably even to to talk about what this stuff all means. There's no way that they're going to keep up and it's going to wash over them like a flood.

• 33:59Anthony Pompliano?

  Yeah, it's absolutely fascinating when you start to think about the the power shift, right, the the wealth shift that occurs here. When you think about talent, it seems like if young, if you're a young person, a lot of people want to go work at banks now want to work in crypto, right? They want to go work on a Bitcoin company. They want to work on a decentralized protocol. Are you seeing that on the ground in terms of the folks that you hire, the folks that you talk to that are joining the industry? Or is that maybe over generalization and still majority of the folks who want to quote, quote, work in finance, they still want to go work at the JP Morgans, the Goldman Sachs and those places?

• 34:41Speaker 02

  I think it is largely true, and it makes a lot of sense. I mean, generally, people have to choose in life between doing something that is, you know, emotionally or ideologically fulfilling, something they really care about and are passionate about, or making a bunch of money, right? And often, people that will go into traditional finance have chosen the latter. And frankly, I don't think there's anything wrong with that necessarily, as long as they're not being evil. But crypto comes along, and actually, now you can do both. You can do something that is ideologically fascinating, and which you can get fabulously wealthy doing. So why in the world would you ever go join a bank, right? I mean, who in their right mind is leaving, leaving school, seeing the state of play in finance, and saying, you know what, I'm going to go make 200 grand a year over at this bank, or 500 grand a

• 35:25Speaker 02

  year over this bank, right? You can make that much or more, joining a crypto company and change the world while you do it. So yeah, anecdotally, we see this, we see people will join Shapeshift from the traditional world. And even if they're leaving Shapeshift, they don't go back to the traditional world, they go to a different crypto company, right? Like, this black hole is sucking everyone in.

• 35:45Anthony Pompliano?

  I, I always feel weird. Sometimes I like walk around New York or Miami, and I just look around me. 99% of people have no clue what's happening. They have no clue what's going on. And it kind of feels like we know a secret to some degree. And You know, my greatest wish is that everyone figures it out because it is the first time, you know, at least in my lifetime where individuals actually have the ability to kind of front run those institutions, right, to get access to things before the institutions. And that doesn't mean that you're guaranteed to get wealthy or be right in certain situations, whatever, but the opportunity exists. And so you still got to take the action, you got to educate

• 36:29Anthony Pompliano?

  yourself, all that. But it does feel like there's a paradigm difference here between, you know, pretty much every other trend of my lifetime where institutions are just, you know, they've got more capital, they've got more intellectual horsepower, and they're able to kind of get ahead of it before individuals figure it out.

• 36:45Speaker 02

  Yeah, Bitcoin crypto is a great equalizer, right? It is going to bring fabulous wealth across the world and is going to care very little about who you are or where you're from. It is going to pull resources away from centralized areas like Manhattan and distribute it across the world, but it's not just redistributing wealth, it is actually creating new wealth because it's a better form of money. Society will be more efficient, will be more honest, more transparent, and it will have a more solid foundation on which to build all other kinds of businesses, right? If you fix money, you allow the world to heal. And we have lived in a world of sick money for many decades, you know, over 100 years, I would say.

• 37:31Anthony Pompliano?

  I could not agree more. Before we finish up, just what's your pitch to people, right? So people who are out there who use centralized exchanges or are interested in finding a new exchange to use, what's your pitch as to why they should consider Shapeshift or maybe some of the others?

• 37:50Speaker 02

  Yeah, so Shapeshift is a self custody crypto platform. So if you ever hear people talk about not your keys, not your coins, that's a very important message, right? It means the entire point of Bitcoin is that you are sovereign over your money. And you're only sovereign over your money if you control your keys. So I have no problem with the coinbases of the world. I think they're great companies. I have used them before. But if that's the, if that's as far as you get into crypto, you haven't actually understood it. Shapeshift, I think, is the step after that, right? Where you are ready to take responsibility and control of your own keys, your own wealth, and to have a little bit more Understanding of the purpose of this stuff. And it is slightly harder than using a Coinbase, but not, not much.

• 38:35Speaker 02

  And so if you want to use an easy service where you maintain control of your wealth and you get that self-sovereign attribute over money, Shapeshift is a great way to do that. And Shapeshift is one of the only non-custodial services in the world that supports not just Ethereum, but many of the different blockchains. And now you can trade across them, no KYC and maintaining your privacy and dignity.

• 39:02Anthony Pompliano?

  I think that is a pretty compelling pitch there. The, the idea of giving people freedom of choice and, and doing it in a, a more private way is, is likely to become a more popular way of viewing the world. And then when you have the decentralized protocols, it, you know, I think we both agree that the legacy banks, the legacy financial institutions, you know, writings on the wall. And we'll see kind of how it plays out.

• 39:29Speaker 02

  Yeah, yeah, they're, they're in trouble. And I've just, I'm so inspired really by all the awesome entrepreneurs in this industry that are building this stuff. It's really, it's a, I'm proud to be part of it.

• 39:39Anthony Pompliano?

  Where can we send people to find out more about Shapeshift or find you on the internet?

• 39:44Speaker 02

  Yeah, shapeshift.com, best place for that. And I am at Erik Voorhees on Twitter, E R I K, Erik Voorhees on Twitter.

• 39:54Anthony Pompliano?

  Awesome, man. Well, listen, thank you so much for doing this. It's pretty incredible to watch you guys essentially just rip out that centralized infrastructure, create a interface for the decentralized world and cheering you on from the sidelines. So excited to see where you guys go next.

• 40:09Speaker 02

  Awesome. Thanks, Tom. Glad to be on.