The Pomp Podcast - 283: Adam Traidman on the Future of Crypto in Asia

Episode Date: April 30, 2020

Adam Traidman is currently CEO and co-founder of BRD, one of the first Bitcoin wallets in the app store. He is also currently the CEO of Ripple Asia and the CEO of SBI Mining Chip Company. In this conversation, we discussed the founding story of BRD, how the company has evolved over the last few years, what the current environment for crypto in Japan is, how the chip manufacturing business has changed due to coronavirus, and what Adam thinks of China's digital currency efforts.   ===============================  Blockset by BRD is your hosted blockchain infrastructure. Blockset enables enterprises and developers around the globe to deliver high-quality blockchain-based applications in a fraction of the time, at a fraction of the cost. Using the services provided by Blockset, businesses can build professional custody solutions, accurate and near real-time portfolio management solutions, auditing platforms, commercial block explorers, and much more: blockset.com =============================== Pomp writes a daily letter to over 45,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at pomp.substack.com

This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Adam Trademan is currently CEO and co-founder of BRD, one of the first Bitcoin wallets in the App Store. He is also currently the CEO of Ripple Asia and the CEO of SBI Mining Chip Co. In this conversation, we discussed the founding story of BRD, how the company has evolved over the last few years, what the current environment for crypto in Japan is, how the chip manufacturing business has changed due to coronavirus, and what Adam thinks of China's digital currency efforts. I really enjoyed this conversation, and I hope you do as well. But before we get into this episode, I want to talk about our sponsors. Blockset by BRD is your hosted blockchain infrastructure. Blockset enables enterprises and developers around the globe to deliver high-quality blockchain-based applications in a fraction of the time at a fraction of the cost.

You can think of them kind of as an AWS for blockchain infrastructure. Using the services provided by Blockset, businesses can build professional custody solutions, accurate and near real-time portfolio management solutions, and auditing platforms, commercial block explorers, and much more. head on over to blockset.com to sign up for an account today and check them out again blockset.com don't forget also i write a daily letter to over 45 000 investors about business technology and finance i break down complex topics into easy to understand language while sharing my personal opinions on various aspects of each industry you can subscribe at pomp.substack.com or go to the description of this episode and click the link. Again, pomp.substack.com. All right, let's get into this episode with Adam. I think you guys will really enjoy this one. 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. His podcast is for informational purposes only. All right, guys. Bang, bang. We've got Adam here with me all the way from Tokyo. Thanks for doing this, man. Hey, yeah, no worries. Thank you for having me on.

For sure. You've got a really unique story, I think, and have your hands in a number of different aspects of the Bitcoin and blockchain economy, if you will. Maybe let's just start with kind of what you do before you found Bitcoin or crypto. Good question. So I started off my career actually as a computer chip designer. I was down in LA at NASA Jet Propulsion Lab and was doing some work at Caltech. And then I moved up to Silicon Valley in the late 90s during the early internet days and did chip design for companies like TI and worked on some chips for Cisco and AT&T, all their early internet infrastructure products. And like most engineers in the valley, I got bitten by the startup bug and decided to go from the big to the small. Exciting companies,

had a few small exits that happened there. I was just a normal Joe. And then eventually moved over to the dark side. And what I mean by that is I transitioned over from engineering into more marketing project, product management, and then into sales. And what I learned is that as much as I was a geek and I'd love to, you know, get my hands dirty in engineering, Silicon Valley's full of some damn smart engineers. And I made a bigger contribution in other areas than in engineering. So I moved into software sales. This is mainly in the areas of like electronic software CAD tools. It was all sort of centered around the chip area, right? And, you know, it was a tough transition time to move from pure engineering into sales, but it worked out well.

And I eventually had a few exits that worked out reasonably well in that space, and then became a serial entrepreneur. I became the founding CEO of four companies, also mainly in the electronic software space, one in the wearable hardware space, and raised venture capital to the tune of over a couple hundred million, built great teams, create products and sold those companies off and exit them you know some worked out well and you know some were reasonable and during one of those transitions a company called chip estimate i sold it to uh at the time it was a five billion dollar uh electronic software company called cadence design down in san jose in the middle of the valley they're now an even bigger company i was

a gm there for about five years and i had the the privilege of flying all over the world doing kind of executive sales and relationship building with a real focus on Japan, China, Taiwan, South Korea, also spent a bunch of time in Europe. And it was around that time that I really started to build connections kind of deep into Japan. You know, in Asia, especially, it's kind of how the US used to be. It's more about long term relationships. It's about circle of trust. And it takes a long time to get in. But when you're in, you're in. And for some reason, that just sort of resonates with me in terms of how I like to do business. So I eventually left the big company, wanted to do startups again, and this is, you know, before the time of the Apple Watch and the Samsung Gear, I was contacted by some professors I used to work with and doctors down at UCLA, and we put together a company doing a nutrition monitoring wearable device, which really kind of changed my perspective on my career path because I was down at the Ronald Reagan Medical Center down in LA, and we were doing a clinical trial,

and this thing was designed it wasn't like a wearable like you know a watch it actually went around your neck and it monitored your eating habits it was to help people you know lose weight right and actually like obesity is a really big problem in the world and I saw these patients cry while using this device because it was actually helping them and I thought son of a gun you know it feels great to be the geek in me to create a faster iPhone but man when you can really impact somebody's life with technology that that really is game-changing and it showed me kind of a new aspect of what I could achieve in my career. So we sold that company to a medical devices company actually over here in Japan. And it was right around that time though, when I was raising money

for that company. And, you know, I've been in the Valley for like 20 years, right? So I'm on Sandhill Road doing the whole Silicon Valley, you know, kind of thing, talking to, you know, the Kleiner Perkins, Andreessen. I was in Andreessen Horowitz, arguably in my opinion, the best VCs in the Valley. And I was pitching my wearable company before we sold it. And I literally heard these guys in the hallways talking about Bitcoin. And I thought, huh, that's funny. Because about a year before that, one of my old employees, a guy by the name of Aaron Voisin, you know, grabbed me, took me to a bar down in the valley, reached across the

table in a very uncharacteristic thing for him, not a touchy-feely guy. And he said, Adam, you have to work on Bitcoin with me. It's the most important thing going on in your lifetime. And I looked at him and I said, well, the coins used to buy, you know, drugs and guns and nefarious activities. I was like, you know, I don't have any political opinions on any of that. But, you know, that kind of stuff just never goes mainstream. Right. And I told him it's out of his mind. I didn't talk to him for a year. OK, that's pretty stupid. Right. But when I was at Andreessen, you know, and I heard him talking about it, I thought, well, crap, these are some of the smartest guys in the valley.

If they're doing it, that was when they were funding Coinbase 21. what there's got to be something to this so i um after i sold the wearable company then i called back aaron who is later would be my co-founder of red wallet now vrd and he told me about this open source project that he made and it was a pure decentralized bitcoin wallet and he said let's build a company around it and i said why'd you make it and he said because i believe that bitcoin is going to be the new form of money and if it is going to be widely adopted right it's going to be it's easy to use i'm looking for my wallet as the cash in my wallet because grandma uses cash too right and he in his whole career is all focused on ux and so he just created a very

very plain and simple mobile and he had good street cred like he had the number two app in the App Store in 2009, the clone of the game Minesweeper and stuff. So he knew what he was doing. And the issue is that when you've got a decentralized wallet like that, the question is, give it away for free. How are you going to make money? So I put a business model around it eventually. And in 2015, we created the company. We raised venture capital. We did a token sale in 2017, December, kind of got in right before sort of the fun there ended. And now we've got about over 4 million customers in 170 countries. The app's got, you know, upwards of half a million monthly active users, right? So a lot of engaged and loyal folks out there. And it's mainly targeted at individuals from, you know, 20 to 50 years old who are investing casually, usually, in crypto, very much like your sort of millennial with discretionary income, you know, that kind of a thing and so I think that that was really the genesis of BRD for me though what would really the epiphany moment for me was when when I was chatting with Aaron in the early days and he

kept getting really pissed at me because I just wasn't getting what he said because I'm questioning all this I'm a I don't I think technology is awesome I'm a geek in my gut right but you know it's gotta do something for people in order for them to adopt it it's not a if you build it they will come right i mean look at even for steve jobs look at the newton right but when aaron said he goes adam if you really want to understand bitcoin the first thing you got to do is you got to forget everything you know about money and everything you know about the financial system and build up your knowledge base again from the beginning like the way it should and the real epiphany moment though is when i when i realized that money isn't just half of

every transaction for goods or services in the world right it is what people and companies and governments used to control literally every aspect of our society, right? And people in my generation, we all thought that the internet was going to be the most impactful revolution or invention of our lifetime. What the hell could be more important than, you know, disrupting communication like we're doing right now, right? But the one thing that could be, and I'm sorry to say it's not politically correct, but money is the most important thing in the world, right? And the one thing that could be bigger than disrupting communication is disrupting that glue, that fabric that keeps society together. And that's why I think guys like Andreessen were pouring

money into it. And that's why I got excited about creating BRD there. Got it. And so one of the questions I always get is what does BRD stand for? Where did that name come from? Well, you want to know the truth? So originally, right, the name of the app was Bread Wallet because bread is slang in english of course for for money right and um you know just practical considerations too it's a single one syllable name like a lot of young finance companies at the time like square strike right it's memorable domain names available you know practical stuff like that right um and um over time what we as we added more and more functionality and expanded our scope to be like digital asset like decentralized bank we got rid of the wallet which is you know kind of a similar

thing that like coinbase did and all these other things back in the early days and then when we did the token sale we had to come up with a ticker so we created brd right like bread and uh then during that time we got a lot of press the company was getting out there a lot we're getting distribution all over the world right and we had some trademark issues with some other companies in the uh general finance space totally unrelated to crypto who were using uh bread no one could and it really wasn't like a direct trademark violation they were in like a totally peripheral area but because of the chokehold that Apple and Google have a distribution for mobile app companies meaning the App Store as soon as there's

a trademark violation they pause downloads right until you resolve it and that's just you know doesn't doesn't work well with a mobile company's business model so instead of going through a protracted sort of like you know discussion and legal stuff we just decided to change the name of the company to BRD, which is also the token name, still stands for bread, not bird. And we've been marketing it as BRD ever since. Got it. And so today when a user goes in and they actually download the BRD wallet, like what is the functionality that's in there and what can they, what do they do? Yep, absolutely. That's exactly the right way to think about it. Like what are

the practical use cases? So it's always been known for simplicity and security and, you know, it's an implementation of Bitcoin in a more pure sense. So it comes with all the other benefits of Bitcoin. It's really an on-ramp. It's the easiest way to get started. So when you launch the app, it's what I really, the reason why we grew really fast,

and the reason why I think by guys like Roger Ver, who invested in blockchain.info, but probably is the individual responsible for the single most installs of BRD on customer devices. The reason is because there's no onboarding, right? It's not like going to a bank or, you know, an exchange and creating an account. You literally download the app, you hit new wallet, boom, you can start sending and receiving crypto, right? So I could just send you, scan your QR code, send you some Bitcoin right now.

That's a really great way when you meet someone in a restaurant or a family member at dinner or in a bar and they say, where do you work? I work in crypto. I've heard about that. What is that? You download, you know, an exchange app, the guy's there for 30 minutes taking selfies, trying to establish, that's not a great crypto experience, right? That's not what Bitcoin is supposed to be, it's a think account, right? You download the BRD app, boom, within five seconds, you know, I can send you some Bitcoin. Oh, that's how it works. That's pretty cool, right? So the onboarding gets them in, it makes it easy. And ultimately what you can do is you can buy and sell crypto and you can trade. And it's really targeted more at the, like I said, Robinhood sort of audience, casual investor, not the high frequency, you know, traders doing day trading who are sitting on exchanges constantly, right? that's the trade-off that you get as we focus on the UX we want to help you know sort of the the average individual global citizen get on to the crypto

bandwagon and you know that's the sort of the rule we play it's kind of like your Robin Hood customer versus like your Charles Schwab customer for sure and then you guys also have come out with block set by BRD which is even an advertiser here on on the podcast and maybe talk a little bit about kind of what the idea or the genesis was for for that body of work and then kind of what you guys have built so far okay sure thanks Bob so yeah we worked really hard to build a brand around BRD and I think a big reason that the crypto folks early on really helped accelerate the growth of the company and the app is because they trusted us it's open source right so there's no funny business with you know all your money's

to disappear someday and we've never had any money hacked from from any brd actually right because it's decentralized there's like no honeypot right and so we took that brand that trust and that sort of you know technology right and it actually it happened as a result to be honest with you of our relationship with svi so remember i said that i started to really get into the japanese sort of relationships and business well when we created brd i came back to japan and we actually raised a lot of money from here and then later in the company's evolution um svi contacted us and they said hey we'd really like to include the brd consumer app in our new crypto banking flow by the way we'd like to invest some money in your company and at the time we weren't even raising

money we told them i said we weren't so interested but uh eventually um we ended up you know taking the strategic investment from them and as part of that investment we sat down with their technology teams they've got some really smart people pump here in tokyo and and what they said was well okay now we understand how your architecture works you ought to take the back end of your consumer app okay which is you know sort of like the server side right talks to all these from blockchains and maybe we could use that too and so our cto and i and the management team sat down and we thought you know

what there's a really big opportunity here so we took the back end of the consumer app talks to all the different blockchains we productized it we turned that into block set a set of building blocks to basically help companies build software for blockchain access quicker right and lower cost and don't have to run nodes lower infrastructure costs and i think really importantly it's out there in production with four million customers for the brd app so you can trust it right plus the core of its open source as well so we productized it with help from svi svi became our first customer block set they launched in production with it a few weeks ago actually for their crypto banking platform and now it's a

product that we're selling in our enterprise sort of division of the company and we're having great success just in the last few months since it launched and you know we appreciate all the folks out there helping us with that getting the word out like you are and we've got major accounting firms now signed we're working with big cross-border payment companies i can't really say the names but they're the big companies that you would know and you know it's it's just about them looking at this it's like the early days of say like cloud um you know hosted like aws and azure got started and initially it's like well we do all that in-house and they're like well wait a minute builders is by it's a lot cheaper to do it that way i can trust that one a lot more and i can

actually grow my business faster but i need a solution that is really scalable not just this little, you know, sort of API to access a few blockchains that works once in a while. I need something that can scale to the size of, you know, a fortune 100 companies needs. That's what blocks it. That's what we do. And so it's, it's like a infrastructure, you know, APIs to access blockchains infrastructure for like next generation banking. Got it. And so is the whole idea there that similar to how AWS provides really that infrastructure layer, people can tap into it and kind of do all these things cheaper, faster, more scalably. You guys are doing that and not only helping them build their products,

but also then giving them access to the various blockchains as well. Right. That's right. So it's not, so AWS is more like, you know, hosting compute resources. Right. And so when you're, when you want to build blockchain apps, right, certainly one of the big issues is like running your own say Bitcoin node or Ripple node or Ethereum node. Actually that costs a lot of money, But just running nodes, that's just one piece of value that we add, right? The real value, I think, is we have one API, okay?

That means there's one set of functions to call by an engineer to access any blockchain. That actually is pretty powerful because today, if I'm sitting at a bank and I want to offer, say, crypto bank accounts to my customers, I've got to write code to talk to Bitcoin, Bitcoin Cash, Ethereum, you know, all these other blockchains. And there's forks, and there's all these changes, and there's bugs. Man, it's a lot of work. Not to mention that I've got to have a legion of engineers who understand the nuances of each blockchain. What BlockSet does is it puts a layer on top of all those individual blockchains, whether they're private or public.

And it basically takes all the data from them, has this sort of metadata layer, because we can analyze the blockchain data as well. And then there's one API on the top. So your engineers only have to code to one spec. And as we add more blockchains in, in the block set sort of, you know, SaaS environment, then those blockchains just immediately become available, you know, to our customer who's building blockchain software with block set. and they don't have to do any real incremental coding or anything right plus we handle all the infrastructure issues running the servers to the forks to the maintenance you know and all those things as well and then we've got partners that that do things like AML and transaction checking right and custody as well so you could build you know custodial banking apps with with

lots of like SBI right and you could just you know myriad sort of applications you want to add virtual cryptocurrency or virtual currency to a a video game you could you could do it with lotset as well so kind of anything in that space for sure and i guess um maybe help us understand like this infrastructure came out of what was built uh for the brd wallet and kind of that whole ecosystem like maybe share some data in terms of like how many users or how much assets you know whatever you're comfortable sharing but can just give us a sense of like it's not like this is a a mobile application that's used by you know a couple hundred people, right? I mean, there's millions of people. Right, right, right. Yeah,

that's right, man. So the BRD consumer app, like 4 million users in 170 countries, right? And, you know, upwards of a half a million or more sort of unique users that are sitting in the app, you know, every day, every week going through and looking at their money, you know, their hodlers or they're doing trading and whatnot. We estimate most recently that the assets under protection we call it we don't use AUM because we don't hold our customers money right being decentralized bank right we use AUP assets under protection is over six billion USD six billion you know USD worth of crypto that users are holding in the app last time we did a had the ability to do sort

of an anonymous sort of averaging on different aspects of the money being protected in BRD our users held on average around five to six times more crypto than say your average coin bases and i i don't think that necessarily is um you know means that brd or coinbase is better or worse but what it means is our users are more engaged right and they're they're investing seriously through the app not just casually buying 10 bucks worth of bitcoin yeah it's super interesting um and then i guess from the geography standpoint uh you're in 170 countries but is there uh any one geography where majority of the users come from is it more U.S., more Asia-based? I think it's pretty much the same for the whole industry. It's definitely

spread, but I'd say, you know, at any given time, North America is still the predominant market share. It can be 40%, it can be 50%, it just depends. There are interesting, you see like flare-ups, you'll see like, wow, Taiwan, you know, in one month, you know, added a 10x the number of users than normal or transactions. We've got this really sophisticated, like a dashboard, web dashboard that the team built so that we can actually see even against like a geographies you know where activity is for our users where the downloads are we could see like support tickets and you know in different regions people might be having different issues you know and things of that sort so we stay on top

of the users and all sort of the demographics and everything to make sure we're addressing everybody's needs but yeah definitely North America mostly we do get a lot of we've always been really popular in Asia and in Japan here that's well simplicity you know sort of resonates in certain geographies too for sure speaking of japan um sbi is uh i think for many people uh they don't know that much about sbi but uh but realize that they're a big organization and they're into crypto and bitcoin um maybe talk a little bit about uh the environment there in japan uh for digital assets and then we can get into sbi mining as well okay sure sure pump so sbi uh actually it's a 20 year old company it's a

large investment bank it's a you know tokyo stock exchange public company originally soft bank investments so it's actually a spin-off soft bank 20 years ago and um you know it's a it's a very big company five six thousand people ten billion dollars you know that kind of a thing right and uh they provide like many japanese companies there's like a conglomerate right There's like 200 subsidiaries. They do everything from, and I think got their name from like an E-Trade-like consumer trading service over the internet. They have a net-based bank. SVI has a huge business in Japan.

They're also big in South Korea, Southeast Asia, even Russia. Not a lot going on in the U.S. in terms of their traditional banking business. But I think the reason why people know SVI is I think SVI is probably the most active investor in the overall crypto and blockchain space by number of companies that they've invested in. The company operates several multibillion dollar funds, not just for crypto investing, but, you know, with a really strong focus on that. And that's because Katao-san, the CEO of SBI, he's more akin to a guy like Masa-san at SoftBank, progressive, you know, more sort of embracing global thinking rather than sort of the more traditional, sometimes myopic, you know, kind of Japanese conservative mindset. And so he looked at what happened between the record companies and Apple, and he didn't want that to happen to him being a bank. And while a lot of other banks are dabbling a little bit in crypto, perhaps, or sort of, you know, closing their eyes to it, KatowSan is going all in.

And that's what really attracted us at BRD to work with SVI. And in a traditional Japanese way, they're not just going in and saying, hey, we're going to launch and operate an exchange in Japan, which they do. They're going like sort of vertical integration style, right? Remember when Sony used to build the chips, the boards, the TVs, then they operated the retail store? Damn, that's some vertical integration, right? Now, with SBI, you know, they're operating exchanges. And then they said, well, how do we get liquidity and fresh coins in the exchanges? Well, we could buy miners or we could build the best miners in the world, right?

And so that's what they decided to do. That's not enough even. How do we get the cheap electricity? They're investing in a variety of clean energy and energy aggregation companies, buying interests in land and in, you know, power companies, utilities, substations all over the world to kind of secure sort of the vertical stack necessary to go from sort of literally hole in the ground power, right, up to mining, right, or to chips, then up to the miners, then up to the exchanges, then the consumer banking app, then the institutional banking

apps on top. And Katausan is just a really firm believer that digital asset-based economy is going to take over the world and totally disrupt the global financial system. He's going to be right there driving that to make it happen. And companies are making very active steps to do that at SVI. So what happened was when they called us in for BRD, I started to spend a bunch of time with the CEO here. And I was in a meeting, kind of like one of his staff meetings. And to be honest, you know i maybe i should have just shut the hell up but you know being an american in japan sometimes it's hard not to and i you know i heard about their plans in in getting into chips and mining and i thought man banks have no business making chips it's pretty damn hard like i know so

foolishly i raised my hand in a very japanese environment and i said hey uh so sure that's the greatest idea in the world and and to be fair there were some other big japanese companies here at the time like GMO launching mining strategies right so there's some you know competitive sort of vibes right and they were like well who the hell are you to comment on something like that and I was like well actually let me tell you I haven't been doing chip design for a long time and actually one of my companies did one of the first Bitcoin mining chips actually even though I wasn't associated with it with Bitcoin at the time and he said oh really all right well you know then what would you do and I told him what I would do and the next thing I knew you know I was CEO

of a new company with uh you know nine figures in funding and i honestly i said no i already have a day job thanks very much very much appreciate the opportunity uh but you know it's long-term relationships here in japan it's about getting in the circle of trust and you know sbi had just invested 15 million dollars in brd and you know i um i thought it was important to have reciprocity there and gratitude and so i told them that i i would help with the mining business and so today I'm also the CEO of SVI Mining Chip, and then in October of last year, they also asked me to become the CEO of SVI and Ripple's joint venture called SVI Ripple Asia. So you can imagine running three companies, I have nothing but spare time on my hands, but I find myself going back and forth between Tokyo and San Francisco quite a bit. But it's interesting to have that visibility across these different businesses, right?

And I'll tell you, you know, they say in the semiconductor space, all roads lead to Taiwan because all the chip manufacturing there. I feel like increasingly, and I'm partial, but, you know, all roads lead to Tokyo in crypto. Japan has always had this weird magnetism pump to Bitcoin. Think about it. You know, why was Carpalus here? Why was Mt. Gox in Japan of all places, right? Roger Ver was running around Japan a lot. Japanese government most conservative in the world about money decides to become the first

one to declare Bitcoin or crypto as money that's so bizarre and then you've got SBI and you've got and you've got all of that so there's this natural sort of affinity to things here right and now that there's a lot of capital coming out of Japan from SBI and others in crypto as well you know there is this sort of magnetism that I that I feel as well and so I I feel you know happy and honored to kind of be part of it and at the center of it, at least from, you know, from this perspective. Yeah. And why do you think there is that kind of interest so much, right? Is it just because they're used to digital assets and they've used kind of non-crypto digital assets in other applications? Is it something to do from like the money that they deal with on a daily

basis? Like what's driving that interest? I wish I could tell you there's like one thing that's obvious answer that it just sort of makes sense right i mean to be honest with you did you see did you see jiro dreams of sushi remember that documentary right did you actually had never seen it and i just saw it for the first time on the way so i went there like a year before that thing came out cash only bro cash only are you kidding me it's like 1200 dinner and they warn you ahead of time like you better you know hit the atm ironically it turns out you can take up to like 10 grand in cash from an ATM machine in Japan. I don't even get started with that one. All right. But actually, Japan's a cash from society or admin. So that's sort of, oh, you know, they embody

digital assets and stuff. Not so much, actually. Now that's changing. Now with pay pay and line pay, just like WeChat pay and Alipay, stuff's starting to change. And you guys in New York just adopted the same standard that Japan's been using for 15 years for the subway, right? With the transit cards. Really cool to do from your iPhone, right? So they have been using that kind of stuff here. So they're comfortable with it. No, you know what? Actually, it is. If I go down the street right now here in Tokyo, and not just in 2020, actually like four or five years ago, you know what? I see huge billboards for FX trading, currency trading, targeted at consumers. That doesn't even make sense in america right huge here by the way those same boards that used to

be fx trading now they're all bitcoin like swear to god and maybe you saw when you were here too um so consumer sort of level trading and sophistication of investors uh seems to be you know something that is a bit of an anomaly here that helps drive this here's another thing to be honest a lot of money on the sidelines in japan and japan just because of the culture and lack of proximity to places like Silicon Valley in New York, Shanghai, right? There's a lot of money here that is waiting to be invested in various things. And so this is why people do trading. This is why people, you know, doing currency trading.

And it's a big part of why they got involved in crypto as well, I think. Also, because of amazing efforts from local crypto communities here, whether it was, you know, in the early days with the Bitcoin meetups and Roger and all this, there were more places here practically like restaurants and stuff that took bitcoin or bitcoin cash you know uh than anywhere else in the world so people would see it a lot there were signs everywhere you know that kind of a thing right and um you know because of mount gox here's the crazy part because of that eight out of ten japanese people have heard of bitcoin and i think that's the highest rate like per capita probably from any country in the world

not always a good thing though because they heard about it because of the because of the scandal right with mountain cogs but it was enough to get the message out there and then you know as is the human psychology the negativity falls away right and then you start to hear the positive things about the gains and that just seeded the whole sort of culture with this sort of notion of you know and put that seed on a foundation of everyone's into investing and trading and you've got you know Japan's response to crypto for sure and as you guys run on the mining side with SBI mining chip how is kovat 19 really impacted that right obviously you have kind of more of a manufacturing type bent and so has there

been impact there yeah that's a good question there there has been some in the early days of the virus when China was locked down right our ODMs manufacturers, you know, the factories literally, right, couldn't operate due to government restrictions. So at that time, we were really just ramping up production, right? And so there was a few delays, probably no more than about three weeks time. Our team did a really good job to, and our partners to sort of, you know, get things back on track and to accelerate things after. Now China's back to normal and large, right? And since the chips, you know, weren't made in China, you know and and we were in volume at that time as well there really wasn't as

much of a new cap you know on the chip side so things were okay and now you know there's been some there's been you hear like Apple's iPhone shipments and all this stuff are going down right but nevertheless and like there's a there's a six month lag with chips and electronics like the chips being made now ordered six months ago before the virus so man the factories are just really full right now and are operating just at rate next speed. So, you know, we'll see sort of lagging indicators on COVID-19 in like the electronic space, you know what I mean? And in mining as well. So, you know, later on this year, there's going to be tightness in inventory

and stuff. For sure. And I guess as part of this, like, how do you think, given your expertise in chip design and manufacturing and the work that you're doing in SBI Mining Chip, How does the halving play out here for miners? Like any thoughts on kind of that Bitcoin halving and the effect on miners? Yeah, I'll tell you one thing. Everybody's got an opinion on it. No one knows what's going to happen. And I'm not going to, you know, be so arrogant as to tell you that I know what's going to happen because I don't.

But what I will tell you is just, you know, we look at the historical data. we expect that a lot of the miners operating in farms where the electricity prices were above around six cents per kilowatt hour all in kind of costs right aren't going to be profitable anymore right so these old ones and so you expect the total network half rate to typically go down afterwards right and you also expect mining orders to go down because there's a psychology to this whole thing it's like ah the mining rewards less well that doesn't seem like a good business to go into anymore now ironically right one of the first things i learned in mining is that the mining reward size and the halving doesn't really necessarily impact the economics

of mining companies how the hell could that be that doesn't even make sense when i say it out loud does it man because the revenues go down right but the idea is that because it takes out a lot of the old hardware right what happens is it's a winner-take-all kind of a situation The whole way to win in mining is to have the lowest electricity costs, the highest power, most power-efficient miners, so that when the halvings happen, or when the price of Bitcoin goes down,

you can still be profitable, or at least rake even, while everyone else, or a lot of the others, have to shut down, because literally every second they operate, they're losing more money, right? And then if you can hang on, the total network hash rate goes down, and then the difficulty goes down and then your percentage of blocks that you might goes up and you can actually make even more money than before the hell potential if enough people get

out so that's why the strategy is best hardware right and then there's all this competition to go find cheap power right and you know when i first got into it you hear oh you know it's this kazakhstan or this stand right or it's this you know new thing in africa right and these like geopolitically unstable areas yeah okay but it's cheap power you know where the biggest source of cheap power actually turned out to be in the world right in the united states in arguably arguably i don't know true right you know one of our one of the most um geopolitically stable places at least from the perspective of like the power not going out right once you're not maybe rolling back out to california but anyway um and so there's a lot going on in places like texas

in New York state upstate from where you are Pacific Northwest as well turns out there's a hell of a lot of excess energy in America and you know it's just not that the marketplace was really not there to connect some of these mining companies in and so that's you know in a nutshell what I've learned about the mining mining industry so after the happening I expect the network cash rate to come down I also though I feel there's a huge psychology aspect to it people hate to show off minors especially if they just bought them because they feel like they screwed up and so they often hang on longer than they should and they just increase the size of

the creator they're creating for themselves so you see lagging indicator on that too but eventually you know they can't do it anyway it's just like this i buy like apple stock right it goes down what does every person want to do there i'm not gonna sell until it goes back up you know because i don't want to feel like i was an idiot right but you know what the right thing to do is right as soon as it goes down you get rid of that dog and then you invest it in something that has a higher likelihood of going up based on you know research that you can do and whatever right unfortunately though you know we can't change how all humans think so you'll see a lagging indicator

on the on the never cash rate is basically what i'm saying then you'll start a recycle refresh phase where people will go and have raised capital to replace all those old miners um if they had cheap enough power if they didn't have cheap enough power they'll close up shop and that's okay that's part of how you know satoshi sort of designed this thing because those miners that are going to operate have to mine more blocks if they're going to run a business of the same size or bigger

than they had before the albany because the mining reward did come down and then ultimately we'll see this transition to fees going up right so that that natural balance between mining companies getting revenue from transaction fees grows as the mining reward revenue kind of continues to go down through subsequent halvings. Yeah, and it feels also like in the past halvings, there's been some level of interest, right? Mostly from the crypto community, but outsiders to the crypto community really weren't kind of paying attention. Now, after that big 2017 run, it really feels like you've got a lot of people paying attention.

And I saw a chart today of Google searches for Bitcoin and Bitcoin halving and things like that. has absolutely exploded over the last like two weeks and i i my personal feeling on that and i feel strongly about this one though it's purely speculation i mean people wanted is it going to go up again should i buy now man the number one question you probably get the number one question i get should i buy bitcoin when should i buy bitcoin and i always say the same thing i say i'm not giving any advice because every time i did before people asked me and i was like man 400 bucks it's like an all-time high from when i got in i never buy 52 week highs boom two weeks later 800 bucks should i buy now adam 800 bucks 52 weeks it's a light you know i i

wouldn't okay i stopped getting in my side yeah well it also comes down to kind of time preference too right you know there's some people who you know especially the people who want to get in and get rich immediately uh they can and i never i tell i never tell people to invest in bitcoin to be honest what i tell them is if you are interested make sure it's discretionary money that you can afford to to not get emotional about right i don't think it's going to go to zero but that's how you should have the psychology of investing not just in bitcoin you know look at oil right or gold right you know so you know for me it's kind of like if you think about it like what it really is which is sort of like professionalized gambling which is what the stock market is as well right

or any sort of investing right um and keep sort of rationality in your head about it right then and you know don't invest more than you can afford to then you know then i think you can kind of weather those crazy volatile gyrations that we have um but you know for the period for people who today are going on to google and typing bitcoin happening after listening to your show they're thinking oh maybe i can make a quick buck around this thing right hey you know um you got just as much you know potential chance going and probably playing blackjack or uh you know playing roulette before we're in vegas right so you know i i can't say i think that's a great idea yeah it's uh it's pretty crazy um there's a lot of people in uh in north america in the united

states especially that uh they know that crypto and bitcoin is really big in um in japan and china kind of all throughout Asia. Is there any one or two things that you think is important for them to know about the region that maybe they don't know or wouldn't think that would be important? Yes, there is actually. And it's all about China. I don't think the world really understands this very important thing that's happening right now. Nothing to do with coronavirus. Okay. So, you know, I have been traveling to China for business for 10 years, call it, right? And for the mining company, I was in Shanghai about nine months ago or so. And, yeah, late last year.

And I went to a store, you know, a normal store that I've been to several times before, kind of like a convenience store. And I grabbed some stuff. I ripped out and whipped out my RMB, you know, my Chinese yuan to pay cash. Sorry, we don't accept cash. By the way, I speak some Chinese. so like you know i i knew exactly what the guy was saying i said don't accept cash how the hell can you not accept cash right i mean this it's like in a mall okay this isn't like some little amount

of pop shop okay and so i'm like okay i'm thinking i've been here before oh wait here's my visa we don't accept visa or mastercard like you used to we don't accept these semester credit anymore thinking how do you accept that right and of course it's wechat or alipay now here's the killer until recently you couldn't even load wechat with money if you didn't have a chinese bank account so you think you figure what the hell is the chinese government doing they're restricting capital coming into the country they're making it difficult for foreigners to transact why would they do that and then why aren't they getting on the bandwagon you know why don't they re-authorize crypto exchanges why don't they put rules down so that companies like vc china and stuff can

operate again why haven't they bought into you know um new sort of financial technologies and all this stuff why are they just using like wechat pay analogy and all this right well the reason is because and give a crap about anything else they know that they have the biggest economy in the world and they get to call the shots remember who called the shots in the early days of the global economy it was the united states government we created swift we created the entire global banking system and if people wanted to do business with america which was and continues to be this big economy they had to play by the rules of the u.s department of treasury they had to be on the wire transfer network they had to let the banks conform to all the u.s rules even though the banks are in

other countries it's crazy but it makes sense because everyone else in the world wanted to do business with america guess what's happening right now nobody seems to get this in five years if you don't support the digital rmb you can't do business with china i don't mean the government i mean any chinese company as is evidenced by the fact that i can't even use their own goddamn cash in their own country anymore you know now fortunately the hotels still take visa and stuff okay and nowadays it's easier for foreigners to load money onto things like wechat still damn difficult right and the reason that they don't care is because they know that everyone's going to play by their rules so for example you know innovations and technologies to help cross-border

payments like what i see in my role with ripple and the ripple joint venture right which is a much better solution to cross border payments than old technologies like swift and you think well why wouldn't china jump at something like this right especially it's you know relatively controllable you know doesn't have to be like decentralized like bitcoin and stuff and and the reason is is because they don't need to care they're creating the digital r b they're going to impose it upon the world just like the us did with the dollar in the early days and they know that because they are the most people you know of anywhere that or well you know maybe india china right this kind of thing right but anyway the point is if you want to do business with them

you're going to have to support it no one's working on that right now okay so that's why at least the way i can help i hope with vrd is block set we're looking at having uh digital asset support for the digital rmb so that companies like every bank in the world every company in the world is going to need to do business with china they're going to need software to basically you know handle the digital r b to me this is the biggest you know potential sort of massive issue in the in the in the economic uh global economic situation that people just don't seem to see coming and you know i say i like to say you know modern warfare is fought with money and information and i think china's got a really great strategy and i think people need to uh you know stop and

notice it and plan for how to work with them and how to make sure that it's not necessarily going to be used for anything other than hopefully efficiency sake and improving the global economy. But I can't say that we always understand everybody else's motivation. So definitely needs to be taken very seriously. For sure. And I guess, how do you think of the digital dollar or other digital national currencies from the other superpowers? Do you think those are likely to happen relatively soon it was farther out oh they're definitely going to happen i don't i don't think they're going to happen soon uh just because of the practical issues man it's really hard look at what happened when the us decided to get rid of gold i mean that was a real there and it didn't

even last anyway right but if you look at what happened in india where they're getting rid of currencies high dollar you know then they're they're going to cash lists and i think china is doing that as well right that's why you see cash not being accepted in those stores anymore right and by the way why didn't that store take cash they got a financial incentive from the government not to accept it anymore they got a financial incentive from the government not to accept the government's own damn currency that's crazy right but that's what i'm talking about right so i think there are clear indicators that governments are going to move to their own digital sort of you know currencies uh i'm not sure they're going to be blockchain based i'm not

not sure they're going to be any currency that you know of or you've heard of right now meaning like a crypto asset like bitcoin or something right um however i think they're coming but i think practically speaking it takes time i don't think you start to see those things really out in the wild uh i would say normally for another five years ten years really however because of coronavirus if these stimulus bills pull back some of that digital usd digital wallet language back into the um into legislation and that stuff goes through to avoid you know contact during payments and stuff it could be a catalyst to help accelerate it but i don't think it overcomes all the practical issues we have other contactless payment methods right now right

you know we don't need the digital dollar to solve covert 19 you know it's not going to completely solve that problem yeah it's super fascinating i think when you start looking at like the geopolitical um competition that can occur here and if every currency ends up being digital the competition really is at the monetary policy level right it's not at the at the technology level which i think um is a whole other can of worms maybe it already is at the you know sort of central government um level you know i mean i would argue that in large part even though our banking industry is privatized you know it's got a lot of ties back into the fed and the central government right especially when you see these bailouts and stuff like this right i mean that's

the that's the government's sort of way to influence the economies through those banking relationships and uh uh interest rates and the lending and all that stuff that happens there so i actually think that is where the main bulk of sort of the economic you know warring is going on uh from a global superpower perspective where the technology comes in is much lower down where it's at your level and my level right i'm using venmo right or i'm you know facebook's libra things over here to be more of a global version of like paypal all that kind of stuff right that's where like technology can make a big difference at the consumer level at the government level technology is sort of less important and i and i argue that because like ach has still settled my hand a lot

in the us on dot matrix printers and mainframes right so clearly like brand new technology is not necessarily you know critically important to central bank sort of you know policy and stuff like that and and they sort of fight by numbers with other countries right like trade right numbers tariffs and all this kind of stuff not by like employing new technology which makes the digital usd better right we could have the most amazing digital dollar in the world but it's not going to change the fact that china is not going to be excited about that because they want to be the new united states when it comes to you know global economics absolutely listen i could talk about this all day it's so fascinating all right me too man and i think that um there's no right

answer right that's part of the beauty of all of this um before i wrap up i always ask people two questions uh first is um what is the most important book you've ever read oh i'm a huge fan of um military science fiction and uh for me you know i i don't i'm it's hard for me to to pick a specific book but what i will say is this i will say in my own life a big part of my job running companies is to take care of and find the best team members and take care of the team the team is the company and the team is the value right and so leadership is something that i'm constantly trying to become better at

and to be a combination of empathetic and and inspiring to people but also to drive them And also to be able to enable them to achieve new things that they couldn't have otherwise achieved, you know, without some structure and without guidance and without vision and without encouragement. But, you know, it's not just all about pure encouragement. It's also about discipline, right? And so I read a lot of fiction in order to allow my mind to relax a little bit. but my sort of nonfiction aspect of all the fiction I read is that military discipline and leadership that I really, really like. And so for that reason, you know, there's a lot of

books that I've read in that space, you know, series of books. And it's always, you know, I don't like sci-fi and all this kind of stuff. So, you know, but that's the underlying theme. And I think that's, you know, what I, if I look back on my career, man, you know, I've started being an engineer. I thought I'd really be good at tinkering with chips and stuff like that. But in the end, what I think really worked out best is to be able to lead and to inspire, probably a lot like yourself. I love that. Speaking of sci-fi, aliens, believer or non-believer? You think they're real? I so want to believe it, Dan. I mean, I used to be one of those nuts who would be sitting there Google searching like 10 years ago for,

I mean, I want to believe that stuff. I love science fiction and all that stuff. but the reason why like okay the navy isn't going to release ufo unidentified flying object doesn't mean alien like this make sure we get that right right they're not going to release videos of that if if there's you know dudes with you know little green dudes running around the earth right because because you know then that that that you can't do that in a non-controlled way you have to very much control information flow that way to not incite um you know global panic right hell We've had a pretty good example of what a small version of Global Pharma can do recently, right? No, man, I want to believe that these videos and stuff are alien-based.

I don't think so. The reason is I feel like if there was, there were aliens and this kind of thing, we would know. We'd have to know. You couldn't contain it, right? Now, one step back, though, the other side of that is we're just in our little myopic view of Earth here. As Carl Sagan used to say, the universe is a very big place. And if we're alone here, it seems like an awful waste of space. It's crazy to think about in this vast, vast universe, right?

What could possibly be out there? You get to ask me one question to finish up here. What one question do you have for me? Oh, yeah. My question for you is, I want to know what makes you get up every morning and do what you do? What is at the core of the inspiration for all the great stuff that you've helped the industry with?

I'm having a blast. At the end of the day, I usually am joking when I say this, but there's a hint of truth in it that one day I'm probably going to wake up and be like, all right, guys, see you. That was an epic run, but I'm just not having fun anymore. Today when I wake up, I write the email every morning. I record usually at least one podcast each day and get all that out there. And then obviously we've got all the investing activities that we do. Uh, but really it's just fun for me. Um, and I enjoy doing it. And it's one of these things where like I would spend my time reading and, and, um, tweeting and doing all this stuff anyways. So why not make an overlap between the things you're personally interested in, um, and, and the work that you do,

uh, kind of on the professional level. And so, uh, I, I just really, really enjoy it. Um, if that ever changes though, like I, you know, no, uh, no secret here. I literally will wake up and send out an email and be like i'm done like i'm not writing anymore uh and if that ever happens like i'm not one of these people who can go from you know writing or uh or recording these conversations every single day to like oh i'm gonna pare it down i'm only gonna do two a week right it's all or nothing so it's like either i do it every day or i'm done i fully agree with you man it's either all in or go right there is no in between we don't want to do anything have asked of us totally for sure where um where do you want people to go where can we send them

uh if they're interested in learning more about you or uh brd sbi uh mining like where do you want to send them i think probably the the easiest place is just brd.com um and uh you know i tell everybody like i tell my teams too it's like uh i'm happy to interact with people i love to help people i love to educate like like yourself and i love to uh to mentor and so you know people should feel free to reach out to me anytime my email is adam vrd.com and uh you know i'm always happy to interact on any of these things or um or even at a personal level so yeah that website isn't going to tell you a lot about svi or all these other things

but it's it's less about you know me and these different companies and all that stuff and it's more about um helping the industry so you know let me know if you'd like to check awesome man well i appreciate you taking the time to do this i think people learn a lot from this and uh and we'll have to do it again in the future. All right. Sounds good. Thanks, Bob. Have a good one. Appreciate the opportunity. Pleasure to get to know you.