Everyone capitalize here, welcome to another episode of Modern Finance. This is the show that covers all the latest Financial products. That means cryptocurrency in a fifties defy Robo investing and even some traditional Financial hacks as well. If you want to read all of the latest crypto news and articles that I'm checking out including a lot of the cool new nft projects that I'm seeing sign up for our newsletter, head on over to Modern dot finance and you'll see the newsletter link.
And in the upper top header, we send that every other week today's episode is with investor and podcast. Host Anthony pump, Leon. Oh, AKA pump pump has built and sold. Numerous companies ran product and growth teams at Facebook and manages. A portfolio valued at more than 500 million in early-stage tech companies. And on top of that, as you'll hear in this episode, he is absolutely all in on crypto and on today's show, we cover just a while.
The ray of crypto and investing topics. It was great to have mon, let's get into it, this is Pop. Kevin Rose in his guests are not registered investment. Advisors all opinions are Kevin's and his guests alone. Nothing discussed. Today should be relied upon for investment decisions. Nor is it investment advice? This show is solely for information and entertainment purposes. Only, please work directly with an investment professional so pump. Thank you so much for coming on the show, man. It's great.
Great to have you on.
Absolutely, thanks so much for having me. I listen to your show and I love the analysis that you provide around all things crypto. And so I'm hoping to chat about just a wide array of different things given how crazy this space is right now. But I think going back to just like when you first got involved in crypto just here in that initial story would be fun. Yeah, so the first time I ever heard about crypto was Bitcoin in 2014, when I was working at Facebook, we had hired. David Marcus from PayPal, you'd come over from the messenger team.
And close proximity. And there was some conversation and can actually remember who exactly it was on that team. There was talk of Bitcoin and remittances and payment apps and all that kind of stuff. And so I turned to an engineer and I just said, hey, what is that? Is that a real thing? And I'll never forget, they said, no, it's stupid. So I didn't Google it or anything which was kind of mistake number one, and I didn't think about it again for about two years. And then at the end of 2016 kind of Q3 or 2016, a
A kid who was a freshman in college approached, me and pitched me on the idea of doing cryptocurrency mining. I didn't really know anything about cryptocurrency but the way he pitched it to me was essentially it's a data center that has persistent need for the power and it's got better unit economics. And so my father had been the data center business for a long time. So I really understood that and so I literally sold my Facebook stock. I took about half the money and I bought a bunch of mining Rigs and started. My easy. Did you pack your own or did you actually buying like already? Prefabbed mining rigs.
So baby. Here's the funny part is actually start out mining ether not Bitcoin. Okay so it was a via the gpus what I did was I used like a third party hosting service so I purchased the hardware I had it delivered to them and then they basically plugged it in. So for me it was something where I wasn't yet ready to understand the technical aspects of actually, setting up the mining Rigs and doing it and as things go sort of Mining. And then in the beginning of 2017, ether went from $10 to $30 to $100 off.
All before like met all right year and I just remember sitting there and I was frankly focused on other investing activities outside of crypto-fascist have what is right. Like I have never seen anything like this and so started spending a lot more time on it and ended up but going down the other Rabbit Hole pretty hard crazy. And was there any practical utility like people were starting to write smart contracts at that point, or had you seen anything other than just people speculating, or what was the thinking there, to be honest? Because my entry point was through mining,
Even know to look anywhere else. Like I was just so focused on mining. And so ended up through 2017, a partner and I a gentleman named Jason Williams. He had been an investor in a, an energy production business. I went ahead and invest a small check as well and then we actually help them build out a kind of vertically, integrated Mining facility. So literally they have take car tires and they basically put them under a really high heat and they break the car tires down into the four basic Commodities so carbons.
He'll send gas and oil, and when they do that, they use some of those Commodities to then generate power. And we're supposed to sell it into the grid. But we basically said was look, why don't you just build Mining facility here and use your power to actually generate more profit right here on site? And so that was fascinating, kind of exercise of, okay? Now let's go a little bit deeper on the technical side of actually understanding how to build these for the airflow in the room and kind of all that stuff. That's why I was doing all of that. I wouldn't even paying attention to anything that was built elsewhere was just so focused on the mining. A
Yeah, that's, that's crazy. What? An awesome. Like, way to enter into cryptocurrency. Most people are just like speculating buying on random exchanges, and you got really deep into it on the mining side right away. What were your thoughts around power consumption? I mean you were doing it in a sustainable way but you know obviously a big black guy lately on bitcoin at least has been around the power consumption side and why are we using coal? Like what are your thoughts on all of that? Yeah. So I think what's really interesting is if I had found Bitcoin and
In sees the speculation, I probably wouldn't have participated right? Like I'm not somebody who does a sports gambling or kind of anything like that. So I actually think the way that I found it really important for me to actually participate and then in terms of my name, I didn't know anything other than just find the cheapest power, right? And we have been an investor in a business that had cheap power and so the financial kind of incentive of a lowest cost power really worked and so we were able to build that kind of vertically integrated mind. Now as I've
To learn more and more about this. I think that there's two big buckets that I always point out one is this thing is an absolute beast in terms of, I just Network size and I'll talk about Bitcoin more. So just because I understand that one more spent more time on it, but I think this is true of the entire industry. And so when you have something that is settling this year, looks like over six trillion dollars of on chain transaction volume. It's going to take energy, right? And again I'm not an energy expert, I don't understand all this pain a nuanced way that expert would but
But when I started to understand how much energy it took, I went and I looked and I said, well how much does other things take? And there's all these articles online that trying to frame energy consumption right long before Bitcoin was even invented they were trying to figure out what's good for the environment, what's not and you find things like why do the Christmas light and electrical consumption, United States? Every year is more than some countries, right? Right. And when you see that you're just like okay that seems pretty crazy, right? And so I think same thing with Bitcoin mining and other words, I think the more important conversation you
That this is, where's the power coming from, right? Because it's not just what the aggregate consumption. It's well is it renewable or not? And what you find is because that Financial incentive is to get the lowest cost power. People are scouring the, you know, world looking for renewable energy. So whether it's hydropower, solar wind, natural gas, or I'm sorry geothermal, or some sort of flare gas capture with like the natural gas Wellhead. 's I think people are just saying okay, I need to find
Ended or free Power. And so, the numbers are all heavily debated, but I think it's just much much more renewable than people. You know, actually. Understand on the surface. Yeah. What are your thoughts of do you think Bitcoin will always be proof of work? I mean obviously they're going to have some some ways to do settlement outside of the main chain. But do you believe that will always be the case? It seems like touching that or mucking with that too much would really go against, you know, that entire die-hard Community. Yeah, so I agree with you that it's unlikely.
I need to change. I think the best way to frame that conversation is, okay if it did change, what would be the alternative? And I think most people would agree proof of stake. I would be the alternative. So, if you look at something like what etherium or some of these other smart contract, platforms are moving towards, and so, when you get a proof of stake system, what you essentially say is the more economic interest you have in the network, the more say you have, right? And so that on the surface sounds okay, except for
That's essentially the system we have today, the Legacy Financial system, right? The Richer you are the more say you have. And so I think that that's at the core, the biggest difference where Bitcoin is basically saying, no, the people who have a say or the people who are actually running the network, it's not so much just how much money you have staked on the network. But I also think there's a trade-off between Bitcoin really really optimize this for what it considers the most important thing which is security through decentralization, right? Right. When you think about it.
Decentralization is actually not needed for majority of things. Right? There's very very few things for decentralization is like essential and so Bitcoin is optimizing for that for this specific purpose that it has in terms of a digital currency and the need for decentralisation. But most of the other use cases don't need decentralization and therefore they can go run on but higher throughput blockchains or lower cost or whatever. Kind of the Innovation is that they have these. Don't need that decentralisation and so they can move to other types of security models without
Out much issue. I wonder what what it cost per like, if I came in and I said, I want to buy up a portion of the network. Meaning, I mean, obviously, you can do that. If you buy just straight minors and you have your own mining setup on the Bitcoin side, on the, if you're moving to proof of stake, if I come in with a billion dollars on bitcoin, what percentage of the network power does that by me, is there, is there a point where are we seeing more big large Farms emerge on the Bitcoin side? Or is it would you consider it?
Early to be truly decentralized still. I think that there's a couple of different ways you could think about Quantico buying a percentage of the network, right? Obviously one piece is just if you coming with a billion dollars and the asset is a trillion dollars, right, you're basically buying a portion of the Bitcoin, right? But there's no changes, there's no power in that like you can't do anything with that outside of there's power in that you can use it for Commerce but outside of that you're not controlling the network in any way. So I think more in the mining side. Yes, yes. Okay so only the coins is basically just
Anshel upside in US dollar terms, right? Then some of mining perspective, another way to look at it is right now. It's about 45 million dollars a day in the daily minor reward, right? And so depending on what type of computers you have the cost of power Etc, how much of that 45 million dollars a day. Do you make right? Where's the percentage of almost like minor revenue on a daily basis? And then the last way that I think you can look at it is basically just on pure hash rate, right? If there's x amount of hash straight and you have why what percentage is y of X, right?
And I think that what ends up getting lost a lot in the in kind of the more cursory analysis of this is people conflate a minor with the mining pools, right? And they look at the mining pools and they say, oh there's somebody in China has all this control or somebody else somewhere has always controlled, right? But I think we're actually finding is when you break down those mining pools there's actually quite a bit of dispersion and so definitely nobody has 51 percent and it looks like yes there are more and more. What I'll call large-scale miners popping up but
Cuz there's more and more of them popping up. The aggregate amount of ownership of that hash rate on a per large minor basis is going down, right? Is that the the amount of people who are showing up, are so plentiful that literally you went from having me be five, large miners tonight, you have 20, right? Have 20 large miners in this original five. Obviously they're kind of market share went down over time, right? And I think that what's fascinating to me and probably the best example of this
Is a digital currency group recently released or created a new business called Foundry and in, I don't know less than 12 months. They went from non-existent to today. They have one of the ten largest mining pools in the world and have been able to vary significantly, start increasing the hash rate that's in North America. And so the trends that I see underway or not, only just large, miners are starting to pop up around the world, trying to Arbitrage, cheap energy for this this asset. But also you're seeing a pretty big shift.
Shift from the eastern part of the world, to the western part of the world specifically North America. And so when you do that, that's another kind of Tailwind for that kind of renewable energy, the Western World the folks over at coin metrics and Nick Carter's have done a bunch of work on this. It's just a Greener electrical Grid in general, right? And so if you naturally just shift hash rate in that direction, you're going to have some improvement on the renewable energy side as well. So ultimately I think that it's like more and more people getting in the game of mining, is very good for the network provides.
Decentralization and ultimately provide some kind of higher floor, right? When you think about just prices and the the demand side of us Supply demand equation for an asset like this. Yeah but you know you have so many crazy guest on talking about all these different projects, even outside of Bitcoin. How do you think about where to spend your time and money and resources when it comes to kind of asset allocation and how has that changed over time? There's some people say I have some buddies that are 50 60
Percent in crypto where I'm just like you're nuts and then other folks like, oh, it's only going to be 10% of My overall overall portfolio. Like what are your thoughts there? Yeah. So the context here, I think it's important where my start investing full-time in 2016. I had nothing in crypto right now is just focused on early stage technology, completely industry agnostic. And just I want to go invest really, really early and work with Founders to build businesses over time. I think that's always been a personal interest and I've continued to do that but obviously crypto has taken more and more
My mind share. And so today, I've got about 95. 96 percent of my net worth in Bitcoin and cryptocurrency. Oh my God. Are you kidding me? No way, yeah, but I always tell people it's a little bit different for me and two different ways. So one is I have a lot of friends who that's also true but they put very small amount of their net worth in to, let's say Bitcoin for example, early on or ether and it just grew to be right. Five ninety, six percent that wasn't necessarily the case. For me, in 2018, I made a very intentional decision
I took 50 percent of my net worth and December of 2018. I put it into Bitcoin and it was essentially a bet that at the time I was 29, 30 years old and I said to myself, look I've got pretty high earning potential I've done pretty well for myself so far if I lose 50%, it's not fatal it'll hurt a lot but I think this is a really good risk-reward to take and so hindsight 2020, that's pretty good decision and then last year in kind of April and end of May of twenty twenty when I saw the Federal Reserve and the administration just start really talking about
Printing so much money Etc. I wrote something publicly and I said, look, if you take a a buffet approach to all the different assets that you can invest in right here, I basically predicted, these are the ones that are going to outperform the rest and I rank them and so I said I think equities was like an 8 out of 10. I said most commodities for like five or six out of ten. Gold was a 2 out of 10 and I said Bitcoins an 11 out of 10, right? And so again, hindsight 20/20 good decision. But as I think about it, now I started to just say to myself when
You invest, where's your advantage? This is something I didn't understand five or six years ago, but I don't know public equities, right? Why I literally have no Advantage there. So if I was gonna invest in public equities, I would just buy the SP or by the NASDAQ and just let the market do its thing. I don't think that I've got any ability to pick stocks over anybody else, right? Do some sort of proprietary analysis in the private Market, though. I actually think I've got a pretty big Advantage, right? One is just pure access but also to is when you've got these early stages,
Please, if you've got the right people around the table, you can actually create pretty significant inflection points in customer acquisition, strategic, decision-making, Etc. And so, I just choose to go spend my time where I think that I've got an advantage, which time-tested strategy here. The buffets and mongers are will talk about this for literally decades, but until it rings true for you. I think it's, it's an aha moment. That's right. That's how I think about it. How do you think about like a rainy day fund though? Like in the as you get older? Do you think your asset allocation will
Change. Do you think you'll have like just buying spy or something? Just get a diversified chunk of the equities Market. I know you're going to laugh when I say this but I actually think Bitcoin is the least risky asset. Somebody can buy today. And the way that I think about it is there's essentially two different Financial systems that we have today. One is the Legacy Financial system where the base unit of account is dollars the school Reserve currency, it is inflationary in Nature's, got an unlimited Supply, the entire system
One by humans that are valuable. And so they've done a pretty good job, especially in the Western World. Been pretty disciplined Etc but there's warning signs there. We have a second Financial system that is now being built in this kind of decentralized digital world Bitcoin is that base unit of account there and there's all kinds of Innovations and kind of high-risk things that are happening. And so when you look into that decentralized digital Financial system people literally call Bitcoin the Boomer coin, right? It's like boring compared to all the things that
The edge of innovation. And so in some crazy way I've said to myself look, I actually have over 90% confidence that the new digital decentralized Financial system is going to be here. 20 years from now compared to the Legacy Financial system are like I think it'll look more like the Innovative one rather than the old one. And so I usually just tell people when that's your mindset, how could you sit with ninety percent of your assets in the old world and only 10% in the new world? I'm unique, I spent a lot of time on this, right? I have the pleasure of talking
A lot of people who are building this stuff and so definitely have an information Advantage, but that's really what gives you the confidence and then frankly in this crypto world people think that I'm super conservative because of just only Bitcoin over all the other things that you could go out and and is it only Bitcoin for you like it, we do dabble in aetherium or any of these other protocols because I feel like this there's so much Innovation to your point happening outside of Bitcoin. Like I would consider those more kind of Angel investment style or you could go down quite a bit.
It almost never to zero, but it you could lose a big chunk of it. But there's also a, just a ton of upside that you might be missing out on. Yeah. So I call it like the, the barbell strategy, right? So, barbell strategy is historically, been used to describe on strategies that look at yields and kind of duration, right? And the duration, essentially is short term, duration, and long term duration, Never by intermediate duration, bonds and that should provide you some high yield, and some low yield, that's lower risk. And that's the way that you could build a pretty attractive return profile. I've essentially borrowed that terminology
Jean said, well, what if you bring this to crypto and you say to yourself? OK, I want to own the least risky asset as the majority of my assets so Bitcoin, right? And then I basically want to go place as you said Angel investment, right? A Small Checks and highly asymmetric assets. That are the farthest out on the risk curve. You can possibly find, yeah, right. And so, if you look at things that are in the top 10 of the crypto assets today, you don't want to put the second third or fourth, least risky asset, right? You just want the least risky which to me is Bitcoin. So he is
Put there. And then basically, all of your asymmetric upside and craziness or high-risk bets. Those are going to be number 3422 on coin market cap, right? Or not even listed there yet. And so that's how I think about getting and capturing some of that asymmetry, but really being protective and defensive with, with the majority of my Assets in Bitcoin, it's interesting. Yeah, I see your point. I mean, essentially you're considering Bitcoin to be the old kind of boring, but yet,
Still going to have phenomenal returns over time. And then what else? And I worry about people that try to buy these like they considered almost like a like an index fund where they should own the top 20 coins and I'm like no no no this is some real shit in there. You got it you got to avoid some of that stuff and I so you're definitely of the mindset of like new projects just getting off the ground could go to 0 but like that's that's where I place my bet sir. Can you mention any of those projects that you're excited about that are outside of Bitcoin?
Yeah, so I'm pretty somatic. I think in thinking through this stuff one that I recently talked publicly about we can maybe even talked about like the investment mechanisms that they just pretty unique. A how the world is changing. Very, very early stage opportunities but it's something called Sovereign s OV R YN. And what they essentially said, was years ago, people wanted to build on top of Bitcoin. They couldn't do that and it wasn't composable. That it has smart contract capabilities. And so, they went, they built smart contract, platform, and aetherium, and then many, many others.
Contract platforms over time and the belief there was that you could scale on a layer 1. I think most people now realize that okay, maybe layer 1 scale is going to be difficult. Let's scale. It layer 2. And so if Bitcoin is going to scale it layer to, so we're other chains, really. The only difference on the layer one is going to end up being just the security. So with this team has done is they've basically built decentralized, Financial applications, and cable protocol layer on top of Bitcoin and in doing. So what it allows for is all the smart contract.
He's using our SK and side chains and that stuff but also interoperability with many other blockchains like aetherium and elsewhere. So you get the decentralized exchange is decentralized funding. All that on top of Bitcoin, what's fascinating about? It is normally if you are I went to make an early stage investment we would call up the founder. We'd learn about the business, we would say, okay like to invest X dollars, let's negotiate, the terms, the founder would agree. And we'd go and we'd make an investment here because it is a decentralized kind of project or or community.
T. I actually had to write up a proposal. Put it forward to the community. There was 20,000 people in a Discord Channel. They all got this, you know, comment and say, oh, they're feedback. I then did a call on this court, about a thousand. People showed up to it, and I easy questions and then they literally took a vote as to whether to allow the investment on the proposed terms or not. So, is this function through a dow? No, they don't think it's technically considered a dow but they've got this like community.
An inch element to it when they're still kind of a kind of a core team, if you will, that is shepherding the project and building a lot of the technology so I don't think it's truly decentralized but it was fascinating learning experience for me. Frankly is the first time I've ever done it of going through and saying, well, this is a very, very different way of one fundraising. But to is also building community and having that kind of community governance, rather than having the more hierarchical structure. And so I think it's something that we're going to see more and more in the future.
Which is going to be unique for traditional Venture investor scrap, their hetero. Yeah, it is. I agree with you a hundred percent. I think that there's a lot of people that are overlooking the importance of the community aspect, especially one associated, with these projects and is funny, is I've been tracking it. I would bind Dogecoin many many, many years ago and I thought it was like the funniest subreddit. It was cool. I was in that subreddit tipping, people. All kinds of crazy amounts of Doge which is just be nuts to tip today because it was so cheap back then. But I just love
The the masses were coming together saying this is an important project. We're going to have fun with it. We're not going to take ourselves too seriously and they really cropped up this new currency. And I just see that as being such an important piece of any new project by having that that really that fanbase that network of people that come together. I mean, we've seen it with Wall Street beds and there's just there's this weird thing happening where these communities are forming around these projects and on their own. It's not some kind
kind of corporate entity that's pushing this. What do you think about? But they things like Dogecoin and some of these meme coins like how do you wrap your head around that? I'm a big believer that the more things change, the more they stay the same. And so I always look for a kind of historical comparisons, or historical trends that help us explain what's happening today. And so the best example that I found so far is take Berkshire, Hathaway, right? Berkshire is kind of the old version of a meeting stock.
I mean, it is almost a religion to some people right there. Literally take the pilgrimage, every year, they go to the annual meeting Buffett and Munger sit up there and they hold court and that they're incredibly charming. And people just really, really are Disciples of that investing strategy. And and so when you think about that, I don't think most people would label it a meme stock, but it has all of the same elements that a Dogecoin has right where a Bitcoin or name your kind of Wall Street bets GameStop or whatever.
And so I think that actually the stuff has been around literally for decades as long as people have been able to communicate and they've been able to allow human emotion to enter into financial markets. And so what I then apply is okay well if this has been around for a long time like how has that helped those businesses or hurt those businesses in Berkshire against a great example where how many people own the stock? Because they simply agree with the way that Warren Buffett investors month a lot, right? Actually, majority of the people and so there's almost
This like long-term holder element of it, where it's don't break compounding when it's working for you and a very specific type of investing. And so if you then look at the corollary and even a doge coin or a Bitcoin, there's a lot of the same elements, right? Why do people hold those coin and not want to sell it, they really believe that it's going to go to a dollar and they're sticking it to the man, right? And so they may not believe in the same investment strategy or kind of have the top down approach, but there's no difference from
Structural standpoint. And so, I think we're just going to see this more and more because humans are able to communicate more with each other. There's a Playbook now, right? Like, how do you do this? And then you should get a bunch of copycats and so I haven't yet figured out, is that something to invest behind or not, or how to think about it from, like, a portfolio, construction standpoint. But I definitely think it's a very real thing, and it's something that's going to stay around for quite a while. Yeah, that's what I'm trying to wrap my head around as well as like. How when does a funny joke meme coin with people?
Ooh, like, I would say you have the OG like original Dogecoin folks that have been the hardcore, Believers forever, right? They would like to see this currency be a real thing. Then you have a lot of people, and there's a lot of these other coins, like Moon coin and a whole slew of them that people are just, I mean, when you look on Twitter, it makes you sick because you look at some of the infographics or posters, like, we're going to go to it's all about pumping the coin and and I'm just like, man, some people are going to get burned here just makes you like, there's so many people are buying into this and they don't realize that. There's some big people are just going to dump this.
And this hits a certain price. So but but doge is different in that I feel like they actually has a chance to turn the corner and not be a joke, mean point, but be a real real thing and I'm wondering what has to happen to where you and I say like, oh crap, maybe we should hold some Doge because this is becoming a real thing. Part of me is to see elon's demands on what do should do and about increasing block time. And he's got a list of things that he would like to see happen the project.
And you have to think of your those core developers. If you go off and you actually adopt and and and really take Elon suggestions and run with them, does this not become a permanent fixture in one a top five coin for the long term? Yeah, I think what's really fascinating? Is it brings the question of what is the currency, right? And ultimately, it currency is a religion, right? It is a belief system. And so, whether it's the US dollar, it's Bitcoin, it's Doge or the Euro, or the
Right. It's just both parties in a transaction. Believe it has value and are willing to exchange it for goods or services. And we can argue over if something is a good currency or not in terms of its store of value ability. But really, if it stores any value at all, no matter how good or bad it, is that it and is used as a medium of exchange by two parties than it is a currency. And so I think that what becomes fascinating to me is there's an entire generation of kids.
They are growing up and they just think very differently, right? I'm in my early 30s and already. I've got a brother who's 24. His relationship with money is so, so different than mine and one time asked him how he sends money to his friends and he said, venmo and Uber. That's what do you mean? Uber is as well, if we take a ride together, he goes when we get out, we split it. And I was like, wow, I never thought of it that way. But yes, you technically, there is a quote sending of money to your friends. Now when you think about that, you start to say, well, what is a currency to
It's All Digital but he doesn't interact with physical cash. He doesn't ever go into his bank and send wires or do anything. That would require you to understand currencies which literally just numbers on a screen and so if one of the numbers on the screen will make you laugh and all of your friends are using it to it becomes a currency yeah? Right. Make em any some money at the same time on the side. Like yeah. So again and I think that this is true of Bitcoin and a whole bunch of these assets and ultimately it
Sure of dollars at one point to, right? And so, I think that you're just seeing new generation of people and again story as old as time, right? How many currencies have risen and fallen done? All of this. And so, I think that it's right now, I'm in a kind of Observer mode. I don't necessarily have like investment thesis off of it, but it's absolutely fascinating to watch this stuff on fold and I don't think that it's going to reverse any time soon. Yeah. I've held Doge on, and off over the years and I looked at it recently and I'm like, I saw everybody trying to pump it to
Sir and I'm like, okay, I don't want to play this game, but then I started to watch the relationship between Elon and the core developers and I'm like, okay, they do everything he says, and I Jim and I came online started. Offering Doge a bunch of other, you know, crypto.com a few other places all started selling Doge. I'm like, okay, well the exchanges are now all picking it up because there's money to be made there obviously, what happens that the developer Community picks this up because that's been the my thing is I always like to see a really active developer Community, like I want to go and get Hub and
There's actual action happening. It's like when you go look at do shits like it's just they haven't touched it in so long. So I want to see but then I realized like maybe it's not the job of Doge core to create the new next wallet, right. It's probably the independent third party that is just going to say Jim and I or whoever it is that's out there that says I'm going to go build a wallet on top of this and make it easier. I don't know it just like there's something weird about this moment where I think like there is a chance
for this to be more than a me and it's just it's starting to like get that spidey sense. I have with a really cool investment. I don't I don't know if you're getting that sense as well but there's something there. Yeah, look I think that what a lot of especially Venture investors and then some of the like more traditional Financial Community is starting to have to wrap their head around is historically, you would go in and you would look at something and you would say, okay, show me the technology. Why is this Superior? How can nobody else create this? It was
All not soft, skilled type analysis. It was very specific stuff. Today, there's this element of like, show me the community explain to me, why? No one can replicate it, right? And doge is almost the best example. I think a lot about these assets, that frankly, you could replicate with the click of a button, almost, right? And there is no leader, there is no employees. There is no kind of team behind it, yet. It still persists, right. It's almost like a startup that everyone thinks it's a dumb idea but it just won't
Die and eventually you're like, man, you're still here. Okay, like it, there must be something here. You have a really, really bad website but people keep signing up, right? All your marketing material, makes zero sense, but sales keep coming it. Like you must have some core like product Market fit, let me understand it. And so, I think that same thing is happening in some of these crypto assets. And the scary part is and we should make sure we call out that there's a downside to all of this right for everyone that works, there's 20 that don't work, plenty of people are going to lose money.
The ones that don't work, but I do think that there is kind of this Middle Ground where they're not all 100% going to go to zero and at the same time, I don't necessarily recommend to people to go try to create the next meme coin, because I think that just the odds of success are so low. And a lot of times, it's not in your control, right? It's only you and I can sit down design, a meme coin. Say okay, here's the kind of launch strategy and then like we're going to make it successful. I think it's literally just people on the internet who are into this stuff who like funny joke.
Oakes latched onto something and then they make it a thing not necessarily the Creator's. Yeah, that's a great point. Do you think we'll see the emergence of new a top five coin, kind of layer ones? One of the things I think about a lot is obviously Bitcoin. What one of the things I love about it is that it's just, it is so basic and so true and it's like purest sense. Then I look at it a theory and I'm like, wow, like a lot of bolt ons coming to the outside to help this thing scale, at this point, it feels old, you know what? It's not that old.
But the technology underlying Tech behind it and what they're trying to do it just, I know they're trying to upgrade it. I know they're trying to increase the transactions per second and fix a lot of the problems, but it feels like they're not able to move at the speed. You really need to be able to move up, but they're not moving at startup speed anymore because they have done, they have so much. There's a lot of assets on the network. They have to be extremely careful about how and when they move, not to break things, what are your thoughts on like some of the up-and-comers? Like, do you think that
At five. Take a look at the, what's happening in the Solana camp, for example, or there's probably at another six or so, really interesting performant, chains out there are those do you track any of those? So don't spend a ton of time on it. There's some of this is fresh on my mind because I just had a conversation with with a team that was really walking me through some of the the metrics that they have. And I had to take aways that again. You have the not my ideas, not my analysis, but one of the things was just how fast some of these other smart.
Platforms have come to Market and really captured a lot of developer attention. The to that they were specifically talking to me about were mattock and then Finance, smart chain compared to aetherium. And just when you look at the on chain data, right? It's just I think by need smart chains. Like, 2x what aetherium has from just a pure volume standpoint and then mattock is about the same as a therapist, right? And for somebody who doesn't spend any time on this really that was surprising to me. But actually don't know how to think about. Is it sustainable? Is it not or anything like that?
But definitely surprising on the outset. And then the other thing I think is again the etherium community I think is very similar to the Bitcoin community in that you can see them trying to create the means. You can see them trying to move from a purely that the best tech wins to know. You have to have the community, you have to have these other elements around it in order to make sure that it's sustainable. And so I think that that's probably the biggest difference to me between Bitcoin and everything else is. Everything else is
Repeating on pure technical kind of superiority or when a developer comes in and wants to build on something other than Bitcoin, they're asking themselves. What has the highest Transaction, throughput? What has the lowest fees, right? What where are the best at developer tools and all that kind of stuff when people come to build on bitcoin, they're not necessarily asking that stuff, right? And I layer 1, they're asking themselves the most important question. Is it decentralized? Is it secure, right? And I think that Bitcoin can soundly say yes, and then when they go to the layer,
To you actually are seeing a lot of those, same questions at the Smart, contract platforms, have, right? Should I be building on top of lightning? Should I be building on top of rsk? Should I be building somewhere else? And that's where you get into kind of the technical innovations and in the technical superiority. And so it just feels like when you want to build and and have applications, the technical conversation is much much more important than on a pure currency standpoint. When you're saying, look, we're going to create a system that is completely built on the idea of decentralization and security that's ends up.
Being that what takes over the majority of the conversation. So it's fascinating, I think that every single person probably yourself a myself included, but we're constantly changing our minds or thinking through this analysis, but but I think that it's it would be hard pressed to find people who really have spent time looking at this stuff and they say, look, it's all worthless, it's not going anywhere. It's not going to be here in 10 year. Yeah, yeah totally. Those those conversations those days of thinking is not going to be here. 10 years of like that ship has sailed a long time ago. It's funny because you know, we had this recent cell
All off and and I had some friends that but you get the text messages every single time. There's something like this. I'm sure you get them as well, right. You got a handful of friends are like what should I do? Like this is crazy and it's, it doesn't even phase me anymore. Do these kind of bubble pops. Are these sell-offs to do. They even hit you in that way? Or you just like, yeah, another day. Like so goes, yeah, I think it's weird, right? Nobody wants to watch a 40% drawdown in any asset that they have exposure to. Like it's just human nature takes over and it's not fun.
I can send text messages and calls and all that I used to answer them Beers Ago with. I don't know what's happening right now. I'm a little bit more confident and explaining what is happening and everyone just breathe and relax and all that. But one of the ideas that I keep coming back to and it's impossible to put any real math or science behind this. But I've been in these moments trying to document it for myself. Is that complete emotional feeling of capitulation right where you just feel
Feel like the market is literally like Are We Wrong? And in those moments that there's been to frankly in the last 14, 15 months in March of 2020 and then probably yesterday actually when Bitcoin had dropped all the way down about $30,000 it just feels like the market feels defeated and so as we know those are probably the best times to be adding more exposure and being aggressive again, Timeless Financial principle of just being greedy when others are fearful. But I do think that it's fascinating to watch because it's human psyche.
Ecology at work, right? There's a reason why the price goes to, $30,000 right is because there's a lot more sellers than buyers. And so I think that in those situations that becomes more of a finance conversation and kind of an investor psychology conversation more so than what I would consider like technology investing right in the startup World outside of crypto. You don't have to worry about kind of high levels of volatility like that, although the founder does from a psychological standpoint, may feel on top of the world, and like the business is going out of business.
Business all in a 12-hour period in a single direction of the company rise. Just now there's a stock price or ticker associated with those human sentiment, it's fascinating to watch. Yeah, I mean for me it's been this transition to is Mike or thesis wrong which is that cryptocurrency is here to stay, and it will be a bigger Market, five years from now, than it is today. And I just ask that question and that the answer is I'm still correct that those things are true. Then there's
Reason to freak out because like, it's just that this is a minor blip and I used to buy into this whole cycle. I used to like, just, like, would eat me up. I'd be like, oh crap, maybe I should sell and I'll buy him when it goes a little bit lower and like those days are gone for if anything, I'm going in and saying, okay, well can I solve some equities to buy some more when this is lower to figure out how to even get more exposure at the right time? But you know, it's really hard to time the market, so I'm careful there as well. But yeah, it's fun to I think with time comes
Confidence. Right? And once you've seen a few of these Cycles, it tends to smooth out your emotions a bit. At least, it has for me, I also think there's an element of cost basis that again I don't necessarily have fully flushed out ideas here but LSU's kind of extreme example to highlight it. If your cost basis for buying Bitcoin is out of thousand dollars going from 60 to 30? Yeah it hurts. It doesn't feel good but that's much easier to stomach then if your cost basis is $50,000
Right, right? And so I do think that over time people naturally one get conditioned from a psychological and emotional standpoint. Just, okay. This is volatile. Here's the extremes, feel pretty good, but also, I think that there's this element of just as the overall market prices continue to go up over long periods of time. Most people's cost basis is lower who have been around for a while, right? And therefore, they've almost got this like error of margin, or I'm sorry margin of error and so I think that plays into it as well. Yeah, that's a great point, it doesn't sting as much.
Such, what are your thoughts on in FTS? I mean there's just been so much craziness over the last six months in this world. Do you track any of it? Do you watch the crazy Sotheby's and Christie's auctions around crypto punks and is that anything on your radar in 2020 and may have 20/20? I started really going deep on this and it wasn't so much an FTC. I didn't really understand what an NF T was it was just the idea of digital art and my thesis that end up publishing in August of last year, was if Bitcoin is
Gold then digital art, is to traditional art, right? All the things that essentially take an analog asset and you make it digital and therefore, more likely to be larger as well than the analog version. I think it's going to happen in the Art Market, right? And it's just, you can open up to a larger market. There's all sorts of advantages from a technological standpoint, Etc. What was fascinating was I was almost too early to the market. I spent a bunch of time on digital art really thought through how to play it. I probably miscalculated the best
way to invest. I started buying digital art, rather than actually investing in some of the platforms. And so I miss some of the early platforms as I was more focused on actually buying up the art. But what were you collecting out of curiosity? So actually, this is a great story for you. I called, I went online. I looked for a bunch of digital art. I ended up coming across ferocious and I was able to get my phone with them and ferocious was living in their parents home and basically said, listen, I really enjoy art, but what I'd like to do is get out of here.
As I said, look, I love this story. I think this could be a really interesting to work on together. And so I privately commissioned a number of pieces from ferocious. I just said, look tell me what's the most you ever sold a piece of digital art from? And that's what I'll pay you and then I'll give you some upside if I ever sell the pieces in the future and what was so fascinating about that was ferocious ended up being more the best digital artists in the world, right? Yeah. So I gotta watch this. This incredible person go through this. This epic run of going from fairly small audience to ended up selling.
Selling 20 plus million dollars with a digital art. And so I think that coming at it from art and not nft, he's a really allowed me to see a use case right for it. But then as I saw other use cases pop up like NBA Top Shot and others what really struck me was this technology again? Does the exact same thing that Bitcoin did. Which was it allowed for money or financial asset to not be a computer file, right? And be able to prove ownership and all the things that we know Bitcoin to be so good.
And so, if you look at MBA Top Shot for example, I think that they're essentially figure out a way to take intellectual property and expose it to a free market. And if you look at the NBA, Top Shot Revenue that they were able to generate. It actually tells me one thing that a lot of people aren't talking about the NBA has drastically under valued their IP for decades, right? And, and the reason being, they essentially take their IP, they sell it to a TV network. There's only so many TV networks. I'm sure the TV.
Networks, maybe they're not colluding but they're probably talking to each other in terms of where the ceiling is of what they're willing to bid for this stuff. And so all of a sudden, the MBA says, wait a second, I don't necessarily need to just sell this to a TV network or to an Amazon or Netflix or something like that. Instead, I can actually unbundle the IEP and I can sell it off in individual pieces to a free market. The NBA is going to be a big beneficiary of that. Yeah, movements of this Technologies are just kind of empowers that and so I think
You can take that same framework and you can just apply it across all sorts of intellectual property and I know, but people are trying different things, again it's just I think the best investment strategy is going to be find the infrastructure that empowers that stuff similar to investing in the crypto exchanges. Five, six, seven years ago, ended up being a pretty good way to get Equity upside in the industry. Yeah, it's interesting to think about on the NBA Top Shot side in some sense, like the dream for an NBA fan is like to own your own basketball team, but you are going to be able to pull that off.
Coughs. Oh, what's the second-best thing? Well, you can actually own a bit of the moments in the history of it and participate in that upside as well, which is, which is really cool. They have so many special moments that it's just like, I mean, the amount you go and you tokenize Jordans free-throw dunk in the dunk competition. I mean, imagine what partial fractional ownership of that would go for, just be nuts. Do you see this being? I mean I'd imagine you believe like I do and that this will just be applied to all these different Industries. Like I heard someone the other day that was talking about this idea of
You tune into a movie and you compensate the movie, as you get deeper into the actual film. So, it's paying for the quality of the film meaning like if I watch the first 10 minutes and bail on it, maybe I'm charged fifty cents, but if I watch the entire thing, I'm Church $30. So it just curves that could happen with even viewership. Not even just ownership, it's just crazy. It's crazy to think about all the possibilities of this, this blockchain enables, when you apply it to all these other assets. Yeah, a little bit and I think that ultimately
Ultimately really, what's happening here? I've been calling it automated Finance, right? It's just Automation and if you can zoom out, you look at just from a 10,000 foot view, we can't have true Automation in the Global Financial system because the assets themselves historically have been electronic qusomes. So if you go back before the 70s and 80s, everything was analog, where you'd physical stock certificate, she had physical, kind of mortgages yet, physical dollars, all that stuff. Well, it took about 20, 30 years, but we transition
An analog Financial system to an electronic to set Financial system. So, now today, when you use dollars, you're actually using electronic uses that are move between centralized entities, when you buy a stock using electronic Q-tips, right? That are moved between centralized entities, but if you want to actually get automation right computers talking to computers and doing things without human intervention, you can't do it with those electronic uses. Because if I want to make an automated automated transaction today, and I told my bank, send the money, it might take a day or two to get their rights, don't
Walk true Automation in that and so what you've got to do is you got to start from scratch. You got to digitize those actual assets and Zips idea of digital currencies, digital stocks, digital bonds digital Commodities. And I think that really, that's the phase that we're at right now is people are figuring out how to do that. I've been figuring out what's the best way to do it. But then once we actually get those assets digitized, then I think you're going to see you don't real automation. Whether it's things, like, streaming payments that you described or something else. That's where I think the like true magic and the aha's going to
For a lot of people and I just go back and I say the best way, I know to describe of the problem up, until somebody's ass has got digitized, is it would be like trying to take a CD-ROM and stick it into a cassette tape player, razors incompatible technology. And so now that we've got kind of digitization of the actual assets themselves, I think people will build all sorts of automated systems that are frankly, you and I can't even imagine yet until we see ya. It is so cool to be on the kind of investor side and we get pitched. A lot of startups in the in the cryptocurrencies.
Space. I saw one last week that was doing this this idea that these real-time payments where they could open up a more or less like a streaming payments channel to an individual. Meaning if you're a an employee of a company and you quote unquote check in for that day and you're working, you're getting paid in real time. So when you leave and you check out for the night, you walk away that money in your pocket which is like you hear that you're like, of course like why wouldn't the why should we have to wait two-plus weeks for settlement to happen when I'm performing?
Work in that day. So it just like it's such a cool to see this Tech come online. It's really amazing time to be alive and watching stuff is being built. Absolutely, I think the other piece that is exciting about. This is if you just simply look at the intellectual Capital, that's flowing into the system, it's absolutely insane. Right? Just the, the high degree of intelligent highly technical, folks, who necessarily just doing it for the money, right? I think that's a big piece people do.
Realize she had is it has a lot of what I imagine the early days of the internet. Felt like where these people are doing this, for more philosophical reasons, right? They feel like the existing system needs to evolve needs to, improve needs to change and sure, people are getting rich along the way, but I do think that there is this underlying sentiment of a, we now can use technology in a new way to have a massive impact on the world. And so, when you see just such a high degree of people flowing into a space, one of the lessons that somebody told me early on in investing was just just follow the
But everyone is running and going and working in an area like Goku, learn about it, go figure out. Why are they doing that? Because the likelihood is that there's actually some value that's being created there. Yeah, absolutely. That's great advice. And I'm seeing this myself as well. Five years ago, six years ago he was we have that we had all the Ico stuff that was happening and you evaluate teams as they come in and some of the engineering Talent was really solid. But these days I mean I'm just blown away. I saw project last week that had four or five Google PhD in
The errors that were working on a new crypto project and I was like wow that would have never been the case even just like five years ago and so you're right the talent that is flowing into this. This world of all things blockchain. It's like that flip has happened and, and I'm really excited because it just means better higher quality products that get put out on shorter time frames. So I'm super pumped on that, just to put a cap on that. The end of the nft conversation. I'm curious. Would you go into a few more of the and if he's that you personally collect? Yes.
So I pretty much stopped collecting the actual entities themselves. And I recognized my mistakes, my sins, and I'm trying to atone for them. Please tell me. You have no punk. You must have at least one crypto, Punky, the table Stakes, this point. Yeah, I actually don't. And it's, here's, here's the crazy thing, right? And again, it's just calling out and Stakes was because I was in the mindset of digital art, right crypto Punk doesn't look very similar to digital art, right? Like taking art and digitizing it. And so I spent way more of my time focused on what
Now would be considered digital art versus more the collectible space. And so as I've learned about this stuff I have pivoted to go and spend time looking at the infrastructure and that's fascinating to me because you've got centralized versions. You've got decentralized versions, you've got all sorts of things around the intellectual property. And so I think that I don't yet quite have like, hey, here's the one big bet that I'm making, but I'm really just fascinated by what's being built and will spend more time on infrastructure anything else before. Yeah, the one thing that's really interesting to me.
Me in, I just want to share this with you is like the blockchain archaeology. So going in and saying the one thing that's so awesome about the blockchain is if you have time and date stamps of one, anything was done on chain. And so what I like to do and something, I've really gotten into lately is go back and say, historically, when we look at the projects and when they were cemented into the blockchain, who did it first, who is the first one to do generative art on the blockchain and, and going back and looking at the crypto Palms being now.
A first for what they were doing at the time, then Auto glyphs on the generative, side, Moon cats and some of these others. And yes, they're not quote, unquote art in the sense that they're, they're not like, they're more on the genitive side. But there's something about that whole world in bet that traceability of understanding. Which artist did, what when that the blockchain provides that I think is really fun to track and and pay attention to. Yeah. And also I think that there's an element here of because you're able
to look at it on the blockchain. It's a new type of story that gets told around the individuals or the wallet addresses of what people do. Yeah. I think in the past it's always been the The Narrative that was told who is good at PR, who is good at the media? Was the person who is able to feel all the attention of a limelight. Now people can go and they can look and you seen it. I've seen it has been multiple times where people are like, who is this person? Or who owns that wall that dress, right? Like the work speaks for them. Rather than the narrative which I think is fascinating.
Yeah, and it's also people are paying attention to how many times like something trades, hands. Like they hash Mass side. They I remember some of the collectors saying, like, it's more important that this not be traded so many times, and I want something that's fresh, it's, and even on the crypto, Punk side. If something hasn't moved to another wallet, they consider it to be even more valuable, which is, which is crazy. And then there's on the generative side, there's a 0x, deaf beef is doing this really cool thing where he's artwork actually degrades as it gets transferred.
Word around, which is just insane. So, the more times you transfer at the worst, the image becomes, it just is so much fun Innovation that's happening here. It's not. Well Pop. I don't want to take up too much of your time by a couple last questions for you. What is your personal crypto stack look like? Do you have favorite wallets are using it in the defy apps out there or it sounds like, you know, primarily in Bitcoin. So there's that do you earn interest on your Bitcoin? Do you lend it out like can you give us a quick rundown of what you do? Yeah, so I've got
Quite a diverse set from a security standpoint, just giving them so public about it. I actually take the security stuff pretty seriously and know you make sure that I don't really have any sort of control or the ability to move anything, on short, notice that could be a pain in the ass. I frankly show me both but no, you've involved, it's important. You got to lock that stuff up. You don't want to be held hostage somewhere it. Exactly. But but what do I want to when I want to access? It's annoying. But but but it's all for the resistor, that's majority of stuff I do. Do some some Lending.
Of it. I basically use block fi, I've got a little bit of Bitcoin in the interest-bearing account there and then that's pretty much it, right? I really don't like again, I'm contrary to popular belief. I'm actually pretty conservative with a lot of this stuff and I've just got very, very high conviction in this idea of kind of digital sound money. And so, anything that could put that at risk, I usually shy away from. And then I choose to take all of the risk with just the early stage bats or kind of a high risk of and then from a pure, like infrastructure,
I am point the two products I probably use the most are Rush strike which allows you to send payments and then and then block 5. They've got a whole bunch of like a suite of financial products and I'm an investor in both of them. And just by nature of having spent so much time at the founders and our standard products tend to just spend all my time there. Yeah, I love Zach over a block Phi. I use them for their stable coin. Interest is just insane. And also, I've been a fan of theirs for a long time. Well, pump, I got to say, I want to plug your podcast in a
In a big way because I think that anytime there's a few great crypto podcaster out there, they're covering the stuff and the more we can get people listening to a variety of shows and learning more about the space the better. So where can people find you and your podcast? Yeah just follow me on Twitter at a palmetto and if you just search on any the platforms for a pop podcast, it'll come up and we'll keep trying to crank out as many of them as we can awesome. Well I'll put all that stuff in the show notes as well. Tom, thank you so much for being on the
show. That's it for this episode of
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