The Pomp Podcast - Jesse Lund, Head of Blockchain Solutions at IBM: How Fortune 500s Treat Crypto

Episode Date: February 13, 2019

Jesse Lund is the Head of Blockchain Solutions at IBM. In this conversation, Jesse and Anthony Pompliano discuss enterprise blockchains, how IBM is using the technology, what their customers are saying, and what Jesse sees as the most important things for the future of crypto. ----- This show is sponsored by The Grove: thegrove.co/pomp Your branding and website are the first things your customers will see.  You never get a second chance at a first impression, which is why it's so important that your website is sending the right message to the world.  Luckily, you have The Grove to help you with that. The Grove is a full service creative and design agency that helps new and established companies tell their stories.  The Grove firmly believes that a brand is more than just a logo - it is the entire essence of who a company is.  That's why The Grove works with companies on every aspect of their marketing, from brand identity, to web development and design, to SEO, to specialized graphic design projects. The Grove has helped grow companies like Tiffany and Co, Bloq, AAA, The Red Cross, and the Chamber of Digital Commerce by amplifying their branding and web presence.  Get big results today, and visit thegrove.co/pomp. ----- Join the Off the Chain newsletter. Pomp's daily email analyzes the crypto market for institutional investors. Simply, it’s the best crypto newsletter delivered to your inbox every morning. No frills. No bullsh*t. Just everything you need to know in a 3-minute read. https://offthechain.substack.com/ ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Jesse Lund is the head of blockchain solutions at IBM. In this conversation, we discuss enterprise blockchains, how IBM is using the technology, what their customers are saying, and what Jesse sees as the most important things for the future of crypto. This conversation was fascinating and I hope you enjoy it. Before we get started, I want to talk about one of our sponsors, The Grove. As many of you know, branding and online presence is crucial to the crypto space. With so many damn scams out there, it's tough to tell who's legit.

The Grove, however, is a full-service creative and design agency that will help you amplify your brand with the perfect website logo collateral or custom design project branding isn't just about looking pretty though dot dot dot like me the grove understands is about driving revenue if you want to check out what they're doing you can go to the grove.co backslash pomp again that's the grove.co not.com co new age stuff the grove.co backslash pomp let's crash their servers and light up the webpage. Let me know when you do it and I'll shoot you some fire emojis on Twitter, thegrove.co slash Pomp. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not

reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys, I've got Jesse here. I'm super excited to have this conversation because everyone hears about IBM and blockchain, but nobody actually knows what's going on. So Jesse is here to answer all of our questions. Thank you very much for joining. Good to be here. Absolutely. All right. Let's go through kind of your background real quick so that everyone has an understanding of your perspective

and then we can get into how you got into crypto. Sure. So I've been with IBM two years now, just almost celebrating a two-year anniversary. It's coming up here in a few weeks. Prior to that, I was a banker. 18 years at Wells Fargo, did a little stint at Union Bank

and have had a variety of roles around the commercial side to the consumer side to the wealth management side, technology side. So I've got a real good, I think, holistic perspective of banking, which is what I think really attracted IBM to the potential and the group that I came here to build. Got it. And then how did you first come across, whether it's Bitcoin, one of the other cryptos or blockchain? Walk us through that initial experience and what you thought. Yeah. So, one of my roles at Wells Fargo was managing the enterprise innovation lab. And so, I was managing an R&D portfolio. And yes, banks do have R&D budgets of a number of things, in addition to kind of managing the overall lab and the lab infrastructure. And cryptocurrencies, in particular Bitcoin, came across the project list right around 2013, 2014. And it was the Capital Markets Group within Wells Fargo that was trying to understand what this thing was

and wanted to write a paper about it, kind of a position paper for their institutional investors primarily. And so we ended up doing some experimentation with Bitcoin. We actually bought nine Bitcoin way, way back in the day, 2013, 14 timeframe. So it didn't cost much. And, you know, we were, we were brand new as a group of about three of us just playing around with it. We didn't really have a full appreciation for, you know, key management and cryptography and how that all worked.

And so I'm sad to say that we lost those Bitcoins. You know, there was no such thing as wallet. But so, you know, somebody was carrying around the, you know, the private key and it just got swept up by the, you know, by the janitor on the sticky note that it was sitting on somebody's desk. So there's nine unclaimed Bitcoins out there that Wells Fargo once owned and are now lost forever. Got it. And what was the general kind of sentiment internally, right? Were people intrigued as they learned about this stuff or maybe even saw some of the stuff you guys were doing? Were they scared of it? Just walk me through, maybe not the people directly in your group, but others in the organization.

What was that reaction or sentiment like? Yeah. So, you know, interestingly, it varied from kind of a polar perspective very similarly to the way it does today. What I've noticed is there's very few people in the middle ground of crypto supporters and crypto deterrents, I'll call them. There's believers and there's unbelievers. And there were believers and unbelievers way back then inside the bank all the way up to the top of the house. And so that was really interesting to see. I don't think there was a fear amongst the non-believers, I'll call it.

But there was certainly skepticism around this notion of a store of value that had no central authority behind it. Kind of the same things that we still hear about today. And there was also, you know, the misconceptions that we still hear about today that, you know, oh, it's only going to be used for, you know, nefarious activities. It's only going to be used by criminals. I didn't have as clear and I think as pointed of a perspective back then that I do now. But, you know, it's kind of the same sentiment and rhetoric that we hear today that we did back then. For sure. And so obviously, it's pretty cool that that early on, you know, you guys even got approval and were willing to kind of jump in and interact with Bitcoin and crypto. at Wells Fargo. What led to the move to IBM and kind of walk me through maybe some of the stuff

that you guys are doing at IBM now? Yeah. So it was really that activity at Wells Fargo and just reflecting back on the excitement that I think a few of us had as we really continued to dig into Bitcoin and not so much what it was. I mean, cause there were always some clunky parts about it, but it represented and the future that it, that it held. And so, um, you know, I continued, um, to manage the, uh, the bit, the digital currency kind of assessment strategy and what became the distributed ledger technology strategy for the bank. And, and of course I had a lot of interaction with IBM because IBM and Wells Fargo are really long time, um, longstanding customer-vendor relationship there. So it was kind of a natural progression. I ran into

a guy named Jerry Cuomo, who I would say is sort of the godfather of blockchain here at IBM, a distinguished fellow here, a super smart guy. And we ran into each other at Money 2020 and just started kicking around ideas and opinions about crypto. And at some point during that conversation it just dawned on me that this was uh no longer a friendly conversation but was kind of a job interview and and the rest after that is sort of history that's awesome and so maybe um you know talk through some of the work you guys are doing uh right now around um you know working with uh with clients and even internally um utilizing blockchain and different crypto technologies yeah so um the i think and you've been following this for a while so you know there's

there this a kind of reaction that that um to bitcoin that has been precipitated by a few you know kind of uh prominent personalities in in the industry and banking industry and so forth um led to uh you know a divorce of what i'll call you know some of the enabling technology i.e blockchain from the Bitcoin value proposition itself. And I think in some ways that was a good thing. In some ways, that was a bad thing. It was a good thing because it spawned over the last several years a sizable amount of investment in blockchain technology

by IBM, by a number of others. And so IBM has been using blockchain technology proper as an emerging technology to really streamline and improve all sorts of existing operational business processes. Supply chain management and provenance-related use cases are the most prominent, where you want to be able to create and form permissioned networks very, very quickly that embody that whole distributed compute and consensus and creating trust among parties who otherwise would have to take a really long time to trust each other and to build networks together. So the group has coalesced around that. We literally have over 1000 blockchain professionals

working on hundreds of projects around the world across a whole bunch of different industries. I was brought in really to lead the financial services industry, and in particular, to build out a portfolio of solutions where IBM has recognized technology is not only transformational to or for its clients, but it's also transformational for itself in terms of how it engages with its clients. And what I mean by that is IBM now as a technology partner, but also a software provider, a global system generator, and a multinational company with operations literally in much every country in the world, we have a lot of delivery credibility. And so we now have the capacity to be involved in some of these projects and developing new types of networks and new types of solutions. And so I was kind of hired to come in and develop that model and that portfolio for financial services specifically, which is the single largest operating segment of IBM as a whole. Got it. That makes a ton of sense. And maybe let's talk about the clients, right? The people out who have these technological challenges, how much of the blockchain work today is push versus pull, right?

Are they pulling you guys in and saying, hey, we really need XYZ type solutions and we think blockchain can be it. Can you help us? Or is the majority of it, you guys have identified certain business segments that have areas where blockchain could improve and you're going out and you're educating them and really showing them the power of the technology, where does that balance lay? Yeah, well, it's definitely both. Because there are big companies and IBM is a vendor for a lot of companies around the world. And a lot of these large companies have big R&D and innovation teams. I mean, it's kind of in vogue, you know, for big companies to have a chief innovation officer.

And so we get a lot of calls because they're reading the same news that we're reading. And we're making some of that news, you know, too, with the technology that we're investing in. So there is a lot of pull. There's a lot of pull from companies across different industries that have, you know, a need to optimize business processes. They've got some pain points, you know, and so they're pulling us in. Invariably, though, we do get involved in education. And, you know, the one thing I told my wife when I first started at IBM is I felt like I was a pretty smart guy, you know, coming out of Wells Fargo. In most of the initial meetings I was in with the internal folks and all of the engineers and IBM

research here, I always felt like the dumbest guy in the room. So there's a lot of really smart people at IBM who really understand this at a really detailed level. And that's important because it still is kind of complicated technology, right? And I think, you know, that's where in some areas, and, you know, believe it or not, it's, I would say it's been a little bit more of a push with the client segment that I represent with, you know, with the banks and the central banks and financial institutions than it is with other industries, which I actually find really ironic. And it was a little bit of a surprise to me. But I guess it shouldn't be because these financial institutions are conservative by nature. And they've got a

lot invested into their existing IT portfolios. And so the introduction of net new technology like this, um, is something that, you know, any prudent CIO is going to proceed with caution and it's so brand new. That's the thing is, you know, the, the market is so, um, uh, I don't know, impatient, uh, with, with a lot of things, but what I've seen is, um, so much progress, whether it's us kind of evolving it, like we have been doing a lot, um, in, you know, in the payment space in, um, in financial services, because we see that in particularly international payments is some some low-hanging fruit um but uh you know it's it's uh people want it want it now and and sometimes i think the industry forgets that blockchain's really only

been around proper for you know three or four years and and bitcoin prior to that which was the catalyst of all this you know only for 10 years and for the first five years everybody ignored it. Right. Uh, so, uh, it's just an amazing time, honestly, uh, really exciting time. And, uh, yeah, it's, it's, it's, I'm, I'm so excited to be here. For sure. What is the, um, most interesting use case that you've seen somebody try to apply blockchain technology to, um, and work with you guys on? Cause the reason I'm asking this question is you guys have a incredible, um, reach on a global basis. So you see different jurisdictions. You see different types of companies. Everyone is somewhere in the IBM

orbit, just given your size and how long you've been around. But what's those interesting use cases that you've seen that have surprised you? Well, I think there's some really novel ones outside of my industry. And I want to hit one that maybe is outside of my industry and then focus on the ones that are inside financial services that I'm really excited about but i think you know i first came here there was there was an application that the company was already a building to track um the um the the movement the ownership of diamonds from you know like from the ground you know to the vault to you know the the ring uh on you know someone's finger and i i i always thought that was really cool because you know you you go buy a diamond i don't

I don't know if you're a married guy. I remember when I was buying my wife, her engagement ring, I thought, you know, I don't, I don't know this thing from, from anything. I don't know where this has been on. This is a piece of glass that's been, you know, that's been in the street just outside, you know, and I thought it was really cool that these diamonds, which are oftentimes engraved with serial numbers can now ultimately be tracked literally from, you know,

their discovery to their current state and then even beyond that to the initial sale and to the resale. And I thought, that's really cool. That could apply to a lot of things like works of art, wine, and could avoid counterfeiting and all sorts of really cool things. So I think when I first got here, that was a big aha moment that, wow, this has really much broader applicability than I've really been thinking because here I am a banker, or a financial services guy by trade. But where I really get excited about it and what we've worked on, I would say the most exciting thing is the work in and around the central banks. So here you have the elite of the establishment or the epitome of the establishment, right? The entities that

that are defining monetary policy, that are literally creating money and creating the rules around how money is created and managed. And the idea of a central bank being involved in the creation of a new type of digital asset, a new type of digital currency that's inspired by something like Bitcoin only 10 years ago is really profound. So we've been in and talking with dozens of central banks over the last couple of years. One meeting I remember with Reichsbank, which is the central bank of Sweden, which is really cool because it's the oldest continuously operating central bank in the world. I think last year they celebrated their 350th year of continuous, um, operations. Um, and, uh, they have this really, um, uh, awesome, uh, vision

around, um, digital currencies and a cashless society. And, you know, I just think, you know, I have kids now and I have my son, you know, was my youngest was born into a world that never knew the world without the internet. And so I just think about, you know, paradigm shifts and transformations and here i'm living through one he's not going to be able to remember what it looked like before but but i am and being able to be on the cusp of that where where money goes truly digital um you know where those barriers break down where you know money moves as as easily as as emails or text messages move today uh is is profound to be able to think that not only is that coming for real um but um when it comes it's going to be you know here to stay absolutely

what is the central bank's view i think most people would um find it not surprising that they're excited about blockchain technology right the the technology itself i think is fairly well accepted across the financial services but central banks in general um and i don't know if you've had these conversations or not but with bitcoin right because it's kind of the the more edgy uh you know less accepted um application of the blockchain technology but have you found that they are um relatively receptive to all applications do they want to focus on specifics like you know more enterprise blockchain type stuff or is there openness to uh bitcoin and some of the benefits and what it may even be able to do for them well again it varies

So if you read, you know, there's papers that are coming out all the time. You know, the BIS, the Bank of International Settlements, is really, you know, an entity that's owned by the central banks. And so, you know, they produce a lot of work. And I think, but, you know, some of the opinions expressed, certainly the central banks are being cautious in their progress in this space. But what I've discovered, you know, having talked to a lot of central banks, the big ones, you know, the big three or five, some really small ones in Asia, in the South Pacific, the sentiment really varies. We were in a meeting with the deputy governor of one of the central banks in Asia, and it was just a profound moment where this deputy governor, who I think was responsible for monetary policy, and the chief economist, by the way, of the central bank was in the room, too. And she made this amazing comment. She said, first of all, their intentions in looking at it was the technology in general and Bitcoin and this concept of cryptocurrencies was what she called the noble task of improving the life of the migrant worker. And I, you know, I was kind of inspired by that right, right off the bat. But, you know, then she said, we're, we're, we're actually looking at and being faced with this, this, this challenge with two equally unacceptable options.

on the one side it's like ignore cryptos ignore bitcoin completely and on the other side it's um you know it's make them illegal right so and she's like we know we can't do either of those and so we know there's some something in between um but i do think that you know and even there's been some economic papers i'm kind of going way back you know even into my you know early early years before I was doing anything more than playing baseball on the corner. But there's an economist named Hayek who I've since recently found has published some works around the denationalization of currencies and this idea of choices in currencies issued by non-bank or non-central agencies and the economic benefits of that. If you haven't read Hayek's stuff,

Go get some of his stuff and read it. But I think it's profound that there are economists that were forward thinking as early as the 70s, early 70s, that completely predates even the fractional notion of digital currencies, of Bitcoin, of things like that. So it does vary. It varies across the board. I won't say any central bank is saying, oh, yeah, you know, we're going to somehow support Bitcoin. I don't think any of them are saying that. But what they're doing is they're looking at things like Bitcoin, autonomous stores of value, and the balance between that and just a shared ledger, which is, you know, kind of where the enterprise blockchain space is focused. Where I think enterprise blockchain doesn't include is this notion of a store and transfer of value. And if anybody or any entity needs to be focused on that, it's the central banks. For sure. The part that's so interesting to me around central banks and Bitcoin specifically is this idea that there is no need for them to do this. until there is. And what I mean by that is there's only 21 million Bitcoin that will ever be created and they all seem to follow each other. And there's an element of if somebody somewhere else who I respect is doing something and it's working, then we should at least have a conversation about it. Doesn't mean that we'll do it, but we should talk about it. And it feels like Bitcoin

is the ultimate kind of prisoner's dilemma, if you will, or FOMO, where people who, if one central bank starts buying and is publicly known, it will lead to others buying more from a defensive position than anything else. I don't know if that's necessarily good or bad, but what do you think about that general kind of sequence of events? Is that probable or more unlikely than than maybe I think. Well, I, I think you're right about how the central banks, it is, it is a band of brotherhood and sisterhood. They all, it's a closed, it's a close community and they do tend to, to follow each other. And the little, the little, the smaller nations are often hesitant to do anything that's radically different than what the larger nations are saying. I do think

though, it's, it's improbable, it's, it's improbable that, that a central bank, you know, many of these central banks hold cash reserves. They hold reserves of other currencies, which is what stabilizes ultimately their currency, right? So they've got their peg to some basket of currencies. I think it's very unlikely that any central bank will ever hold crypto or hold coin as part of their reserves. I could be wrong, and that would be really cool if I was, but I think in the near term, that's pretty improbable. But I do think that they're going to pick up on some of the functional attributes that things like Bitcoin offer, right? Which is the ability to efficiently store value and then the ability to transfer it quite seamlessly and quite quickly

without the need for intermediaries. And as central banks begin to adopt that, they have a back channel into some initiatives that many of the bigger central banks have been thinking about anyway, which is how do we open up the national payment system? I mean, that's one of the primary functions of a central bank is to manage these really important, highly fault-tolerant payment systems that support all of the commerce in the country and in and out of the country. So the real-time gross settlement system. The wire system is obviously one of the most important ones. And as central banks look at issuing digital currencies, digital denominations, crypto versions of their own fiat currency, what they effectively do is create an extension of the

real-time gross settlement systems that they have for use by the public domain, which has traditionally been a domain that, you know, only banks have access to. And I think they're more worried about the implications and, you know, precipitating some unnatural digital run on the bank because, you know, they might think that you or I, if the Fed issued, you know, a Fed coin that operated a lot like Bitcoin does, that was as easily accepted and readily traded as Bitcoin is, that people would rush to take their deposits out of their banks that they don't trust and just hold them in a digital form essentially on central bank balance sheet. And that's problematic. So I think they're thinking through the mechanics of all of that stuff. But I don't

think it's likely that central banks are going to jump into the crypto space beyond using the capabilities of crypto to issue their own assets got it and i guess here's a um and i don't have an opinion here but but i'm interested to hear how you guys have thought about this as you're working on a lot of these blockchain technologies right you can go and you can service uh what we'll just call kind of enterprise clients you can go and you can work with these central banks or other more government-type or large financial service companies or organizations. But how much focus does a large corporation like an IBM put on using the technology internally? So actually, building things to be deployed for either efficiency or security sake internally

versus using it as a tool to go out to clients with? Well, quite a bit. I mean, I think it's really compelling when, you know, a company who's the inventor of a technology kind of eats its own dog food by using its own technology. And, um, that's certainly the case here with IBM, uh, with blockchain from some of the early, early days, we, we did deploy, um, an early, uh, supply chain, uh, application that, that kind of helped, um, reduce, um, collections of, of, of payments in, in, in amongst all of our suppliers. I think we've got, um, a demo of that, even a really cool explainer of it, uh, out on the, uh, the website, but, um, you know, as it relates to going to cash specifically and payments, especially for big multinationals, um, it's a big deal. Uh, you know, I mean, they're, you know, IBM take IBM as an example, IBM operating in more than 160 countries,

you know, we're making payroll and, and all of those places, cash management, you know, across the corporation is, is a pretty serious activity. Um, and if we can make that easier so that we're, you know, able to, to move money, um, across borders and, and perform FX activities in more real time than the days or weeks that it takes, it eliminates a lot of heading and a lot of expense and a lot, just a lot of, um, inefficiencies. So yeah, it's, it's as important for you know big corporates as it is for you know banks and central banks for sure what um what would be the one thing you see from your seat um that you wish a large majority of people knew that maybe they don't know is there something that kind of is surprising to you um whether it's in the

corporate world or even maybe even personally but you just have a very unique seat and so what's something that that you wish that everyone would learn one thing comes to mind that um that that I keep reading about too is, is sort of the, and you're, by the way, you're a, you're a great guardian of the truth in this regard. I I've noticed, but I, but I, I, I've noticed that a lot of people tend to want to write about Bitcoin and write about cryptos as though they are the preferred tool of criminals. Right. And I won't say that criminals aren't dumb,

but we should encourage criminals to use Bitcoin more because that's how we're going to catch them. So this notion of crypto being more attractive to nefarious activities than cash is a really bad sentiment. We got to realize that even with Bitcoin and with some of the anonymity that's built in there, the movement of cash and the movement of money and the transfer of value is you know ultimately publicly and and eternally traceable right so you know if there's any nefarious activity that's linked to any you know input into a bitcoin account you can follow that money you can't do that with cash you really you really really can't and so that's one thing that that i hope um you know the detractors of crypto either start to learn more or to start

talking more honestly about. Yeah. It's one of these things where, you know, the U S dollar by far on a volume basis is the choice currency of criminal terrorists, money launderers, you know, hold on yards. And, um, I think on top of that, you've got a world where, uh, law enforcement has, has a unique perspective in the sense that they would rather you if you are going to commit a financial crime do it with your hands on a keyboard right it is so much easier to track this stuff what i do wonder is um how the regulatory or law enforcement officials across jurisdictions will start to work together right does it become easier or harder as people work in a um you know more global um environment and now have um you know financial

products or services that, that can operate kind of more freely between those jurisdictions, that the impact on how those regulators cooperate, um, will be very interesting and we'll probably see, um, you know, some that continue to work together very, very closely and others that just say, you know, look, we, we, uh, we're not friends and make it more difficult, but I don't think we have that answer yet. Yeah, you're right. But, but I think, you know, for those, well, I may be, you know, lumping you into the category of my commitment. But I mean, for those of us who would really like to see more transparency in the world in general, you know, particularly in politics and in finances and things like that. I think in some ways, the advent of crypto kind of

forces parties to work together, right? Because they're working against a, you know, a data set, if you will, that's, that's publicly visible. Right. I mean, so, um, the, the transparency is so much better with some of these things. Now I realize there's cryptos that are designed to, to kind of obscure transparency. Um, and you know, that, that probably wouldn't fall into this category, but to your point, I actually think, you know, this technology, you know, is, is, is based in and around kind of promoting trust and transparency. And that, that is just generally speaking, a good thing for everybody. For sure. As you talk to the financial services clients specifically, banks and things like that, where do you see the biggest opportunity to start

applying some of this technology and the kind of transparency that you're talking about? And I'll give you something to compare it to. I was having a conversation earlier with somebody about what would a bank look like if you took all of the components and replaced it by a blockchain solution? Not even saying it would be successful, but that would be pretty radically different. Where's kind of the first step or two if organizations do want to enter into this world that you really see the benefit or the opportunity? Yeah. Well, it's a great question. And it really leads into an area of investment that my team has been making the last year and a half, which is around payments and international payments. But to kind of build up to that, what you were saying in that analogy or that hypothetical of building a bank around blockchain or distributed ledger technology, think about it.

A bank really is just a giant ledger or a set of interconnected ledgers. And one of the more efficient, inefficient areas of banking is when you need to coordinate debits and credits, accounting entries, which represents essentially payments, the movement of money between counterparties across different ledgers that don't talk to each other. And the central banks have facilitated and gone to great lengths over hundreds of years to make this process more efficient of connecting the individual ledgers of individual banks with each other. And nowhere is that more, you know, is the inefficiency more pronounced than in international transfers than in cross-border payments where there is no central bank. There is no bank of banks involved because you're crossing jurisdictions, right? So there is no central bank of central banks that exists today. I don't know if it's a scary thing to think of the prospect of that happening. You know, one central authority that controls all the banks in the world, that's kind of scary.

But what if it was a one decentralized but trustable distributed ledger that provided that capability? I think that's that's really practical and very realistic. And so we are actually seeing central banks and involved in activities with central banks that are doing just that. So they're facilitating the movement and the exchange of currency between their two jurisdictions, between the two banks, by simply sharing a distributed ledger. And then it just becomes ledger entries on this common ledger, as opposed to all these machinations that you have to go through to kind of, quote unquote, move money across border, which is facilitated today through this hugely inefficient thing called correspondent banking, right? Where one bank holds, you know, um, uh, foreign deposits with another bank and exchange creates foreign deposits for that bank. And if you think about that too, um, banks have this unique

and maybe in some ways kind of unfair and kind of scary, um, way of, of creating money, um, in that sense where, you know, if one bank in, you know, in Europe says to another bank in, um, in the U S Hey, I want to have, you know, a hundred million U S dollars in the U S and the U S bank says, Hey, no problem. We'll, we'll just create a hundred million dollars for you on our deposit system. And, and the offsetting entry is, well, you got to create a hundred million dollars worth of, you know, foreign currency in your deposit system. You know, they just essentially created money in two different places of the world without doing anything. And I'm not sure that's cool, but I'm not an economist. So I can't go much deeper than that. But I think

it would be really awesome. And where we're investing, tangibly investing is in that cross-border payments optimization space. And I think that's just a stepping stone to optimizing more things. And in that cross-border world, is that done with Bitcoin? Is that on something like, um, stellar Ethereum where, like, how do you think of using the public chains versus maybe something you guys have built? Just walk me through that. Yeah. Yeah. So, um, I mean, it's, it's, it's not a, um, a trivial process, right. Because of all of the laws in place in different jurisdictions that are, um, that are really designed to protect, you know, businesses and consumers, right? So there's a lot of know your customer activities

that have to happen. There's a lot of transaction monitoring activities to prevent, you know, or to detect, you know, money laundering. And so there's a portion of some of the solutions that we're building that is just handling the messaging and the hooks that allow the banks in different jurisdictions to do what they're good at um and you know that's that's a that process of payment messaging you know uh is is a required process that often goes under overlooked when you know someone is sending money to another person but as it comes is that process of one bank telling another bank they're sending money and then the actual movement of that money um those all those happen today on separate networks and whenever you do transactions on

separate networks you've got you know reconciliation activities got all this overhead that adds time and cost etc and so the the novelty of what we're doing is um trying to combine those two um onto a single network and you i mean the the the way to um actually uh the the secret sauce the magic in the ability to do the settlement piece the actual money movement piece in real time as opposed to you know, kind of out of band, um, and taking multiple days is to actually transfer a digital asset, right. To actually transfer, um, something that represents a digital store of value. And so, uh, yeah, that, that, that's kind of what we're doing. We, we are in, in our solution. Um, I would say, and in our portfolio agnostic to, um, you know, individual distributed ledger technologies,

We have a really strong partnership with Stellar. We think from the standpoint of the creation of digital assets and the scalability, the transactional scalability of being able to exchange those assets in real time, the Stellar network and the Stellar protocol is probably one of the best out there right now. But we also have a very significant investment and commitment to Hyperledger and Hyperledger Fabric, which is a project in there that provides, you know, smart contracts. It's geared more toward permission networks and therefore more toward, you know, private networks. So we'll make use of a combination thereof. But, you know, I would say our strategy today is open to others. We've recently kind of joined as an associate member of the Enterprise Ethereum Alliance. Certainly, we can't ignore the developer community that's over there and want to be able to take advantage of that. And so, I'd say Hyperledger Fabric, Stellar, Enterprise Ethereum Alliance, these are all just indicative of an evolving solution story that is really DLT agnostic.

Awesome. All right. So before I wrap up, I usually ask a bunch of rapid fire questions. What do you think is your most controversial thought that a high majority of other people would disagree with? That the issuance of a retail or a publicly accessible central bank digital currency is a long way away. In other words, I think it's coming imminently oh you think that it's coming very very soon i do you want to put a uh a timeline oh i thought you were going to say are we going to wager some bitcoin on that that's where i thought you were going no no no no no no no bitcoin only goes one way uh in uh in my world it only comes in go out that's good well uh so i you know again uh i i would say um it won't

just to qualify that it, it, um, likely won't be one of the big five central banks, but it'll be a central bank whose currency is probably pegged to one of the big five currencies through the reserves that they hold. And I would say, you know, you're going to see, um, some kind of issuance in the next, uh, 12 to 24 months. I mean, and, and I don't think that's a long time as I read, you know, others that are talking about not going to be 10 years or, or whatever. So yeah, that's what I would pay on. All right. Other than IBM, what's the most important company in crypto? Uh, well, I, I probably say a stellar,

I think what they're doing and doing it as a nonprofit kind of doing it transparently is, uh, is, is pretty awesome. All right. And then, um, what is the one regulation that you would improve or change if you could? um i would improve uh and we are involved i will say in at least in the u.s um you know activities around a legislation that seeks to improve the qualification of asset classes in this general category that we call cryptocurrency i think i think um there needs to be more cleared in asset classification. And I think the SEC has, has begun to do that with, you know, really kind of digging

into a lot of these ICOs. Are they currencies? Are they commodities? Um, I think that's going to be really important. What's the most important book you've ever read? I like, uh, I like crossing the chasm and I'm dating myself when I, when I do that, but I'd say that's one of the most important books that i've ever read all right that's no i think that's a uh very fair answer um all right i usually ask one non-crypto question and then we'll wrap it up and i'll let you ask me one question so think of that question while uh we talk about uh aliens um what is the probability that aliens exist what is that number sentient uh beings or just life elsewhere oh good uh good clarification most people don't clarify uh sentient uh

i'll go with a safe answer and say 50 you think 50 yeah that that's low why so low well i you know it's an expansive universe and and i know we've only been here a short period of time but but we have you know well except for maybe you know roswell new mexico we have no real you know tangible things to point to that might suggest otherwise all right that's fair lack of evidence i'll uh i'll buy that um all right what uh what one question do you have for me um what's your favorite crypto besides bitcoin today and i realize it can change you know oh man you already know my mo that uh i answer every question with the same answer um Um, my favorite Bitcoin other, or my favorite crypto other than Bitcoin. So I'm going to

caveat this and say, it's not necessarily my favorite. I don't have favorites. I think I have, um, things that I think bring value and things that I don't think bring value. If I had to, um, if I had to pick another one, I think I would go with Ethereum as, the crypto that is the second most important is the way I would frame it. And the reason is probably a little bit different. Most people will likely focus on the technology and what exactly it can do. I'm much more interested in the amount of intellectual capital that is being focused on it. So there's just a ton of really, really smart people who believe in it. They want to see it be successful. They're actively building all kinds of things, both improving the actual underlying

network, but also building all of these dApps and things on top of it. And then I'll cheat a little bit. I'm going to add a second answer here because it's a project that it's not really a cryptocurrency per se, but Lightning Labs and the Lightning Network are fascinating to me. I mean, these people are building something that if successful, will change the way that money and value moves around the world. But they're also building something that is incredibly young. It's literally less than a year old and could fail at any point. And so I think that anytime you have those asymmetric type opportunities or events,

it's fascinating to watch who's building them and what the outcome is. So I think that would be my two answers there. Awesome. No, that's great. I love it. I, I'm, I'm not far off in, in, in agreement. Have you ever had, uh, Joe Lubin on your show? We, we have not had Joe. We, uh, we just had Sam who is, uh, went one of, uh, Joe's very early partners there. And, uh, and it was a fascinating, uh, conversation. So maybe we'll release, uh, Sam before you. So nobody knows that, uh, Sam is coming. We usually don't, uh, tell anybody who's on the way. All right. Good. Good. No, I was just curious. Cause I I've gotten to know Joe fairly well, um, the last, you know,

a year or so. And I think he's a really interesting guy. He'd certainly like your answer. So that's, that's really cool. Yeah. I am, uh, I need as many allies in this, uh, in this business as I can get the, uh, there's plenty of Twitter trolls. I hear you. Well, you're doing a good job, man. I love, I love, uh, reading your, uh, your stuff. And I think you're spot on and, and, uh, And very objective, always positive. So that's really cool too.

So thanks for what you're doing. Life's too short, man. I appreciate it, Jesse. Thank you so much for the kind words. I appreciate taking the time to do this. I am cheering for you guys and let's do this again soon. Awesome.

Sounds good. Thanks, Pop. Take care. All right, guys. I appreciate listening to that episode. I enjoyed it and I hope you did too. Before we go, I want to remind you that it was brought to us

by The Grove, a full-service creative and design agency that has worked with companies like Block, Chamber of Digital Commerce, AAA, and the American Red Cross. You can check out more of their work at thegrove.co backslash Pomp.

Again, that's .co and not .com. thegrove.co backslash Pomp. Go check it out and let me know what you think. Hey everyone, Pomp here. If you like this episode of Off The Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts,

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