Jeremy Gardner, Managing Partner at Ausum Ventures: How We Built the First Crypto Prediction Market

Jeremy Gardner is a Co-Founder of Auger, and a Managing Partner at Ausum Ventures. In this episode, Jeremy and Anthony Pompliano discuss the early days of Bitcoin college clubs, how the first prediction market got built, what it was like to be part of the team that built the first STO, and how crypto is going to evolve moving forward. ----- Ethereal Summit returns to New York City this May 10th to 11th to kick off Blockchain Week and offer you a chance to go deep into the heart of crypto, blockchain, and Ethereum. Get up close with outspoken crypto leaders like Mike Novogratz, Joe Lubin, Tushar Jain, Danny Ryan, and yours truly Anthony Pompiliano. Ethereal Summit is where you can get in the mix with the builders of blockchain. Check out Etherealsummit.com with discount code POMP to get 20% off tickets to come hang with the brightest minds in blockchain at Ethereal Summit New York, May 10th to 11th at Pioneer Works in Brooklyn. ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

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

• 0:01Anthony Pompliano?

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

• 0:12Anthony Pompliano?

  Jeremy Gardner is a co-founder of Augur and a managing partner at Awesome Ventures. In this conversation, we discuss the early days of Bitcoin college clubs, how the first prediction market got built, what it was like to be part of the team that built the first STO, and how crypto was going to evolve moving forward. I really enjoyed this conversation. Jeremy's got a ton of crazy stories, and I hope you enjoy it as well. This May 10th and 11th, Ethereal Summit is coming to New York City to kick off Blockchain Week. It offers you a chance to go deep into the heart of crypto, blockchain, and Ethereum. Come hang out with Mike Novogratz, Joe Lubin, Tushar Jain, Danny Ryan, and yours truly. You get into the mix with the builders of blockchain and Ethereum, it's less shiller,

• 0:57Anthony Pompliano?

  all killer. Go to etherealsummit.com and use my discount code POMP to get 20% off tickets. I'll see you there on May 10th and 11th at Pioneer Works in Brooklyn.

• 1:08Speaker 01

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

• 1:34Anthony Pompliano?

  Bang, bang. Jeremy's in the house. What's up, man?

• 1:38Speaker 02

  It's good to be here. I'm in New York and trying to survive the weather.

• 1:43Anthony Pompliano?

  All right, Jeremy's a legend. CryptoCast on San Francisco. We'll get into your background in a second, but you recently moved to Miami and he won't shut up about how it's cold and the weather sucks in New York. So we're gonna do this and then you can get back down to Miami.

• 1:56Speaker 02

  I'm gonna hop on a flight right after this interview.

• 2:00Anthony Pompliano?

  All right, what the hell were you doing before crypto?

• 2:04Speaker 02

  I'm actually, I'm in the midst of writing a memoir right now.

• 2:09Anthony Pompliano?

  Are you really?

• 2:10Speaker 02

  Yeah, yeah.

• 2:11Anthony Pompliano?

  Are you writing it or you have like a ghostwriter?

• 2:13Speaker 02

  I've got a guy I'm writing it with. I've got like 275 pages of unpublished writing, lots of blog posts. When I got kicked out of college when I was 18, I had like an anonymous blog that went pretty viral. It went, and so.

• 2:28Anthony Pompliano?

  Like Tucker Mack style?

• 2:30Speaker 02

  Yeah, but I mean, not that sort of debauchery, more like adolescent ruckus. Uh, just, I was a total miscreant growing up and so there are a lot of great stories. Uh, pre crypto, I don't even know how much I'm going to get into the crypto component of my life in the book.

• 2:47Anthony Pompliano?

  All right, so what were you doing right before you first discovered Bitcoin?

• 2:54Speaker 02

  Can I say this on air?

• 2:56Anthony Pompliano?

  Yeah, you can say whatever you want. It's a free country, man. Uh, yeah. New York, man, you can say whatever you want.

• 3:01Speaker 02

  I, you know, I'll leave it at this, you guys can read the book. Uh, I, I, I was in some fairly illegal activity based in New York and Massachusetts where I was from. I just dropped out of my first college and I was, yeah, I was neck deep in illicit activity. And some very unfortunate series of events where some bodies washed up in a river led me to go back to college. Ended up at the University of Michigan where I just happened to move in with a Bitcoin enthusiast.

• 3:34Anthony Pompliano?

  Really?

• 3:34Speaker 02

  Uh, yeah, but, but, but one thing I should mention, and I think it's very interesting for you is that when I was in college, right before Bitcoin, I developed my own major. Um, it's very uncommon at the first school I went to and even at, uh, Michigan where the honors college, which I was a part of, allowed it, it was very uncommon for people to develop their own major. I developed this multidisciplinary study in political strategy. Uh, and this was political studies, microeconomics, mostly game theory, social psychology and military strategy. In fact, I was one of the very first, I was the very first, uh, non cadet to study military strategy. I had the US Military Academy at West Point, uh, and so.

• 4:16Speaker 02

  It's amazing to think how I developed the perfect major for working in crypto.

• 4:23Speaker 02

  I thought I was going into politics, but it turned out I had developed just the perfect major for what we do, because it's all about strategy and it's all about tactical thinking. It's always thinking about several steps ahead and I know you have a lot of experience with that and I'm sure your time in the army is probably informed the way you think about crypto and crypto economics and how this whole big macro game is being played.

• 4:49Anthony Pompliano?

  For sure. When you move in with the Bitcoin enthusiast, what uh, like what happens? He's like, "Hey man, you ever heard of this internet magic money?"

• 4:56Speaker 02

  Well, so his name's Kennard Hockenhall and he's-

• 4:59Anthony Pompliano?

  What's the name?

• 5:00Speaker 02

  Kennard Hockenhall. And he, he's uh, an African-American young man from the inner city of Detroit, had his house foreclosed upon uh, his family during the Great Recession, became effectively an anarchist as a result, totally lost his faith in banks and government. And, and he actually started one of the very first Bitcoin exchanges in the United States. It was called BitBox. He was in uh, I want to say, I think he was in the first boost class, Adam Draper's accelerator, uh, and it ended up getting defrauded uh, via wire

• 5:42Speaker 02

  and he ended up shutting down the company and he was sleeping on the couch in my apartment, rebuilding his company back at Michigan where he had, he had been intending and was also converting to Judaism because he'd been part of this all Jewish fraternity that we lived with and decided he liked the religion. Great guy, fascinating, but it's all he wanted to talk about. The other guys in the apartment weren't really interested in being my friend and I didn't know anyone there. And so I started to learn about Bitcoin, had learned about it like two years prior in 2011 because of the Silk Road. I had thought that was fascinating, uh, you know, this black market, amazon.com, but I actually found Bitcoin to be the shitty part of that experience.

• 6:26Speaker 02

  So I never actually bought any, but revisiting the technology with Canard. Uh, I really became endeared. I had been at Occupy Wall Street in 2010, 2011. I had gone to school two hours uh up north of here and every weekend I had gone to Zuccotti Park and protested the banks and seen.

• 6:45Anthony Pompliano?

  Yo, Zuccotti Park was lit back in the day.

• 6:48Speaker 02

  It was lit and it was wild and it was, it, it, it showed me as someone that was studying political strategy and very interested in the whole concept of revolutions and how you drastically disrupt a system. I thought maybe Occupy could accomplish something and they accomplished nothing. Because all we did was protest. One, we didn't have demands, but two, how do you just, what do you get? A bunch of regulations that are burdensome for the banks? No. What, it would take me two years to realize and only upon discovering Bitcoin was that you have to create a new financial system. And once I realized what Bitcoin could be, that I, in really this kind of frictionless way to transact value,

• 7:30Speaker 02

  we should transcend Bitcoin. It's the concept of the blockchain, but nobody was talking about blockchain back then. We were just talking about Bitcoin and cryptocurrency. Blockchain was not really a term even back then, you know, there were, there was a space between block and chain.

• 7:46Speaker 02

  And we should, we should discuss how that was one of the greatest marketing ploys ever developed by this industry was shifting from Bitcoin to blockchain.

• 7:54Anthony Pompliano?

  Why, why?

• 7:55Speaker 02

  Well, I'll just say I got so excited because I realized it could be more than just internet money, you know? All value itself could be transacted frictionlessly and trustlessly between anybody, anywhere in the world with an internet connection. But the marketing ploy, so if you rewind, when did you first get involved in the industry?

• 8:15Anthony Pompliano?

  So first I ever heard about it was in 2014, working at Facebook. And I turned to an engineer who literally was like, this is dumb and never thought about it, didn't Google it. And literally was the laziest person on the planet. Uh, and also probably the dumbest because I should have obviously.

• 8:33Speaker 02

  Well, it looked stupid at first.

• 8:36Anthony Pompliano?

  And I'm not technical. And so I turned to the person that I, you know, one of the people I respected the most and asked them, what do you think?

• 8:42Speaker 02

  Well, yeah.

• 8:42Anthony Pompliano?

  And he said it was dumb. So I said, okay.

• 8:44Speaker 02

  And you're lucky enough to have engineers in your life until I was at Michigan, like up until, until I was like 22 years old. I didn't know any computer scientists. I didn't know any developers. I went to liberal arts school. I'm from a small farm town in Massachusetts. Like, there's nobody in my life besides for buying drugs off the internet that would be interested in Bitcoin. I didn't know libertarians. I'm from the most liberal city in America. Like, there was no reason for me to take Bitcoin seriously, but then I had this kid that had a very poignant life experience and who I was forced to hang out with that got me into it. But it probably wouldn't have happened otherwise because Bitcoin is a very hard to understand concept.

• 9:28Speaker 02

  I mean, I always thought gold was stupid, so I didn't even have that touchstone. But going to the marketing ploy, I mean, in 2014, and this is why I ask, in 2014, Mt. Gox imploded. Charlie Shrem, who you just had on the show, went to jail. And most publications pretty much either said or intimated that Bitcoin was dead. And it effectively was. I mean, nobody could get banked. Banks that had been exploring creating cryptocurrency exchanges, exploring the technology, just, you weren't allowed to utter the word Bitcoin in a lot

• 10:09Speaker 02

  of big banks. And the world kind of forgot about the tech. And so what we did was, there was a handful of people who'll go unnamed, that engaged some of the top crisis PR firms in the world. So what do we do? We got this technology. We're heavily invested in it. We think it's the future, but it's become toxic. And you can't blame the media and most people from thinking Bitcoin was stupid and that it was dead. I mean, its only association was with black markets, frauds, and hacks. I mean, there was nothing really redeeming about Bitcoin at that point in time, except its potential. And so what they said was,

• 10:54Speaker 02

  well, what is the innovation in Bitcoin? We started talking about this idea of this distributed ledger, the blockchain, if you will. And we started talking about blockchain technology.

• 11:09Speaker 02

  Forget Bitcoin, it's just this, it is this new paradigm for transacting value that the internet and the world has never had before. And by doing that, we created a world word that could be uttered at banks, that could be uttered at Fortune 500 companies by heads of state or our members of parliament. We created a new phrasing that made this technology acceptable even when Bitcoin wasn't. And so, you know, the Bitcoiners were like, how dare they say blockchain's not Bitcoin? I was like, fuck yes. That's amazing that these guys are talking about it. When banks started talking about blockchain technology in 2014,

• 11:49Speaker 02

  and moreover in 2015, they single-handedly saved this industry. By legitimizing this underlying innovation that was a part of Bitcoin, the blockchain, they legitimized Bitcoin unknowingly. I truly think this industry could have been squashed back then if the banks had just not dabbled in blockchain technology, not talked about it, not done these proof of concept trials, not said blockchain's not Bitcoin. But because they did, Bitcoin was able to really revitalize itself. Industry, companies and industry were able to get funding. And a lot of those companies that were doing blockchain, not Bitcoin initiatives,

• 12:34Speaker 02

  are now doing Bitcoin initiatives again. And so, you know, there are a lot of heroes in this story of Bitcoin, but the banks play a really tremendous role that a few individuals are willing to recognize because they legitimized blockchain tech, which is a big part of what Bitcoin is.

• 12:55Anthony Pompliano?

  Do you think any of the bank executives hold Bitcoin?

• 12:58Speaker 02

  Oh, for sure.

• 12:59Anthony Pompliano?

  I think it's like a, I think it's like a... Zero percent chance that they don't.

• 13:03Speaker 02

  No, no, no, no. I mean, I, I, I, I think it's beyond the realm of doubt that many bank executives do. Now, some don't. Jamie Dimon probably doesn't, but his daughter does. You know, that's just as good in my mind.

• 13:18Speaker 02

  You know, that speaks loads to the technology. But I mean, look, I, I, I've got into crypto. I wasn't an anarchist. I wasn't a libertarian, but I thought Bitcoin and blockchain technology could make the world better. And I believe it could help disintermediate the banks, who I had a much bigger problem with than the government.

• 13:38Anthony Pompliano?

  So you'll love this, uh, because it fits right into your story. One of my theories is that the reason why 25 to 35 year olds are so pro crypto is that that age group, that 10 year gap is just old enough, when the global financial crisis hits, to be cognizant of what's going on. They see the housing market just exploded. They see people losing money, losing their wealth, all this stuff. But they don't have enough wealth to actually be affected themselves. So they see their parents being affected, their friends' parents, you know, other people that they know. And it's the ability to see it happen, not be hurt by it,

• 14:23Anthony Pompliano?

  and also then realize all of those large financial institutions that your and my parents probably grew up thinking were bulletproof. Those things aren't anything near what you guys thought they were, right? And so now 25 to 35 year olds are hitting the stride of, hey, we've accessed this new technology. We actually don't believe that those banks are fully solvent, right? And you actually don't see that many, like 15 to 20 year olds, in my experience. The 15 to 20 year olds are not nearly as excited about this as the 25 to 35 year olds.

• 14:55Speaker 02

  They want Fortnite and Z Bucks.

• 14:57Anthony Pompliano?

  And it's crazy.

• 14:58Speaker 02

  That's because you, you got it right, but you missed, you missed something that's really important for millennials. So millennials cut off at 25, pretty much, you know. They're old enough to remember dial up internet, a world without mobile phones. But not really a world before that, for the most part. And I mean, I mean, the, the, the later, the older ones can remember a world without the web, barely. But. What we have all lived through, this unifying experience starts before the Great Recession. It starts with nine eleven. And nine eleven.

• 15:34Anthony Pompliano?

  I was in eighth grade.

• 15:36Speaker 02

  Yes, nine eleven is the essential moment for millennials. Because what it represented was a shift in how we think about privacy in the world. In which Orwell's nineteen eighty-five actually started to become a reality. And you know what? In twenty nineteen, it is nineteen eighty-five, it's just later than he predicted. Uh, we live in this growing Orwellian world. And then, so since two thousand one, we've seen our rights taken away, we've seen our privacy taken away. We've seen the growth of oligopolistic internet companies that that kind of harvest all of our data. And we we've, we don't like it.

• 16:18Speaker 02

  Humans have an inherent uh desire towards some form of privacy, not total privacy, some form of privacy. And then we had, then we had the Great Recession. And all of a sudden, we saw how the banks just fuck us. They don't care. They they are money-making capitalistic enterprises that really just don't give a shit about the individual. And because of that, you have millennials who now have grown up in a world where privacy is an afterthought, where the government doesn't care about the individual, not that they ever have, but you can actually see that now. Uh, especially with like agencies like ICE, which has become more of an issue these days.

• 17:00Speaker 02

  And then you see, uh, and then you see the the financial system implode. And you and you see it get rebuilt in a way that only benefits the companies that caused the implosion. And and so, yeah, well, why not is not, why not believe in something that has only a slight chance of success today? It's much greater. I'd say the success of cryptocurrency in fifty percent. Uh, blockchain technology is great over fifty. Much over.

• 17:25Anthony Pompliano?

  I think that Bitcoin, uh, Bitcoin's potential as the global reserve currency is over fifty percent.

• 17:34Speaker 02

  I'm close to that. I'm not there yet.

• 17:36Anthony Pompliano?

  So before we get into a whole bunch of things that you believe, some that I think are very well documented, some that are controversial, and then some that I think majority agrees with you on, let's go through, you leave Michigan. How do we get from Michigan to Crypto Castle in San Francisco?

• 18:00Speaker 02

  It was a very short timeframe, but you have to just go back to Michigan. So Kennard,

• 18:08Anthony Pompliano?

  Shout out Kennard. We need to get Kennard on the podcast.

• 18:10Speaker 02

  You should get Kennard on this. I can make that happen. But what happened was that

• 18:18Speaker 02

  Kennard had started two years prior, I believe, the Michigan Bitcoin Club.

• 18:23Anthony Pompliano?

  Okay.

• 18:24Speaker 02

  And he is like restarting it. He's like, I've got this guy from my former fraternity, Danny Block. He's this really hilarious pothead from Ohio that was gonna lead the Michigan Bitcoin Club. And he's like, you should join and be a part of it. I was like, I've got nothing better to do. So I was like, okay, I'll go. And at the very first Michigan Bitcoin Club meetup, a reporter shows up from USA Today, and she's, she wants to talk to us about Bitcoin and our club. And I don't really have much to offer because I'm fairly new. But we speak to her, and partway through the interview, she mentions that there are Bitcoin clubs at MIT and Stanford.

• 19:08Speaker 02

  And at that moment, I see an organizing opportunity. I had worked for the governor of Massachusetts that past summer and that fall when I dropped out of school doing some of that illicit stuff. I was also helping running the campaign of the woman who's now Attorney General of Massachusetts.

• 19:25Anthony Pompliano?

  And the irony of that is not lost on me.

• 19:28Speaker 02

  No. And well, I worked at, it's funny, you know, people really just hate how I talk about privilege and being white, like on Twitter, and the libertarians and anarchists just bash me, and I get unfollows every time I talk about it. But I worked at the Massachusetts Commission Against Discrimination, and I just saw.

• 19:48Speaker 02

  How radically different people that are not white, straight males are treated. And I realized that I was going to spend my life, at first illicitly, but then in a much more socially beneficial way through what I'm doing now, by taking advantage of the privilege I have and recognizing it, and not shying away from the privilege that I have. So it was a really instructive experience and it definitely taught me how to avoid getting in trouble with the police. Once again, story for another day. Regardless, I got really dismayed by the bureaucracy in government and the total inefficiencies. But I did

• 20:32Speaker 02

  learn how to organize politically. And so I saw this organizing experience or opportunity at Michigan with these MIT and Sanford clubs, and so I asked for the journalists to put me in touch with them. I just thought something might happen. And so I'm going to name drop right now because it's so funny who was on those calls. So the head of the MIT Bitcoin Clubs were Dan Elitzer, who's now does ventures at the Ideo Lab. It was Ryan Selkis, who now runs Misari Crypto here in New York. From Stanford, it was Andy Bromberg, who's now the president of Coinless, and Ryan Breslow, who started Bolt. I mean, it was just a rock

• 21:16Speaker 02

  star cast of my first real call in crypto. And I get on the call that same night because the Stanford and MIT guys had already had something planned, and they're all talking about their respective successes and failures as clubs, offering to share resources with one another. And the MIT guys are talking about their potential hundred dollar Bitcoin drop and the first college conference.

• 21:41Speaker 02

  And there seems to be a lot of opportunity. Ryan and Andy, who have gone on to become two of my best friends. We dropped out of school at the same time together. Were very smug and didn't want to tell us about anything they were doing. But, you know, I felt like we could do something with these groups. At the end of the call, I suggested, hey, why don't we create an organization out of this? And everyone's like, sure, go ahead. We don't have time for that, but we'll be a part of it, kind of. But I used their names and I created what was called the College Cryptocurrency Network. I got on every Bitcoin group, every channel, every social media. And I just spoke to people. I'm like, hey, if you're a college student, you're interested in Bitcoin, come start a chapter of this organization.

• 22:24Speaker 02

  And I don't know what happened. I think it was probably Gox imploding that brought attention to Bitcoin to so many young people. But within three months, we had incorporated and had 100 chapters in 20 plus countries on every habitable continent. I mean, it was just an extraordinary success. I was asked to speak at conferences and then through, and then through what would become the Blockchain Education Network, as it is known now, I met Joey Krug, who is this brilliant 18 year old computer scientist. He wanted to start a point of sale system for crypto and we decided to build it together. I mean, he was just super smart.

• 23:08Speaker 02

  I was like, you and I, Wozniak Jobs, let's do something. Let's do this.

• 23:14Speaker 01

  Who was Steve Jobs next year?

• 23:16Speaker 02

  You know, honestly, Joey's so enigmatic, he can do anything, you know. He was obviously the programmer, but you know, he's brilliant. You know, he now runs a hundred million dollar hedge fund, you know, youngest person in the world to ever do that. I mean, I mean, he is, I got so lucky meeting him. And so he was actually from a small town in Illinois. And so I planned to spend the summer working on the nonprofit that summer. So I was like, hey, just like come to Michigan and spend a few weeks here and work on the company. I got him to some crypto conferences in Chicago. And we just spent a bunch of time together and we developed a real kind of brotherhood and.

• 24:00Speaker 02

  Then we decided, we started to get traction around the end of the summer. The nonprofit was doing well as well. We had raised, you know, a couple hundred thousand dollars from a few crypto companies. And so Joey and I decided to take the leap of faith. Well, not exactly. Joey decided to take a leave of absence from Pomona, where he was in school. I, given my incredibly turbulent academic career, getting kicked out, dropping out, you know, going from a horrible student to pretty much straight A's in college. I really didn't want to drop out of school. I had one year left. I was going into my senior year and I was supposed to take one class each semester

• 24:44Speaker 02

  and then work on my senior thesis so I could focus on my nonprofit and my startup. And then, and so I was like, Joey, I don't know. I'm down to work on this from school, but like, I don't know if I really want to drop out and focus on this full-time. Like, my parents will hate me. And then what happened was I got a call from the dean of the honors college and she's like, can you come in? And I'm like, I don't think I did anything wrong for once. So I go into the office and it turns out that they had run an audit of my transcript and I had too many out-of-state credits. So I had more than enough credits to graduate if I had gotten them in the state of Michigan.

• 25:25Speaker 02

  But because I hadn't gotten my credits in the state of Michigan and all my AP credits, they didn't count. I had maxed out my credit limit from out-of-state and all of a sudden, in order for me to graduate on time, I would have had to take like eight classes each semester or been in college for like a whole extra semester after the following year, in addition to taking, being neck-deep in courses. And the dean of the honors college, for the first time in her career, told me to drop out of school. She's like, I've never done this before, but I see what you're doing with your nonprofit. I see what you're doing with your startup. And if you ever need to come back here, you can. And that's all I needed. You know, it was a very quick conversation.

• 26:07Speaker 02

  It felt like destiny. I knew that Bitcoin blockchain technology maybe had a, this is the summer of 2014, maybe had a 10% chance of succeeding. But I knew, I knew just down in my gut that if it did succeed and I stayed in school and left behind the nonprofit, left behind the startup, I would regret it for the rest of my life. And that's what I told my parents. And I was like, look, if in two years this hasn't worked out, I'll find my way, find a way to pay my way back into school and I'll go back to school and I'll finish. But I gotta go do this Bitcoin thing. And so I ended up dropping out like two weeks before the semester started, summer of 2014.

• 26:49Anthony Pompliano?

  Okay.

• 26:49Speaker 02

  And so Joey and I dropped out of school and then we were like, wait, we don't have any money.

• 26:58Speaker 02

  We really had nothing. Like I had some money in the stock market, but like I was like, oh, I don't really want, I don't want to sell that. And then we got contacted by a startup that was going to be based in LA that had raised some angel money. They're like, and I had been talking to them because they wanted to do marketing through my nonprofit. They're like, why don't you come join us as contractors? And Joey and I were like, well, we need money and it provides housing. And so we moved out to LA. And it was just the most disastrous scenario you could imagine. Joey just came out to me when I got to the house and he was like, I don't know what we got ourselves into.

• 27:39Speaker 02

  I mean, it was, it was bad. The CEO who will go unnamed had just lost his mind, was office mad, had just had a child out of wedlock. Nobody really knew what they were doing. The company had no direction. And it was, it was the most stressful two months, three months of my life. I mean, the whole longer experience was, but that, that, that initial period where we dropped out of school, moved to California, I was like, I could be in college. I had a great girlfriend back at Michigan. Like it was the first real girlfriend I'd ever had. I was like, everything was going well for me at Michigan. And now I've just dropped out to do this Bitcoin shit that's probably gonna fail. What am I doing here? But.

• 28:23Anthony Pompliano?

  So how do you get from LA to San Francisco?

• 28:25Speaker 02

  So Joey and I are, you know, we're pitching this point-of-sale startup that takes credit cards and Bitcoin payments. There was the switch to the chip-in-depth system from Swype that, beginning in 2015. So Joey and I are like, we'll create this new startup that implements a chip reader and also takes crypto payments. We created actually the first Bluetooth low-energy BIP for Bitcoin payments and actually even did sound-based transactions for Bitcoin, which is very cool. But then, so this company's trying to figure out what it's doing. It's a total disaster.

• 29:08Speaker 02

  But then we stumble upon a white paper for a decentralized prediction market platform. It was Paul Storck's TruthCoin. And I was like, no, this is a great idea. I had made a bunch of money on Intrade back in 2012 and 2008 on the presidential elections. I would, I just was really good at like betting on the electoral college outcomes. I made thousands of dollars in high school and college. And then saw Intrade get shut down and there were no real prediction market platforms. So I saw the need potentially for decentralization. Now, obviously, at that time, it was the first fad of decentralize all the things. In fact, Bitpay even had a sticker that said that.

• 29:52Speaker 02

  But I thought most decentralized things, decentralized things people were talking about were pretty stupid. Decentralized Reddit, Twitter, Facebook, whatever. It just, it didn't make a lot of sense back then. You know, there was really only Bitcoin and a bunch of crappy altcoins. And so I didn't really get that, but decentralized prediction markets made a lot of sense. I'm like, Joey, I, I think we have to do this. And... He agreed and and we start talking to the team. We're not sure about the guy that's the CEO. Like, we're like, I don't think we can keep this guy around. But but we we end up deciding, you know, we can't do this in in in LA. There's no resources here. It's the first place where or the second time I met Brock Pierce,

• 30:35Speaker 02

  who would become my colleague at Blockchain Capital. And, you know, he was like, look, I've worked in the world of gambling for a long time, and you guys are probably gonna go to jail for this, stay with the payment, stay with the payment system. But I I I just felt this calling for creating this decentralized global source of truth and forecasting. And so I'm like, guys, like, let's go move somewhere where we can do this. Let's move to San Francisco. Let's go raise some money and maybe get rid of that CEO. And and we moved out to San Francisco. Our house fell through. Two days before we were on the drive up, as the guys were driving up to San Francisco, our housing fell through.

• 31:18Speaker 02

  And I was in, I was speaking in Brussels at a conference where I was hanging out with Vitalik for one of the first times and budding with him because we were the only young guys speaking at the conference. And when I came back, just our housing situation was a nightmare. We found this dingy two-bedroom or three-bedroom apartment out in Daly City in San Francisco. And I dubbed it the Bitcoin basement because it was literally the basement of the house, which would end up flooding like a month then. I mean, it was it was it was roughing it in the most quintessential sense of the term in terms of Silicon Valley startups. I mean, everything that went wrong could, you know, employees quit. You know, we had to get rid of the CEO.

• 32:03Speaker 02

  And then and then, you know, we started grinding and and eventually we raised a tiny bit of money, enough to get a house that would become known as Crypto Castle. You know, I just like alliteration. It was a house overlooking the city and the Petronell Hill neighborhood. We couldn't afford an office space. We couldn't afford to live separately. We were taking a thousand. All our salaries, but the Crypto Castle seemed like a nice name, especially because we wanted it to be a hub for entrepreneurs and crypto people to hang out because there was no place like that back in 2014. Oh, 2015 at this point, we moved in in January. And so the Crypto Castle was born as a result and the hardship didn't stop, but.

• 32:48Anthony Pompliano?

  So when you move into Crypto Castle, what's the general premise? Just you guys are going to live there? You're going to build the company as an office?

• 32:55Speaker 02

  It's just a hoffist for Augur. That was it.

• 32:58Anthony Pompliano?

  A hoffist?

• 32:59Speaker 02

  Yeah.

• 32:59Anthony Pompliano?

  I never heard of it for like a whole office?

• 33:01Speaker 02

  Yeah, that was it. You know, we couldn't afford anything else and it worked, but you know, there was also no place for the crypto community to kind of get together. And so I I used, I I added it to Google Maps. I added a Facebook page. I talked about it. Uh, Vitalik would stay there when he was in San Francisco and and I think that was the key moment. One of the times that Vitalik was staying. Uh, a reporter from some news website that never really took off. Uh, who came to interview Vitalik about Ethereum and then was so fascinated by our house. Uh, that she ended up writing an entire art article about the Crypto Castle.

• 33:40Speaker 02

  And from then on, it's just been a touchstone for any journalist wanting to coverage crypto and not wanting to have to do the intellectual work required to explain crypto.

• 33:52Anthony Pompliano?

  Just talk, just write about the Crypto Castle.

• 33:53Speaker 02

  It's much easier to talk about a house full of Bitcoin enthusiasts than it is to talk about crypto itself. And so that led to just an onslaught of press for the past half decade, pretty much.

• 34:06Anthony Pompliano?

  Yeah. And so, uh, do you like a lineup of folks who paraded through their, over the first two years? Pretty much everybody, right?

• 34:16Speaker 02

  Yeah, I mean, literally anyone that was in town i- in San Francisco, and once it became well known, would ask to stop by and the community was so small back then. Yeah, a- anybody came through. I mean, I, my favorite moment to this day was like three years ago and Vitalik was staying at the house. And Bram Cohen came over, creator of BitTorrent, now Chia Network and. They had this very interesting intellectual conversation and standoff that was just one of the most amusing engagements because they're all, you know, they're both wonderful guys. Uh, but both kind of on the spectrum. I think they'd both say that.

• 34:55Speaker 02

  And so the interaction was just so, uh, just so beautifully nerdy. You know, they're kind of challenging each other on ideas, but it, there's no, uh, there was never any of this point of full-fledged debate. And I just sat there just totally enamored with the conversation. It was, it was just fascinating, you know? We had, there was, there was another night where we had, I don't know if Vitalik was there, but two of our other advisors of Augur, Robin Hanson, who's one of the top academics when it comes to prediction markets, Elizabeth Stark, who would go on to found the Lightning Labs. Uh, we were, they were there and we just had this long, late night of conversation.

• 35:39Speaker 02

  Uh, you know, everything at the, at, at the castle, either in San Francisco or Miami, I try to keep spontaneous. I don't, I'm not like, I'm, I'm known as a partier, but I don't like to plan parties. I just like to have things happen, you know? Have alcohol flowing, just, you know, have there be a, a, a free-flowing dynamic where people can converse without kind of apprehension, you know? Because

• 36:01Anthony Pompliano?

  All right. So as you're doing this in San Francisco, uh, how do you end up working at Blockchain Capital?

• 36:08Speaker 02

  So we pulled off the first successful ICO in almost a year, uh, with, with Augur. And I was at my wit's end at that point. I, I, I'd been through so much stress over the past year of my life doing Augur that, you know, I, I, I, I wasn't going to last. There were three, probably three years, two, three years left of coding. I wasn't a coder, wanted to keep costs low. I had a falling out with one of my co-founders and, and left the project. And, you know, at that point I was, because this is kind of how these ICO dynamics worked, especially back then.

• 36:50Speaker 02

  And they were so rudimentary. I was fully vested, if you will. So the economic incentive wasn't really there. And, you know, I didn't think the team needed me as much back then. In hindsight, that probably wasn't as true. But, you know, Brock, who I had got into knowing the conference circuit was like, come join my firm in San Francisco, where I was already living. I had an entrepreneurial residence. I had kind of humored the idea with the folks over at Pantera as well. But, you know, I went and sat down with Brad and Bart Stephens, the two brothers who run Blockchain Capital now. And they kind of quizzed me, told me Augur was gonna get me sent to jail.

• 37:34Speaker 02

  I mean, everyone said that back then. You know, they said Ethereum was probably gonna fail. They were still pretty Bitcoin focused, but obviously it started at a firm called Blockchain Capital. And, you know, it seemed like I had three, no, two years ago, two years prior after I decided I didn't want to work in politics. I had been thinking of what are my dream jobs? Like, what do I want to do after college? Because I don't want to go into politics anymore. And I had decided I wanted to become a venture capitalist. Then I was reading online. It's like, the only way to become a venture capitalist is to be

• 38:07Speaker 02

  investment banker or as experienced entrepreneur. Turns out not to be true. It's the most nepotistic industry. But all of a sudden, fast forward two years, after deciding there's no way I was ever gonna become a venture capitalist. Because I, no one, no one had, at that point in my life, identified my entrepreneurial instincts as such. And so I was like, oh, well, I'm screwed. I'm never gonna become a VC. Two years later, the offer lands at my door and I'm like, sure, I'll do it. Like, I was willing to do it for free. You know, they offered me some carry on the fund and I was like, that's perfect. You know, like, I had enough money from the Augur ICO, you know, back pay from salary and such, that I felt comfortable. And so I was like, yeah, I'll do it.

• 38:52Speaker 02

  I'll go be a VC. And it was a great time because that was, that was really the depth of the first bear market. I learned a lot, learned a lot about investing. I mean, the Stevens Brothers are like

• 39:06Speaker 02

  as legacy VCs as it gets. Their fathers started investment banking on the West Coast. They're just total rock stars. They know exactly what they're doing. And then Brock and I are just like soul brothers, like we're just crazy, wild entrepreneurs. And learning how to balance those instincts between professionalism and being outlandish goobers was a really great thing at probably what 24, 25 years old. So I, I, that was one of the best experiences I could have had at that point.

• 39:38Anthony Pompliano?

  What, what are some of the companies that you guys invested in while you were there?

• 39:41Speaker 02

  So the companies that where I really helped lead the investment, uh, the, the, there were, there were a handful. Bolt, which is my, Ryan, who I'd known for several years at that point, had started this payments company that, you know, shifting between Bitcoin and non Bitcoin, but uh, they, they, they were getting ready to launch and we invested in them. And they're

• 40:06Speaker 02

  and they just exploded. I mean, they're just crushing it right now.

• 40:09Anthony Pompliano?

  I talked to Ryan on the phone and uh, uh, common mistake. So there's only two mistakes that I ever really make in investing and I repeat them. Is uh, if I lose sight of who the founder is and I start falling in love with the idea rather than the founder.

• 40:26Speaker 02

  Yeah.

• 40:26Anthony Pompliano?

  Uh, and then two is uh, worrying about the valuation at the early stages.

• 40:30Speaker 02

  Yeah, and the valuation would cause hesitation, but they're rock stars. Eric and Ryan, the two co-founders are just brilliant. Classic Stanford, Silicon Valley startup dropouts, uh, beloved the guys and, and they're doing amazingly. And they've, they've got some interesting stuff up their sleeves in regards to crypto. And then, and then uh, Tyrion, a Wayne Vaughn startup. I met him at the very first consensus, you know, just allowing people to easily hash onto the blockchain, which was at that time, really one of the best value propositions of the blockchain, not Bitcoin movement, those kind of timestamps.

• 41:10Speaker 02

  You know, I got very close with Micah Winkelsbeck from JAM, uh, really just, that was a compelling company. Just because Micah just will, is just such a dynamic entrepreneur. And you know, I, I, I learned.

• 41:26Speaker 02

  To a certain extent that I probably am not the best entrepreneur. Like, I am not a builder per se. I am a masterful delegator. And so I can real, I'm really helpful with entrepreneurs that need to build companies. I'm really helping them delegate, focus on what they need to focus on. I'm much better at helping entrepreneurs build companies rather than building them myself. At that point, I had built, you know, the blockchain education network at Augur. But I, I, I was, I was becoming less certain that I was a, a, a great CEO per se. I, I knew very quickly that I didn't want to scale a company past a hundred employees. And that was a very important realization to have because, you know, a lot of entrepreneurs make that mistake.

• 42:11Speaker 02

  They think they're going to see a company through to an IPO and often they're not the right person to do that. But I, but while there, I had started a distributed magazine, which is a hundred and eight page primer on blockchain technology, comes out twice a year through BTC Media, has a website called distributed.com. And it's my favorite resource to give people that I've never want to learn about blockchain technology because it's print, you sit down with it, you start from front to finish. And at the end, you have a sense of what blockchain technology is, what its potential is. And so that was a, a really great thing that I accomplished while at B cap and then also helped them structure the first tokenized security ever.

• 42:53Speaker 02

  So while at Augur, I, we created the first utility token. I then want to create the first security token.

• 43:00Anthony Pompliano?

  So walk, walk me through the thought process as to why to do that? How did you guys structure it and what were the results?

• 43:07Speaker 02

  So it's super funny. So with Augur, we didn't want to create a token. We didn't want to do an ICO. That was like terrifying. We got rid of the word ICO. We called it a crowd sale, token sale. We, we, we, the ICO was just sounding like an IPO. It sounded horrible. And for almost a year after we created Augur's rep token and after our, our sale, the term ICO dissipated. We, we actually effectively got rid of it and it, but then it came back with a vengeance. With Augur, what we did was we realized that in order to have a decentralized consensus, or a decentralized oracle, if you will, you had to have a token that was not Ether,

• 43:50Speaker 02

  in order to create, turn history into our story, a collective recollection of truth. And it was scary, but at that time, I didn't think there would be that many utility tokens. I didn't see that many use cases for utility tokens, and frankly, I still don't. You know, there are thousands in the world now, but Augur, in my view, its rep token is still the best utility token there is. But what I didn't predict was how many would come after it. Now, how many will remain is yet to be seen, but I think my original estimate, at the time that we created the first utility token, is that there will probably be a few hundred in the world.

• 44:33Speaker 02

  I heard Jeremy Alair on your podcast earlier today, saying that he thought there would be thousands of utility tokens. Now, there may, but I don't think they'll have the high financial value. I think they'll have much more of a governance utility, more than anything. But that experience should have led me to realize that when we were talking at Blockchain Capital about tokenizing our third fund, that it would lead to more than just tokenized venture funds. But we did it. Like, I don't know what the guys say, but none of us realized what tokenizing a security could be. Nobody was talking about it.

• 45:17Speaker 02

  We were realizing that a lot of the ICOs coming out were securities, so we're like, well, we're gonna call it a security, because we know it's a security. But really, the whole, like, I thought the idea of tokenizing assets was interesting, but since no one had done it, no one was talking about it, it's hard to say that we, I mean, I know as a fact that I didn't predict what would come. We thought, you know, we were democratizing venture capital, we were creating greater liquidity for LPs, but...

• 45:49Speaker 02

  I really don't think that this movement towards the tokenization of all assets, everything that is scarce in the world, that wasn't really on our mind. And I don't want to take credit to suggest it was. But sure enough, just like with utility tokens, it's just been this tsunami that's come since. And you know, I'd be very inclined to predict that within a few years, you know, tokenized securities, tokenized real world assets will be the largest crypto asset class in the world. And it is just, it's just crazy to think that, you know,

• 46:27Speaker 02

  you can pioneer these new forms of assets and not even realize what you're doing at the time. You're just thinking about what you're building. And then it just leads to this cascade of innovation and scams.

• 46:44Anthony Pompliano?

  So talking about scams, walk me through how you think some of those early efforts with Augur and the blockchain capital token. Like where do we divert from pretty reputable legitimate projects that are, you know, fairly transparent, et cetera? How do we divert into what we saw in 2017? Like, do you think there was kind of industry-wide mistakes that were made? Or do you think that's just natural? When these markets go through the boom and bust cycles, you're going to get the scammers and the fraudsters?

• 47:18Speaker 02

  That is the nature of the free market. When you have a new innovative open source technology allows anyone to raise and make money, they're gonna do it. Like, there was nothing we could have done to prevent it. I mean, I think, I wish there were more people like I, you know, people think I'm like this ICO shell and think that I've scammed a bunch of people for their money. I was frightened. I thought everything I was seeing was crap. Because keep in mind, we had worked so hard on not creating a token and then realizing that we had to for Augur.

• 47:57Anthony Pompliano?

  Why did you have to?

• 47:58Speaker 02

  Because you can't have a decentralized form of consensus on a blockchain if it doesn't involve humans because you can't have internet-based inputs into a smart contract. So in order to say whether the Yankees won the World Series or whether Trump was elected, you have to have a way to validate whether that happened. And that's what Rep Augur's token enabled, was that thousands of people around the world that own that token, report on the outcome of events and are incentivized to do that.

• 48:28Anthony Pompliano?

  Is there a world where, let's say that you and I are on the Augur platform, we make a bet that Trump's gonna become president, right? You say he is-

• 48:37Speaker 02

  No way it's gonna happen.

• 48:38Anthony Pompliano?

  Right? No, you say he is, I say he's not.

• 48:40Speaker 02

  I wish.

• 48:41Anthony Pompliano?

  Uh, he becomes the president, right? The risk factor or the attack vector to Augur would be that the crowd reports, he did not become the president.

• 48:52Speaker 02

  So, and we worked on this heavily. This is, this is where my game theory came in, and it was really helpful. We randomized who reported. So you wouldn't want to report on something that you thought wasn't going to happen, because you didn't know whether you were going to be the one reporting on that outcome. So because it's totally randomized who's reporting on each outcome, it's, it's next to impossible to try to game that system.

• 49:19Anthony Pompliano?

  Got it. Very interesting. And so then, as you guys did, as you guys released Augur, right, one of the things that, I'll play devil's advocate for a minute.

• 49:29Speaker 02

  Please.

• 49:29Anthony Pompliano?

  One of the things that people will, I think, push back on and say, "Look, it's great, that's decentralized, it's super interesting, but it's really hard to use." Right?

• 49:40Speaker 02

  Oh, yeah.

• 49:40Anthony Pompliano?

  In terms of the user experience, user interface, etc.

• 49:43Speaker 02

  I mean, it's better.

• 49:44Anthony Pompliano?

  It's gotten much better, right? But like, how do you think about the evolution of the industry with Augur in mind, right? And I ask that as in like, this is one of the earliest versions of-

• 49:55Speaker 02

  It was the first app on Ethereum. We started building on Ethereum nine months before it launched. Cause we wrote a white paper on how to build a decentralized prediction market on top of Bitcoin, and it turns out Bitcoin's not very good for that. And Vitalik, who is, you know, the only young speaker on the conference circuit, who I knew well at that point, was just like, and he'll have prediction markets. He was actually already an advisor to Augur before this happened, but he suggested, "Why don't you try building on Ethereum, and we'll help work with you guys to make sure the code works in a way that allows you to build this platform on top of it." We were like, "We'll give it a shot." And, you know-

• 50:32Speaker 02

  That was too early. And by all measures, we should have failed. I mean, the idea that we were gonna build on a blockchain that didn't exist yet, that everyone said it was vaporware and was never gonna work, was the craziest thing I've ever heard of. I mean, like, no wonder no one wanted to invest in us before our ICO or give us a loan even, because no one thought Ethereum was gonna work out. I mean, it was, you know, I mean, I guess it raised 18 million, which was a huge amount of money back then. But, you know, there is not a lot of people that believe that Ethereum would be successful, let alone Augur. And for all the right reasons. I mean, it was super early. I mean, as a venture capitalist today,

• 51:13Speaker 02

  I mean, in hindsight, I probably wouldn't have invested in that. I mean, it was such a moonshot. And blockchain technology today, you know, fast forward, you know, what, four years? And it's still just in its nascent seed. This technology is so new, yet I get Bitcoin's been around for 10 years. But blockchain technology, like, this layer of innovation that can really be developed upon, primarily through Ethereum, but also through Bitcoin and other blockchains. You know, we're talking about four years. I mean, it is as new as it comes. If you think about the web,

• 51:51Speaker 02

  you had DARPA net before it. You had almost three decades of development before it was ripe for building infrastructure. I mean, look, if you had talked about uploading videos to the web in 97, you would have been laughed at. Like, you know, and that was four years in, that was five years in. Like, we're so early on, and you just have to acknowledge that. And so what's so essential? People hate centralization. What is essential is that you create what I call third-layer applications. Okay, what's that? So what you have is you have the protocols, such as Ethereum, you have the second layer, which is Augur,

• 52:32Speaker 02

  and then the third layer, which is a company such as Vale, which is a Sequoia-backed startup that's creating markets on top of Augur, but creates a centralized Interface for users, so no meta mask. Ideally, no crypto, you can use credit cards, but you can interface with blockchain technology. Those are the onramps, you know, anything without a credit card, anything without just a browser-based interface or application-based interface is not going to succeed today. It's really not. I mean, there's some backend applications, absolutely. But if you're trying to sell products to consumers, this technology is not there yet. It's not because Ethereum is bad, it's not because any Bitcoin is has a slow transaction throughput.

• 53:17Speaker 02

  It's just the fact that the infrastructure and the developments in this technology are not there yet. We're very early. We are creating a form of value that in all of human history has never existed. It's web-based, totally decentralized value. And that is a paradigm that will take time to develop. It just doesn't happen overnight. And no, like infinitely scalable blockchain solution is going to fix that. There's a lot more to building a sustainable crypto economy and blockchain-based economy than just like scalability or speed.

• 54:03Anthony Pompliano?

  What do you think about Bitcoin as a payment today? Right, so you originally got incentivized or excited about Bitcoin and crypto came in. And now you have expanded your view to a lot of utility tokens, a lot of blockchains. Where do you stand with Bitcoin?

• 54:25Speaker 02

  So Bitcoin is a horrible payment system. I don't.

• 54:28Anthony Pompliano?

  Hold on, before you go to the negative side, what are the good aspects of Bitcoin that you still?

• 54:32Speaker 02

  Bitcoin's amazing. I mean, it's that it's

• 54:36Speaker 02

  in the broadest sense of the term, it's a frictionless payment system. It is peer-to-peer. It is just like email. You don't need a bank or you don't need a government. It is, it's dynamic, micropayments are possible, censorship resistant, it's totally global. It is the most exciting and amongst the top five most exciting innovations of the 21st century.

• 55:00Anthony Pompliano?

  What are the other ones that you put up there?

• 55:04Speaker 02

  I think I think social media despite all of its negatives is incredibly important. I think that the smartphone, once again, just incredibly important. I mean, just so game changing. Having a supercomputer.

• 55:19Anthony Pompliano?

  What are the negative sides of Bitcoin?

• 55:22Speaker 02

  Negative sides of Bitcoin are very simple. It because it's deflationary, it's a volatile asset. There because there's no central bank, it makes a horrible form of money. Like, yes, I get like, like, white privileged libertarians in America are like, oh, it's sound money. It's great. But guess what? If you're 98, 99% of the world, or just look at America, where the vast majority of Americans cannot, would not know where to come up with $400 in case of an emergency, volatility in your money is untenable. I think the annualized volatility of gold, which is $7 trillion in market cap, seven and a half trillion

• 56:07Speaker 02

  in market cap, it's 15%. That's too much for an individual that doesn't know where to come up with $400. Think and then think about the rest of the world. It's just crazy. Volatility does not work for money. People need reliable money more than they need censorship resistant money in the vast majority of circumstances.

• 56:30Anthony Pompliano?

  What do you think about the argument, though, that Bitcoin was more volatile in the beginning? It's gotten less volatile over time and all we are is on like a 50 to 100 year cycle where it will eventually be non volatile like fiat currencies, but it's just going to take time to get there.

• 56:50Speaker 02

  But it's what? What's market cap today? 200 billion?

• 56:53Anthony Pompliano?

  Of crypto?

• 56:54Speaker 02

  Yeah. A Bitcoin.

• 56:56Anthony Pompliano?

  Oh, Bitcoin, no, Bitcoin 60 billion.

• 56:58Speaker 02

  Oh, really? Is that low these days? Jesus. Oh, my God. I don't look at the price. Look, 60 billion. It needs, like, even if it reaches the market cap of gold, which is seven and a half trillion, that's still too volatile is what I'm telling you. Now, I think my price point for Bitcoin, if it's successful, it's about three times that of gold. I think it's 10 times better than gold, but I think it will be valued at three times gold. That's 21 trillion. That's $1 million of Bitcoin. It sounds crazy, but I actually believe that.

• 57:30Anthony Pompliano?

  I think that's low.

• 57:32Speaker 02

  I, you know, it's hard to imagine, I mean, just given that we're at $4,000 a Bitcoin, you know.

• 57:38Anthony Pompliano?

  Crazy.

• 57:39Speaker 02

  It's a crazy thought, like, people that look at me, but I, I, I give them the math behind it, and it makes sense, you know? It's better than Bitcoin, uh, gold in every single way, 10 times better in my view. Uh, giving it a 3X premium on gold is not outrageous, but regardless, there, there could be a point where Bitcoin is non-volatile, but at that point, I think in terms of a pure internet money, we'll have found something better. Now, as a global reserve currency, could totally fill that niche. But, a- a- and 15% annualized volatility is not horrible, uh, but I'm not-

• 58:18Anthony Pompliano?

  It's not great either.

• 58:19Speaker 02

  But it's not great either. A- a- and you have to expect it will be treated the same as gold in terms of its volatility. And so, it, it has a long way to go before it's something that people can use every day.

• 58:31Anthony Pompliano?

  What about Ethereum?

• 58:33Speaker 02

  What about it?

• 58:34Anthony Pompliano?

  Wha- what are your current thoughts?

• 58:36Speaker 02

  Ethereum is the best bet for the development of censorship-resistant applications. I don't care what anyone else says.

• 58:45Anthony Pompliano?

  Applications, not money, but applications.

• 58:47Speaker 02

  No, and ether was never supposed to be money. Uh, I mean, the, the, the thing that is crazy, now, it could become that, I mean, they're, they're very easy to quantify arguments that Ethereum or ether could, I hate when ether is called Ethereum, so, let me call it, well, well, let me use the right nomenclature, but, uh, ether could become money, but that's not its intended use and that's-

• 59:11Anthony Pompliano?

  You're saying the Ethereum network could be the foundation or the protocol for the censorship-

• 59:16Speaker 02

  What we're now calling decentralized finance.

• 59:17Anthony Pompliano?

  Yep, but, but the non-censorable applications, that's what you think, okay?

• 59:22Speaker 02

  But is it, but, but, but what I love about Bitcoin and why I'm a Bitcoin bull is because it is- Censorship resistant money and that's it. What I, what I hate and I, I mean, I'm, I'm just traumatized by it is, you know, people trying to tell me that Bitcoin can do everything. It can't. It's great as this censorship resistant form of digital gold, this digital store of value, but that's what it's great at. And there's no indication that it's going to be more than that. Yeah, yes, we have Lightning Network. Yes, we have all these other innovations, but fundamentally Bitcoin does one thing really well and that's all I care about because as I said, if, if people realize it's 10 times

• 1:00:05Speaker 02

  better than gold and it has, you know, a 3X premium on gold, it's worth a lot of money. You know, it's, it's very valuable and it's valuable to the world and, and, and to a certain extent, it could become this digital global reserve asset. But, you know, I think we're at the point where innovation is, it, it transcends just Bitcoin in this space that we can expect there to be a global digital currency that is blockchain based, that is de- true, truly decentralized and it's not Bitcoin. And I think that's the likely outcome.

• 1:00:39Anthony Pompliano?

  What do you say about XRP?

• 1:00:41Speaker 02

  XRP is the best investment I ever made, probably will be, uh, ever will be. I invested, you know, years ago, uh, I just, as a tiny hedge, it was the, uh, when I, after the Augur ICO, I got back a bit of money and I put all my money into crypto. It was primarily into Bitcoin, into Ether, then I put a little amount in XRP and XRP just, I mean, talk about mooning, I mean.

• 1:01:08Anthony Pompliano?

  217, 30,000%.

• 1:01:11Speaker 02

  You know, but it, but it got up to like, I bought it at 0.002 cents or something and it went up to like 350, 375. And at that point, I was like, it's finally, uh, I'm going to sell crypto for cash for the first time.

• 1:01:27Anthony Pompliano?

  That was the first time you sold crypto for cash? Was XRP?

• 1:01:30Speaker 02

  Pretty much, you know, I had sold small amounts in the past, uh, but for the, that was the first time I cashed out some, some real money and. I don't regret it because I looked at XRP and I was like, right now, it has $111 billion market cap, 333 billion undiluted. I mean, it was something crazy and yet nobody in the world was using it. I mean, I mean, it was not used. I had bet on XRP because I thought, hey, this bank-friendly cryptocurrency could be a great idea. But fundamentally, just like at a pure fundamentals level, no banks were using it. I mean, at BlockChain Capital,

• 1:02:14Speaker 02

  we were an investor in Ripple. I love Ripple. I mean, their, their, their software was actually getting implemented in banks across the world. I mean, they were one of the most promising startups in, in our portfolio. I mean, I was encouraging the BlockChain Capital guys, it's like, let's buy a secondary. It's like, I wanted to buy secondaries. I love Ripple, the company, but XRP, it just wasn't getting adopted in, in the way that it had been outlined or suggested that it would be. And to this day, that remains true. I don't own any.

• 1:02:48Anthony Pompliano?

  Litecoin. What do you think about Litecoin?

• 1:02:50Speaker 02

  Garbage, trash, just, oh my God. I mean, talk about just a shitcoin. Like, I love Charlie Lee. I remember like, at the very first MIT Bitcoin conference dinner, we were, we were in the urinals taking a piss and I'm like, Charlie, like, what value does Bitcoin, does Litecoin have over Bitcoin? And he didn't really have an answer. And I was like, all right, this is exactly what I thought it was.

• 1:03:17Anthony Pompliano?

  What, what is one project that nobody knows about or nobody's talking about that they should be?

• 1:03:23Speaker 02

  I've got a startup that's about to come out. It's called Union Market or Union Marketplace. The CEO is prodigious. He reminds me of Joey or Vitalik at his age, with even better social skills. I love those guys, but I mean, he's, he's very sociable, based here. We were his first investor. They're about to go live, be announced and very exciting stuff, pretty much creating a staking marketplace. And if staking becomes what it is, this is going to be an essential part of that economy.

• 1:03:56Anthony Pompliano?

  All right. And before we go through the lightning round, you have a new company that is not crypto-related.

• 1:04:04Speaker 02

  I do.

• 1:04:05Anthony Pompliano?

  But. You're living in Miami.

• 1:04:08Speaker 02

  I am.

• 1:04:08Anthony Pompliano?

  Tell us about Crypto Castle Miami and then let's talk about the new startup.

• 1:04:11Speaker 02

  Well, Crypto Castle Miami, I mean, I run a social impact fund. When thinking about the socially impactful nature of crypto assets and blockchain technology, I mean, I always knew the United States was not an interesting market. But then I started to travel around the world and I slowly but surely developed a thesis that Latin America was the ripest market in the world for crypto asset and blockchain technology adoption. And so, but some people may say, well, what about East Asia? Well, you've got WeChat and Alipay and the Chinese hegemony. Like, no, it's not interesting there.

• 1:04:52Speaker 02

  Then you look at a place like Africa, they've already got mobile money. I mean, they've already leapfrogged the banking system and that's not volatile. Once again, they've already got like good payment systems. I mean, it could use some improvement, but Africa, not that interesting. And, and I thought, I was saying, look, it's Latin America. People are like, you have to go to the Middle East, North Africa. And I was like, okay. So I just went, I just went, I did a Gulf state tour. Guess what? Financial services, um, adoption, like whether it's banks or mobile money, anything in the Middle East and Gulf states, 16%. How the hell are you going to get your Bitcoin if you don't have a bank account or any way to digitize your cash?

• 1:05:37Speaker 02

  There, I mean, talk about the unbanked. I mean, they have got nothing there. There, there is no infrastructure for people getting into crypto. So I've got, I am beyond certain that Latin America is going to see massive adoption of this technology faster than anywhere else. We're seeing, we're seeing the beginnings of that in, in Argentina and Venezuela, even in Brazil, where I just was. And so I wanted to be close to that. I, and I, you know, I, I found that, that Silicon Valley had reached the point of diminishing returns for me. So I wanted to live somewhere close to Latin America. I wanted somewhere that was different from San Francisco and a place that was warm and fun. And I landed on Miami and decided to replicate what I had done with the San Francisco Crypto

• 1:06:22Speaker 02

  Castle, but really get an actual castle this time.

• 1:06:26Anthony Pompliano?

  So you've got a mansion in Miami with a pool. Looks pretty cool. You've got yachts, jet skis, the whole nine yards. And people can basically join as a member of the Crypto Castle Network.

• 1:06:40Speaker 02

  And come stay whenever, whenever, depending on their membership. Yeah, it's, it's, it's a bit of a business. I'm just trying to break even, not pay rent. But that's it. And just trying, but more importantly, you know, Miami is probably the best hub, especially in the winter, for popular culture. And what's important about that is not today, but a couple of years down the line, for my portfolio companies and for the industry as a whole, we're gonna have to cross the chasm of mainstream adoption. And people are gonna need to be talking about that. So guess what I'm doing? I'm evangelizing rappers and DJs and artists and Instagram models and all the, and, and, you know, government officials from Latin America, anyone that's

• 1:07:25Speaker 02

  interesting that's coming to Miami, they're probably coming through the Crypto Castle, they're hearing about it, you know, if they're interested in crypto, they're coming. If they're not interested in crypto and I want them to be interested, I can make it happen. And so it's actually my, my impact, my ability to, to move this industry forward is perhaps greater in Miami than it is in San Francisco, simply because I'm the only tech guy there. I'm the only young tech entrepreneur in all, all Miami.

• 1:07:50Anthony Pompliano?

  All right. So, but explain why you're starting a non-tech company.

• 1:07:54Speaker 02

  So why am I starting a non-tech company?

• 1:07:55Anthony Pompliano?

  Made man.

• 1:07:56Speaker 02

  A big made man. I, yeah, I, the thing about entrepreneur.

• 1:08:01Anthony Pompliano?

  What is made man?

• 1:08:02Speaker 02

  Well, so the thing about entrepreneurship is that it's, it's about solving a real problem in your life. And my problem is, is I like to go out at night. I like to have sleepless nights. I don't like to take care of my body as much as I probably should. And, you know, my skin bears the brunt of, of that poor decision making. And it just drove, drove me nuts that, you know, I would have a long night. Wake up next to a girl I was dating. I'd go in the shower, I'd wash my face, I'd have a coffee. She'd be in the bathroom for three minutes. We'd both be getting ready to go to work. She'd look good as new and I would look like a train wreck and people would

• 1:08:46Speaker 02

  notice first thing when I walk into a meeting or an office. They'd say, oh, it looks like you had a long night and I hated that. And I was like, why don't men have these options? So then I would go on TV or do a documentary about crypto. And they'd put makeup on my face and in three minutes I looked better. I was like, whoa, this is crazy. Now, like, like this feels like something that needs to be done. And so I knew for a couple of years that this was interesting. But then, but then I realized that it could be done. You're, you're obviously not selling makeup to men. But you are selling, you're selling a skincare solution that improves how their face look, looks immediately. And so I looked at what men are already wearing. They're use, they're using SPF, obviously.

• 1:09:31Speaker 02

  They're using moisturizer. They're using anti-aging, anti-inflammatories if they have breakouts. I was like, why don't we create a five-in-one solution? Keep it all natural and then just have a tint. You know, women have these tinted moisturizers. Just have a tint that just evens out their face, makes them look better. And there's all their skincare solutions in one. And one of the coolest things that we're doing with this is that we're creating an a, like a home applicator and a travel applicator. And we're taking these jewel-like cartridges that people can just replace. So it's going to be a monthly shipment and it's just going to be cartridges that you plug into the travel applicator, the home applicator. That makes it super easy to use. All your skincare solutions in one.

• 1:10:14Speaker 02

  In the future, we can add more kind of products that have that cartridge. And just creating something that's really dynamic, you know? It's not taking away from what I'm doing in crypto. I've got a fabulous team. But it was, it was one of those moments as an entrepreneur was like, this is a market. This is an opportunity. This is something I can do right now and so I'm doing it.

• 1:10:36Anthony Pompliano?

  One of the first guys to do a ICO and a security token sale is hopefully going to be one of the first guys to do men's skincare. All right, before we wrap up, rapid fire questions. What's the most important company in crypto?

• 1:10:51Speaker 02

  Without a doubt, it's Coinbase.

• 1:10:53Anthony Pompliano?

  Why?

• 1:10:54Speaker 02

  Because while they may not be as big as a place like, a company like Binance, they are incredibly important to the US crypto ecosystem. They are the on-ramp for virtually anyone that wants to buy crypto. And until crypto assets and blockchain technology moves beyond a speculative technology, where people want to use crypto for another reason, Coinbase is that company. And we can't shake that, we can't change that. I don't think anyone comes close. I mean, I think Binance is great for on the global stage. The fact is, is that Coinbase is in San Francisco,

• 1:11:37Speaker 02

  and it is the on-ramp for the US economy to get involved in this technology. And that's not changing anytime soon. So when they miss that, it's bad. But frankly, they've never had a hack, you know? For all the misgivings they may have about Coinbase, I really, truly believe that they are a good company for this industry. And with, if something truly existential were to happen to them, it would be a really bad moment for this space.

• 1:12:10Anthony Pompliano?

  That would be bad, for sure. What one regulation would you change or improve if you could?

• 1:12:16Speaker 02

  Money transmission laws. You know, I am a major donor to Coin Center for this very purpose. The fact is, if you're a fintech startup and doing anything that resembles the transmission of money, you have to get registered in every state in the union. California, I mean Coinbase still does not have its money transmission license in California, and like 15 other states. I mean, it's insane. And so what Coin Center is working on, and I think we'll have to do this in a big, it will have to be part of a big bill, it won't be done on its own, is a federal money transmission charter. It becomes a state's right issue, but at the end of the day...

• 1:13:00Speaker 02

  I mean, if you're a fintech startup, your life is a nightmare and it maintains the oligopoly of financial technology companies. It's hard to be innovative in this space unless you have millions of dollars in years of time to get the proper licensing in every single state. And that's just not fair if we want to see innovation in that sector.

• 1:13:22Anthony Pompliano?

  Most important book you've ever read?

• 1:13:24Speaker 02

  The Art of War, Sun Tzu.

• 1:13:26Anthony Pompliano?

  Why?

• 1:13:27Speaker 02

  I read it twice a year because, one, it instructed my college major. So it was my inspiration for my college major. But, once you realize that you can approach life tactically in every situation, treat every moment like warfare, whether it's work, or personal relationships, or romance, it doesn't matter. When you can approach everything tactically, start to think several steps ahead, think defensively and offensively, with that kind of military mindset, you win more. You're just more successful. And that was so enlightening. So I guess even more essential

• 1:14:08Speaker 02

  was the fact that Larry Ellison said that this is the most important book that he's read. It was on the back of the book, you know, Napoleon Bonaparte, that was one text that he kept in his saddlebag. I mean, it is, it just shows how, thinking tactically, it transcends the battlefield. It is something that you apply to your life every single day, and it's so important to think about. Because you avoid the missteps one would take when they act with their emotions. If you can step back from your emotions and think really with a forward-looking mentality, you'll always be more successful.

• 1:14:52Anthony Pompliano?

  Or Alien Drill?

• 1:14:55Speaker 02

  I think that aliens, if they don't exist now, they have existed in the history of the universe. But if you look at how humanity has evolved, you know, in 200 years, we've gone from, you know, shitting in the streets and riding horses to landing on the moon and sending, putting rovers on Mars. And on the constant brink of nuclear apocalypse, you know, I think it's very likely, and there's a good theorem for this that I forget, that there's a good likelihood that any intelligent enough civilization will necessarily destroy itself.

• 1:15:39Speaker 02

  And so I think, you know, if you took a thousand advanced civilizations, alien or human regardless, you know, the majority of them would destroy themselves. And so, yes, I think they're aliens, or there have been aliens. But, but you, I take a cautious approach to extraterrestrials.

• 1:16:03Anthony Pompliano?

  They're gonna come hang out one day.

• 1:16:04Speaker 02

  I hope so. I mean, or I'll go hang out with them. I'm down. I mean, Elon and I can go take a shuttle. I'm ready.

• 1:16:11Anthony Pompliano?

  All right. What one question you have for me?

• 1:16:15Speaker 02

  What is the most important lesson you learned from serving in the military?

• 1:16:25Anthony Pompliano?

  You can't force people to follow. You can only earn their...

• 1:16:35Anthony Pompliano?

  You can't force somebody to follow you, but you can earn the right to lead them.

• 1:16:42Anthony Pompliano?

  Which is very nuanced, but even in the military where it's very hierarchical, and there's this sense of like, this is my rank and it's higher than yours, and so do what I say. The best leaders in the military do not try to force followers. They instead earn the right to lead. And there's a lot of very little things that the military teaches you about how to do that. Things as simple as, you know...

• 1:17:18Anthony Pompliano?

  Officers eat last, right? Non-commissioned officers eat second to last. And what you find is the people who have spent the most time in the classroom and in training, they think that you can force followers. The people who have spent the most time at war understand that you have to earn leadership. And I think that that is a lesson I'm incredibly grateful for and also one that also applies to non-military situations as well.

• 1:17:51Speaker 02

  Virtually everything you learn in the military, you can apply to real life. And this is actually, I love that because what I tell my entrepreneurs is like, look, you can't make people listen to you, but you can make them respect you.

• 1:18:03Anthony Pompliano?

  That's all it is.

• 1:18:04Speaker 02

  And that, like you said, that nuance is so important because without that understanding, they'll never follow you, they'll never listen to you, and you'll never build a great company. But if you can be someone that is respected, then you can accomplish anything.

• 1:18:22Anthony Pompliano?

  I completely agree. All right, man. Listen, I appreciate you coming. This has been a lot of fun. I'm coming to Miami.

• 1:18:30Speaker 02

  I can't wait.

• 1:18:31Anthony Pompliano?

  You're scaring me, but I'm coming. And we will have to do this again in a couple of months to catch up on everything.

• 1:18:38Speaker 02

  Yes, there are always updates to be had and lots more to talk about.

• 1:18:42Anthony Pompliano?

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• 1:19:27Anthony Pompliano?

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