The Pomp Letter

To investors,

I was recently listening to a conversation between Joe Rogan and General H.R. McMaster, a retired United States Army lieutenant general who served as the 26th United States National Security Advisor from 2017 to 2018. The discussion was quite wide-ranging, but a specific comment from General McMaster caught my attention.

About 30 minutes into the conversation, the General was speaking about the United States and China. He described the difference between confrontation and competition. This excerpt highlights his main point:

“What I would often hear from friends in Southeast Asia and beyond, these are my counterparts when I was engaging as the National Security Advisor, they would say ‘Don’t force us to choose! Don’t force us to choose between Washington and Beijing!’ And what I would tell them is ‘Hey…that’s not the choice you face. The choice you face is between sovereignty and servitude.’

The United States is on the side of sovereignty. China wants servitude. Because what Xi Jinping wants to do, and the Party is clear about this, is they want to establish exclusionary areas of primacy across the Indo-Pacific region. And excluding who? Us!

As the first step in being able to rewrite some of the rules of international commerce and political discourse. And to isolate their regional rival, Japan. So I think we are at a critical moment where we have to compete effectively. This does not mean that we are on a path to confrontation…because we vacated these competitive spaces, China became more and more emboldened. And we were actually on a path to confrontation.

Now I think this idea of transparent competition is what we ought to really pursue with China.”

This idea of competition, rather than confrontation, is a nuanced concept that is important to understand. The United States and China are the two superpowers of the world. They have competing ideologies and political systems. The two countries are optimizing for the same end result, but they are choosing to take very different paths.

Violent conflict was the default way of dealing with countries that are at odds with each other historically. That solution appears antiquated in today’s environment. Modern weapons have evolved to the point where they are almost too lethal. Either country could wipe out entire cities and wide swaths of the other country’s population with lightning fast speed. The collateral damage is unknowable, and frankly, the battlefield has shifted from atoms to bits. Cyber warfare is a bigger focus for both countries, compared to military operations that would require invasions, the dropping of bombs, and potential loss of human life.

Regardless of the military tactics that are pursued, there is no denying that the United States and China are in a global competition. They are competing for resources, technology, talent, and ultimately, economic prosperity.

The United States’ pursuit of efficiency over resilience was well documented by the COVID-19 pandemic. We were exposed to have little domestic manufacturing capabilities and a heavy reliance on international partners for the production and distribution of various goods. This realization has rekindled a concentrated effort to on-shore manufacturing and supply chains, while treating these important functions as national security issues.

As we look forward to other areas of competition, it is hard not to identify the intersection of money and technology as an important area of focus. The Chinese Communist Party has created, and is testing, a central bank digital currency that gives them immense control over their citizens. This new currency carries the exact same monetary policy as the existing renminbi, but the technology upgrade empowers the centralized government to more easily confiscate wealth, censor transactions, punish citizens, and exert complete financial control over all users.

You could argue that this won’t be a problem for the global population if China is merely going to hand this technology to their own citizens, but that is not their plan. Just as China has scoured the world for opportunities to lend capital and exert more influence or control, they are looking for opportunities to increase adoption of the digital renminbi by citizens outside of China.

As I have written about before, this pursuit of the Chinese digital currency is all about accessibility. If you’re a citizen in Venezuela, Zimbabwe, or other faltering countries, you are frantically seeking for an asset that you can convert your fiat currency into. Your domestic currency is failing. Historically, gold and other analog assets were options, but there are too many horror stories of confiscation at borders, etc.

The first option for many of these people is to seek US dollars. There is safety and stability that comes with holding the world’s reserve currency. The issue is that it may be dangerous to purchase physical dollars on the black market, your bank is likely to collude with your government to confiscate money in your account, and it can be incredibly expensive to purchase dollars due to unofficial currency conversion rates.

The ideal scenario is that you can use an internet connection to access a new currency. If you don’t have access to a digital dollar, but you have access to a digital renminbi, there is a high likelihood that you will simply pick the best of what is available. Now many people will say “No! They will convert their assets to bitcoin!” Maybe this is true, but the reality is that the volatility of the asset, and the newness of a decentralized currency, still scares a good amount of people in these countries.

Regardless of the popularity of bitcoin, the United States can’t sit on the sidelines in these scenarios. The global competition for digital currency adoption is already underway. China, the most important competition that we have today, has already created and distributed their digital currency. They are going to push the pace of adoption outside their borders, which is essentially a move to gain market share.

The United States must act with speed and conviction. We must decide whether our central bank and the US Treasury are capable of creating their own digital dollar in a timely manner, or we must go with the technical solution that has already received market adoption from one of the private US dollar stablecoin enterprises.

Additionally, just as General McMaster’s pointed out, the United States should heavily consider advocating for, and facilitating, the use of technologies that give the average citizen more sovereignty. China wants servitude. America was built on sovereignty. If America was to continue to pursue our ethos, there is a national security argument to be made for the United States to work aggressively to see bitcoin succeed on a global stage.

This may seem counterintuitive to most people, but the United States of America should pursue a dual strategy — drive global adoption of digital dollars and bitcoin. Bitcoin prevents the centralized, authoritarian governments of the world from sinking their fingers into every corner of an individual’s financial life. It makes it impossible for a dictatorship to censor citizens or coerce them via financial controls.

The digital dollar extends the US dollar dominance and increases the likelihood that the world’s reserve currency is the number one choice whenever someone wants to make a transaction. Bitcoin is defense. The US dollar is offense. These two assets, working in tandem, can help the United States become the dominant player on a global stage, while simultaneously wrecking havoc on our largest competitor.

We have to recognize that we are in competition. Conflict is not the intended goal. The United States can win in the free market. We have the intellectual horsepower, the technical capabilities, and now we must ensure we have the political will to compete. If we are willing to play the game, I like our chances of winning.

Hope each of you has a great day. I’ll talk to you tomorrow.

-Pomp

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Kevin O'Leary is a world-class entrepreneur and investor, and is also the host of the popular ABC show "Shark Tank".

In this conversation, we discuss Kevin's growing crypto portfolio, regulation necessary for the Crypto space, Institutional Capital, and where he see's the industry going in 2022.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Bitcoin 2022 is the largest Bitcoin event in the world that takes place 4/6 - 4/9 in Miami Beach. Click HERE to learn more and use promo code POMP for 10% off.

* Fundrise is largest direct-to-investor real estate investment platform. Go to Fundrise.com/Pomp today and get $10 when you place your first investment. 

* Mode allows you to buy, earn and grow Bitcoin, all in one app. Download Mode on the App Store and Google Play. Only available in the UK. 

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. Download the Brave privacy browser at brave.com/Pomp today.

* Abra is an all-in-one secure app that allows you to trade over 110 cryptocurrencies. Download Abra today and get $15 in free crypto once you fund your account. 

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* MyBookie allows you to bet and withdraw with Crypto. Use promo code ‘POMP’ to double your first crypto deposit at MyBookie.

* Coin Cloud is the world's leading digital currency machine operator. To get your $50 in free Bitcoin, visit www.Coin.Cloud/Pomp 

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in digital assets inside your IRA. Visit choiceapp.io/pomp 

* BlockFi provides financial products for crypto investors. To start earning today visit: http://www.blockfi.com/Pomp

* Circle Yield offers qualified businesses superior returns on USDC holdings for terms of up to 12 months. Visit circle.com/pomp today; terms apply.

* BTCS was the first US-public company to secure today’s top layer one protocols. Test out the BTCS Data Analytics Dashboard today at BTCS.com  

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Okcoin is the first licensed exchange to bring new cryptos to market. To get started, and go tookcoin.com/pomp

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

Bitcoin critiques have been proposing the idea of a government ban for the digital currency over the last decade. Their argument is that bitcoin threatens the US dollar or other fiat currencies, so governments around the world will intervene to stop the adoption of the asset.

Most critics are willing to admit that it is unlikely that governments, militaries, or central banks could actually shut down the decentralized computing network. Instead, the critique revolves around the idea that governments will ban or outlaw ownership. While this argument may seem absurd to the bitcoin community, there is historical precedent for these types of government actions.

President Franklin D. Roosevelt signed Executive Order 6102 on April 5, 1933, which explicitly was aimed at "forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States." According to Wikipedia, the next few days and months were much the same:

On April 6, 1933, The New York Times wrote, under the headline Hoarding of Gold, "The Executive Order issued by the President yesterday amplifies and particularizes his earlier warnings against hoarding. On March 6, taking advantage of a wartime statute that had not been repealed, he issued Presidential Proclamation 2039 that forbade the hoarding 'of gold or silver coin or bullion or currency', under penalty of $10,000 and/or up to five to ten years imprisonment."

They go on to explain the impact of this Executive Order:

“Executive Order 6102 required all persons to deliver on or before May 1, 1933, all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve in exchange for $20.67 (equivalent to $413 in 2020) per troy ounce. Under the Trading with the Enemy Act of 1917, as amended by the recently passed Emergency Banking Act of March 9, 1933, a violation of the order was punishable by fine up to $10,000 (equivalent to $200,000 in 2020), up to ten years in prison, or both.”

The US government couldn’t shut down gold or gold production. They couldn’t put gold bars in jail or financially fine the inanimate asset. The only option was to outlaw ownership and require citizens to turn in their gold.

Ultimately, the bitcoin critics have argued that the US government could pursue a similar strategy with the digital currency. Regardless of whether the network can be shut down, the government will simply ban ownership and require all US citizens to turn in their bitcoin.

The idea would be two fold — the government would financially gain from the ownership of bitcoin, but they would also open an opportunity for a national central bank digital currency. In effect, the CBDC would replace bitcoin as the digital store of value, medium of exchange, and unit of account. The central bank would maintain their monopoly on the production and distribution of money, along with centralized control over the variable monetary policy that it holds today.

Something happened yesterday though that the bitcoin critics did not expect — a sitting US Congressman put forward legislation to outlaw the Federal Reserve from creating and distributing a central bank digital currency.

Yes, you read that right. Representative Emmer is attempting to ban the central bank digital currency, rather than trying to ban ownership of bitcoin.

Emmer’s main issue with the current CBDC proposals is that they will likely lead to a lack of innovation and an increase in financial surveillance capabilities. It is telling that the Congressman decided to explicitly call out China’s CBDC efforts as an example of what the United States must avoid doing.

Lastly, Representative Emmer left the door open for a central bank digital currency in the United States, but appears to require it to fit within a specific framework. That framework would produce an open, permissionless, and private central bank digital currency, which frankly is the exact opposite of what the Federal Reserve and other central banks around the world want.

The bitcoin critiques have been pontificating for more than a decade about the potential government ban of the asset. None of them anticipated that sitting US politicians would actually attempt to ban the creation of a central bank digital currency. This is interesting because we have yet to see a politician put forward legislation to attempt banning bitcoin or other digital currency assets.

My big takeaway on this development is that politicians, business owners, and every day citizens recognize the issue at hand. The blind belief in the Federal Reserve is eroding quickly and the concerns of future infringements on financial privacy are getting louder. Majority of people believe that the government should stay out of their financial life, including how much money they have, who they transact with, and what they are purchasing.

The United States has historically served as the shining example on a global stage when it comes to freedom, innovation, and economic prosperity. Our country was built on the idea that the government should fear the citizens, not the citizens fearing the government. Authoritarian governments, such as China, see an opportunity with central bank digital currencies. They want to increase financial surveillance and significantly hamper the freedom of their citizens.

The United States is better than that. We don’t need to trust the government or central bank. The technology exists now to avoid giving them the power, control, and ability to potentially violate our trust in the future. It is encouraging to see Representative Emmer taking this courageous step forward. The conversation changed yesterday.

We shouldn’t be outlawing ownership of bitcoin. We should be outlawing our government’s ability to spy on their citizens.

Hope each of you has a great day. I’ll talk to you tomorrow.

-Pomp

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Dylan LeClair is the Senior Market Analyst at UTXO Management, a digital asset fund investing in the analog to digital transformation of money and the emergent financial system.

In this conversation, we discuss bitcoin, on-chain metrics, market structure, and what to expect as we go deeper into 2022.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Bitcoin 2022 is the largest Bitcoin event in the world that takes place 4/6 - 4/9 in Miami Beach. Click HERE to learn more and use promo code POMP for 10% off.

* Fundrise is largest direct-to-investor real estate investment platform. Go to Fundrise.com/Pomp today and get $10 when you place your first investment. 

* Mode allows you to buy, earn and grow Bitcoin, all in one app. Download Mode on the App Store and Google Play. Only available in the UK. 

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. Download the Brave privacy browser at brave.com/Pomp today.

* Abra is an all-in-one secure app that allows you to trade over 110 cryptocurrencies. Download Abra today and get $15 in free crypto once you fund your account. 

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* MyBookie allows you to bet and withdraw with Crypto. Use promo code ‘POMP’ to double your first crypto deposit at MyBookie.

* Coin Cloud is the world's leading digital currency machine operator. To get your $50 in free Bitcoin, visit www.Coin.Cloud/Pomp 

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in digital assets inside your IRA. Visit choiceapp.io/pomp 

* BlockFi provides financial products for crypto investors. To start earning today visit: http://www.blockfi.com/Pomp

* Circle Yield offers qualified businesses superior returns on USDC holdings for terms of up to 12 months. Visit circle.com/pomp today; terms apply.

* BTCS was the first US-public company to secure today’s top layer one protocols. Test out the BTCS Data Analytics Dashboard today at BTCS.com  

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Okcoin is the first licensed exchange to bring new cryptos to market. To get started, and go tookcoin.com/pomp

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

The phrase “Web3” has taken the technology world by storm. It is used to describe the next iteration of the internet, which includes the belief of Web3 proponents that decentralized protocols and tokens will be core features of a new system. There are thousands of entrepreneurs and investors betting their time, money and energy that this new iteration will be the future of technology. There are thousands more who believe that the entire Web3 system is unsustainable and simply a way to enrich the proponents.

Regardless of where you fall on the debate, I thought it would be interesting to investigate the question “who owns Web3?” In order to do this, we can look at the token supply breakdown of various projects. First, here is Solana’s initial token distribution (source: Messari):

The second example we will use is Uniswap’s initial token distribution:

These two examples highlight a few takeaways. The team’s normally hold between 20-30% of the token supply, private investors are somewhere between 15-50%, which depends on how much of the token was sold before launch. And the remainder of the token supply is used for various activities, including premined rewards, airdrops, yield farming, ecosystem funds, and many others.

Here is another visualization of various projects:

This is interesting because in a recent study it was concluded that founders in “Web2” companies held approximately 15% of their company’s equity at the time of the IPO. The comparison isn’t perfect (not all of the founder/project token allocation goes to the founders specifically), but it appears that Web3 founders are able to hold on to more of the economic value for what they create compared to Web2 founders.

But this still doesn’t answer the question of “who owns Web3?”

There are three specific groups of people who own tokens in these ecosystems. They are the team, private investors, and the community. In the legacy Web2 world, only the team and private investors end up owning equity in a company, so the Web3 world has a structural advantage in their ability and desire to get economic incentives in the hands of their community. Web2 companies have tried this before, but were largely unsuccessful. Airbnb tried to give equity to the hosts on their platform and Uber tried to give equity to their drivers. The explicit acknowledgement of the asset being equity meant that regulations prevented these companies from doing it.

Ok, back to the owners of Web3. The team is fairly straightforward. If you are the founder, early employee, or a contributor to the project, you are compensated for your efforts in a way that is determined by the team. This is no different than a traditional equity.

The big debate in the Web3 world is about investors. Obviously, the more that a project claims that they are decentralized, the more critics will complain that any ownership by large investors (venture capitalists and private equity) is antithetical to that mission. Maybe this is true or maybe not, but it is important to remember that the actual investors are not the VC firms themselves.

For example, if Sequoia Capital invests in a company or project, then the ownership mostly lies with nonprofits and schools. Here is an excerpt from the Sequoia website:

“Sequoia invests primarily on behalf of nonprofits and schools, with organizations such as the Ford Foundation and Boston Children’s Hospital forming most of our limited partner base. Working for them gives us a greater sense of responsibility and purpose.”

The average VC firm takes 20% carried interest on their investments, so if a firm owned 30% of a project’s tokens, the non-profit LPs would have 24% of the tokens and the venture capitalists would have approximately 6%. This doesn’t mean that venture investors owning large stakes of tokens is right or wrong, but it is important to understand the economics of who actually owns these tokens, rather than who purchased them.

The next point is that Web2 companies are all owned by large venture capital and Wall Street firms. Chris Dixon of A16Z made this point last night when he tweeted the top 10 holders of various public company stock:

As you can see in these breakdowns, most of the largest holders are passive investing vehicles from Vanguard and their peers. These passive vehicles are usually owned by retail investors and/or pension funds, etc. So in a crazy way, the VC fund LPs are nonprofits, foundations, pension funds, etc. These same investors are the owners of the Web2 companies through these passive investing vehicles as well. The more things change, the more they stay the same. The difference is whether Wall Street or Silicon Valley are getting to charge fees for the privilege of allocating the money.

Lastly, the bitcoin community hangs their hat on no venture capitalist investment needed to launch the network. This is one of the strongest arguments that is put forward by the community. But the start of the network does not necessarily reflect the current state of the network. What do I mean? There is billions of dollars now in the hands of Wall Street and Silicon Valley.

Take the Grayscale Bitcoin Trust as the first example. They currently hold more than 3.4% of the outstanding bitcoin supply. Just one investment product, which is also the world’s largest bitcoin investment product, holds a material percentage of all bitcoin in circulation. We also must mention that Satoshi Nakamoto is believed to hold approximately 1 million bitcoin, which would make him the largest holder of bitcoin in the world.

Next let’s take a look at the public companies that hold bitcoin. MicroStrategy holds over 124,000 bitcoin on their balance sheet, Tesla holds more than 43,000 bitcoin, Square owns 8,000 bitcoin, and the various bitcoin mining companies own a few thousand more bitcoin combined. This means that publicly traded companies around the world hold approximately 1% of all bitcoin that will ever be in circulation.

This analysis also doesn’t take into account that a large portion of cryptoassets are actually held as IOUs in centralized custody or exchanges. For example, Coinbase is reported to have more than $90 billion of assets under custody and at one point held 11% of all cryptoassets in the market. Mindblowing numbers.

So what is my conclusion on who owns Web3?

Simply, the same people who own Web2 companies and the same people who own bitcoin. Out of the three of these types of assets, bitcoin appears to have the most decentralized ownership, but Web2 and Web3 aren’t as far behind as the public narrative would tell you. Ultimately, ownership of an asset is predicated on the ability to convert other assets, whether they are fiat currencies or not, into the desired asset. Essentially, wealthy people and organizations have the financial resources to acquire significant chunks of an asset.

We shouldn’t compare the asset ownership percentages today as a snapshot in time. We should instead look at how the trend is evolving. The legacy Web2 companies are becoming more and more concentrated in ownership. Bitcoin has shown to become more decentralized in ownership over time. Web3 tokens are still up in the air. Will they become more centralized or more decentralized over time? No one knows yet, but that is going to be the most important question when it comes to answering “who owns Web3?”

Hope each of you has a great start to your week. I’ll talk to everyone tomorrow.

-Pomp

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Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Bitcoin 2022 is the largest Bitcoin event in the world that takes place 4/6 - 4/9 in Miami Beach. Click HERE to learn more and use promo code POMP for 10% off.

* Fundrise is largest direct-to-investor real estate investment platform. Go to Fundrise.com/Pomp today and get $10 when you place your first investment. 

* Mode allows you to buy, earn and grow Bitcoin, all in one app. Download Mode on the App Store and Google Play. Only available in the UK. 

* Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet. Claim your Unstoppable Domain here today.

* Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. Download the Brave privacy browser at brave.com/Pomp today.

* Abra is an all-in-one secure app that allows you to trade over 110 cryptocurrencies. Download Abra today and get $15 in free crypto once you fund your account. 

* FTX US is the safe, regulated way to buy digital assets. Trade crypto with up to 85% lower fees than top competitors by signing up at FTX.US today.

* MyBookie allows you to bet and withdraw with Crypto. Use promo code ‘POMP’ to double your first crypto deposit at MyBookie.

* Coin Cloud is the world's leading digital currency machine operator. To get your $50 in free Bitcoin, visit www.Coin.Cloud/Pomp 

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in digital assets inside your IRA. Visit choiceapp.io/pomp 

* BlockFi provides financial products for crypto investors. To start earning today visit: http://www.blockfi.com/Pomp

* Circle Yield offers qualified businesses superior returns on USDC holdings for terms of up to 12 months. Visit circle.com/pomp today; terms apply.

* BTCS was the first US-public company to secure today’s top layer one protocols. Test out the BTCS Data Analytics Dashboard today at BTCS.com  

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services. Learn more at LMAXdigital.com/pomp

* Okcoin is the first licensed exchange to bring new cryptos to market. To get started, and go tookcoin.com/pomp

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

It is no secret that Turkey is experiencing painfully high levels of inflation right now. Economists’ expectations for inflation numbers in December are just over 30%, which includes estimations that range from 26% to 37%. Regardless of where the number officially ends up, the inflation that Turkish citizens are dealing with is hard to comprehend for investors in the developed, western world.

Governments are not thrilled in these scenarios to take responsibility due to previous monetary or fiscal decisions. Instead, they historically blame corporations for price gouging, implement price controls, and even institute capital controls in the most extreme examples. The higher the inflation gets, the more severe the government’s response tends to be.

The United States is experiencing nearly 7% inflation and we see our politicians calling out various industries, from beef producers to grocery stores, in regards to alleged price gouging. If history serves as a guide, it is unlikely that the corporations are actually price gouging. It is much more likely that their labor and material costs have drastically increased, so they need to raise their prices in order to still have any profit.

Turkey has already gone one step further than the United States though. They are not only accusing corporations of price gouging, but they are actually using the police to enforce a form of price controls. Here is a video that was released by the local authorities that shows them in various grocery stores.

The second tweet is translated by Google as saying:

“As Polatlı Municipality, we continue our strict controls against exorbitant prices. In these difficult days, our fellow citizens; We will always be against those who are not on the side of the poor and the poor.”

This reminds me of the classic “I am from the government and I am here to help you.” Obviously, these grocery store owners are unlikely to hike prices for the fun of it. They are dealing with a high inflation environment that has only become worse through 2021. If you put yourself in their position, I’m not sure there is much to do other than to continue to increase prices at the same rate as the devaluation of the currency.

The scary part of this video is that you have the police intervening in markets, which obviously doesn’t allow for free market forces to take hold. You can’t have a system of supply and demand if you also have artificial constraints on the market. As we know from history, these types of price and capital controls can actually exacerbate the situation, rather than help to fix it. Regardless, this is a nasty situation for business owners and citizens alike.

Let’s bring it back to the United States though. Politicians who have accused grocery stores domestically of price gouging have not looked at the numbers it appears.

We can use Kroger as one example of what the actual financials are telling us:

Not only is Kroger actually making less money this year, even though food prices are 5-6% higher based on the national average, but the business is also operating on a measly 2.4% profit margin. Those razor thin margins mean that the business must be insanely accurate at predicting supply chain and labor costs, along with any changes to demand.

Whether we are talking about the United States, Turkey, or many other countries around the world, business owners are facing significantly higher inflation than usual. They are going to have to raise prices. This is how capitalism and free markets work. We shouldn’t allow politicians and central bankers to gaslight us. A large portion of the problem stems from undisciplined monetary and fiscal policy. The market intervention is not a solution.

Besides ensuring that we are educated on how markets work and what the financials of these businesses are, it is important to focus on another simple idea as well:

High inflation erases hope for the most financially vulnerable in a society. Politicians attack corporations and business owners in response, which demonizes success. These are some of the ingredients of how societies crumble. It doesn’t have to be this way though. The popular saying of “money is the root of all evil” can be slightly changed to be more accurate — “fiat money is the root of all problems.”

Fix the money, fix the world. Billions of people around the world stand to benefit from a global store of value that can’t be debased or devalued by any one person, group, or government. We are well on our way to that solution. It can’t come fast enough for those living under high inflation though.

Hope you have a great start to your day. I’ll talk to everyone tomorrow.

-Pomp

SPONSORED: Mode allows you to buy, earn and grow Bitcoin, all in one app. Not only is it an easy and safe way to buy and hold Bitcoin, Mode allows you to pay and receive up to 10% Bitcoin Cashback for FREE from its growing list of online partner brands.Mode, the UK fintech app is one of a kind.

They are FCA registered and are listed on the LSE. They chose to hold Bitcoin on their balance sheet. They are piloting a Bitcoin Payroll product to pay UK employees in BTCMode is offering 0% trading fees on all Bitcoin buys and sells. Available on the App Store and Google Play.

Download Mode today and enjoy 0% trading fees on all Bitcoin buys and sells until Dec 31, 2021. Click here to get started. Only available in the UK.

THE RUNDOWN:

Kraken to Develop NFT Marketplace Offering Token-Backed Loans: Crypto exchange Kraken is developing a marketplace for non-fungible tokens where users can arrange loans using the tokens as collateral, the exchange’s founder and CEO Jesse Powell said in a Bloomberg News interview published Friday. The marketplace will provide custody, and the exchange is figuring out how to determine the liquidation value of NFTs deposited so that users can use them as collateral for loans, Powell said. Read more.

Iran Banning Crypto Mining Until March 6 to Save Power: Iran is banning authorized crypto mining in the country until March 6 in an attempt to save power and avoid blackouts this winter, according to a Bloomberg report. The move will free up 209 megawatts of power for use by the country’s households, according to Mostafa Rajabi Mashhadi, the director of state-run Iran Grid Management Co., who was interviewed by state TV. Read more.

India’s Central Bank Recommends Basic Version of CBDC: As India grapples with uncertainty around cryptocurrency regulation, the Reserve Bank of India (RBI), the country’s central bank, said it is inclined to offer a basic central bank digital currency (CBDC) initially before implementing a more sophisticated version. A report titled “Trend and Progress of Banking in India 2020-21″ released on Tuesday elaborates on the thinking of the RBI on a CBDC. Read more.

Crypto Futures See $300M in Losses After Spot Market Drops: A drop in crypto markets from Monday evening (UTC) prompted almost $300 million in liquidations across several crypto futures contracts, data from analytics tool Coinglass showed. More than 109,000 traders’ positions were liquidated in the past 24 hours. Read more. 

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Kevin McGarvey is the Co-Founder & President of All Out Parking Lots. Kevin has built a great 30 person small business and has recently converted to a Bitcoin Standard. They have put Bitcoin on the balance sheet and have started paying out weekly Bitcoin bonuses to employees.

This is a fascinating conversation to understand how an entrepreneur of a non-public, non Wall Street backed, company can successfully convert to the Bitcoin Standard to run their business.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Mode allows you to buy, earn and grow Bitcoin, all in one app. Not only is it an easy and safe way to buy and hold Bitcoin, Mode allows you to pay and receive up to 10% Bitcoin Cashback for FREE from its growing list of online partner brands. Download Mode today and enjoy 0% trading fees on all Bitcoin buys and sells until Dec 31, 2021. Only available in the UK. 

* Cryptocurrency is the future, so don’t get left in the past, bet with MyBookie and you can get in the game now! The best part is, MyBookie accepts well-known cryptocurrencies like Bitcoin and Ethereum so you can bet and withdraw with Crypto. To get you kickstarted with crypto, use my promo code (POMP) to double your first crypto deposit up to at MyBookie.

* Coin Cloud has been serving customers since 2014 and has established itself as the world's leading digital currency machine (DCM) operator. More than just a Bitcoin ATM, Coin Cloud machines make it easy to buy and sell Bitcoin and 30+ other digital assets with cash. To get your $50 in free Bitcoin, visit www.Coin.Cloud/Pomp 

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in bitcoin and 19 other digital assets inside your IRA. Choice enables you to trade real bitcoin, other crypto, and stocks without having to pay a dime in capital gains. Join me and the 20,000 other bitcoiners who have started their tax-efficient stack, and open your Choice Account today. Search ‘stack sats’ in the app store or visit www.choiceapp.io/pomp  

* BlockFi provides financial products for crypto investors. Products include high-yield interest accounts, USD loans, and no fee trading. To start earning today visit: http://www.blockfi.com/Pomp

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 other cryptocurrencies. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days.

* CityCoins are programmable tokens that allow citizens to become stakeholders in their favourite cities. MiamiCoin was the first CityCoin launched and within it’s first two months it has already raised over $10 million USD in donations for the City of Miami. Join the CityCoins Discord to become part of the community, and help us build towards a crypto civilization.

* Crypto.com allows you to buy, sell, store, earn, loan, and invest various cryptocurrencies in an user-friendly mobile app. Join over one million users today. You can download and earn $50 USD with my code “pomp” when you sign up for one of their metal cards today.

* Circle Yield offers qualified businesses superior returns on USDC holdings for terms of up to 12 months. Managed by professional financial institutions, Circle Yield is the best way to earn returns on your USDC. Visit circle.com/pomp today; terms apply.

* Nasdaq-listed BTCS was the first US-public company to secure today’s top layer one protocols. Recently, BTCS launched the beta version of its digital asset analytics dashboard! From across multiple exchanges, the BTCS Data Analytics Dashboard lets you evaluate your entire portfolio’s performance with plans to add year-end reports and yield earning on your crypto through linking to staking pools. Test out the BTCS Data Analytics Dashboard today at BTCS.com  

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services - offering clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

* Okcoin is one of the most popular licensed exchanges. Okcoin is the first to bring new cryptos to market, offering some of the lowest fees in the industry, an easy to use app, and Earn feature! It’s easier than ever to sign up, buy and trade crypto in just 2 minutes on Okcoin with credit & debit cards or just link your bank account to the best new crypto assets. So get started, and go to okcoin.com/pomp

* Matrixport is Asia’s fastest growing digital asset platform with $10 billion in assets under management and custody. It offers one-stop crypto financial solutions including fixed income, DeFi in 1-click, structured products, Cactus Custody™, spot OTC and lending. Go download the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users. 

* Ethernity.io is the world’s first authenticated and licensed NFT platform, trusted by over 150,000 members. Visit Ethernity.io, where you can buy and sell authenticated NFTs from top notable figures, rights, license, and IP holders you can’t find anywhere else; the start of an entire ecosystem bringing utility to #NFTs.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

The global financial markets are obsessively watching what the Federal Reserve is going to do with interest rates in the coming months. Based on the most recent FOMC meeting, Fed Chairman Jerome Powell has signaled that the Fed is likely to hike interest rates approximately three times in 2022.

I don’t want to spend our time together this morning debating whether the Fed will actually raise interest rates or not, but rather I want to talk through what is likely to happen if interest rates are increased. The general consensus is that high growth stocks, risk assets, and other recent big performers would sell off when that occurs. As any student of history knows, we have seen this story play out before.

History doesn’t always repeat. It sure does rhyme though. Keith Rabois’ expectations are shared by a large portion of the investing community, particularly those who understand interest rates and their relationship to risk assets.

So if we are operating under the assumption that risk assets will sell off when the Fed raises interest rates, we should expect bitcoin to suffer the same fate, right? Well….no one knows yet.

The prevailing consensus view has been that bitcoin is a risk asset. It has an inverse relationship with interest rates. When central banks and politicians manipulate interest rates lower, and pump trillions of dollars into the market, bitcoin should go higher.

Over the last 18-24 months, we saw interest rates moved lower and trillions of dollars injected into the economy, along with bitcoin’s price going up hundreds of percent. But what if bitcoin’s price increasing has less to do with interest rates and QE? What if bitcoin’s price increasing was more related to the bitcoin halving in May 2020?

Hear me out for a second.

The inverse correlation between tech stocks and treasury yields has been playing out exactly how you would expect. Yields go up and risk assets sell off. Yields go down and risk assets go up.

This inverse relationship is not what we are seeing between bitcoin and Treasury yields though. We are actually seeing the exact opposite. Bitcoin’s price appears to be moving in lockstep with Treasury yields.

So if this short-term trend continues to play out, what would that mean for bitcoin? Again, no one knows for sure. But it would be very interesting if the prevailing consensus view is misplaced and bitcoin would actually benefit from increasing interest rates. That would violate the framework that many people have been viewing the digital currency through.

Caleb Franzen elaborates here:

So why could this idea of bitcoin and yields increasing together potentially be true? Well…one idea is that some people actually deem bitcoin to be their reserve currency. They view cheap capital via low rates as a path to borrowing money and making investments that could earn them more bitcoin. If rates were to rise, risk assets would sell off and these people would go back into their safe haven asset — bitcoin.

This may sound insane to the legacy Wall Street crowd, but there is an increasing number of young people who see the digital currency as that safe haven asset in their portfolio. The entire point of investing in anything outside of bitcoin is to outperform bitcoin and eventually convert back into bitcoin. Obviously, if you’re a good investor than you can pick up more bitcoin. If you’re a bad investor, you end up with less bitcoin. This is the new risk-reward that many young people are evaluating.

Ultimately, none of us know what the Fed is going to do in 2022. We also don’t know how every single asset will react. If we see bitcoin moving in lockstep with interest rates though, my guess is that an entirely new crop of investors are going to start paying attention. Who doesn’t want an asset that moves with interest rates, yet produces a materially higher compound annual growth rate?

Keep your eyes on the relationship between risk assets, bitcoin, and Treasury yields. We are likely to learn a lot over the next 12 months. It will be worth learning, regardless of what occurs. Hope each of you has a great day. I’ll talk to everyone tomorrow.

-Pomp

SPONSORED: This year has seen unbelievable growth of this community and I wanted to pass on a small thank you to all my old and new subscribers alike.

To get your free unique code for a $40 credit at unstoppabledomains.com simply fill in this form.

Unstoppable Domains are the #1 provider of NFT domains, These domains make sending and receiving crypto easy, can be used as your username on Twitter and better yet they don't have any renewal or gas fees. 

Don’t forget to fill in this form to get your unique $40 USD voucher.

Thanks,

Pomp.bitcoin

Please see full terms and conditions here

Scot Wingo is the Co-Founder & CEO of Spiffy, an on-demand car cleaning and car servicing app.

In this conversation, we discuss inflation, entrepreneurship, crypto, Web3 and NFTs.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Mode allows you to buy, earn and grow Bitcoin, all in one app. Not only is it an easy and safe way to buy and hold Bitcoin, Mode allows you to pay and receive up to 10% Bitcoin Cashback for FREE from its growing list of online partner brands. Download Mode today and enjoy 0% trading fees on all Bitcoin buys and sells until Dec 31, 2021. Only available in the UK. 

* Cryptocurrency is the future, so don’t get left in the past, bet with MyBookie and you can get in the game now! The best part is, MyBookie accepts well-known cryptocurrencies like Bitcoin and Ethereum so you can bet and withdraw with Crypto. To get you kickstarted with crypto, use my promo code (POMP) to double your first crypto deposit up to at MyBookie.

* Coin Cloud has been serving customers since 2014 and has established itself as the world's leading digital currency machine (DCM) operator. More than just a Bitcoin ATM, Coin Cloud machines make it easy to buy and sell Bitcoin and 30+ other digital assets with cash. To get your $50 in free Bitcoin, visit www.Coin.Cloud/Pomp 

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in bitcoin and 19 other digital assets inside your IRA. Choice enables you to trade real bitcoin, other crypto, and stocks without having to pay a dime in capital gains. Join me and the 20,000 other bitcoiners who have started their tax-efficient stack, and open your Choice Account today. Search ‘stack sats’ in the app store or visit www.choiceapp.io/pomp  

* BlockFi provides financial products for crypto investors. Products include high-yield interest accounts, USD loans, and no fee trading. To start earning today visit: http://www.blockfi.com/Pomp

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 other cryptocurrencies. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days.

* CityCoins are programmable tokens that allow citizens to become stakeholders in their favourite cities. MiamiCoin was the first CityCoin launched and within it’s first two months it has already raised over $10 million USD in donations for the City of Miami. Join the CityCoins Discord to become part of the community, and help us build towards a crypto civilization.

* Crypto.com allows you to buy, sell, store, earn, loan, and invest various cryptocurrencies in an user-friendly mobile app. Join over one million users today. You can download and earn $50 USD with my code “pomp” when you sign up for one of their metal cards today.

* Circle Yield offers qualified businesses superior returns on USDC holdings for terms of up to 12 months. Managed by professional financial institutions, Circle Yield is the best way to earn returns on your USDC. Visit circle.com/pomp today; terms apply.

* Nasdaq-listed BTCS was the first US-public company to secure today’s top layer one protocols. Recently, BTCS launched the beta version of its digital asset analytics dashboard! From across multiple exchanges, the BTCS Data Analytics Dashboard lets you evaluate your entire portfolio’s performance with plans to add year-end reports and yield earning on your crypto through linking to staking pools. Test out the BTCS Data Analytics Dashboard today at BTCS.com  

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services - offering clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

* Okcoin is one of the most popular licensed exchanges. Okcoin is the first to bring new cryptos to market, offering some of the lowest fees in the industry, an easy to use app, and Earn feature! It’s easier than ever to sign up, buy and trade crypto in just 2 minutes on Okcoin with credit & debit cards or just link your bank account to the best new crypto assets. So get started, and go to okcoin.com/pomp

* Matrixport is Asia’s fastest growing digital asset platform with $10 billion in assets under management and custody. It offers one-stop crypto financial solutions including fixed income, DeFi in 1-click, structured products, Cactus Custody™, spot OTC and lending. Go download the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users. 

* Ethernity.io is the world’s first authenticated and licensed NFT platform, trusted by over 150,000 members. Visit Ethernity.io, where you can buy and sell authenticated NFTs from top notable figures, rights, license, and IP holders you can’t find anywhere else; the start of an entire ecosystem bringing utility to #NFTs.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

There has been immense scrutiny on the Federal Reserve and central banks around the world over the last 18 months. Everyone from investors to business owners to retirees are trying to figure out what the central banks will do with interest rates and asset purchases, so they can better prepare their portfolios for the future.

It is easy to get lost in the day-to-day drama of what the central banks are going to do. Every mainstream media outlet is talking about the various scenarios. Investing forums and Twitter users are speculating on the color of the Fed Chairman’s tie or whether he uses the word “dovish” or not. Some analysts even spend time trying to measure correlations between the length of press conferences and future interest rate decisions.

It has become absolute madness. The financial world, and various related aspects of society, all patiently wait for the decisions of a small group of 12 people who emerge from the FOMC meetings. There are other people in the room during the meetings, but ultimately 12 people are deciding what will happen to trillions of dollars in assets and billions of people. (here is a 2016 FOMC meeting as an example)

It doesn’t have to be this way though. The elites who make up the minority don’t have to be the ones to make the decisions. In fact, I would argue that the world would be better off if humans weren’t in charge of making these decisions at all.

We know that human decision-making is flawed. We are emotional animals. We have bias. There is academic study after academic study that shows how humans are experts at poor judgement.

So what does that have to do with central banks?

Central banks are supposed to have two core components to them — independence and predictability. José Manuel González-Páramo, a member of the Executive Board of the European Central Bank from 2004 - 2012, gave a speech in June 2007 titled “Inflation Targeting, Central Bank Independence and Transparency.” In that speech, he stated the following:

“Indeed, the principle of central bank independence in the pursuit of the goals of monetary policy has been codified in the legal systems of many countries. Perhaps even more importantly, there is evidence that the importance of this principle seems to be increasingly well understood by society at large. According to all surveys among euro area citizens, an overwhelming majority of respondents support the pursuit of price stability as a goal of the European Central Bank (ECB) and back the ECB’s independence in order to guarantee the achievement of this goal….

…But I am not here to talk about politics. Indeed, one of the great advantages of central bank independence is precisely that we can ignore the political furor and concentrate on the welfare-enhancing objective of keeping inflation under control. At the same time, I could not agree more with the view that central bankers must strive to fully comply with the standards of transparency and accountability that democratic societies rightly demand from independent public agencies.”

Central bank independence is absolutely crucial. Additionally, Jose went on to say the following about a central bank’s predictability:

“Going back to the subject of expectations, I have thus far focused on inflation expectations. Before concluding, however, I should like to mention another type of expectation which is of interest to central banks, namely expectations regarding future monetary policy rates. Such expectations provide benchmarks against which to assess various aspects of crucial importance for a central bank’s success, such as its transparency, its predictability, and the effectiveness of its communication strategy, among others. As a result, expectations regarding future policy rates, whether taken from surveys or financial market data, are an essential source of information for assessing the degree of understanding of a central bank’s monetary policy strategy and conduct by market participants and external observers.”

These are the words from central bankers themselves — the independence and predictability of a central bank are essential to the organization’s effectiveness.

This brings me to a new type of central bank that has been created. It is fully automated, completely independent, and the most predictable organization in the world. What do I mean?

A pseudonymous person or group created an automated central bank a little over a decade ago. They ensured that no one person or organization would ever own it or control it. The central bank is decentralized, which gives it complete independence. This person or group also made sure to write the monetary policy for the central bank into software code and then ensured that no one would be able to change it unilaterally. As if that wasn’t enough, the creator(s) of this digital central bank also open-sourced everything so that it could be audited by anyone, at any time, from anywhere.

This digital central bank structure allows for the most independent and most predictable central bank in the world. In a sense, you can think of this new creation as an automated central bank that is superior to the human-led central banks that have existed for the last few decades.

So what is this new central bank? Bitcoin.

Bitcoin is completely decentralized. It has a programmatic monetary policy. No one owns the network and no one controls it. The system is fully transparent and anyone can audit it. The monetary policy is written into software so you know every future monetary policy decision for the next century. Bitcoin is the most independent and most transparent central bank in the world.

As people begin to understand how this automated central bank works, they will slowly decide to start storing their economic value and personal wealth in the independent and predictable system. This difference is being highlighted even more recently with the undisciplined and variable decision-making that is happening.

Eventually the world won’t hang on every word of a press conference. We won’t rely on 12 people in a room making decisions for billions of people. The system will be more democratic. It will be more accessible. And ultimately, it will lead to a more prosperous world.

Independent. Predictable. Bitcoin.

This is the way.

-Pomp

SPONSORED: This year has seen unbelievable growth of this community and I wanted to pass on a small thank you to all my old and new subscribers alike.

To get your free unique code for a $40 credit at unstoppabledomains.com simply fill in this form.

Unstoppable Domains are the #1 provider of NFT domains, These domains make sending and receiving crypto easy, can be used as your username on Twitter and better yet they don't have any renewal or gas fees. 

Don’t forget to fill in this form to get your unique $40 USD voucher.

Thanks,

Pomp.bitcoin

Please see full terms and conditions here

Zac Prince is the co-founder and CEO of BlockFi.

In this conversation, we go on a deep dive into BlockFi's product suite and discuss the Bitcoin Rewards Credit Card, Earning Rewards In Other Cryptocurrencies, Interest Accounts, BlockFi's regulatory update, and future products.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Mode allows you to buy, earn and grow Bitcoin, all in one app. Not only is it an easy and safe way to buy and hold Bitcoin, Mode allows you to pay and receive up to 10% Bitcoin Cashback for FREE from its growing list of online partner brands. Download Mode today and enjoy 0% trading fees on all Bitcoin buys and sells until Dec 31, 2021. Only available in the UK. 

* Cryptocurrency is the future, so don’t get left in the past, bet with MyBookie and you can get in the game now! The best part is, MyBookie accepts well-known cryptocurrencies like Bitcoin and Ethereum so you can bet and withdraw with Crypto. To get you kickstarted with crypto, use my promo code (POMP) to double your first crypto deposit up to at MyBookie.

* Coin Cloud has been serving customers since 2014 and has established itself as the world's leading digital currency machine (DCM) operator. More than just a Bitcoin ATM, Coin Cloud machines make it easy to buy and sell Bitcoin and 30+ other digital assets with cash. To get your $50 in free Bitcoin, visit www.Coin.Cloud/Pomp 

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in bitcoin and 19 other digital assets inside your IRA. Choice enables you to trade real bitcoin, other crypto, and stocks without having to pay a dime in capital gains. Join me and the 20,000 other bitcoiners who have started their tax-efficient stack, and open your Choice Account today. Search ‘stack sats’ in the app store or visit www.choiceapp.io/pomp  

* BlockFi provides financial products for crypto investors. Products include high-yield interest accounts, USD loans, and no fee trading. To start earning today visit: http://www.blockfi.com/Pomp

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 other cryptocurrencies. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days.

* CityCoins are programmable tokens that allow citizens to become stakeholders in their favourite cities. MiamiCoin was the first CityCoin launched and within it’s first two months it has already raised over $10 million USD in donations for the City of Miami. Join the CityCoins Discord to become part of the community, and help us build towards a crypto civilization.

* Crypto.com allows you to buy, sell, store, earn, loan, and invest various cryptocurrencies in an user-friendly mobile app. Join over one million users today. You can download and earn $50 USD with my code “pomp” when you sign up for one of their metal cards today.

* Circle Yield offers qualified businesses superior returns on USDC holdings for terms of up to 12 months. Managed by professional financial institutions, Circle Yield is the best way to earn returns on your USDC. Visit circle.com/pomp today; terms apply.

* Nasdaq-listed BTCS was the first US-public company to secure today’s top layer one protocols. Recently, BTCS launched the beta version of its digital asset analytics dashboard! From across multiple exchanges, the BTCS Data Analytics Dashboard lets you evaluate your entire portfolio’s performance with plans to add year-end reports and yield earning on your crypto through linking to staking pools. Test out the BTCS Data Analytics Dashboard today at BTCS.com  

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services - offering clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

* Okcoin is one of the most popular licensed exchanges. Okcoin is the first to bring new cryptos to market, offering some of the lowest fees in the industry, an easy to use app, and Earn feature! It’s easier than ever to sign up, buy and trade crypto in just 2 minutes on Okcoin with credit & debit cards or just link your bank account to the best new crypto assets. So get started, and go to okcoin.com/pomp

* Matrixport is Asia’s fastest growing digital asset platform with $10 billion in assets under management and custody. It offers one-stop crypto financial solutions including fixed income, DeFi in 1-click, structured products, Cactus Custody™, spot OTC and lending. Go download the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users. 

* Ethernity.io is the world’s first authenticated and licensed NFT platform, trusted by over 150,000 members. Visit Ethernity.io, where you can buy and sell authenticated NFTs from top notable figures, rights, license, and IP holders you can’t find anywhere else; the start of an entire ecosystem bringing utility to #NFTs.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

We have all heard Albert Einstein’s famous quote that “compounding is the eighth wonder of the world” and “he who understands it, earns it; he who doesn't, pays for it.” This concept sounds great as a theory, but there is something incredible when you actually see it play out in reality.

The most recent example is when I saw Garry Tan tweet this excerpt from The Psychology of Money about Warren Buffett:

This means that Warren Buffett accumulated 99% of his net worth in the second half of his life and 96% of his wealth after he qualified for social security. There may not be any better example of compounding in the financial world.

Now one of the important things that many people miss in this analysis is that Warren Buffett has been fortunate enough to live to 91 years old. If he had passed away in his 60s, 70s, or 80s, the compounding story would never be told to the severity that it is today. Additionally, he took full control of Berkshire Hathaway in 1965 and has remained in control ever since.

The average life expectancy in America is just under 79 years old and the average tenure for a public company CEO is just under 7 years. Warren Buffett has drastically outperformed both of those metrics, which helps him continue to benefit from compounding. As Buffett’s partner Charlie Munger says, “the first rule of compounding is to never interrupt it unnecessarily.”

Here is an interesting angle for you though — In response to the Buffett example, Paul Graham posed the question: “I wonder how much of the increase in economic inequality is due simply to people living longer.”

It is impossible to quantitatively arrive at a concrete answer, but there is definitely some anecdotal evidence that would suggest Graham is onto something. The average life expectancy in 1975 was 71.4 years and in 1990 it was 74.8 years. People are definitely living longer.

If you have bad money habits, your financial situation will only continue to get worse the longer you live. The same is true if you have good money habits. The longer you live, the better your financial position. This is ultimately what Warren Buffett understands better than most. The pursuit of compounding over long periods of time is a competitive advantage.

So how does this play out in financial markets?

Over the past 30 years, the S&P 500 index has delivered a compound average annual growth rate of 10.7% per year. This means that if you start with $10,000 it would have grown into more than $211,000 over the 30 year period. Compare this with Bitcoin, which has a compound annual growth rate of 161.4% over the last decade, and you can see why so many young bitcoin investors are outperforming their stock investing peers.

These data points made me think about an important piece of advice that a well respected hedge fund manager once told me — most of your financial returns will come from the markets you select to invest in, rather than the actual securities you decide to hold. Another way to think about it is through the lens of entrepreneurship advice “When a good team meets a bad market, the market wins. When a bad team meets a good market, the market wins.”

So much of compounding is predicated on the idea that a high rate of compounding will continue for decades. If you’re successful in finding one of these markets, the challenge won’t be in making many good decisions, but rather in having the discipline and emotional control to avoid making any decisions at all. This is ultimately where I think bitcoin is at the moment. It continues to compound at an impressive rate. You just have to be patient enough to outlast everyone who can’t think long term.

Hope you have a great Tuesday. I’ll talk to everyone tomorrow.

-Pomp

THE RUNDOWN:

Narendra Modi's Twitter Account Hacked With Announcement India Would Adopt Bitcoin: Narendra Modi's Twitter handle was "very briefly compromised," his office said, when a tweet was sent from the Indian Prime Minister's account saying his country had adopted Bitcoin and would be distributing the cryptocurrency. "The matter was escalated to Twitter and the account has been immediately secured," the Indian PM's office said in a tweet on Sunday. "In the brief period that the account was compromised, any Tweet shared must be ignored," officials added. Read more.

Robinhood Working on New Crypto Gifting Feature: Code discovered in a beta version of Robinhood’s iPhone app reveals the popular no-fee trading platform is considering adding a feature that allows users to send cryptocurrency to each other via digital gift cards, according to a Bloomberg report. Read more.

Sportswear Giant Nike Purchases NFT Fashion and Collectibles Startup RTFKT: Multinational footwear behemoth Nike just took a big step into the metaverse. On Friday, NFT collectibles and fashion startup RTFKT announced on Twitter that the company had been acquired by Nike. The terms of the deal were not disclosed. Read more.

Elon Musk Named Time’s Person of the Year, Says Crypto Unlikely to Replace Fiat: Time Magazine named Elon Musk its Person of the Year for 2021 on Monday, and in an interview with the publication the world’s richest person said he “doubts that crypto will replace fiat currency.” Time called 2021 “the year of Elon Unbound,” given the many notable statements, actions and accomplishments of Musk, the CEO of Tesla and SpaceX. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Nick Huber an Entrepreneur, Investor and the founder of Sweaty Startup. He's built a great portfolio of self-storage facilities and service businesses.

In this conversation, we discuss real estate, inflation, cash flow businesses, and how young people can get started today.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Mode allows you to buy, earn and grow Bitcoin, all in one app. Not only is it an easy and safe way to buy and hold Bitcoin, Mode allows you to pay and receive up to 10% Bitcoin Cashback for FREE from its growing list of online partner brands. Download Mode today and enjoy 0% trading fees on all Bitcoin buys and sells until Dec 31, 2021. Only available in the UK. 

* Cryptocurrency is the future, so don’t get left in the past, bet with MyBookie and you can get in the game now! The best part is, MyBookie accepts well-known cryptocurrencies like Bitcoin and Ethereum so you can bet and withdraw with Crypto. To get you kickstarted with crypto, use my promo code (POMP) to double your first crypto deposit up to at MyBookie.

* Coin Cloud has been serving customers since 2014 and has established itself as the world's leading digital currency machine (DCM) operator. More than just a Bitcoin ATM, Coin Cloud machines make it easy to buy and sell Bitcoin and 30+ other digital assets with cash. To get your $50 in free Bitcoin, visit www.Coin.Cloud/Pomp 

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in bitcoin and 19 other digital assets inside your IRA. Choice enables you to trade real bitcoin, other crypto, and stocks without having to pay a dime in capital gains. Join me and the 20,000 other bitcoiners who have started their tax-efficient stack, and open your Choice Account today. Search ‘stack sats’ in the app store or visit www.choiceapp.io/pomp  

* BlockFi provides financial products for crypto investors. Products include high-yield interest accounts, USD loans, and no fee trading. To start earning today visit: http://www.blockfi.com/Pomp

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 other cryptocurrencies. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days.

* CityCoins are programmable tokens that allow citizens to become stakeholders in their favourite cities. MiamiCoin was the first CityCoin launched and within it’s first two months it has already raised over $10 million USD in donations for the City of Miami. Join the CityCoins Discord to become part of the community, and help us build towards a crypto civilization.

* Crypto.com allows you to buy, sell, store, earn, loan, and invest various cryptocurrencies in an user-friendly mobile app. Join over one million users today. You can download and earn $50 USD with my code “pomp” when you sign up for one of their metal cards today.

* Circle Yield offers qualified businesses superior returns on USDC holdings for terms of up to 12 months. Managed by professional financial institutions, Circle Yield is the best way to earn returns on your USDC. Visit circle.com/pomp today; terms apply.

* Nasdaq-listed BTCS was the first US-public company to secure today’s top layer one protocols. Recently, BTCS launched the beta version of its digital asset analytics dashboard! From across multiple exchanges, the BTCS Data Analytics Dashboard lets you evaluate your entire portfolio’s performance with plans to add year-end reports and yield earning on your crypto through linking to staking pools. Test out the BTCS Data Analytics Dashboard today at BTCS.com  

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services - offering clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

* Okcoin is one of the most popular licensed exchanges. Okcoin is the first to bring new cryptos to market, offering some of the lowest fees in the industry, an easy to use app, and Earn feature! It’s easier than ever to sign up, buy and trade crypto in just 2 minutes on Okcoin with credit & debit cards or just link your bank account to the best new crypto assets. So get started, and go to okcoin.com/pomp

* Matrixport is Asia’s fastest growing digital asset platform with $10 billion in assets under management and custody. It offers one-stop crypto financial solutions including fixed income, DeFi in 1-click, structured products, Cactus Custody™, spot OTC and lending. Go download the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users. 

* Ethernity.io is the world’s first authenticated and licensed NFT platform, trusted by over 150,000 members. Visit Ethernity.io, where you can buy and sell authenticated NFTs from top notable figures, rights, license, and IP holders you can’t find anywhere else; the start of an entire ecosystem bringing utility to #NFTs.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

There was an article in the Financial Times recently that discussed market cycles, sell-offs, and investor risks. My friend Josh Wolfe from Lux Capital shared it on Twitter with a fairly sober warning that most young investors haven’t experienced a market downturn. Here is the article and the tweet:

This got me thinking — has the generation of 35 year olds and younger actually never experienced a market downturn?

We know that the 2009 - 2020 performance of the stock market was the single longest bull market in history. The trailing 10 year performance of the S&P 500 from today is approximately 265%. By numerous methods of evaluation, you could argue that financial assets and markets have done remarkably well over the last 12 years.

So why are we talking about this?

The more that I thought about this perspective, the more that I disagreed with it. In fact, I want to make the argument that people under the age of 35 have experienced some of the worst market downturns in history over the last 12 years. I know this is counter to the public narrative, but hear me out for a second.

First, college students who were graduating in 2009 were thrust into the Global Financial Crisis. This was the worst economic downturn since the Great Depression in the United States. While they may not have had many personal financial assets, a large percentage of them saw their parents, friends, and family get wiped out financially. The job market was excruciatingly tough and many of these young people were forced to live at home with their parents for a few years until they got their feet under them.

Although the multi-year bear market technically ended in March of 2009, there was still immense pain felt by people across the economy for a number of years. Take job growth for example - we didn’t see positive growth until March 2010 (a full year after the market downturn ended).

So these young people graduated right into one of the worst economic crisis in history. But that isn’t the only economic crisis they have endured. These same investors were in their early 30’s last year when they lived through a second economic recession. The COVID-19 public health crisis led to a swift economic downturn and tough labor market.

During March of 2020, all financial assets were falling at a blistering pace. Gold was down more than 10%, stocks were down 25-35%, and bitcoin was down more than 50% in a single day. There were multiple weeks where more than 6.5 million people filed for first time unemployment claims and the unemployment rate reached nearly 15% at one point. On top of that, business owners and leaders were faced with the single toughest business environment of the last 50 years — they were asked to continue to run their business while being locked in their homes by their government.

Now we quickly forget the economic recession of 2020 because the central bank and government stepped in with an incredible amount of monetary and fiscal stimulus, which drove asset prices upwards quickly. But that doesn’t take away from the fact that (a) investors lived through an incredibly painful drawdown in financial markets and (b) that citizens who lost their jobs or had their businesses impaired were still dealing with the effects for many months later.

Ok, so we have a demographic of investors that have lived through two of the worst financial markets in the last 50-100 years. That is the totality of the story, right? Nope.

We forget that young people have been investing in bitcoin and cryptocurrencies in a fairly significant way for a number of years. During that time, there have been three separate bear markets of at least an 80% drawdown in prices since 2011. Yes, you read that right. 80% drawdowns have happened THREE TIMES since 2011.

I’ll give the benefit of the doubt and say that most people were not invested in the market in 2011, or even pre-2017. But by 2017, numerous exchanges had tens of millions of users and there were hundreds of billions of dollars in market cap across the assets in the crypto industry.

Those investors who were participating in the 2017 crypto bull market got smacked in the face with a year long market crash in 2018 that saw bitcoin drop more than 80% and many other assets drop more than 95%. You could easily argue that the crypto market participants in 2018 experienced a market crash that is worse than any single market crash the stock market has ever seen. It may sound like hyperbole, but it is just math.

The crazy thing about that market crash in 2018? Majority of bitcoin holders never sold their assets. They simply held it.

Stanley Druckenmiller actually cited this as the reason that he decided to invest in bitcoin. He recently shared that Paul Tudor Jones called him and said “Do you know that when bitcoin went from $17,000 to $3,000 that 86% of the people that owned it at $17,000, never sold it?” Maybe the young people were on to something with their strong hands.

This brings us to 2021. Just this year, there have been six separate market downturns of over 20% in the first 11 months of the year. There was one drawdown of more than 50% as well. Even if you had never invested in bitcoin or cryptocurrencies before 2021, you likely experienced more 20% drawdowns this year than all 20% drawdowns in the stock market for the boomer generation’s total lifetime. Pretty crazy stuff.

So what is my point in explaining all this?

The public narrative is that young people have never experienced a market downturn. The older generations, the cynics, and the persistent bears like to propel a narrative that asset prices are being pushed up by young, naive investors who have never seen a bear market. That simply isn’t true though.

The generation of investors who are under the age of 35 have actually lived through worse financial markets than any other generation of financial investors. How many of them can claim to have lived through at least five market downturns in 12 years? Additionally, how many folks in the older generations can say they lived through an 80-95% market downturn and didn’t sell their assets, but instead bought more?

Young investors are the most resilient investors in history. They truly have diamond hands. The incumbents don’t have the stomach for this type of volatility. You could actually argue, digital natives are just built different. They store majority of their wealth in assets that have 80 vol and fluctuate 5-10% a day.

This is what happens when we live in a world with undisciplined monetary and fiscal policy. The young people refuse to play the game based on old rules. They understand that bear markets in the stock market have been outlawed and market corrections are banned. The central bank and politicians have to step in every time and prop up asset prices. And alternative assets, like bitcoin and cryptocurrencies, are the only honest market left.

Keep this in mind as you continue to watch the insanity in the legacy market. Hope you all have a great start to your day. Talk to you tomorrow.

-Pomp

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THE RUNDOWN:

Fed Chairman Jerome Powell Retires the Word 'Transitory' in Describing Inflation: The nation’s economic steward said it will back off of using the word “transitory” to describe the fast pace of price increases, as Federal Reserve policymakers acknowledge the increasing risk of more persistent inflation. “We tend to use [the word transitory] to mean that it won’t leave a permanent mark in the form of higher inflation,” Fed Chairman Jerome Powell told Congress on Tuesday. “I think it’s probably a good time to retire that word and try to explain more clearly what we mean.” Read more.

Libra Creator David Marcus Says He’s Leaving Facebook at Year’s End: David Marcus is leaving Facebook (now Meta) with the company’s libra (now diem) stablecoin yet to be fully launched. He said Tuesday on Twitter he was stepping down as Meta’s crypto lead and leaving the company, suggesting he’d return to his “entrepreneurial” roots. Marcus leaves the Diem project, first announced in June 2019, as it continues to face stiff regulatory headwinds. Read more.

A16z Leads $28M Round for Privacy Coin Iron Fish: Iron Fish, a decentralized blockchain network that aims to create a cryptocurrency as private as cash, has raised $27.7 million in a Series A round led by Andreessen Horowitz (a16z) ahead of the network’s Dec. 1 testnet launch. “While a number of Web 3 teams are now building developer-oriented privacy tools for blockchains, there’s also a need for mainstream privacy solutions that are accessible for everyday users,” wrote a16z general partner Ali Yahya, deal analyst Elena Burger and crypto partner Guy Wuollet in a blog post. Read more.

Five Things to Know About Twitter’s New CEO Parag Agrawal: Twitter’s co-founder and long-serving CEO, Jack Dorsey, handed the reins to former Chief Technology Officer Parag Agrawal on Monday. Here are five things to know about the new leader of one of the world’s biggest tech companies. Read more.

Borderless Capital Launches $500M Algorand-Focused Fund: Borderless Capital is launching a $500 million ALGO Fund II to help develop projects built on the Algorand blockchain. The company announced on Tuesday the fund will invest in “digital assets powering the next generation of decentralized applications on top of the Algorand blockchain network,” including projects “to disrupt the creators economy with [non-fungible tokens] and initiatives that can increase capital in the ALGO [decentralized finance] ecosystem through liquidity mining, lending, borrowing and yield farming,” the company said in the press release. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Steven Nelkovski is the CEO and Patrick O'Sullivan is the Chief Bitcoin Officer of the Perth Heat, an Australian Baseball Team. They have fully converted their entire organization to a Bitcoin Standard by holding Bitcoin on their balance sheet. They will be paying players in Bitcoin, accepting payments in Bitcoin at their stadium, and placing Bitcoin logos on the team merchandise.

In this conversation, we discuss pitching the idea to the organization, creating a Chief Bitcoin Officer role, paying players in Bitcoin, and the future of their team on the Bitcoin Standard.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Mode allows you to buy, earn and grow Bitcoin, all in one app. Not only is it an easy and safe way to buy and hold Bitcoin, Mode allows you to pay and receive up to 10% Bitcoin Cashback for FREE from its growing list of online partner brands. Download Mode today and enjoy 0% trading fees on all Bitcoin buys and sells until Dec 31, 2021. Only available in the UK.

* Coin Cloud has been serving customers since 2014 and has established itself as the world's leading digital currency machine (DCM) operator. More than just a Bitcoin ATM, Coin Cloud machines make it easy to buy and sell Bitcoin and 30+ other digital assets with cash. To get your $50 in free Bitcoin, visit www.Coin.Cloud/Pomp 

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in bitcoin and 19 other digital assets inside your IRA. Choice enables you to trade real bitcoin, other crypto, and stocks without having to pay a dime in capital gains. Join me and the 20,000 other bitcoiners who have started their tax-efficient stack, and open your Choice Account today. Search ‘stack sats’ in the app store or visit www.choiceapp.io/pomp  

* BlockFi provides financial products for crypto investors. Products include high-yield interest accounts, USD loans, and no fee trading. To start earning today visit: http://www.blockfi.com/Pomp

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 other cryptocurrencies. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days.

* CityCoins are programmable tokens that allow citizens to become stakeholders in their favourite cities. MiamiCoin was the first CityCoin launched and within it’s first two months it has already raised over $10 million USD in donations for the City of Miami. Join the CityCoins Discord to become part of the community, and help us build towards a crypto civilization.

* Crypto.com allows you to buy, sell, store, earn, loan, and invest various cryptocurrencies in an user-friendly mobile app. Join over one million users today. You can download and earn $50 USD with my code “pomp” when you sign up for one of their metal cards today.

* Circle Yield offers qualified businesses superior returns on USDC holdings for terms of up to 12 months. Managed by professional financial institutions, Circle Yield is the best way to earn returns on your USDC. Visit circle.com/pomp today; terms apply.

* Nasdaq-listed BTCS was the first US-public company to secure today’s top layer one protocols. Recently, BTCS launched the beta version of its digital asset analytics dashboard! From across multiple exchanges, the BTCS Data Analytics Dashboard lets you evaluate your entire portfolio’s performance with plans to add year-end reports and yield earning on your crypto through linking to staking pools. Test out the BTCS Data Analytics Dashboard today at BTCS.com 

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services - offering clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

* Okcoin is one of the most popular licensed exchanges. Okcoin is the first to bring new cryptos to market, offering some of the lowest fees in the industry, an easy to use app, and Earn feature! It’s easier than ever to sign up, buy and trade crypto in just 2 minutes on Okcoin with credit & debit cards or just link your bank account to the best new crypto assets. So get started, and go to okcoin.com/pomp

* Matrixport is Asia’s fastest growing digital asset platform with $10 billion in assets under management and custody. It offers one-stop crypto financial solutions including fixed income, DeFi in 1-click, structured products, Cactus Custody™, spot OTC and lending. Go download the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users. 

* Ethernity.io is the world’s first authenticated and licensed NFT platform, trusted by over 150,000 members. Visit Ethernity.io, where you can buy and sell authenticated NFTs from top notable figures, rights, license, and IP holders you can’t find anywhere else; the start of an entire ecosystem bringing utility to #NFTs.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

Bitcoin’s on-chain distribution continues to become more decentralized over time. We can explicitly prove this claim by looking at the on-chain metrics, which offer unique insight into the amount of bitcoin that is held by each individual bitcoin address.

First, let’s take a look at the largest holders of bitcoin on-chain. We can see that the number of bitcoin addresses with at least 10,000 bitcoin in their balance peaked in October 2018. Bitcoin's price was ~ $6,500 and we were about to get the final puke down in price of the 2018 bear market.

If we look at an order of magnitude smaller, the number of bitcoin addresses with a balance of 1,000 bitcoin or more peaked in February of 2021. There are currently about 2,100 bitcoin addresses that hold 1,000 bitcoin or more, which is very similar to where we were throughout most of 2020.

Now let’s take a look at bitcoin addresses with a balance of 100 bitcoin or more. The all-time high for that measurement peaked in February 2017, which was before the craziness of the 2017 bull market. At the time, there were about 18,500 bitcoin addresses that met the criteria, but today we have only approximately 16,100 bitcoin addresses with 100 bitcoin or more.

But here is what is really interesting — bitcoin addresses with at least 0.01 bitcoin or 0.1 bitcoin in their balance have continued to hit all-time highs. Today, there has never been more bitcoin addresses on-chain in the 12 year history that hold these smaller amounts of bitcoin.

Here is the 0.01 bitcoin balance chart, which shows more than 9.33 million bitcoin addresses:

Here is the 0.1 bitcoin balance chart, which shows more than 3.28 million bitcoin addresses:

These distribution charts are noteworthy because they highlight a very important part of the bitcoin story. As time goes on, the digital store of value continues to become more decentralized. This increase in decentralized ownership is not only a positive security feature, but it also means that the benefits of economic empowerment that bitcoin presents will eventually be enjoyed by more people globally.

You can think of the distribution of bitcoin holders as one piece of a three-legged stool. Bitcoin miners continue to get more decentralized over time and we continue to see more bitcoin node operators popping up around the world. This symbiotic relationship between holders, miners, and node operators allows bitcoin to gain strength, while continuing to run effectively without a CEO or centralized control.

Bitcoin’s design is beautiful and things are playing out exactly how they were intended. The electronic peer-to-peer cash system is evolving into a fully decentralized, digital store of value that can’t be debased, censored, or manipulated.

Hope each of you has a great start to your week. I’ll talk to everyone tomorrow.

-Pomp

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THE RUNDOWN:

El Salvador Buys 100 More Bitcoins as Crypto Market Falls: The government of El Salvador bought 100 more bitcoin, President Bukele tweeted on Friday, while the price of the largest crypto currency by market-cap fell near $54,000. “El Salvador just bought the dip. 100 extra coins acquired with a discount,” Bukele said. Bitcoin price fell about 8% on Friday around $54,237, as broader markets tumble on new COVID-19 variant fear. Read more.

Crypto.com to Sponsor Latin America’s Leading Soccer Competition: After renaming the Staples Arena in a $700 million deal in November, Singapore-based crypto exchange Crypto.com will become an official partner of Latin America’s leading soccer competition, CONMEBOL Libertadores. Through an agreement with CONMEBOL, the governing body for soccer in South America, Crypto.com will serve as an official partner of CONMEBOL Libertadores from 2023 to 2026 and as a licensee of the competition’s official non-fungible tokens as of 2022, the company said in a statement Thursday, without disclosing further terms. Read more.

Japanese Consortium Plans to Issue Bank Deposit-Like Digital Yen by End of Next Year: A consortium of 74 Japanese firms is planning to issue a digital yen that will work similar to bank deposits by the end of 2022, the consortium’s secretariat, DeCurret, said in a white paper and a progress report published on Wednesday. To ensure the stability of the digital currency, the consortium, dubbed Digital Currency Forum, is proposing a model similar to how bank deposits work, according to the white paper. The digital yen will be issued by banks as their liability, the paper added. Read more.

Hackers Are Attacking Cloud Accounts to Mine Cryptocurrencies, Google Says: Hacked Google Cloud accounts were used by 86% of the “malicious actors” to mine crypto currencies, according to a new report. Of the 50 hacked Google Cloud Platforms or GCPs, 86% of them were used for cryptocurrency mining, which typically consumes large amounts of computing resources and storage space, Google’s Cybersecurity Action Team wrote in the report. The remainder of the hacking activities included phishing scams and ransomware. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Preston Pysh is a financial investor and host of the "We Study Billionaires" podcast.

In this conversation, we discuss negative yielding debt, increasing stress on pension plans, and how Bitcoin can solve recent macro economic problems.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Podcast Sponsors

These companies make the podcast possible, so go check them out and thank them for their support!

* Mode allows you to buy, earn and grow Bitcoin, all in one app. Not only is it an easy and safe way to buy and hold Bitcoin, Mode allows you to pay and receive up to 10% Bitcoin Cashback for FREE from its growing list of online partner brands. Download Mode today and enjoy 0% trading fees on all Bitcoin buys and sells until Dec 31, 2021. Only available in the UK.

* Coin Cloud has been serving customers since 2014 and has established itself as the world's leading digital currency machine (DCM) operator. More than just a Bitcoin ATM, Coin Cloud machines make it easy to buy and sell Bitcoin and 30+ other digital assets with cash. To get your $50 in free Bitcoin, visit www.Coin.Cloud/Pomp 

* Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit compassmining.io to start mining bitcoin today!

* Choice is rebuilding the way bitcoiners approach retirement by making it possible to invest in bitcoin and 19 other digital assets inside your IRA. Choice enables you to trade real bitcoin, other crypto, and stocks without having to pay a dime in capital gains. Join me and the 20,000 other bitcoiners who have started their tax-efficient stack, and open your Choice Account today. Search ‘stack sats’ in the app store or visit www.choiceapp.io/pomp  

* BlockFi provides financial products for crypto investors. Products include high-yield interest accounts, USD loans, and no fee trading. To start earning today visit: http://www.blockfi.com/Pomp

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 other cryptocurrencies. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days.

* CityCoins are programmable tokens that allow citizens to become stakeholders in their favourite cities. MiamiCoin was the first CityCoin launched and within it’s first two months it has already raised over $10 million USD in donations for the City of Miami. Join the CityCoins Discord to become part of the community, and help us build towards a crypto civilization.

* Crypto.com allows you to buy, sell, store, earn, loan, and invest various cryptocurrencies in an user-friendly mobile app. Join over one million users today. You can download and earn $50 USD with my code “pomp” when you sign up for one of their metal cards today.

* Circle Yield offers qualified businesses superior returns on USDC holdings for terms of up to 12 months. Managed by professional financial institutions, Circle Yield is the best way to earn returns on your USDC. Visit circle.com/pomp today; terms apply.

* Nasdaq-listed BTCS was the first US-public company to secure today’s top layer one protocols. Recently, BTCS launched the beta version of its digital asset analytics dashboard! From across multiple exchanges, the BTCS Data Analytics Dashboard lets you evaluate your entire portfolio’s performance with plans to add year-end reports and yield earning on your crypto through linking to staking pools. Test out the BTCS Data Analytics Dashboard today at BTCS.com 

* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services - offering clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

* Okcoin is one of the most popular licensed exchanges. Okcoin is the first to bring new cryptos to market, offering some of the lowest fees in the industry, an easy to use app, and Earn feature! It’s easier than ever to sign up, buy and trade crypto in just 2 minutes on Okcoin with credit & debit cards or just link your bank account to the best new crypto assets. So get started, and go to okcoin.com/pomp

* Matrixport is Asia’s fastest growing digital asset platform with $10 billion in assets under management and custody. It offers one-stop crypto financial solutions including fixed income, DeFi in 1-click, structured products, Cactus Custody™, spot OTC and lending. Go download the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users. 

* Ethernity.io is the world’s first authenticated and licensed NFT platform, trusted by over 150,000 members. Visit Ethernity.io, where you can buy and sell authenticated NFTs from top notable figures, rights, license, and IP holders you can’t find anywhere else; the start of an entire ecosystem bringing utility to #NFTs.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

I thought it would be fun to assemble the most breathtaking photos that I could find related to bitcoin mining as we head into Thanksgiving here in the United States. The bitcoin miners spend immense time, effort, and capital to help secure the world’s strongest computer network. Here are some visualizations of their work:

These are two Bloomberg photographs from inside Bitriver, the largest data center in Russia, which is attached to the Bratsk aluminum plant (the largest in the world). You can see that they have 3-story high stacks of bitcoin miners that run 24/7/365. This 100 megawatt facility requires immense cooling from fans that run throughout the building, which is insane to think about since the data center is located in an incredibly cold climate.

This is a photo of Bitmain’s mining facility that was previously operated in Inner Mongolia, China. You can see that the site held rows of buildings that were outfitted to run bitcoin miners, including the sides of each wall containing the necessary cooling to run the machines all day, every day.

Inside of Bitmain’s Inner Mongolia site, you can see that they simply had racks and racks of bitcoin miners constantly working to produce as much bitcoin as possible.

The Bitfury mining farm in Amsterdam is one of the cleanest ones that you will likely find. This was rumored to have started as early as 2011 by Valery Vavilov.

In contrast, the Dalian mining farm in China may not look like much from the outside, but this location was mining approximately 750 bitcoin per month at one point. They were also able to boast at the time that they were one of the largest bitcoin miners in the world.

This is an iconic photo from TIME that shows a bitcoin mining farm located right next to a hydropower station in Sichuan region of China.

Here we have one of Crusoe Energy’s gas flare mitigation sites in Montana. Not only do these types of bitcoin mining farms prevent destruction to the environment, but they are a great way to monetize power that was previously hard to profit from. It is a win-win for the energy producer and the bitcoin miners.

This is a photo of liquid immersion bitcoin mining machines at a Beeminer facility. You can see how closely packed the machines are, along with how effective the liquid cooling must be in order to efficiently run a setup like this.

Lastly, this is a picture of the geothermal energy facility that is built into a volcano in El Salvador, which is now home to bitcoin mining equipment thanks to the country’s President and his new interest in bitcoin. Also, the Blockstream team was recently on the ground in El Salvador and was able to hook this bitcoin mining facility up to their satellite infrastructure, which is pretty cool too.

I share these photos with each of you today because it is a reminder that there is a lot of incredibly cool stuff going on to support and secure the bitcoin network. The system has no CEO, no employees, and never raised a dollar of venture capital money. People from around the world have flocked to it though and they continue to make it more powerful over time.

Enjoy your Thanksgiving with family and friends. I won’t be writing Thursday or Friday this week, so I will talk to you all again on Monday.

-Pomp

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* LMAX Digital is the market-leading solution for institutional crypto trading & custodial services - offering clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

* Okcoin is one of the most popular licensed exchanges. Okcoin is the first to bring new cryptos to market, offering some of the lowest fees in the industry, an easy to use app, and Earn feature! It’s easier than ever to sign up, buy and trade crypto in just 2 minutes on Okcoin with credit & debit cards or just link your bank account to the best new crypto assets. So get started, and go to okcoin.com/pomp

* Matrixport is Asia’s fastest growing digital asset platform with $10 billion in assets under management and custody. It offers one-stop crypto financial solutions including fixed income, DeFi in 1-click, structured products, Cactus Custody™, spot OTC and lending. Go download the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users. 

* Ethernity.io is the world’s first authenticated and licensed NFT platform, trusted by over 150,000 members. Visit Ethernity.io, where you can buy and sell authenticated NFTs from top notable figures, rights, license, and IP holders you can’t find anywhere else; the start of an entire ecosystem bringing utility to #NFTs.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable.

Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe