The Pomp Podcast - Joseph Weinberg, Co-Founder of Shyft Network: The Earliest Days of Bitcoin Mining

Episode Date: May 31, 2019

Joseph Weinberg is Co-Founder of Shyft Network and CEO of PayCase Financial. In this conversation, Joseph and Anthony Pompliano discuss mining Bitcoin in 2010, moving to live with a tribe in the Amazon forest, plant based medicine, and the idea of building an interoperable, permissioned blockchain. ----- 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. Joseph Weinberg is co-founder of Shift Network and CEO of Paycase Financial. In this conversation, we discuss mining Bitcoin in 2010, moving to live with a tribe in the Amazon forest, plant-based medicine, and the idea of building an interoperable permissioned blockchain. I really enjoyed this conversation and I hope you do as well. 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, bang, bang. I'm here with Joseph. He has been in the game just as long as anybody.

So thank you so much for taking the time to come on and talk with us. Thanks for having me. All right, you were manning Bitcoin in what, 2010, 2011? Late 2010, yeah, December. You're a psychopath. how did you hear about this and uh and why uh why am i bitcoin that early fully in psychopathic mode um i was finishing my my first semester um in third year comp sci and me and my two buddies

were actually in a distributed um systems class so we're sitting there i was like we just finished last exam actually so it was the 13th of december i'm like going home getting out gonna hit the snow you know just Hanukkah whatever it is um and my friends just hit me with it I'm gonna hit the snow in Hanukkah yeah of course yeah I'm from Vancouver and Whistler you know we had to go hit the slopes that's what we do all right um yeah and then so um so they were sitting there after like our exam was done and they were mining and I'm sitting there like what are you guys on their laptops yeah on there oh yeah this is like easy it is like no difficulty and I'm like what are you guys doing oh we're uh mining this thing called the bitcoins like what is the hell is

the bitcoins like what is this um sat down with them and then the next six months plugged in more computers we were running them you know effectively free yep for the most part um yes we ran for about six to eight months um kind of shut it down moved over to the peruvian amazon after and all right a bunch of questions one how much bitcoin could you mine in let's say a day back then probably like four it depends on really the size like we were i was just running a macbook we were probably running like two to six thousand depending on what the days were two to six thousand bitcoin yeah i would say on five laptops yeah probably oh across okay so yeah you have five laptops running in a 24-hour period you can mine between two to six thousand around there kind of depends

but yeah and then i'm not a math guy so if we do let's say two thousand bitcoin times a six thousand dollar price 12 million bucks today that's kind of a lot of money the good old is but we never would have thought it would get there like the day that it hit thirty dollars we were like, oh, my God, Bitcoin's at $30, sell everything. Yeah, yeah, yeah. But you couldn't sell it all, right? So, like, you wish. You know, you crash the market as much as you can, keep on going.

Got it. And so why did you stop? So there was a few different reasons. Like, I think at that time, Bitcoin was very much a really cool, you know, science project for a lot of different people. I was still young, like, you know, I was 20 years old. And so I had a lot of figuring out what I'm going to do with my life, as most people have. I'm still figuring that out.

Me too. It's true. I'm just trying to figure it out day by day. But I think that was kind of when the moment was, I'm like, all right, I've got to figure out what I'm going to do. It wasn't as all-encompassing. The community didn't really exist outside of your IRC channels. And so it was just time to take a departure and start figuring out what to do with my life. I haven't figured it out since and stuck right back with good old Bitcoin, but nonetheless.

nonetheless you you it's not like you went and like got like a corporate job you where did you move to the peruvian amazon all right hold on the the peruvian amazon is like you're talking like a rainforest yes what is there why are you doing that what's going through your head at the point at that moment first of all it was like western world's cool i figured it out you know understand everything there is i found bitcoin it's over there's nothing else bitcoin i'm like this thing's crazy this is cool but i was like i need to see a different side of the world you know like we there must be different ways of living you know and that's kind of just the way i always like view the world it's like you have to take a different approach when everyone's looking left

you go right yep um so started backpacking in peru one thing led to another ended up like six hours down the ukele river which is the amazon river right in the heart of the amazon with this tribe all right so how do you go down the river like you get like in like a kayak in a boat like a canoe or like a little dinghy boat with a guy that you know takes you up and they're saying oh there's any paddles no it's like a little like like a motor yeah i'm trying to figure out how how like amazon forest we are at this point definitely not yeah but we're deep like there's piranhas everywhere like yeah i would not go you can't get in the water uh you can just don't cut anything or you won't be there much longer um yeah and so yeah so like long story short i was

there. I was supposed to stay for a week. And it was interesting. I ended up staying for about six months. What's the tribe? It was a tribe that I was living with. Okay. This isn't the tribes where they've never seen humans before, obviously. Those are much further. Okay. I actually have been to those before. Really? Yes. Okay. Let's start with the tribe you were with. Yeah. So they're the largest tribe in the Peruvian Amazon. And it was an interesting experience. I went there to kind of try to learn and try to see what a different world looked like um and i definitely got that you know they at the time had you know most of them weren't wearing clothes they had no we're going no clothes no homes yeah well they had they had they had roofs some had roofs over

their head like but very very minimal like this is effectively dirt roads and dirt buildings um but the coolest thing was is everyone had satellite dishes okay kerosene canisters to like get electricity yep and um and mobile phones that was what everyone had no clothes but most of them yeah women no shirts like yeah it was like this weird interesting like like weird like inception point of like their civilization where they've gone it's actually the funniest part the funniest thing is that the majority of of elders don't even know how old they are so when you say how old are you they say oh i was born on the year with three monsoons right like they look at time differently and so you have this like interesting inflection point where technology and society from

our spaces and from our world is starting to proliferate yeah um but they had nothing yeah except for these few little components and then of course they had a western union which was also a mud hut on the side of the road as well which is a sign yeah yeah um and that was like kind of like the first most interesting thing about bitcoin as well is like and probably about a month and a half in like i was just you know i was i was doing work helping them out they were running this healing center in in the amazon and um what is that yeah so they the idea is that you can look at different medicines and different plants within the the the world and within the amazon to you know heal you in different ways right yeah and and um a lot of people from the

western world you know uh kind of partake in that type of medicine experience um and they were running this with shamans and everything there at the time and is this like the ayahuasca stuff yeah it's it's like that there's i recently learned about this and i'm fascinated i feel like there's a whole world that i never knew about until these people started telling me about this yeah it's like very fascinating um and it's you know the whole idea is it's like a hallucinogenic slash like a mind-altering yeah i mean it's different things to different people and i think it's it's really depends on the experience yeah um that's a really deep answer yeah yeah there we go time to get deep i mean like i think that like the i think it's you know

to them it's a medicine you know um and i think yeah but but the whole point is that basically you can use the plant as a medicine or a way to uh i don't want maybe prescribes the wrong way but like yeah it is a solution to problems yeah in their mind yeah the idea is that it like blends your conscious with your subconscious and allows you to work through the things that you have the hardest time you know understanding got it yeah um and so and then is there other things other than like the ayahuasca that's like the smallest one like tribes within that part of the world don't really use ayahuasca very much it's like yeah they actually they use other plants it's yeah well it's like for a certain very certain subset um yeah and so like that's kind of what

the it really depends on what you're you know you go to a doctor they prescribe you something it's no different than there they just don't have you know pharmaceuticals the same way some of the other types of stuff that um they use like a lot of tobacco based like products they'll they'll do different types of like long periods of of fermenting and different types of plants and yeah it's really interesting and and it's kind of this concept that like you know as humans we have everything in the world that we need to cure ourselves you know and so that there's two ways of dealing with a lot of like sickness one can be through pain and and the relief of it or the numbing of it which western medicine does or the other one is really like you will feel more pain

in some contexts but it's about you know using natural plants as a way to heal yourself yeah I always think of Western world, we give people sugar and opioids and alcohol and, like, all this other crazy stuff. And in other parts of the world, they just don't believe in that. That's it. And it's interesting. In their culture, they don't even have a word for cancer. Really? Yes.

And it's an interesting thing. What's, like, their life expectancy? Well, that's the irony is that it's a lot of them, they don't know how old they are. But they live, like, a lot of them live well over 100. Really? Yeah. so they've extremely long life. I mean, they don't actually know how long it is. That's the irony of it, but, uh, it's fascinating. It's a totally different world. And so, I mean, it's not probably

for everyone and it's really, um, you know, you have to be cut out to kind of really go through an experience that is very different than here, but I think it gives you a perspective on the world that, that is really important, especially to our ecosystem and, you know, what we're all trying to achieve today. Is it dangerous there? No, I wouldn't say so. No, they're very welcoming. It's really that you just have to have – Like you look like me. You're like a white dude. Yeah.

Yeah, yeah, yeah. Like you're rolling up like a Jewish white dude, right? Jewish guy. Yeah, yeah, totally. Yeah, yeah. I'm rolling up like this. Like it's nothing like too crazy. But they're welcoming.

They're accepting. Like to them, it's – as long as you treat others with respect, you get treated back. And it's interesting. Like the number one thing in their culture is never steal. Like they don't actually have police in that part of the world, right? And so they're very much governed by their community, which comes down to this interesting thing of, like, how our ecosystem starts to work in that same context. Well, they, like, agree to a set of rules, it sounds like. They agree to a set of rules.

Usually doctors or shamans are among the highest people and the most important people in that system. So it's not that they have, you know, a mayor, per se. It's very different. But it's very much community-based. And the one thing you do is you never steal. And that's the only thing that carries. It's not violent or? No.

I mean, there's violence everywhere, right? and it really depends on you know situations um but it's yeah i mean you just have to know where you're going and make sure you're you know you understand the places got it and then do you like hit them up and be like hey i'm on the way like i'm showing up every so every december i actually do oh really yeah you go every december i go every december so dude i finish yeah i finish hanukkah and then when everyone's having christmas and new years i'll just go there i've taken some people from your show as well before actually really yeah yeah so i me and melton demers went once. It was more for just vacation and just to explore the Amazon. Um, yeah, but yeah, every year

I bring new friends and old friends. I got some people I know that'll go with you. A hundred percent, man. There you go. Yeah. Come for a week or two, but, uh, it's a really cool experience. Got it. And, and so then, uh, you said that you even went deeper into the Amazon forest and. Yeah, just on, yeah, on a five day trip. And these ones aren't, don't happen often. Yeah. Um, but it's effectively what we did was we went, um, uh, like deep into the heart of the Amazon. no one usually goes to those yep um they barely even speak spanish in most cases they don't they speak like their own native tongue and these are non-contact tribes yep so these are the ones that like you don't want to run into yeah non-contact tribes meaning they don't they don't interface

with like humans how we think yes like any western civilization they don't touch yep and it's this misconception that they've never you know been in contact but they actually choose not to be in contact got it it's an important thing and they're violent when they come in contact uh yeah like so the way that we had to they are oh yeah because they don't know any better they're like you're in our territory we're you know gonna kill you like we're talking about like straight oh like like human nature no rules yeah like kill me i kill you yeah and like their perception is just like like you'll they'll walk down a river and be able to shoot a monkey 300 feet away without even looking at it like yeah they just have that like perceptive ability that like no one here

the western world isn't ready for oh yeah no no no definitely we're like wait a minute you It's fit for like a movie of some sort, I'm sure. But yeah, it was one of the most interesting experiences. And I like to go back to remind myself that things are different. I'm thinking like the Western world's most badass people are like literally they can't even – they're not even allowed to show up, right? Because they're just so soft compared to these people who literally are just like, listen. It's not Wall Street or Bay Street. Let's put it that way.

It's a very different world. Okay. All right. So you go through this awesome experience. I'm super intrigued because I love seeing how other people live, right, especially when they do things that they believe are normal or traditional. And they're so counterintuitive or just in contradiction with the way that, like, maybe you or I grew up. Absolutely. And I think it takes a lot of cultural understanding and immersion in multiple cultures to realize that, like, just because you grew up in a culture doesn't mean that you're right.

Absolutely. It is, like, the most important thing. And, by the way, it doesn't also mean you're wrong either. No. Like, it's just that is how your culture exists. Another one can actually exist in a completely different way that contradicts yours, and you both can be right. Completely. 100%.

But you need to understand where they're coming from. Like, it's all about understanding perspectives, right? Like, it's, yeah. Last question about the Amazon. Then we'll talk about, like, actual things we'll be talking about. What do they do for money? Anything that they can, to be honest. It's like a lot of bartering.

It is. It's a total barter economy, like, in every sense of the word. I mean, a lot of it is working for NGOs or other companies or else it's, you know, doing small labor tasks. The actual, the intent of the center that they built there that we've funded since then actually, like on a yearly basis, is to kind of build the community's ability to use this kind of healing center

as a way to actually sort of survive and live. And so it's a lot of like living off the line and working off it, and you know, it's a commerce driven society, but it's very small, so. Got it. Why'd you come back? Because I needed, I would realize one day, I'm like, man, I need like a real job.

I need to like figure out what I'm doing. These Bitcoin aren't even worth $30 anymore. No, this was like end of like 2012. I'm like, yeah, this is still like, this isn't working here. So we got to change it up. So here we go. Let's change it up, basically. Got it.

And you came back and what'd you do? I moved to Toronto. So I'm from Vancouver originally. I'm on the West Coast in Canada. Your friendly neighbors up north. And I moved to a company called Extreme Labs first, actually. So we're the largest mobile app developers in the world. So we worked on Facebook, Instagram, Twitter.

I was there for only about six months. We got acquired. And then Bitcoin started to kind of, you know, like show life again in a few ways. And so I said, you know what, I'm out of here. I'm going to start working directly on the space. And I've kind of been here ever since. So I started working with a friend of mine named Jaron, who at the time was running a small exchange here in New York called Coinsetter. And within probably three to six months period, you know, Bitcoin started to boom.

Everyone first saw Bitcoin and be like, what is this crazy thing? The internet magic money has value. And I was like, and I'll never forget, like, mid to end of 2013, like, I remember I, like, looked around, like, in our office, and I was like, oh, my God, I have tons of these Bitcoins. Like, I'm flying, got on the next flight back to Vancouver, grabbed hard drives for Dear Life, and, like. Oh, because you had basically, you had mined so many of them, or had mines. Yeah, we. And then you didn't think they were worth anything, so you kind of forgot about them. They weren't worth anything.

Yeah, like, I was, you know. Yeah, yeah. Yeah, it was, like, a totally different, like, thing. I was like, oh, my God, I'm out of here, back, get them, hold on for dear life. Well, it's better than all the stories you heard in 2017. Somebody was like, oh, shit, you know, I got 800 Bitcoin on this hard drive that I threw out two years ago. I think in the landfill it's in this area. Yeah, I was trying to avoid those at all costs, right?

Like, that was the number one mandate. And then at the time, like, it was interesting. Like, and the space then was, like, so much different than it is today, too, right? Like, it was playful. It was, like, fun and games. And, and it was, I think this magical time and like, so it was like pre-nascency, but like everyone was just so interested in ideas. It wasn't about regulation and like really this like hard, high finance thing in any

sense of the word, you know? And it was really kind of quote unquote kids trying to figure out what, you know, this meant to the future. Right. And I think it was, it was a, it was a cool time. It was also kind of a very scary time. Um, and, and yeah. Yet, so when you're building a startup, right, you go through the usual hoops and bounds.

You know, you maybe raise some seed, friends and family. You know, you go to build a mobile app or something like that. You know, there's this usual, I hate to say the word usual path, but it's kind of this like, you know, there's a certain route. This space, we quickly found out, was a very amalgamated and weird version of that. Because, oh, the moment that we start trying to build that app or whatever the application is that you're building, you're getting attacked by regulators. Like, you're getting bank accounts shut down. No one can get banking. Like, we can't have the most basic services.

And then on top of that, we're getting, like, you know, calls from the FBI. You're getting calls from, you know, like, money laundering divisions and governments, and you're 21 years old. And you're sitting there being like, what is going on here? Like, this is, it just, like, you know, you're coming after the largest institutions in such a different part of, you know, of the world than what you would probably have thought at the time. And we didn't realize the impact that it would have. But it was also that everything was ten times harder to do. Like, we could not do the simplest things. And, I mean, VCs would kick you out of the rooms and everything else, right?

But it was extremely hard to run businesses then. Like, and even today it's hard. Like, it's hard to get bank accounts even today. and so and on top of that you're dealing with new ways of forming exchanges what are exchanges how do they operate you know the what actually happened in why coin setter came into canada was ca vertex which is the largest exchange at the time was hacked lost 20 million bucks and so jaron called me up he's like man we have to move into canada so we came in we acquired the asset and then the biggest problem that we had at coin setter and this was you know late 2014

was our bank accounts cost about $28,000 a month just to have bank accounts. And when you're a small company, you know, this is after Mt. Gox, like no one's touching Bitcoin. You know, you have regulators in Fintrack and the equivalent of FinCEN here saying like calling us every day,

suspicious transaction reporting, like you have Silk Road things that are like, you know, bubbling up. You're sitting there being like, what am I doing? Like, this is crazy, right? And yet, like, we just, everyone then just believed so wholeheartedly in, like, what we could achieve in the space that it, you know, was one of those things where, like, it didn't really matter that, you know, you weren't able to really build a business. And powers at bay were not letting you by any capacity.

And so what ended up happening is what we recognized was that some of the bigger exchanges at the time, you know, like Kraken included, were really making good headways in the non-North American only market. And so we ended up being acquired by Kraken. They kind of took a lot of the user base and the assets. And kind of at the same time, I was working on another company in Canada to focus on different use cases on top of Bitcoin as well. What was the other company? It's called Paycase Financial. We're one of the oldest, definitely oldest, still standing Bitcoin companies in Canada today. It's been a lot of morphing as the space is kind of provided and required.

So we have about seven different focuses underneath the kind of umbrella, I guess, if you will. So really focusing what we started to focus on in late 20, mid 2015, was looking at if Bitcoin were to be successful, what would be the core use case that would actually drive, you know, help and and actual fundamental change to people that, you know, that lived in the Peruvian Amazon or that live in Canada or the United States and abroad. And what we recognized was if you could solve how remittances worked, what it would do is unlock these, you know, think local, act global. No matter where you are, you have high entrenched, you know, systems that are in companies that really, you know, take the largest amounts, you know, from the side of, you know, the lowest income generating populations on the planet. And it was really this one thing where Bitcoin could start to solve, you know, problems today if you could get the infrastructure to work, right? And if you had basic things like banking and regulation and these changes in cost models would still start to function. I still think that's largely the case today. But then what we recognized was, you know, we couldn't get a bank.

And that became extremely difficult. And this was, you know, 2015. We're one of the only banked companies in the country today. But that took us many years and a lot of different movements. and so like a lot of the businesses that we started building underneath paycase were really set around focusing on solving core problems that we had in remittances so bitcoin throughput for example we needed a way to drastically scale how bitcoin was working and that's even still the case today you know and we can talk about bitcoin in a minute and scaling and architecture

and everything um but you know bitcoin doesn't have a scaling problem but you need ways to allow transaction throughput to happen you know in certain environments like like payments and settlement. And so what we looked at was, okay, how do we start working with certain companies in the space that were working directly on layer two scaling solutions? And this was kind of at the early formulation of Blockstream. And it was a really amazing time to watch that company just start to kind of foundationalize itself. And then what we then looked at was, you know, what's the next thing? Identity, KYC compliance. These things are such overhead arching costs that if you don't reduce the cost of them you'll never make things like remittances free um and then the problem

then became in this biggest thing that we probably focused on over the last two years was how do we work with regulation regulators heads of states central bank heads and world leaders and through the oecd to start writing regulation for the ecosystem because if we do not have places where the ecosystem can go in really places that we can call home that is attributable to how this space is built today, then, you know, we're in a big problem. And I think that regulation is very complex in this space. And you need, you know, you need the old guys who, you know, the old guys who kind of know what they're doing to go and work with regulators to actually explain things. Because if you don't, you know, where are we left off? Yep. So that's been kind of the encompassing part

of a lot of different areas since. When you were building Paycase, what is like the one or two things that you took away as to this was the most important work we did it's a really good question and i think it's still like we're still building it every day right and i think it comes down to you know a few different things like i think the biggest the most important two things that we have today are how do we make sure that bitcoin survives um and what will it take for the ecosystem to continue to have the right support it once had even when everyone's watching it and that comes down again to the you know we need places to call home i mean like quite frankly bitcoin doesn't care about regular bitcoin itself doesn't care about regulation doesn't care about anyone looks

like the what the economist joseph stegler or whatever i'm gonna mispronounce the name but uh i recently said that we should shut down cryptocurrencies yeah and you know well it just it cracks me up that you get the the twitter peanut gallery just literally i mean it's like literally on cue as soon as he said it everyone just goes that's the point you can't shut it that's the point like yeah like we've been waiting for you to help us explain to everyone you can't shut it down yeah 100 like and i think that there's the bitcoin can't be stopped it can't be shut down and i think that's like what makes it beautiful but bitcoin still will adapt to its environment right like it is a species in many ways and the importance is how it adapts and one

of the things that i always so i spent a bunch of time talking like the institutional investor Right. And these are people who the idea that you went to the Amazon forest, like makes them uncomfortable. Right. Right. And just like that's not something that they would do. They go every single day. They put their suit and their tie on. Right. They go to work. They do their job. It's all about managing risk. Right. Going to the Amazon forest is risky. Right. Of course. Of course. They manage risk professionally. Right. And so many of them have great lives. They enjoy it and they're very happy. Right.

Which is ultimately the most important thing. When it comes to something like this, though, there's no pattern recognition. Right. It's not like a stock. Oh, I can see a stock. It's undervalued because here is the cash flow analysis that we've done. Right. And here's the enterprise value.

And this is what I think is going to happen in the future. Right. That's, again, something that they understand. When you look at Bitcoin, it's non-correlated. The drivers of value are very different. Definitely. They can't wrap their head around that. The second thing is this idea that, like, oh, if it can't be shut down, that must mean you're trying to do something bad.

Right. Right? Like, it immediately goes to, like, the absolute fringe use case. Yeah. And what I try to explain to them is, like, just because it can't be shut down doesn't make it bad. No. Actually, let me walk you through all the examples of why that's a good thing. Absolutely.

Here's all the people who are trying to shut things down that aren't doing bad things. Like, the person trying to exert control is actually the bad person in this situation. Not the person trying to withstand, you know, that control or protect their wealth. Yep. I think that that's the type of stuff that just people don't understand until they really sit and think about it. Yeah, and I think that, like, that's, like, the – there's, like, a few, like, really core things, right? Like, in order to make a system that is not controlled by and really affect, like – what is, like, government insurance? It's really – it's an insurance policy.

Central banks have an insurance policy. Like, you know, like, banking money is an insurance policy backed by the bank, right? And in the case where you have systems that are not inherently insured, you need a way of insuring itself. And the only way to do that is to make sure it can never go down, right? And if it is vulnerable to fault or to sometimes stopping, then it's not a very, you know, safe system. And that's, like, the hard thing, right? And so it's looking at what are the core factors that make these things, you know, still safe, not in a negative context, right? And I think that's where – and that's what I think is, like, so important about today and institutionalization in this space is that it's starting to change the context, but it takes time to educate.

And that's like a large reason why we focused on the things that we focused. And I think that's really why we've been working on building things like shift is like you need things that can allow institutionalization to happen and a better way of understanding how institutions start to play, whether they be investors or people or institutions, governments. All right. So switch gears and go to shift. Right. So I did pay case working a lot now on shift. Shift is S-H-Y-F-T, which I always call out because on the internet there's a lot of things called Shift. I've actually invested in companies called Shift, spelled differently. But explain what Shift is and why you guys are working on this. Yeah, so Shift is effectively a few different things. And so the goal of Shift is to build a permissionless way for identity credentialing,

any type of asset custody ownership to exist on any type of a network. It is a POW blockchain at its base layer, but its value derives in that it works as a secondary application layer or a secondary network layer across pretty much every blockchain. And this is what's really interesting. And the question is kind of why are we working on it? What we found was that when working in this space so early, the biggest problem that we had was that we could not get banking. We could not get institutions, regulators, and anyone to understand how we as the ecosystem build, why we do things a certain way as exchanges, as service providers, as anyone. And what we recognized was that if we do not start looking at how do we build some system that solves compliance or regulation in the first degree for how the ecosystem works, then how are we ever going to actually bridge the gap? Like, if we don't understand how we do things and provide it in some sort of a standard such that the traditional world can also understand that and relatably work on it, you're never going to get to the place that we need to.

It's almost like, and I'm thinking out loud here, but it's almost like you're saying, hey, I'm a cowboy. I went into the Wild West. I figured it out, but there's no way that the rest of the town's coming out here, so I might as well make it safe. I might as well put roads. I might as well build, like, a whole little, you know, city that they're used to. Okay, now you guys can come on. Like, this is something you recognize. Exactly.

And the question is, how do we not degrade the core fundamentals of what makes the space what it is? Because, like, what makes, you know, Bitcoin interesting is nothing else other than openness and decentralization. Like, there's nothing that's interesting about a database, right? So how do you keep the core tenets of those things but also allow people to actually start building institutional requirements, regulatory requirements government-based you know upgrading services while still maintaining a certain way of doing things but doing them just fundamentally differently that's really the goal and so we spent the last two years working on it and it came out of early work that we were doing and really more so understanding of how blockstream was working on secondary layers

and it was an interesting time and the what i think made it so interesting for shift is that we literally brought people from every major protocol in the space together to actually work on it so core developers and early developers were bitcoin core from blockstream and a lot of architecture for that was done from you know x guys at blockstream core developers in ethereum the co-founder of ethereum um co-founders of eos cardano and all of these guys were effectively all came in as well as an rsk to all say how do we start to build all of these systems so they interoperate across everyone because again like people aren't going to sit there and care about protocols they want to know is my identity data safe can we start building new applications that

look at at trust in different ways so let's talk a little bit about the actual product that shifts moving and some of the things you're trying to solve so two of the core tenets are uh this idea of like permissioning right on permissionless blockchains yes um and then also the interoperability um which is a big word for those at home uh and i said it correctly um but but uh talk a little bit about the idea of so a permissionless blockchain what that is and then why it is I don't want to say controversial, but just it's a unique idea to put permissioning on a permissionless blockchain. Yeah, and so effectively what we wanted to do was to look at what systems are working today in the space. And this is from past lessons, right?

Like, I think having openness at the base layer is critically important. And Bitcoin security overwhelmingly is obviously the most secure way of ensuring infrastructure, I think, over today and in the future. But what we recognized was that you needed new foundational ways of connecting other blockchains together for the purposes of things like data routing. How do I make it so that a project that's working on Ethereum or on EOS or on Cardano that's working on different types of data permissioning has the right environment across all of those networks on an upper layer in order for us to build a global identity system? Like if identity is cordoned off to certain things and in certain protocols, you're never going to have like a truly global system. And so the question is more like how do you at a secondary layer start to permission out infrastructure sets that allow institutions and governments to actually start to integrate? And how much of this is around data versus like monetary value? Yeah, so at the core protocol network level, it functions very similarly to how gas on the Ethereum network works.

And the reason being is that you can deploy any arbitrary smart contract on top of the network. But that's not really what it's best used for, right? So you want to work on taking Ethereum smart contracts, whatever they might be, and deploying them for cheaper. Then shift is an easy way to do that. But where it gets interesting is in where you start to look at permissioning requirements. Let's say I'm a Bitcoin exchange and I want to pass and I want to sign that in fact, you know Anthony has Onboarded with me for KYC, you know, how do I look at and say, okay?

I'm going to blindly validate that you're in a participant on the exchange And then another exchange bit for next comes along and says I want to actually pull your data So instead of you having to replicate all of these data requirements constantly, you're starting to spread passport information everywhere you should be able to sign proof and validity that, in fact, you are who you say you are. And, in fact, Bitfinex or Bittrex or a bank or a government can actually sign on your behalf proving validity of who you are. It's about how do you take trust of different participants in any environment and effectively sign those or give them a standard way to sign proof. And that becomes a transactional currency in and of itself.

And are you able to give somebody that trust or that validity and then take it back at a certain point and kind of there's a more dynamic relationship between you and that other party? Yeah, the idea is that like in the big thing that we were looking at was how do we ensure the GDPR compliance is still maintained? And this is yeah. And that was like the big thing is that we needed a way that in very certain environments that we could ensure that any regulatory requirements were still being met, whether it's a global one or it's a jurisdictional one. And so the idea is that you basically have the ability to both sign different key pairs or different, you know, information data sets across different participants, but also ensure that there's consent that's occurring across all parties involved. So if I'm sharing information from one bank to another, you have to have consent that sits across that to ensure and a bunch of other kind of really interesting features that really allow institutions to actually play. And in your eyes, how much of the hardcore Bitcoiner community is like excited about this versus like the institutional world? It's a good question. I would say less about less Bitcoiners.

And I don't it's a bit of a it's a bit of a draw. Right. Like and I think that there's a like there's two different camps and I came out of both. And it's like it's been an interesting position, to say the least. like you know i i'm a very much a bitcoin maximalist you know i mean you were there really early yeah and and the one thing i recognize though is that like um and i think that to be honest the reason why i started focusing on other things was that bitcoin is in a very good place it has the brightest minds around it and bitcoin will continue to do what it does best you know and i don't think that anyone anyone who tries to compete with bitcoin

i think is in for a ride um and with that being said is that i think that there's other problems that our ecosystem needs to come to the table and start to solve. You know, like money and the idea of what value is is what Bitcoin is solving. And I think that it's doing a fabulous job. But, you know, I think that we can use our capabilities and what we know into the next areas that are critically important for civilization. You know, and that goes into identity. It goes into data privacy.

It goes into ensuring regulations are not, you know, overarching and overreaching. Talk about the interoperability and, like, why that's so important here and what the advantages of that are when it comes to some of this data and trust and validity. Yeah, so you have this big problem today where, and this is like the interesting thing of how we looked at Shift, is that we look at like these main networks. You look at Bitcoin, you look at Ethereum, you look at EOS. Everyone is running and gunning to make sure that the future of the world exists on one network.

And we took the exact opposite approach. We said we are only as strong as the networks of networks that we connect to. so shift gains its strength in security and intro and adaptability in its ability to actually peg across all these other networks so it's almost like you're only as strong as the links between the networks correct and that's a really important argument we look at it almost as that we believe that we're a side chain of side chains our main chain is a side chain okay in fact you probably make a rap song out of it um but uh but uh but and it's like a really important like you know The thing is to say, listen, we believe that if we can work with every major protocol in the space and build them to be stronger and start bringing in much more institutional grade use cases where we built from the beginning to be an actual use case solution or problem set solution, then we can start helping everything start to just mold and solidify.

And, you know, I don't like this idea that I think it's a waste of time to keep arguing and complaining whether Bitcoin is better than Ethereum and all these things is that they're good for certain things and they're bad for others. And the question in my mind is, can you start to build on top of all of them and start connecting them all in and with the things that they're meant to be used for, right? And that's really where I think we've really focused. We know that Bitcoin's best at security. We know that proof of work works. And I think we use it. We use Ethereums like EVM for different smart contracting capabilities because we know that

it's a lot more flexible for certain things that are required. We know that EOS is very good at dual threading, high speed, right? And so in the requirements that we need in certain conditions, we can use that, right? This idea that you need to start playing with things that make sense for the purposes that they do. And taking that approach, I think, also helps us because, again, we're not focused on building the best protocol. Inherently, the protocol will speak for itself, but it's in its ability to actually solve problems. And if you can't solve fundamental problems that the world has, then what are we doing? That's what we're here for.

What do you think the first couple of applications are that get built on top of this? Yeah. And so I think that we've taken a big focus on national identity system as one. So we had a deal with the Bermudan government last year. We'll announce, I think, around consensus, but that's going into phase one right now. And so we have about three to five other countries in probably the next 18 months that will take that same identity system and actually start to deploy it. So Bermuda was a really great test. And, you know, we wrote a lot of the regulation there as well. But it's 65,000 people.

And so we kind of are using that as a very good model and testbed to build an identity system on top of shift. That's kind of like number one. Over the next 18 months, we have countries that span in the 50 million user populations to 100 to 400 or 500 that will start to kind of be more announced and present over the next year. But I think that that's kind of one big pillar. And how do you look at identity standards? The next one I think is, which is critically important to the space, is how you do better at KYC or onboarding across any of the companies in the space. And this comes to say, how does exchanges better handle data security?

How does ICOs better manage the fact that they shouldn't have to manage our passports in the first place? Like, I shouldn't have to give a bunch of kids who I'm investing in a project a passport. It doesn't really make sense. And so is there new ways that we can apply, you know, this credentialization, this ability to credential anything in the crypto space using crypto as a way to better authenticate and validate? Those will start to, I think, really become apparent very quickly. We're working with some of the biggest Bitcoin exchanges to do that and other very large venues. And then I think looking more into the institutional large payment space. We're working with a lot of, you know, very large institutions and more of the financial side to look at how do you build single sign-in authorization, global identity as a, you know, attributed to their brands and more of a validation and verification.

And then ultimately, I think just more developers working on cool things. I think that's going to be the big thing. And how do you basically just start bridging all of the different contracts that sit on all these protocols today? And that's like the big thing is everything is interoperable. Do you think we get to a world where you don't have a U.S. passport and then a state driver's license and then, you know, some other country visa or whatever? Like there's just one global identity system that everyone plugs into and maybe there's like, you know, again, I'm thinking out loud, but like you've got badges, right? So, hey, you're allowed to go to this country because you have this badge, but you have the, you know, you can drive a car in this country because you have this other badge or this other like, you know, unique identifier. Like, how do you think this plays out?

I think that you come to some sort of, like, we look at it as shift enables, you know, global citizenship and universal citizenship. And I think that that's, like, kind of the perspective we take. Being mindful that you have to be very careful in how those systems are built, right? Like, this system and this space can't be rewritten, and it's very hard. And so you have to be very cautious about what you build, you know, and what you choose not to build, right? There's a lot of things that, you know, Bitcoin core developers could probably build that they probably choose not to. Right. And the question becomes a lot. Exactly. Right. And it's, you know, it's a question of like, what's the right thing to do and what's not.

Do I think that we come to this one? You know, my fear is only in Skynet in those types of situations. Right. And and I also think that that's why having, you know, open systems are really important because it makes it hard to create Skynets. Because the last thing you want is identity that is controlled and owned by, you know, very few. You know, and that's a hard one, right? And so I don't think that you get to that, but I think that, you know, we will have more and more clever ways of ensuring privacy to happen. And I think that this is the fundamental layer that you need to start. And again, like, when you go to the Philippines, for example, there's 80 different identities. There's not one card, right?

They don't even know how many people they have, and they can't provide services. You can't properly vote. Like, these are fundamental, like, blocks and pillars of civilization. So if you don't even have the most basic thing, like, you know, like, let's just start with getting them one ID before you work on 80 different ones, you know, and then we'll figure out, like, you know, how they move around the world, right? It's so crazy to me. What's your, like, ultimate dream for Bitcoin and for crypto? Like, describe, like, the finish line, if you will. Yeah, it's a really, it's a, that's a great question.

I think that, like, my vision and my dream is that Bitcoin is the closest thing that we have to, I think, freedom in the future. And I think that what I want to see is that it is adopted positively and that it is used, you know, the same way that anything else is used today, whether it's a mobile phone, whether it's, like, payments and anything else. And that, like, what I'm noticing today is that we're having a very hard stance from a regulatory perspective, and I think that the ecosystem needs to do better and be better at making sure that, you know, we have a voice. But I see a world where you have, you know, tokenization of everything, and I think that that's the logical, you know, future. And a lot more freedom. Like, at the end of the day, this is about more control, more ownership, and more freedom. And if we can provide even 15% of that, you know, to the majority of the world, which isn't here, I think that we've done our job. I always talk about Bitcoin specifically, but a lot of this is it's the only weapon I know of where the people get to fight back against the man or the government to some degree.

And if the weapon falls in the hands of the people or with the man or the government, it can't be used against them. Exactly. And that's the beauty of it. And it's about like, yeah. And again, that's also why it's like you need to look at upgrading governments like you need. And they're on side. It's like you have to know how to talk to them. Right. And that's like the one thing at the OECD that we really focused on last year

is that we've been writing policy standards to make sure the G7 and 20 understand how the space works. And these are from the earliest guys in the space. Because if you don't do that, if you do not step over our line and say, listen, we need to help you, you're writing our future. And if we're not the ones helping you write it, then we are doing a disservice to the space. Not good.

Not good at all. Absolutely. Before I wrap up, most important company in crypto? Ooh. Ooh, that's a good question. Most important company. Most important company. You can't say your own.

I definitely will not do that. I think for Bitcoin, Blockstream. Okay. I think for Ethereum, I have maybe consensus because I don't really have very many others. And yeah, the list, I don't know. I don't look at one company. I think everyone's important, to be honest.

And I think everyone needs to build together. What's the one regulation you would change or improve if you could? The one that we've been really fighting to ensure is the question of what KYC and the Financial Action Task Force requirements are. We've been doing a lot of work in advising the FATF directly. And the one thing we have to make sure is that Bitcoin is not looked at as a payment method the same way that bank transfers are done. And I think that they're coming towards that. But if you do not get the FATF on side for how this happens, we're going to have a very big problem globally. Yeah, it's fair.

What's the most controversial thought you have in crypto? What do you believe that everyone else is going to disagree with you on? That everything becomes a zero-sum game. Why? That there is very big opportunities investing in projects that only focus on zero-sum. So if you assume the whole world becomes zero-sum, what are the projects that become foundational to zero-sums, and can they become profitable?

That's kind of the way that our fund looks at it from a thesis perspective. Name one that you think fits that. So the idea that if I can put prices to zero, right, if shift kind of does this in some ways, it makes the cost of doing business effectively over a long surface area of time zero. And if you can assume that that is true and if that all things advantage effectively by having more surface area at zero, by not making anything more profitable than the other, and there is tremendous value in networks that can do that. If you make cost advantages that maintain cost pricing, like, high, then I don't think that you have an advantage. But if you can keep things extremely low, making things free, if you can make business out of making things free but forcibly, then it becomes really interesting. And I think the space can do it. There's a lot of interesting incentives that are happening today.

Most important book you've ever read? Oh, good question as well. Most important book I ever read. I would say John McAfee's one, but that wouldn't be true. I think it's a good question. What would be my favorite book? Maybe The Starfish. What is that?

It's a book that talks about decentralization. And Brock Pierce actually showed it to me. It's really interesting, but it talks about how decentralized systems and organizations start to work. And I think it's incredibly important. Yeah, I think it's really important to look at it because it's something that most people say, like, what is this whole decentralization thing? And there's very few books that very clearly dive into, you know, what these are, how this organizational change works. And I think it's important to not, you know, to find clarity in understanding why things work and why they're happening. Yeah.

It's pretty interesting. I'll send you one. Yeah, I'd love to read. Before I finish, I should let you ask me one question, but we talk about aliens first. I'm in. Believer, non-believer? Absolutely. Why?

Because of a few reasons. I think that, I mean, coming from the jungle, you see a lot of interesting things. With the aliens and the Amazon? Yeah, 100%, right? Like, I think, and I would again echo what John said the other day. Like, we are all aliens. We're all unique. and I think

that the world is just simply too big like the one thing that I've like recognized in interacting with governments over the last like few years is like there's a lot of weird stuff that happens you know like conspiracy theories like aren't that much conspiracies and they're not really usually theories like

a lot of things happen the world is big you know and it would not surprise me that they're very good at holding some things to heart you think that they've like visited aliens I think they're probably there you think so i think so i mean i don't think it's in the way that we think like you know green guys walking yeah but i think that they're probably genetically in all of us i think 100

and i have a strong belief that they're they're not far away so the answer that no one's said yet uh and i'll say about this yesterday was um this whole idea of being able to like mutate cells and edit genes and dna yep we're gonna have aliens pretty quick oh yeah oh yeah that's like next week i think they just did a like a woolly mammoth last week or something like yeah yeah like that's gonna be real real fast yeah and uh what makes an alien is the real question you know like what do you define it to be yeah you know yeah yeah and that's the big we're gonna we're gonna head down a road that i think a lot of people aren't ready for if uh if we really if like the crisper stuff becomes real oh yeah it's it's coming i don't i don't think anyone's

going to be able to stop it no of course not just like bitcoin yeah there we go i'm all in on both those boats so we'll see too uh what one question do you have for me what is the one value of bitcoin that you would fight for and put everything on the line for what's the one thing that like that means to you what's the most important thing i think that i'm gonna cheat i'm gonna answer this in two ways i think if you ask me what is the most valuable thing to the greatest number of people on the planet uh i am on record of saying that i believe the mass adoption of bitcoin will do more for equality in the world than all philanthropic efforts combined um love it and the reason being inflation drives income inequality at a rate that we can't even really comprehend um it's the largest

driver of income inequality uh in the world and so if you remove inflation from the world There are some challenges It's not 100% perfect But there are a lot of benefits as well And so I think that's probably Has the largest impact It basically just prevents the elites from stealing wealth

From the poor Which generally I think a lot of people Have a hard time arguing that would be a good thing There's some psychos out there But that's fine So I would say that's one If you asked me what is likely to have the most severe impact on a certain percentage of the population's life right so

like what i just talked about was like broadest reach now if i go like greatest depth uh it would be the inability for uh governments or bad actors to seize the asset um and the reason why i say that is uh there's a lot of there's a lot of people but it's still a relatively small number of people in the world but it's still a big number that uh they live every single day in fear that somebody's going to seize their wealth right and um and so that ability i think is like such a unique component of bitcoin that it gives people like peace of mind for something they can't find anywhere else like there's like no other asset in the world that they can get that from right and so uh i think that that's kind of how i think about it's like there's a answer that is how broad can

we go right and then there's an answer of like how deep can we go right and so i think that's it that's a great answer yeah it's true i just thought of that be the switzerland in your pocket when switzerland's no longer switzerland yeah yeah yeah i i need to think more about it but like there's a lot to kind of unpack in that but i think that i think that's i think that makes sense and it's something that i believe yeah i agree so we'll see i don't know somebody on the internet will tell me how i'm dumb all right like that's the way it goes that's bound to happen for sure all right man listen i really enjoyed this uh i think people are going to love uh hearing from you and uh it's not every day that i get to talk to somebody who's got so many different life

experiences and uh it's a lot of fun so i have to do it again in the future thank you have a good one thanks hey everyone pop 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 please do us a favor and rate review, and subscribe. To review, simply go to the Off The Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off The Chain.