#599: Patrick Stanley On Creating Equity For Cities

Patrick Stanley is the founder and CEO of CityCoins, a new product that allows you to support your favorite cities while earning yield in Bitcoin. In this conversation, we discuss CityCoins, how they work, municipal equity vs debt, government’s role, how citizens benefit, why this benefits bitcoin, and why Miami was the first city. ======================= Revolut is a finance app in the US and UK, that say they're the simplest way to access crypto. Sign up today at Revolut.com/pomp and make 3 card transactions to get $15, which you can exchange for any tokens Revolut supports. As usual, when you move your money from fiat to crypto your capital is at risk. See T&C's for details. Revolut is a financial technology company. Banking services provided by Metropolitan Commercial Bank, Member FDIC. Cryptocurrency services provided directly by Paxos Trust Company, LLC. ======================= Whether you're an experienced crypto trader or just starting out, Kraken has the tools to help you achieve financial freedom. With the new Kraken app, you can easily buy and sell over 60 of the most popular cryptocurrencies in just a few minutes. Featuring a sleek new design and an easy-to-use interface, you can now take your crypto portfolio with you on the go, 24/7. Visit kraken.com/pomp to learn more or search "kraken" in the app store. ======================= Unstoppable Domains makes crypto easier by replacing your address with [AnyName].crypto. They allow you to send and receive over 70 cryptocurrencies, including BTC, ETH, and LINK with a single blockchain domain. Go to unstoppabledomains.com and get [YourName].crypto to make your crypto life easier. =======================

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. Now let's kick this thing off. Patrick Stanley is the founder and CEO of City Coins, a new product that allows you to support your favorite cities while earning yield in Bitcoin. In this conversation, we discuss city coins, how they work, municipal equity versus debt, the government's role, how citizens benefit, why this benefits Bitcoin, and why Miami was the first city to live in. I really enjoyed this conversation with Patrick, 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 Revolut. Let's go back to the basics for our second. I've partnered with Revolut,

• 0:43Anthony Pompliano?

  a finance app in the United States and the UK that says the simplest way to access crypto. They're putting their money where their mouth is. You can sign up and make three-card transactions and get $15. That's right, $15. What can you do with that $15? You can exchange it for Bitcoin or any other tokens Revolut supports. That's right, they are crypto-enabled. As usual, when you move your money from fiat to crypto, your capital's at risk, but when you sign up at revolut.com/pomp and make those three-card transactions, you get free money. Again, revolut.com/pomp. Go check it out and let me know what you think. They're really big in the UK and they doubled all of their assets in crypto last year, so obviously users think that there's something special there. Go check it out.

• 1:26Anthony Pompliano?

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• 2:10Anthony Pompliano?

  Kraken in the App Store. Again, kraken.com/pomp or search Kraken in the App Store. Last but not least are my friends over at Unstoppable Domains. They've building something very, very cool. Unstoppable Domains has teamed up with OKX to make crypto simpler by supporting .crypto domains on their exchange. Unstoppable Domains allows you to receive over 70 cryptocurrencies, including Bitcoin, Ethereum, and Chainlink with a single blockchain domain name. This makes it so much easier for millions of users to send and receive crypto by using their name, like pomp.crypto. That's the domain I have, pomp.crypto. It's the stress-free experience needed for mainstream crypto adoption. Plus, .crypto domains are NFTs that are stored in your wallet,

• 2:49Anthony Pompliano?

  so you permanently own them and can transfer to your other wallets as needed. Go to unstoppabledomains.com and get your name .crypto to make your crypto life easier. Unstoppabledomains.com/r/pomp, or you can click on the link in the description. Alright, let's get into this episode with Patrick. I hope you guys enjoyed this one.

• 3:06Speaker 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.

• 3:35Anthony Pompliano?

  Alright guys, bang, bang. I've got Patrick here with me. Thank you so much for doing this, man.

• 3:39Speaker 02

  Thanks for having me on.

• 3:40Anthony Pompliano?

  Absolutely. Let's just jump right into city coins. I think this is kind of a fascinating idea that you've been working on. What exactly is a city coin?

• 3:51Speaker 02

  City coins allow you to put a city into your portfolio. So when you support a city by buying its city coin or mining its city coin, you're directly contributing to potentially some yield that the city themselves is earning. So what city coins can do is a few functions. So you can program city coins, like developers can use them. You can mine them and then you can stack them. So the process of mining. mining a city coin is the process of sending a base currency into the city coin smart contract for that specific city. And competing to mint new city coins.

• 4:32Speaker 02

  Now, this, the base currency that's being forwarded into it gets diverted to two areas. Thirty percent of it goes directly to a reserve wallet that a city can claim custody of. And seventy percent of it goes directly to everyone else that is locking up their city coins. Via this, this conflict called stacking. And so, so that's the, the basic gist. And we think that this is going to create a completely new dynamic between government officials and the markets.

• 5:02Anthony Pompliano?

  Got it. And so, right now, when you think about kind of the technical architecture of this, you guys are using the Bitcoin blockchain for security and, and kind of merge mining stuff in? Or how does it exactly does it work leveraging the Bitcoin blockchain?

• 5:18Speaker 02

  Yeah, so we're actually, we're actually just sort of generalizing what the stacks blockchain is already doing. By recycling Bitcoin as kind of like a crystallized proof of work. And forwarding that into the stacks blockchain to secure the stacks blockchain. So what I described with how you mine city coins, you do the same thing with the stacks blockchain as well. So, you know, people compete to get new, new stacks by forwarding Bitcoin. And that secures the network. And so it's like a race essentially, see who can forward the most and, you know, your, your chances of winning is sort of weighted based on how much you've contributed.

• 5:59Speaker 02

  So it's pretty green, like you don't have to, you don't have to create your own proof of work and you don't have to rely on, you know, something that we believe is less secure, which is proof of stake. And, and so essentially what we're doing there is we're saying, okay. If this works for the stacks blockchain, well, it can work for chains above the stacks blockchain. In this case, the whole city coin ecosystem. So what we're doing is we're actually using stacks as the base currency to forward in to the city coins. Smart contract to mint new city coins, just like stacks requires Bitcoin to mint new stacks.

• 6:34Anthony Pompliano?

  Got it. And so let's just fast forward 25 years, right? And kind of go to the Ultra Bowl case for this. It works. And let's pick a specific city, anywhere in the world that ends up doing this. Who is kind of the customer or the users when you think of this? Do you think of the government, the local government as the customer? Do you think of citizens in that local ecosystem as the customer? Is there investors? Like, just walk me through first, kind of structurally, how you think about who this is serving? And then we can kind of talk about what that would look like if it works.

• 7:07Speaker 02

  Yeah, sure. So just to sort of take a step back. I think every startup city is going to have its own city coin. It's almost like every company has its own cap table. And that's how you organize people to, you know, do work in success of the company's mission. Thing that's going to happen with cities. And you can imagine like cities like Bangalore, India, Miami, Florida, New York City, Dubai, Singapore, all having their own city coins. And even small cities like, and even Bitcoin Beach, right? Can have its own city coin, like Dollar Sign Beach. And I think what's going like, essentially, there are, there are, you know, two and potentially three customers. So the first customer is the city government.

• 7:51Speaker 02

  And I'll walk through kind of like why they're a customer. So the city government is given this sacrosanct reserve wallet that they can claim, and no one else but then can claim. And the economics are such that when the, when the, if the market cap for that, that city's coin is at like a billion dollars, that city is earning like $50 million per year. That's enough to like wipe out municipal debt servicing. That's enough to recruit new crypto startups into their, into their, into their sort of municipality. And I think what's going to happen is you're going to see this sort of archetype of CEO of the city emerging, for which like, you know, a mayor like Mayor Suarez is really kind of one of the first.

• 8:34Speaker 02

  And so what they're gonna do, I believe, is I believe that the best sort of city cities will operate like startups essentially. They'll use their funds to recruit new founders, who could also add more utility to their own city coin, who can build apps around it, or just apps generally in the crypto space that, you know, that exist and they get tax revenue. But you can imagine also a world where like these city coins become even more valuable than a billion dollars. Like, let's say, a city coin becomes worth 10 billion dollars. Well, then you're getting into a territory where for many cities, you would not, you would not necessarily need to tax your own residents because your income is

• 9:16Speaker 02

  actually eclipsed what the sort of tax, the tax budget and burden is on a yearly basis. So that's like a complete inversion from what we're used to, which is like, you know, government creation of debt, tax, spend, all that. This is like a much more positive sum, sort of thing. So that's like, that's like the model of startup, startup city, city as a startup. Now, the other side of the, of the sort of equation is the stakeholders. So you can have, you know, people who live in the city, people who live out of the city, who are hodlers, or just traders providing liquidity. But the reality is, there is now a market relationship with the city that the users can have. So, you know, initially,

• 9:58Speaker 02

  your ways of voting, I'll give a few examples of how they, how they benefit. So originally, your ways of voting were, you know, vote with your ballot, which, in which case, like, half the time, pretty pissed at who gets elected. And then even if your, your person does get elected, they don't always do everything you want them to do to benefit your city. And then the other way is voting with their feet. Very few people can actually vote with their feet, but we proved that it's very possible in 2020 with remote working, et cetera. You know, almost all my friends have like moved from whatever, San Francisco or New York to Miami or to some other city. And they're, you know, they're essentially, they're essentially, that's the exit and the other, the voice is ballot, right? Now,

• 10:42Speaker 02

  this third option of voting with your coin, I think is really, really useful. Because there will be hundreds, if not thousands of city coins in the future, you're going to be able to move your assets from jurisdiction to jurisdiction, and essentially have capital flight at the speed of light. Now that's a lot easier than waiting four years, two years to vote with the ballot. A lot easier than picking up, uprooting your family, moving to another place. You know, not all cities are created equal. So like, you know, some people are willing to, you know, take a hit for the schools and, and, and maybe the tax burden isn't so much and they like the weather or whatever, so they stay put. But they should have the ability to sort of win and help

• 11:27Speaker 02

  win in the cities that match sort of their ideology, right? Because if you're, if you're a token holder, you're earning yield as a function of merely holding and locking your coins. Now, that's just, that's like a purely financial and sort of voting aspect of city coins. And you're, you're also, you're also going to be able to sort of develop with city coins too. So you can imagine like proof of HODL, you know, access control to digital and physical applications and locations. And you can imagine, and you know, so you can imagine people betting, like, you know, voting, essentially voting on what they think is going to happen in the future. You can have people actually voting themselves like within, within like the, within

• 12:10Speaker 02

  the, the actual, within their actual city coin group. And you can, you can imagine like, you know, atomic swaps and like, you know, transferring in and out of, of different cities' coins and using decentralized exchanges and just programming applications that require usage of that, that city's city, that city's city coin. So I think it's interesting. Yeah, go ahead.

• 12:34Anthony Pompliano?

  And so when you think through that, right? It sounds like the city, there's a way to basically change the economics of a city and to use kind of new technology to, to do that. It also seems like maybe there's another side of this that is almost like you could bet on a city early, or you could bet on the safety of a city staying relevant. And maybe even in some crazy way like you could like short a city, which is like a little weird, but, but potentially possible. And so is it fair to say that really it's the city and the city is a proxy for this local citizens because the city is going to use that revenue to, to kind of make the city better? It's kind of one type of customer. And then the second type of customer is individual investors

• 13:19Anthony Pompliano?

  or organizations that are investors. And that could be local citizens or other people around the world?

• 13:26Anthony Pompliano?

  Got it. Okay. And so let's talk through if Amit is sitting in that government seat, right? So, you know, let's use Miami as an example. Right now, you guys have Miami coin. What is the evaluation that the mayor of Miami, a governor of the state, etc., would make in terms of what their options are? So what are the things that they could do? And then why would they do certain actions versus other actions?

• 13:54Speaker 02

  Yes, I think the primary action, the primary decision that these municipalities need to make initially is whether they're going to claim their reserved wallet. Now, mining city coins and the reserved, mining city coins can happen prior to that. And therefore, their reserved wallet will be credited money ongoingly, like 24/7. And essentially, what happens is that bag gets so big, it becomes a fiduciary duty for the city to pick it up. Right? So if you have $10 million just sitting on the sidelines and you're not doing anything, your citizens are going to get pretty pissed that you're not using it to, you know, fix

• 14:39Speaker 02

  homelessness, or recruit more crypto startups, or, you know, beautify the city, you know, or do whatever you want to do with it. The factor means most cities actually have budgets that are like right at the cusp of what they can tax. And this provides, this provides an additional revenue source for cities that was previously not there before. So instead of the zero-sum tax and spend sort of methodology, this is a much more positive sum sort of way for cities to benefit from people supporting the city.

• 15:19Anthony Pompliano?

  And are they able to take, let's say there's $10 million sitting there in that wallet, they claim the wallet, can they actually go sell the tokens to get the cash or whatever asset that they want?

• 15:31Speaker 02

  Yeah, they can do whatever they want. So they can, they can, so they're going to be earning stacks. And if they want to buy back their own coin, their own city coin, which I think is a very healthy thing to do. They can buy back their own coin and they can just do that if they want to. They can liquidate into USD and just say, hey, um, you know, we want to keep crypto on our balance sheet, but we're willing to like liquidate into USD ongoingly and, and we'll, you know, use this budget for something the city controller can decide. And or they can say, hey, this is a great opportunity for more transparency. We'd like to show you where we're sending this money to. So you can actually track the payments on the blockchain.

• 16:11Speaker 02

  And I think increasingly what you're going to, so increasingly what you're going to see are mayors operating in public and financial controllers operating in public and having feedback with the community. And sort of like showing where the money is going and sort of optimizing for, optimizing for people being bullish on the city. Like you were saying before, you can, you can effectively short a city or go long a city. Like San Francisco is a city that I think unfortunately is like kind of being run into the ground in, in some ways. And San Francisco is a great city, but it's a city that could be doing a lot better. And so you could bet on the turnaround, maybe San Francisco is trading on 10 cents on the dollar.

• 16:54Speaker 02

  And based on what you think it's going to do in the future, you think they're going to get their act together. Whereas maybe Miami coin, you think is just going to continue booming as long as Suarez is sort of mayor. And you know, there might become a time when it's overvalued and, and you want to move into another city. And like Bitcoin Beach or something, you know, or, or Singapore or Dubai or whatever, but.

• 17:15Anthony Pompliano?

  What, why is this the right time for this now, right? One of the key parts of technology kind of taking hold and gaining adoption is just the right timing of, of a market. Why, why do you think now is the right time?

• 17:26Speaker 02

  Yeah, so I think that, I mean, there's, there's like a huge 30,000 foot view on this. And then there's like the 10 year view. And I think if you, if you look at, if you look at like the United States. I think when you talk to most people, you say, hey, I think the US is kind of like a descending country. It's no longer on the ascent, which is like an unfortunate, unfortunate conversation to have, of course, but most people will agree with you. They'll say, yeah, that's like a fact. That's true. Like essentially, we're like sunsetting in a way. And I see like just within the United States, there's an opportunity for city-states to actually become more important

• 18:07Speaker 02

  than than like the sort of top co, than that, like the the whole nation. And in part, I think city coins represent a way to almost like buoy buoy countries like the US that might be on the descent and accelerate countries and celebrates accelerate cities that essentially want to modernize. You're already seeing, you're already seeing like the playbook from El Salvador and Paraguay and South America, which is, by the way, on like same longitude lines as the US. I think it's like they're a great release valve. We already seen the playbook there, where essentially they they plug into like the Bitcoin standard and they they, you

• 18:51Speaker 02

  know, essentially try to modernize their country through attracting like technologists and crypto capitalists. And, you know, some say like, okay, they have nothing left to lose, so why don't they do it? I think they're actually just like the first raindrops of a huge geopolitical movement that's going to happen. And that is essentially going to be where many cities and even countries sort of move over to the crypto access axis of of sort of capital as opposed to the sort of fiat like USD or yuan or whatever. Yeah. So I think this is just like an opportunity for opportunistic cities. I think they're going to benefit tremendously from this. And the ones that move fastest might be not

• 19:35Speaker 02

  the ones that you'd expect, but they're but the ones who are sort of most opportunistic.

• 19:41Anthony Pompliano?

  You could have literally gone and worked with anyone, right? Everyone from a New York City to an El Salvador Bitcoin Beach to Tijuana to somewhere in Asia. But you chose Miami. What? Why Miami over kind of all the other places you could have gone first?

• 19:59Speaker 02

  Well, one thing is Miami, Miami.

• 20:05Speaker 02

  Miami is incredibly technologically progressive, like, let's just like call it what it is. You know, you have, you have, you know, Florida with low taxes, you have Francis Suarez and the rest of the gang in Miami. And essentially rooting people on to move to Miami, embracing, embracing, embracing, you know, essentially technology and capitalism and, and, and all that. And it's a very diverse city. It's not, it's not just a, you know, it's not, it's, it's not a super homogenous city. There's a lot of heterogeneity. And the, the culture is, is a, is a, is a vibrant one, you know, it's not a boring town, that's for sure. And it's sort of like a gateway to South America too. I think that's really important.

• 20:51Speaker 02

  And then the thing that, that, one of the things that kind of tipped it for me was like, was like, you know,

• 21:01Speaker 02

  San Francisco was kind of this foil for Miami to grow. In terms of like two poles on an ideology, San Francisco essentially and got infected with like an exotoxic meme and, and, and their, their entire city is sort of, um, is their, their entire city is on a mission to validate their ideology that is like incongruent with reality. Whereas like Mayor Suarez and, you know, love him or hate him, I'm very pro Suarez, but love him or hate him. And he's actually capturing all these new customers and customers, I mean, like new citizens and new people visiting the city. And he's doing that by using SF as a foil.

• 21:42Speaker 02

  And like, what, what's crazy to me is it's not even clear that SF even like realizes they're, they're in a huge issue. They're, they're, they're, they're in, they're in a really bad place. Like, I, I, I think they're actually, I think, I think they still think that everything's just going to be fine for them when it's not actually totally clear that that is going to be the case. So SF being a good foil for Miami honestly did, did impact some, some, some of this. And I think, you know, when you have a mayor that's like willing to talk to you on Twitter, it's like, how, how can you not want to reward that person for the work that, that he's doing, you know, like essentially. When you say you're pro-technology and you're pro-technologist and you're gonna have

• 22:26Speaker 02

  a safe place for freedom to innovate, you're not gonna cast these people out, well, the people that you're welcoming in are going to reward you very much, like, they want to help you. And tech is like an incredibly helpful culture. Like, you know, there's a lot of journalists that like to write bad things about technologists and, you know, no one is morally 100% pure, like, no one's a puritan. But technology, I've worked in much of it in different industries, and like, technology has been most like positive some, you know, helpful sort of culture I've ever been in. And I think Suarez knows this, and Suarez stands to benefit from it. So, we wanna, we wanna, we wanna help

• 23:11Speaker 02

  them out. And if they help out this movement, they're gonna be unlocking the door to a massive, massive movement that is like already well underway.

• 23:20Anthony Pompliano?

  One of the ideas that you've shared with me before that I think is fascinating is this idea of municipal equity versus municipal debt. Maybe elaborate on that a little bit and just kind of explain what those two things are and the differences and kind of, you know, how people can kind of capitalize on this framework.

• 23:37Speaker 02

  Yeah, so, a lot of people are familiar with municipal debt, where a government will, like, city government will create, you know, like, 800 million or a billion dollars worth of debt. And then they'll sell it for, you know, a low interest rate, and then their taxpayers have to pay it back. Right? So, there's very antagonistic relationship between their ability to effectively, you know, print money that they can spend, that later has to be raked, you know, or has to be like, you know, taken out of the hands of their citizens.

• 24:17Speaker 02

  And the issue, one of the issues is like, you know, the citizens don't even own that debt. They're not benefiting from the interest rate there. Like, how many, how many Miamians own Miami muni bonds? Like, very few. It's mostly like, you know, institutions and sovereigns or whatever. And, you know, when, when, when there's good money be made, it's, it's, it's, and there's like large spreads. It's usually because, it can be because like a city is about to go BK and like go bankrupt. So that's not, that's not like a, that's not like the sort of positive sum, uh, sort of, uh, situation that a concept like municipal equity, uh, conceptually would, would be. So like municipal equity is something where, um,

• 24:59Speaker 02

  all stakeholders, uh, have a stake in success of the city. So you can imagine like,

• 25:07Speaker 02

  imagine if you had NYC coin and like, you know, there's a lot of people in New York City that want to, that want to hold that coin because it's, it's bearing, it's bearing a very healthy interest rate. And the success of that city means that not only does their interest rate go up, uh, sort of commensurately to the market cap, but also their, their, uh, their holdings go up and the city benefits from it as well. So, um, you know, I think a lot of people feel detached from their city in terms of ways they can help. And this is, this is like, um, this is one way where they can win with the city and help and help, help, you know, help the city win as well. And, you know, similar to how people have, uh, ownership in, in a company.

• 25:51Speaker 02

  Um, you know, this is like a, this is like a sort of companyfying, um, you know, the idea of cities.

• 25:59Anthony Pompliano?

  Is it fair to think of, uh, maybe debt being, um, kind of an old model for the way that a city would work? And, and equity, uh, with new technology actually being the way that cities in the future will be financed? Or do you think it's kind of a coexistence where they'll both, uh, be leveraged for different things?

• 26:18Speaker 02

  I think of the coexistence, just like you have, you know, cities that have, um, you know, I'm sorry, you have companies that have, um, that have, uh, you know, corporate debt and, and, and all that. I think, I think it'll, I think it'll coexist. But, you know, not all debt is bad, obviously, but, you know, you can get in trouble with that and, um, and you get in real trouble when, you get in real trouble when you realize that the old paradigm that people were living under before, which was one of immobility, where people didn't really move from city to city very often, is completely out the window now. Like 2020, it really blew the lid off, off of, off of, of, of that, um, off of that, uh, being the reality, right? Like, you know,

• 27:02Speaker 02

  New York, when New York City, they have some extremely small amount of, of people paying like all the taxes in New York City. It's like that 1% leaving New York City decimates New York City. So they can't even afford to have those people leave, right? And so you can get into some pretty precarious situations if, if they're, you know, they're taking out too much debt or, um, you know, the budgets are too high. And I think, um, this is just like one more tool for the governments. It's also kind of like a Trojan horse too. Like these governments are essentially all going to be getting Bitcoin because when you earn stacks, you also earn Bitcoin. You can, it's like a dual yielding asset. You, you have, like they earn stacks and they can lock those and earn more Bitcoin. And same with the city coin holders. So, you know, it's like, uh, but when, when you think about how people approach trying to like cryptoify cities, they're like,

• 27:48Speaker 02

  well, you know, uh, let's try to get crypto to be adopted for, you know, payments in stores. It's like, maybe not, like, maybe, maybe actually, you know, cap tables are like pretty, pretty valuable and like, and, and they might be like most valuable data structure that exists. And, you know, cities can actually use cap tables as, as a tool to, uh, to, uh, sort of, um, Essentially get more revenue and have the ability for people to interface with their government on a more like real time basis as opposed to every four years. Yeah, hoping this is like a very positive Trojan horse.

• 28:26Anthony Pompliano?

  Yeah, when you think about kind of the structure that you're leveraging here, some people will say, hey, why don't you just use Bitcoin, right? Why do you need to leverage stacks or kind of the Miami coin or city coin structure? Walk through maybe the pros and cons of doing something like this with just Bitcoin versus kind of leveraging the security of the Bitcoin blockchain and then doing it kind of on this side chain or kind of a layer two type approach.

• 28:53Speaker 02

  Yeah, to be sure, we are anchoring into Bitcoin. And so Bitcoin becomes more valuable as a function of more usage of things like city coins that creates more demand for block space on Bitcoin. So that's like checking the box there. But in terms of, you know, why don't you just try to get Bitcoin integrated into every city? Every city's got its own ideology. You can view them like companies. Like you wouldn't put you wouldn't put 500 companies in the same cap table because they're all different companies. And they have, you know, they have their own employees that are that have a stake in the success of those companies and those various missions. So you could have, you could have a, you could have a, take like a city like SF and a city like Miami, you think those

• 29:38Speaker 02

  cities want to be on the same capital? Well, hell no. Like those cities want to be on their own cap table and they want to live or die based on, based on, you know, how will the markets, you know, appreciate their, their, their sort of ideology and how they operate. Now Bitcoin is actually very useful in terms of like a substrate. So you can view Bitcoin like Unix or Linux rather. Like you have big companies that plug into, plug into Linux because they know that the others can't really mess with it. It's like a digital no man's land. I think Bitcoin really is that. Right? So like,

• 30:16Speaker 02

  I think it's good to like view Bitcoin as like the as like the sort of digital no man's land where all these different cities can plug into and they know that the substrate is not going to change. It's like a low entropy carrier. And and yeah, the cities are just represented with their own their own cap tables. So people, people, people have some, they can essentially like trade, they can they can trade these cities based on what's going on. And you wouldn't be able to do that if it was all in the same quote unquote cap table, which would be Bitcoin. That would be like, you know, kind of diffusing the whole thing.

• 30:48Anthony Pompliano?

  There's this mining aspect, obviously, to Bitcoin, but there's also a mining aspect to the city coins. Maybe describe kind of what that means when you say mining with these city coins? And how does that work? Who benefits?

• 31:02Speaker 02

  Yeah. So with Bitcoin, you know, you mine with compute and electricity and that proof of work is incredibly costly, but it's incredibly secure. And we don't really see a reason to replicate proof of work over again. Like Bitcoin is good. And so what we what we think should happen is just recycling that proof of work. So what we do is we, you know, take Bitcoins that sort of crystallize robot sweat and throw it into another consensus mechanism, which is called proof of transfer. So this already happens, as I mentioned earlier, from Bitcoin into the Stacks blockchain. So Stacks is secured by Bitcoin. And then we take the, you know, the

• 31:48Speaker 02

  the fuel, which is the Stacks token, to then secure new blockchains and new and to mint tokens on new smart contracts. So we're essentially generalizing that proof of transfer where people have to like the Stacks, they have to transfer Bitcoin in order to in order to mine new Stacks. And then they have to, then sorry, the holders of the Stacks tokens who temporarily lock them, have that Bitcoin that was sent to be that was sent via mining transferred to them. And so

• 32:24Speaker 02

  Yeah, so then, as I mentioned earlier, we take that stacks, use it to essentially compete to mine new city coins. So you could have like, you know, like over 100 people or 100 miners sending stacks into the into the city coin smart contract for Miami coin. And who, who, who wins that is pseudo-random. It's like, it's kind of random, but it's weighted based on the amount that's been put in. So if you put in like 90% of all, of all the, of all the sort of money that's going into that, into that specific block, you have a 90% chance of winning the, the block reward at the end of those 10 minutes.

• 33:11Anthony Pompliano?

  And when you think about this, is this individuals doing it? Is this the local government doing it? Is it a kind of combination of everyone? Who's actually kind of the ideal miner, the ideal market participant there?

• 33:24Speaker 02

  Yes, so definitely getting a lot of institutions and individuals interested. I think cities will also do it themselves. And I think there's a world where the sort of archetype for who's mining is

• 33:38Speaker 02

  also kind of like a trader. Because what you can do is you have a decision where when you mine, say you mine for like 100 blocks or you're likely going to win some blocks, right? And when you win those blocks, you'll have, you'll have, you'll have the value at which you essentially mine those, those tokens for and the value that those tokens are trading on the market. And so you're able to arbitrage on the market if you want. Like if you're mining those tokens at a 10% discount, you might decide, hey, I want to like just sell these tokens as I'm mining it and just take that 10% net profit. Some people are going to say, ah, actually, I don't want to do this. What I want to do is I want to hold on to these, I want to stack them and earn more Bitcoin as a function.

• 34:21Speaker 02

  So I think you're going to, you're going to get like different archetypes. So you have like city mining institutions, individuals, traders, like individual hodlers and then traders. And we'll see where it, we'll see where it nets out.

• 34:33Anthony Pompliano?

  Where do you go from here? So you got Miami and kind of have been getting that up and running and talking to city officials and kind of pushing it forward. Is this, let's go to 50 cities in the next year? Is it go to two cities? Kind of what does that rollout look like and kind of what are the future plans?

• 34:52Speaker 02

  We want to move very fast. We want, we want to let my, we want to let Miami win, like succeed in the beginning.

• 35:00Speaker 02

  But then fast follow with many city coins where the community is sort of voting on which is, which is coming next.

• 35:09Speaker 02

  I love to see two years from now, 200 city coins in existence, trading and you know, dozens of them at over a billion dollar valuation.

• 35:20Speaker 02

  And maybe even some at over $10 billion valuation.

• 35:25Speaker 02

  But the more cities we can create, the more of a dynamic we can have between the cities. And you know, so people can, people can choose from a menu of different cities that they want to put in their portfolio as opposed to just being limited to a small handful or just even one. But I think it would be a mistake to just like launch a thousand cities right now. I think it'd be like a huge diffusion of focus and

• 35:49Speaker 02

  the goal here is like, make, make, make Miami like, make, make Miami very successful. And then as soon as it's very clear that Miami is successful, move on to the next cities that the community decides.

• 36:05Anthony Pompliano?

  I don't know if you have an opinion, but do you think Miami is going to take the wallet? Like they're going to claim the wallet?

• 36:12Speaker 02

  I hope so. I think they're a pretty, I think they're a pretty progressive city.

• 36:17Anthony Pompliano?

  Yeah, it's, it's fascinating to me to think about the game theory that goes into basically as the value grows inside of a wallet. Do they actually take it or not? I don't know. I'd have to think through like why they wouldn't take it right to some degree.

• 36:33Speaker 02

  I mean, imagine, imagine like thousands of people who hold Miami coin and are on Twitter, you know, trying to get Miami to pick up the bag and who are also saying, no, we're gonna, we're gonna, we're gonna will this to happen, right? Like, let's get Miami coin to over a billion dollars valuation. If it gets over to a billion dollars valuation, what that means is that the cost to mine Miami coin will go up commensurate with the market cap and therefore their reserved wallet will be worth enough where it actually becomes a fiduciary duty to pick up, to pick up the bag, so to speak. And, and it's really important that the community, that the community

• 37:14Speaker 02

  kind of works together and, and, and, and helps make this happen. But I'm, I'm optimistic.

• 37:23Anthony Pompliano?

  Yeah, it's absolutely fascinating. How can people get involved? What, what are the ways that, uh, somebody who's listening to this, watching this, uh, what can they do?

• 37:32Speaker 02

  Uh, yeah, first follow Mine City Coins, uh, at Mine City Coins on Twitter and, uh, sign up with your email at citycoins.co. You'll get all sorts of announcements and, and, and like AMAs and, you know, and like ways to vote on new cities and things like that. And, and, um, and, um, you know, if you want to mine Miami coin when it begins mining, uh, which is, looks like, it looks like it's slated for July. We'll, we'll see what happens, but it looks like, looks like July. And there's a bunch of, there'll be a bunch of like tutorials and stuff for how you can do that. Um, and so there's a bunch of content now being created

• 38:13Speaker 02

  right now. And, but, um, I think in the future, there'll be like a, kind of like a playbook, guidebook for, do you want to bring City Coins to your city? Here's how you do it. Here's how you talk to your elected official, and here's how you get people voting on it, sort of thing. But focus is like laser eyed on Miami for the time being.

• 38:32Anthony Pompliano?

  Got it. And when you start to think about, um, kind of the, the maybe social aspect of this, uh, is it helpful for people to kind of talk about it with, uh, their local officials or, or talk to, uh, other people in their community? Or does you really have to wait until, uh, you kind of come to their city or town first?

• 38:53Speaker 02

  I think it's helpful. I think like the more the idea can spread and socialize, the better. Like, this is a really good meme. It's like a very, it's a very positive meme. And it spreads, it spreads pretty easily, seemingly. Like, people seem to get the concept very quickly. Like, way, way quicker than they, you know, get the concept of like smart contracts, or, you know, decentralized computing, whatever. People understand what cities are. And so, yeah, spread this with, with your grandma, spread this with, you know, spread this to everyone you know. And get them signed up at citycoins.co for sure.

• 39:27Anthony Pompliano?

  I love it. Before I let you go, ask everyone the same three questions, and then you'll get to ask me one. Uh, most important book that you've ever read?

• 39:36Speaker 02

  I mean, hate to be trite, but probably Sovereign Individual. That's pretty good. Also, like, The Bias of Communication by Harold Ennis is like, that's a, that's a weird one, but it's a good one.

• 39:48Anthony Pompliano?

  What is that one about?

• 39:50Speaker 02

  Uh, it was written by this, like, Canadian dude in, like, 1951. I, I love, I, I like pretty much only read books that are like about the future that predict future well and have been validated. Depression books. And it's essentially about, uh, different forms of communication. So you have like time bias communication, like oral tradition, uh, or like the Great Pyramids. And then you have like space bias communication, which is like, you know, stone tablets or like the pyrrhous, like, can move far, but then maybe they don't last very long. Uh, and sort of marrying these two forms of communication can allow for essentially like prosperous civilizations to exist. And, you know, I think of like Bitcoin as like a time and space bias, uh, method of communication.

• 40:32Speaker 02

  And like a perfect substrate to build sort of like civilization-level software, which is why I'm like, I'm, it's weird to feel like, uh, like contrarian, like, I feel like Bitcoin's already won its money. But I feel like it's like super undervalued as like substrate that people can like anchor into. And, um, I'm looking forward to that, like catching on a lot more this decade. I think, like, I think Bitcoin's, Bitcoin's gonna evolve once more in this decade as like a, kind of like a truth, like a ledger of truths over this decade, you know, over this decade. And, you know, Citycoin is just one way of sort of anchoring into that, that thesis.

• 41:07Anthony Pompliano?

  Got it. What do you, what about the sleep schedule? Uh, my friends are ready to sleep. I sleep, you know, five, six hours. Now I sleep eight or nine. I sleep on their thermo-regulated bed and I just turn it cold as hell, like as cold as it can go, but pretty much I just do that. Uh, it's been a game changer for me. What's your sleep schedule?

• 41:23Speaker 02

  Nice, man. Uh, I, I've been falling asleep at like nine 30, 10 o'clock at night and like waking up at six, six 30. Um, I'm on, I'm on Pacific standard time. So kind of wake up early. Um, but I, I do turn the temperature down to 60 degrees and just like put, you know, I do it like the Austrians do, or you're like, you know, or the Swiss, you know, just put on like a, a big, heavy blanket and I sleep really deeply that way.

• 41:48Anthony Pompliano?

  It's, uh, it's the best way to do it. Uh, third question, and then you get to ask me one is aliens. Are you a believer or a non-believer?

• 41:56Speaker 02

  Uh, you know, if you're asking about UFOs, I think that's just like, I think that's just like new physics. You can like replace little green men with new physics. Um, aliens?

• 42:09Speaker 02

  I don't know. I think if you asked me this question a year ago, it's a definitely aliens exist. Um, um, I haven't really, I don't have a reason to say they don't exist, but just kind of like re-examining things. Um, yeah, I, I don't know. Like I, I, I think in this next, this next like hundred years, we're going to learn a lot more about the nature of reality, especially through the lens of physics. And, um, there may be a world, there may be a world where, um, where, um, you know, believing that there's no aliens is actually like, besides like bacteria, whatever, is not so crazy. Like who, who knows? I don't, I don't know.

• 42:43Anthony Pompliano?

  It's a, it's a wild, wild world we live in, my friend. What one question you have for me to, uh, to finish up?

• 42:50Speaker 02

  Um, how, how many brothers do you actually have?

• 42:56Anthony Pompliano?

  Unlimited. It's infinite. Literally, we just spawn more and more and more.

• 43:00Speaker 02

  There, there is one queen pop that just gives birth to all the little pops.

• 43:05Anthony Pompliano?

  That, that is my mother. Uh, no, there's, uh, there's five boys total. Uh, I am, uh, I'm the oldest and then my two youngest brothers are on Twitter. So three of us, uh, obviously plus my wife and, and, uh, there's two brothers that actually have Twitter accounts, but, uh, they are pseudonymous and, uh, they're, they're not really interested in, uh, revealing themselves. But one day maybe I could, uh, I can get them to, uh, start participating in the fun.

• 43:32Speaker 02

  They should stay pseudonymous. That is like definitely the go-to these days. Like, separate your working name from your real name.

• 43:38Anthony Pompliano?

  Yeah, that's what they've done so far and they just kind of hide out in the shadows, you know, and follow along, but no one knows they're there.

• 43:47Speaker 02

  Nice. And you're in Miami now, right?

• 43:50Anthony Pompliano?

  I am.

• 43:51Speaker 02

  How are you liking it?

• 43:54Anthony Pompliano?

  I love it. I'm just, I always describe to people, I'm just happier. Like, it's a simple way to just describe everything all rolled up in one, which is just literally, I'm happier. So, I'm not, I'm not leaving.

• 44:06Speaker 02

  That's amazing. Are you gonna mine Miami coin?

• 44:11Anthony Pompliano?

  Potentially. Let's get it live first.

• 44:16Anthony Pompliano?

  Right? All right, where can we send people? You said @minecitycoins on Twitter and then citycoins.co?

• 44:26Speaker 02

  That's right, yeah, nailed it.

• 44:28Anthony Pompliano?

  Okay, and where can people follow you on Twitter?

• 44:31Speaker 02

  I'm Patrick W. Stanley. @PatrickWStanley, it's long, but...

• 44:37Anthony Pompliano?

  Awesome, man. Well, listen, thank you so much for doing this. I think this is a super interesting concept and if the mayor of Miami or somebody else in another city ends up kind of embracing this, I think that it could be pretty interesting seeing this idea of municipal equity versus municipal debt. So, I appreciate you coming on, explaining it to us, and we'll definitely have to do it again in the future as things progress.

• 44:56Speaker 02

  Yeah, Suarez, if you're listening, which I know you are, we can't wait to help you and thanks for being a great mayor.