The Pomp Letter

To investors,

The President of El Salvador announced on Saturday night that he was planning to build the world’s first “Bitcoin city,” which would live at the foot of a volcano in his country. There is a lot to unpack here. Before we get into the details though, it is important to remember what El Salvador and President Bukele have already accomplished.

The country announced in June at the Bitcoin Conference that they would make the digital currency legal tender across the nation. This legislation was proposed and approved just a few days later, which eventually led to “bitcoin is legal tender” going into effect in September of this year. Along with the legal tender decision, El Salvador has also created and launched a bitcoin wallet and payment system named Chivo, which has been downloaded and used by more than 50% of the 6.5 million Salvadorians. Bukele and his team then created a network of more than 200 bitcoin ATMs that have been spread across El Salvador to help onboard more bitcoin users. Lastly, the government created a bitcoin mining facility at one of the many volcanoes in the country so they could leverage volcano energy to mine bitcoin.

This context is important because President Bukele has a track record of not only successfully executing on his plans, but doing so in lightning fast speed. We live in an age of politics where you can discount almost any announcement and reliably believe a very small percentage of plans will actually be accomplished — that doesn’t seem to be the case in El Salvador at the moment.

So the country isn’t scared to make big announcements and then has a track record of delivering on them…great. But what about Bitcoin City?

The general idea here is to create a brand new city that would serve as the shining example of what is possible in the 21st century. Bukele specifically referenced the need for nation states and leaders to build modern-day versions of what Alexander the Great built in Alexandria, Egypt. The city’s ancient history is described with the following:

“Alexandria was best known for the Lighthouse of Alexandria (Pharos), one of the Seven Wonders of the Ancient World, its Great Library (the largest in the ancient world), and the Necropolis, one of the Seven Wonders of the Middle Ages. Alexandria was the intellectual and cultural centre of the ancient Mediterranean for much of the Hellenistic age and late antiquity. It was at one time the largest city in the ancient world before being eventually overtaken by Rome.”

The idea of Bitcoin City in El Salvador would include a quadruple-threat approach to an urban location — renewed ideas around energy, physical space, and taxation.

First, the energy approach is simple. The city will have no CO2 emissions and everything will be powered by the volcano that sits adjacent to the planned site. I’m not an expert on volcanic energy, nor do I have enough understanding of urban electrical grids to evaluate the potential efficacy of this plan. But the idea of using volcanoes to power energy demand isn’t a groundbreaking idea, so let’s give them the benefit of the doubt that this will be relatively straightforward to pull off.

Second, the physical space will be a fully functioning city. Everything from an airport to housing to commercial real estate. The overall shape of the city will be circular in design and will include a central plaza, where people can gather, that will look like the bitcoin symbol from above. These ideas are not new. In fact, they are quite old, especially given some of the inspiration goes as far back as Alexander the Great. The renewed focus on applying these old ideas is what makes it novel in modern society.

Third, there will be no income, capital gains, property, payroll, or municipal taxes in Bitcoin city. Yes, you read that right. The only taxation of a citizen in Bitcoin City would be a 10% sales tax. Every other tax plan that you have grown accustomed to in the developed world will be absent for residents.

It is easy to see why people are getting excited about this new city, but you may be wondering why it is called Bitcoin City?

It isn’t because bitcoin will be legal tender - bitcoin is legal tender in every city in El Salvador. It isn’t because many bitcoiners will consider moving there, although that is the hope. The new city is being called Bitcoin City because it will partially be funded by bitcoin-backed bonds.

This is where things get interesting. The local government will be issuing a $1 billion tokenized bond that will carry a 6.5% yield for investors. Approximately $500 million will go towards building the city, maintaining the infrastructure, and generally solving the cold start problem when you create a new place for people to live. The other $500 million in proceeds from the bond offering will be invested in bitcoin.

These are considered bitcoin-backed bonds for two reasons: (1) half of the bond proceeds will be invested in bitcoin and (2) the bonds will be tokenized on Blockstream’s Liquid side-chain. Both of these concepts are novel and innovative.

Here is the description from Blockstream’s blog post:

“Today, the president of El Salvador and I have announced that they will be issuing a $1 billion US “Bitcoin Bond” on the Liquid Network. The $1 billion US raised will be split between a $500M allocation of bitcoin (BTC) and a $500M infrastructure spend for building out energy and Bitcoin mining infrastructure in the region.

El Salvador also aims to create a government securities law and grant a license to Bitfinex Securities to process the bond issuance.”

They go on to talk about a special dividend from the bond as well:

“The Bitcoin Bond will have special dividends dispersed on an annual basis generated by the staggered liquidation of bitcoin. Using Blockstream’s Asset Management Platform (AMP), dividends are easily paid out to bond holders.

Since we’re using the Liquid Network and Blockstream AMP, we’re also able to easily accept investments as small as $100 to democratize access to the bond.”

And finally, the blog post culminates with the following statement:

“The Bitcoin Bond represents the start of a reformation of capital markets, built on Bitcoin and layer-2 technologies like the Liquid Network. Now, investment capital can flow in from around the globe without friction. Dividends can be distributed to investors instantly, with built-in cryptography to maintain confidentiality. Bonds can be traded 24/7 with other assets like stablecoins, using protocols that help eliminate the need for trust.

Bitcoin will save the day.”

There are two main takeaways that I have from the early information that we have received. First, El Salvador is plugging their entire country into the bitcoin network in the same way that MicroStrategy plugged their company in the network last year. This will likely prove to be an incredibly intelligent decision, but it will also create a number of fast followers that will attempt to emulate pieces of the El Salvador plan.

Second, I would imagine there will be immense interest in the El Salvador bitcoin-backed bonds. They are reportedly going to carry a 6.5% yield, which would make them competitive in the market by itself, but the bitcoin-backing means that they will become even more attractive. If El Salvador is able to easily capture demand for the bonds, you can anticipate them to issue many more of them, along with having a multitude of countries, states, and cities racing to do the same.

People around the world will have a million questions about the plan, how the government expects to execute it, and what their ultimate intentions are. I don’t pretend to have those answers, but it is obvious that no one is pushing the pace of innovation and experimentation at the nation state level faster and further than the country of El Salvador.

No one had nation state adoption of bitcoin on their 2021 bingo cards, which means it is unlikely that anyone had bitcoin-backed bonds to build Bitcoin City in a country where bitcoin is legal tender on their bingo cards either. We are living in wild, unprecedented time. Now would be a good time to start paying attention.

The world is changing. No one can predict the future, but we sure can study intently what is happening right now. Hope everyone has a great start to their week. I’ll talk to you all tomorrow.

-Pomp

GET HIRED IN CRYPTO: Are you looking for a job in the bitcoin and crypto industry, but don’t feel like you understand the nuances of the industry well enough to be hired? We have a training program aimed at helping people just like you.

The 3 week intensive course was created with the help of the HR teams at top companies in the industry and has seen graduates get hired at Coinbase, Gemini, BlockFi, Kraken, Anchorage, Strike, BTC Inc, and many more.

Our next cohort starts November 30th. APPLY HERE: www.pompscryptocourse.com

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

This is a throwback episode that was recorded with Murad Mahmudov that was recorded on October 31, 2008. It was only the 25th episode we had created for the podcast.

In the conversation, Murad explains why he is so bullish on bitcoin, including the path to bitcoin reaching $10 million per coin. Enjoy!

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,

Financial markets have been on a tear for the last 12 months. Everything in your portfolio appears to be going up at an exciting rate. If I were to ask each of you the performance of your portfolio, you would quote me a percentage increase on a nominal basis. If I then asked you for the real rate of return, you would take the nominal number and subtract 6%+ inflation to get the real rate.

The problem?

Your nominal rate of return is based on a comparison to an asset that continues to fluctuate in value, so it doesn’t adequately represent the true return on investment that you are capturing.

Let me explain more.

Every investor in the western world denominates their portfolio in US dollars. They quote the prices of their stocks, bonds, and commodities in the US dollar exchange rate. When they say that the S&P 500 is up 29% over the trailing 12 months, they are explicitly highlighting the difference between the dollar value and the stock market.

But we are living in a time where there has been historic expansion of the money supply, which means that the S&P 500 appreciating in value could have as much to do with the dollar depreciating in value as it could with the stock market actually increasing in value. This makes it tough to measure true value creation and value capture by investors.

A better way to look at the value of your portfolio, and any appreciation or depreciation, is to denominate the assets in bitcoin. Now before you roll your eyes and move on to the next notification, hear me out. Bitcoin is a digital store of value that has a finite supply. It also has a much lower inflation rate (1.78%) than majority of the currencies that you have previously used to denominate your portfolio.

When you look at the S&P 500 denominated in bitcoin, it doesn’t look pretty. Here is the all-time performance.

And then here is the one year chart of the S&P 500 denominated in bitcoin.

Almost every asset on earth is losing value against Bitcoin, the digital store of value. This is a really important concept to understand, because as Peter Thiel has continued to reiterate - Bitcoin is the most honest market we have. The supply of the asset is programmatic and can not be manipulated by anyone. The value is determined by a free market, without the intervention of a nation state, central bank, or financial organization.

If you denominate your assets in a store of value that is constantly being devalued, everything you own will appear to be increasing in price. You feel like you’re getting richer and richer. It is easy to understand why you would rather own the assets than the depreciating store of value (dollars). But you must ensure you are intellectually honest with yourself. Are the assets accruing more value or is the denominating currency losing value? Both make the price of the asset increase, but only one of them is a true measure of value accrual and sustainability.

A great way to conceptualize this idea is to remember that in any given year, countries with the highest inflation numbers also have the best performing stock markets. Whether we are talking about Venezuela, Zimbabwe, or Argentina, investors holding stocks in these markets appear to be getting wealthier and wealthier until all of a sudden there is a catastrophic tipping point and no one can get out. I’m not arguing that this is what is happening in the United States, but the extreme example makes the less extreme example more obvious.

As many of you run through the calculation, you will find that your portfolio has been drastically losing value when measured in a digital store of value that is immune from supply manipulation. Your stocks are down. Your bonds are down. So are your currencies and commodities. Bitcoin has increased by more than 300% in the last 12 months when measured against the US dollar, so the rest of your portfolio simply follows suit.

The US dollar will continue to be a fantastic medium of exchange. It is highly liquid, accepted by millions of businesses and individuals globally, and comes with the full faith and credit of the United States. But the dollar may not be the best store of value asset to denominate your portfolio at this time, especially when you consider approximately 40% of all dollars in circulation have been created in the last 18 months.

My point in writing this is not to convince you to go put all of your assets in bitcoin, but rather to get you to switch your frame of reference. The assets you allocate towards have to keep up with, and ideally outperform, bitcoin. This is no easy task. The digital store of value has grown at a compound annual growth rate of 180% for the last decade.

Hopefully this perspective is helpful as you all seek to better understand your portfolio, the true appreciation/depreciation, and how to allocate your resources moving forward. The pursuit of intellectual honesty is a noble one, but it is almost never easy. Hope you have a great start to your week. I’ll talk to everyone tomorrow.

-Pomp

SPONSORED: Gun.io is every fast-growing technology company’s secret weapon. With Gun.io, companies hire world-class developers in a fraction of the time.

Finding the right technical talent is hard, especially in this competitive hiring market. Gun.io gives you access to peer-vetted developers who you won’t find on job boards. We combine our industry-leading matching algorithm with human relationships and support to uncover the right developer for your team, fast.

The result? No stacks of resumes or endless interviews. Instead, you can have a conversation with the candidate our team of senior engineers believes is perfect for your role within days, not weeks.

Whether you’re growing your team, in need of short-term help, or making your first technical hire, meet the right candidate for the job on Gun.io.

THE RUNDOWN:

Bitcoin’s Biggest Upgrade in Four Years Just Happened – Here’s What Changes: The first bitcoin upgrade in four years has just gone live. It is a rare moment of consensus among stakeholders, and it’s a big deal for the world’s most popular cryptocurrency. The Taproot update means greater transaction privacy and efficiency – and crucially, it will unlock the potential for smart contracts, which can be used to eliminate middlemen from transactions. Read more.

SEC Rejects VanEck’s Spot Bitcoin ETF Proposal: The U.S. Securities and Exchange Commission rejected investment firm VanEck’s proposal for a spot bitcoin exchange-traded fund in a decision released on Friday. The agency had previously delayed its final decision on the proposal in September. In its letter, the SEC wrote that “the Commission concludes that [the fund] has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with … the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and to ‘protect investors and the public interest.’” Read more.

The Crypto Capital of the World: The anything-goes ethos has dogged Ukraine for years, and now the government is hoping to bury it, with an assist from cryptocurrency. In early September, the Parliament here passed a law legalizing and regulating Bitcoin, step one in an ambitious campaign to both mainstream the nation’s thriving trade in crypto and to rebrand the entire country. Read more.

Sam Bankman-Fried Discussed the Best Blockchains for Mass Crypto Adoption and the Rise of NFTs: Crypto billionaire Sam Bankman-Fried, who heads up the FTX exchange, recently discussed the current cryptocurrency climate, including the outlook for institutional investment, the rise of non-fungible tokens and how a badly placed ad can make rookies question the legitimacy of a crypto exchange. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Lyn Alden is the founder of Lyn Alden Investment Strategy, which provides market research to hundreds of thousands of individual investors and financial professionals. Lyn’s focus is on value investing with a global macro overlay, including currency differentials, shifts in monetary policy, and equity valuations.

In this conversation, we discuss inflation, employment, supply chain disruptions, monetary policy, fiscal policy, stocks, bonds, commodities, and bitcoin.

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!

* 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.

SPONSORED: To investors — when it comes to investing into the different areas of my life, I look to do one thing on a daily basis to nudge each area forward. For nutrition, that one thing is AG1 by Athletic Greens. 

Why? Because lacking a perfect diet and the cognitive stamina to research everything I need to do, creates a mental and physical headache that AG1 solves for me.AG1 is their all-in-one nutritional powder made with 75 premium ingredients combining eight essential products—a daily multivitamin, superfood complex, probiotics, adaptogens, and more—to give you the power to take control of your health.

I love it simply because it’s so convenient, so comprehensive, so fast and so tasty. I actually enjoy taking it every day. 

Investing $2.89 a day in a better for you health drink, is a no brainer. Particularly, when they are going to give you a year’s supply of Vitamin D and five travel packs for free with your subscription.

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,

Last week, I told the limited partners at Pomp Investments that I would be returning all outside capital at the end of the year and would be converting my investment activities into a family office. The response to this communication was incredibly powerful so I figured that I should share the decision publicly. No matter your occupation or life goals, my hope is that the letter below can help you.

Here is the letter that I sent to the limited partners at Pomp Investments:

To investors,

Hope each of you is doing well. I am writing this letter to inform you that I will be returning all uninvested capital at the end of this year and retiring from managing any new outside capital moving forward. I will be converting all of my investment activities into a family office. This decision is the product of many weeks of deep thinking, so I wanted to share my logic with you below. 

We live in a world filled with endless dopamine hits. Every second, there is a social media feed to scroll, notification to check, or incoming message on the 10+ messaging apps we have on our phones. The constant roar competing for our attention creates an addiction that is hard to break for many of us. 

This digital addiction prevents us from stepping away to think. Unsurprisingly, if we are unable to find the time to think, then the art of long-term thinking gets completely lost. We are simply hamsters running on the wheel looking for the next dopamine hit. 

I took a few weeks recently to consciously step away from the digital world for a few hours a day. It allowed me to think deeply about what I was optimizing for over the long-term. I don’t define “long-term” as a few months or a few years, but as decades. 

This process continued to lead me back to two key points. First, the idea of a billionaire. Much of the world measures billionaire status by the number of dollars that a person possesses, but the measurement of billionaires based on dollars is not the right way to look at it in my opinion. 

Graham Duncan coined the phrase “Time Billionaire” and it has stuck with me ever since I read about it. The idea is that time is the only asset in the world that can’t be purchased. Warren Buffett is worth tens of billions of dollars, but no young person would switch lives with him if they had to be in their 90s. In turn, the young person is wealthier than Warren Buffett because of time. 

I’m 33 years old. If I am fortunate enough to follow the average life expectancy of an American today, I still have more than one billion seconds left in my life (more than 31.5 years). I’ll have to avoid catastrophe, but the odds are in my favor. 

The funny thing is that I’ll continue to increase my financial net worth, but I’ll continue to lose my time net worth. Most of my peers and colleagues are well into their 40s, 50s, and 60s. They’ve been chasing financial wealth for the majority of their life, yet they have wasted their wealth of time with reckless abandon. 

I’m committed to making sure that doesn’t happen. Ultimately, this is why I’m returning all external investor capital and will only be managing my personal portfolio moving forward. It will allow me to spend more of my time with my family. It will allow me to side-step the constant incentive to raise more money, charge higher fees, make more investments, and make wealthy people even wealthier. 

This brings me to my second key point — educating the average citizen. I don’t have it all figured out, but I have been able to build a knowledge base that allows me to walk away on top at a very young age. I’ve seen the impact that I can have by sharing this information with other people and it is the single greatest impact I believe I can have right now, so I’ll continue to create content with a focus on lifting more people out of their current situation. 

So what does this all mean for your investments?

The short answer is that you’ll be in a good position. A number of the funds that I have fully invested are top performers. The portfolio that I have built with your capital continues to look more attractive every day as well. I will continue to manage the investments that have been made and will look for opportunities to liquidate positions as they become viable and make financial sense. 

For the uninvested capital, I’ll be returning 100% of that to each of you at the end of this year. And there will be no more capital calls moving forward. In essence, we have reached the end of our journey together in terms of new investments. 

Now many of you will be curious about whether I will be walking away from investing completely and the answer is no. I’ll continue to invest my personal capital into funds and early-stage opportunities. There is something freeing about being able to invest your own money. You have the ultimate skin in the game.

When I started investing full time in 2016, I barely had enough money to make pathetically small investments. I needed the outside capital. It was the only way that I could get in the game. Fortunately, the situation has changed, and now I can devote my time to other things that I want to accomplish.

This letter is not an easy one to write. I’ve worked diligently for years to build the relationships and capital base that I am now walking away from. I know deep down that this is the right decision though. As Anna Quindlen said in her 1999 Mount Holyoke Commencement Speech:

“When I quit the New York Times to be a full-time mother, the voices of the world said that I was nuts. When I quit it again to be a full-time novelist, they said I was nuts again. But I am not nuts. I am happy. I am successful on my own terms. Because if your success is not on your own terms, if it looks good to the world but does not feel good in your heart, it is not success at all. Remember the words of Lily Tomlin: If you win the rat race, you’re still a rat.”

It has been an absolute pleasure working with each of you over the years. We have had an incredible run together, but all good things must come to an end. I’m looking forward to the next chapter of my life and spending more time with my family. 

Respectfully,

Anthony Pompliano

The response I received from the limited partners at Pomp Investments was incredible. A number of people wrote me to share that they had made similar decisions over the years and it was the single greatest thing they did in hindsight. Others shared words of encouragement, along with small nuggets of wisdom that have helped them enjoy their families and friends more.

I still have a lot of work ahead of me. I’ll be supporting and managing all of the investments that I’ve made, along with continuing to run the holding company that I own. But I’m really excited about spending more time with my family. The family office will be deploying capital into funds and early stage opportunities in the new digital world, so if you’re a founder — you know where to find me :)

Time is precious. Spend it wisely. Focus is a superpower. Enjoy your family. And just do the s**t that makes you happy. Hope everyone has a great start to their week. Talk to you all tomorrow.

-Pomp

Do you want to get a new job working in the bitcoin and crypto industry? There are hundreds of open roles at the industry’s top companies. You can work remotely and every skill set is needed: www.pompcryptojobs.com

Don’t feel like you understand crypto well enough to make the transition yet? No worries. We have a training program that has helped people get hired at Coinbase, BlockFi, Kraken, Gemini, BTC Inc, Strike, and many others. APPLY: www.pompscryptocourse.com

THE RUNDOWN:

Incoming NYC Mayor on Businesses Accepting Bitcoin: 'We're Going to Look at It:' New York City Mayor-elect Eric Adams (D) on Sunday said he is “going to look at” potentially encouraging businesses to accept cryptocurrency as a form of payment, after the incoming mayor made headlines last week when he said he will take his first three payments in elected office in bitcoin. Read more.

House Sends Infrastructure Bill With Crypto Tax Provision to US President: The U.S. House of Representatives voted to pass a bipartisan infrastructure bill that contains a controversial cryptocurrency tax reporting requirement. The House voted in favor of the bill with at least 218 ayes late Friday night, fulfilling a key priority for the Biden administration amid controversy over whether an accompanying Democrat-led bill would also move forward. The Senate originally passed the bill in August after lawmakers shot down any attempts at amending the crypto provision. Read more.

FBI Warns of Scams Using Crypto ATMs and QR Codes: The Federal Bureau of Investigation is warning there has been a rise in fraudulent schemes using cryptocurrency automated teller machines and quick response codes to facilitate payments. The FBI said it has seen an increase in scammers directing victims to use physical crypto ATMs and QR codes to complete payment transactions. Read more.

NFTs Take Over NYC: This week’s NFT.NYC conference, which was first held in February 2019 as a quirky curiosity before an audience of a few hundred early enthusiasts, was spread across six venues, with three days of programming covering 600 speakers. Some 5,500 tickets were sold – with space limitations leaving 3,000 more on the waitlist – to attendees who traded 700,000 speaker and sponsor swag NFTs. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Julius Dein is the most popular social media creator in thew world. He has tens of millions of followers across various platforms and earns billions of views per month. Julius is also an incredibly intelligent business man who understands the business behind content better than most.

In this conversation, we discuss growing social channels, earning billions of views per month, making videos go viral, scaling a content team, building an eight-figure business, and why Julius is excited about bitcoin.

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!

* 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 is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.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 was talking to a friend recently about the various investment opportunities in the crypto industry. He kept explaining how much exposure he had to publicly traded stocks, so I asked my friends at Bitwise to do an analysis on that piece of the market. Below is their write-up. Really fascinating stuff.

Crypto assets are the best returning asset class over the past one, three, and five years. And yet, many traditional investors remain on the sidelines.Why? Among other reasons, because crypto assets are just different. You don’t buy them in traditional brokerage accounts. You can’t value them like stocks. There are no spot crypto ETFs. They can be intimidating to many investors.Fortunately, investors have a new choice: Publicly traded crypto equities. Over the past two years, dozens of crypto equities have listed on public markets, and you can now build a portfolio of companies across crypto mining, brokerage, asset management, and more.The best thing? These “picks and shovels” plays are among the fastest-growing and most-profitable companies in the world. They’re also being overlooked in certain ways by Wall Street.

The Crypto Combo: High Growth and High Profitability

Crypto equities today combine two characteristics rarely found together: Exceptional top-line growth with very high levels of profitability.

Take Coinbase, the premier crypto exchange. At a market capitalization above $50 billion, it is already ranked in the top 200 largest U.S. public companies. And yet, 2021 median estimates project astounding revenue growth of 426.9%, with a net profit margin of 43.6%. Usually, when companies are growing that fast, they are unprofitable; think Facebook (now Meta) in its earliest days.  But thanks to massive growth in the crypto ecosystem, with  aggregate crypto exchange trading volumes surpassing $10 trillion through August (more than 5x all of 2020), Coinbase has been able to pair that growth with significant profits.

It’s not alone.  The chart below compares the median top-line growth and net margins for pure-play crypto equities, as captured by the Bitwise Crypto Innovators 30 Index, with other industries in the S&P 500. Crypto equities are expected to deliver top-line growth and net margins of 371.0% and 37.5%, respectively, for 2021. That is higher than any other industry in the S&P 500, and significantly above the average company, which is scheduled to deliver 11.9% growth and 14.9% profit margins.

CRYPTO EQUITIES STAND OUT IN TERMS OF THE PROFITABILITY GENERATED FROM THEIR TOP-LINE GROWTH

2021 median estimates of revenue growth versus profitability levels for crypto equities and S&P 500 industries. (Area of each circle is proportional to the total market capitalization of each industry).  

Crypto stocks shine even compared to other fast-growing businesses.  For instance, the median company in the disruptive technology oriented ARK Innovation ETF (ticker: ARKK) is expected to grow revenues by 40.4% while having a negative net profit margin of -9.4%. 

What’s even more interesting about crypto equities is that they are largely flying under the radar. Despite superior fundamentals, they currently trade at a median 2021 P/E ratio of 22.3x, just marginally higher than the S&P’s average of 21.2x. 

FAVORABLE GROWTH AND PROFITABILITY DYNAMICS ARE NOT REFLECTED IN 2021 P/E MULTIPLES

2021 P/E multiples of crypto equities versus the industries of the S&P 500 Index

There are many reasons for this unique combination. For one, reputational, regulatory and other concerns have prevented traditional companies from entering the crypto market in significant ways, shielding early movers from well-funded competitors for long periods of time. Additionally, crypto equities still have scant market coverage, depriving them of significant analyst coverage and institutional awareness. 

There are of course also significant risks. Crypto equities are exposed to crypto asset prices, which can be volatile and have historically demonstrated elements of cyclicality. The exceptional historical returns in crypto have been accompanied by sharp and sometimes prolonged corrections, and those drawdowns could happen again.  Additionally, risks related to regulation, market infrastructure, technical developments, and user adoption can also affect these markets.

Still, as a fast-growing and often overlooked sector, these companies bear real consideration, both from investors locked out of the traditional crypto market and from investors looking to augment their crypto exposure.

Are Cryptoasset Correlated With Crypto Equities?A common question investors have about crypto assets is whether their returns are correlated with crypto assets.  In other words, can you get crypto-like exposure with crypto equities?

The chart below shows that the answer is yes … mostly.  

CORRELATIONS BETWEEN CRYPTO EQUITIES AND CRYPTO ASSETS TYPICALLY RANGE BETWEN 0.50 AND 0.75

30-Day rolling correlations of daily returns between the top 10 constituents of the Bitwise Crypto Innovators 30 Index and the Bitwise 10 Large Cap Crypto Index. Data from December 1, 2020 to September 30, 2021 for all companies except for Coinbase, for which data is available from April 14, 2021 to September 30, 2021.

The chart looks at the correlation between the 10 largest pure play crypto equities and the broader crypto market. It finds that crypto equities offer material exposure to cryptoassets, with correlations typically ranging between moderate (0.50) and significant (0.75). While not a perfect proxy, this is a robust connection.

Another important angle is whether these stocks are  leveraged or de-leveraged to cryptoasset price action. Commodity stocks tend to be leveraged plays on the commodity cycle, as their profits tend to go up more than the price of the underlying commodity during bull markets and vice versa in bear markets. Our analysis suggests crypto equities share this relationship with the underlying cryptoasset prices, although again to different degrees.

CRYPTO EQUITIES ARE LEVERAGED TO CRYPTOASSET PRICES TO DIFFERENT DEGREES

Betas of the top 10 constituents of the Bitwise Crypto Innovators 30 Index (vertical axis) to the Bitwise 10 Large Cap Crypto Index (horizontal axis). Data from December 1, 2020 to September 30, 2021 for all companies except for Coinbase, for which data is available from April 14, 2021 to September 30, 2021.

The chart shows that crypto equities’ betas to cryptoassets range from 0.41 for Coinbase to 1.52 for Argo Blockchain. This range is intuitive considering that the subsectors within crypto equities are exposed to cryptoasset price cycles in different ways. Crypto miners tend to have significant operating leverage to crypto prices and therefore their share prices tend to exacerbate the crypto price cycles. Other industry players, however, have valuation drivers that may not be entirely influenced by crypto prices. Exchanges, for example, derive their revenues from trading volume, which may not always move in tandem with crypto prices (and can even spike during short pullbacks), and from additional services that they can add on top of trading fees such as custody, staking, and lending.

Conclusion

Cryptasset adoption accelerated in 2021, with the global crypto population more than doubling from 100 million in January to 221 million in June. Through the disruption of existing paradigms, the creation of new opportunities for different segments of society, and shifting of consumer behaviors, crypto is reshaping the world. Crypto equities are capitalizing on this as the fastest growing segment of the public markets, providing an opportunity for investors to participate in this exciting megatrend.

Hope this was informative for each of you. I’ll be looking to do more analysis like this in the coming weeks. Thanks to the team at Bitwise for being so helpful and putting context around the data as well. Talk to everyone tomorrow.

-Pomp

THE RUNDOWN:

Michael Saylor Says MicroStrategy Will Continue to Keep Adding to Its Trove of Bitcoin: MicroStrategy will continue stockpiling bitcoin for years to come, and while the cryptocurrency's price is volatile, "it's going up forever," CEO Michael Saylor told CNBC on Monday. The bitcoin bull outlined his bullish outlook on the digital asset after a MicroStrategy regulatory filing last week showed the company bought 9,000 bitcoin in the quarter ended Sept. 30. The data analytics company's bitcoin count stood at 114,042, and the stash was worth nearly $7 billion on Monday as bitcoin traded around $61,220. Read more.

NFL Star Aaron Rodgers Gives Ringing Endorsement of Bitcoin: NFL superstar Aaron Rodgers offered a resounding endorsement of bitcoin on Monday, tweeting that “I believe in Bitcoin & the future is bright.” The longtime Green Bay Packers quarterback and three-time MVP revealed that he’s working with Square’s Cash app to receive an undisclosed amount of his salary in bitcoin for the first time. New York Giants star running back Saquon Barkley said in July he would be receiving all his future endorsement money in bitcoin, while several other NFL players have also said they would get part of their salaries in cryptocurrency. Read more.

Coinbase Revenues Could Hit Nearly $50B by 2025: Coinbase is the best-positioned cryptocurrency-related company to benefit from the industry’s soaring growth, Hayden Capital said on Monday in a memo on the crypto exchange. Coinbase could reach $49.2 billion in revenue exiting 2025 under a bullish outlook of mass crypto adoption, rising interest among institutional investors and the sector growing to $6.8 trillion in total size. Under a more conservative crypto market cap estimate of $3.4 trillion, the firm would more than double revenues to $21.3 billion by 2025. Read more. 

Biden Administration to Congress: Put Stablecoins Under Federal Supervision – Or We Will: A group of U.S. regulators urged lawmakers to subject stablecoin issuers to the same strict federal oversight as banks, in a highly anticipated report released Monday. Congress should also require custodial wallet providers to be regulated by a federal agency and limit stablecoin issuers’ interactions with non-financial companies such as tech or telecom providers, the President’s Working Group for Financial Markets said. The latter recommendation appeared to be aimed squarely at Diem, formerly Libra, the controversial stablecoin project created by Meta, the social media giant previously known as Facebook. Read more.

Pension Funds Wade Into Crypto Investments: The Houston Firefighters’ Relief and Retirement Fund made news recently when it announced it was investing $25 million in bitcoin and ether, marking what was believed to be the first time a U.S. pension fund had put cryptocurrencies directly on its balance sheet. Of course, $25 million is only a drop in the bucket compared to the $5.5 billion in total assets held by the fund – more precisely, it represents just 0.5% of its portfolio. But it still was a notable first step by the historically conservative investment fund. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Rich Antoniello is the Founder & CEO of Complex (now Complex Networks). They recently sold the business for approximately $300 million to BuzzFeed.

In this conversation, we discuss media, entrepreneurship, capital markets, bitcoin, NFTs, and some of the CRAZY stories from over the years.

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!

* 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 is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.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 are many deeply held beliefs in the bitcoin and crypto industry that get repeated over and over again. One that I have always found peculiar is that “[Fill in the blank] is merely an attempt to get more bitcoin.”

The argument is presented as a negative swipe at anyone who is buying, holding, or creating any investment assets outside of bitcoin. Before we dig deeply into this perspective, it is helpful to take a look at what capitalism and investing actually mean.

Capitalism is defined as “an economic system based on the private ownership of the means of production and their operation for profit.” Capitalism is the pursuit of profit by private market participants.

According to Principal Financial, “investing is a way to potentially increase the amount of money you have. The goal is to buy financial products, also called investments, and hopefully sell them at a higher price than what you initially paid. Investments are things like stocks, bonds, mutual funds and annuities.” The idea of investing is simple — you buy assets with your money in order to sell them later for more money.

In the legacy financial system, this means Americans are investing dollars with the goal of getting more dollars back at a later date. They may be investing their dollars in stocks, a piece of real estate, their own business, or a speculative bet that has low probability of succeeding. Each individual chooses to allocate their capital how they see fit, and according to their risk-return profile, but ultimately the free market will decide who made good decisions and who made bad decisions.

The market is the referee and the scoreboard is who ends up with more dollars at the end of the day. We can argue ad nauseam about whether the system is fair, why people want to invest, or which investments are better than others, but it is fairly indisputable that the point of investing is to acquire more money (dollars).

This brings us to the new digital financial system. Dollars are not the reserve currency, but rather it is widely accepted that bitcoin serves as the global store of value. There are a plethora of reasons why bitcoin is superior to dollars, so for the purposes of this analysis, we are going to operate under the assumption that everyone agrees bitcoin is money. Once you understand that bitcoin is money, it is obvious to see that individuals are going to take two actions — saving and investing.

Bitcoin allows people to save in a way that preserves and increases their purchasing power over time. You can focus on spending less than you make and then storing that economic value in the decentralized, digital currency that has grown into a $1 trillion asset. This is no longer possible with dollars, specifically as a long-term store of value, because of the historic devaluation that we are witnessing.

But not everyone will be satisfied by simply saving. They either don’t make enough gross income or the delta between their income and expenses won’t leave much to save. Some others will simply aspire to acquire more bitcoin and at a faster rate than through saving. These are the investors. They are willing to allocate their capital to risk-reward situations that may or may not end up working out. Those that choose to take risk will be judged by the free market. If they made good decisions, then they’ll get back more money. If they make bad decisions, they’ll get back less money.

The two systems are the exact same. The store of value or money is different, but we have savers and investors in both the legacy and digital financial system. So let’s bring this back to the people who constantly state “[Fill in the blank] is merely an attempt to get more bitcoin.”

Yes, of course. That is how capitalism works.

Think of it this way — every bitcoiner building a business right now is trying to acquire more bitcoin. They aren’t doing it to acquire more dollars. These entrepreneurs want more bitcoin.

Every content creator that sells sponsorships or subscriptions is trying to get more bitcoin. Every bitcoiner is going to work as an employee trying to earn more bitcoin. Everyone involved in the bitcoin industry is trying to create economic value to acquire more bitcoin. They each pursue this goal differently, but capitalism is the ultimate pursuit of more money. If bitcoin is money, everyone is going to pursue it.

This is true of most investors and entrepreneurs in the non-bitcoin verticals within the crypto industry too. Many ICOs from 2017 ended up acquiring a lot of bitcoin with their proceeds or on their balance sheets. We see multiple DAOs that put bitcoin on their balance sheet. Almost every exchange, wallet provider, miner, and yield provider has bitcoin on their balance sheet. Bitcoin is money and everyone is trying to make more money!

I think there is a psychological perspective held by most bitcoiners that anyone who uses a non-bitcoin path to acquire more bitcoin is a bad thing. If you build a bitcoin company, then acquiring more bitcoin is a good thing. But if you build a company that doesn’t support bitcoin, whether it is a technology startup in a non-crypto field or a crypto startup, then the person is somehow “bad” or “immoral” for trying to acquire bitcoin. It feels like that anger and virtue signaling is misplaced. Bitcoin is money and everyone wants it.

We can debate the merits and durability of the various things that people build in order to acquire more bitcoin, but the pursuit of bitcoin is just capitalism playing out. Not every company will work. Not every technology will gain adoption. Not every podcast will be interesting enough to hold an audience. Not every employee will stay at a company forever. The free market will determine who creates true value and who doesn’t, which will allow for capital to flow to these people and organizations over time.

Now it should go without saying, but there will be plenty of critics so I want to be abundantly clear, there are always scams, frauds, and unethical actions that people take in the pursuit of money. That is true if they are pursuing dollars or bitcoin. Those people should be called out. They should be punished by society, whether legally or socially. There is no room for bad actors. But just because someone chooses a technology or a legal structure that you don’t find appealing or durable does not make them a scammer or a fraud.

This brings us to how I think the world is going to unfold moving forward. Bitcoin will continue to ascend to global store of value status. It will be adopted by individuals, corporations, financial institutions, pensions, and nation states. Quite literally, every type of organization will recognize bitcoin as the best store of value on the planet. They will hoard bitcoin like it is the most important thing they do.

The digital, decentralized currency will allow a higher percentage of people to simply save what is left over from expenses without having to worry about the debasement of their net worth or savings. They can “Bitcoin and chill” without fear of what will unfold in the next monetary policy decision or how the macroeconomy could create a catastrophic financial situation for them.

But there will still be investors. Bitcoin won’t disincentivize capitalism. These investors will risk capital in exchange for a potential return. These investors will seek risk to earn more money. They will allocate funds to equity opportunities, both in the public and private sector. They will find yield opportunities for passive income. They will purchase real estate. They will create their own businesses to invest their capital and time into. And they will purchase a variety of digital assets that exist in the virtual economy, including non-bitcoin assets with the hope of selling them for more bitcoin at a later date.

You can chide them because the underlying technology is something you don’t like. You can argue that the incentive structures won’t work over the long term. You can even yell from the rooftop that they are going to lose money. But that is why we have a free market. Those that make good investment decisions will be rewarded and those that don’t will suffer financially.

I say all of this because no one, regardless of whether you consider yourself a bitcoiner or not, has a moral high ground on the “right way” to acquire more bitcoin. Bitcoin is money. Every single person in the world is going to pursue the acquisition of more of it, regardless of what you think. Some will save in bitcoin. Others will invest in bitcoin-focused companies. There will be those who earn in bitcoin. And there will be hundreds of millions of people who invest in other assets with the sole purpose of acquiring more digital money.

Welcome to capitalism. A story as old as time. There is plenty of nuance along the way, but as the saying goes: “the more things change, the more they stay the same.”

Hope each of you has a great start to your week. Talk to you tomorrow.

BONUS: We have officially launched Bitcoin Pizza in 20 cities and with nearly 100 locations around the United States. You can order a pizza through Uber Eats or on our website: www.eatbitcoinpizza.com

When you order a pizza, you are supporting a local small business. I donate 100% of my profits to fund bitcoin developers through the Human Rights Foundation’s Bitcoin Developer Fund. Hope you enjoy the pizza :)

-Pomp

SPONSORED: Gun.io is every fast-growing technology company’s secret weapon. With Gun.io, companies hire world-class developers in a fraction of the time.

Finding the right technical talent is hard, especially in this competitive hiring market. Gun.io gives you access to peer-vetted developers who you won’t find on job boards. We combine our industry-leading matching algorithm with human relationships and support to uncover the right developer for your team, fast.

The result? No stacks of resumes or endless interviews. Instead, you can have a conversation with the candidate our team of senior engineers believes is perfect for your role within days, not weeks.

Whether you’re growing your team, in need of short-term help, or making your first technical hire, meet the right candidate for the job on Gun.io.

THE RUNDOWN:

Two of the Biggest Bitcoin Mining Companies in the World Are Battling It Out in a Texas Town of 5,600 People: In Rockdale, Texas, two of the biggest names in bitcoin mining are battling it out for market share and cheap electricity. These rivals also happen to be next-door neighbors. Bitdeer – a firm spun off from Chinese bitcoin mining giant Bitmain – is four-tenths of a mile down the road from Riot Blockchain, one of the biggest publicly traded mining companies in America. Both are tenants of property once occupied by aluminum maker Alcoa, but they share little else in common. Read more.

Amazon Web Services Looks to Drive Crypto Settlement and Custody to the Cloud: Amazon Web Services is searching for a specialist to foster digital asset underwriting, transaction processing, and custody in the cloud, according to a recent job posting. The infrastructure giant wants to hire a Financial Services Specialist to work with global financial institutions and innovative fintechs, and “transform the way they transact digital assets (ex. cryptocurrencies, CBDCs [central bank digital currencies], stable coins, security-backed tokens, asset-backed tokens and NFTs [non-fungible tokens]) from price discovery to execution, settlement and custody.” Read more.

DOJ to Hire Director for Its Crypto Enforcement Unit: The U.S. Department of Justice is looking for someone to head its newly announced National Cryptocurrency Enforcement team. The DOJ posted a job opening for the director’s role on USAJobs, the Federal government’s jobs website. The director will lead “a team of experienced prosecutors investigating and prosecuting cryptocurrency cases as a central part of a nationwide enforcement effort to combat the use of cryptocurrency as an illicit tool,” the job posting said. Read more.

Cathie Wood's $500K Bitcoin Call Is Already Happening: Cathie Wood isn’t afraid to make bold predictions. Back in early 2018, the owner of Ark Invest said Tesla shares would go from $300 to $4,000 within five years — a potential upside of around 1,200%. Yet Tesla hit the target early. This January, Tesla shares surged past the $800 mark, or $4,000 on a split-adjusted basis. Pretty astounding, but Tesla may not be Wood’s most bullish call at the moment. Last month, she told CNBC that the price of Bitcoin could soar to half a million dollars in five years. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

George Gammon is an investor, entrepreneur, and real estate expert who teaches macroeconomics and investing.

In this conversation, we discuss macro economics, monetary policy, bitcoin, gold, investing, real estate, international markets, and personal freedom.

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!

* 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 is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.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,

Jack Dorsey sent the tweet heard ‘round the world on Friday night. He explicitly called out hyperinflation, which has been historically considered an off-limits topic for executives and politicians in developed nations.

As you would expect in today’s internet age, everyone started to pile in and call Jack Dorsey uninformed, stupid, irresponsible, and much more.

No one topped this one though:

Not everyone immediately took to yelling at Jack Dorsey though. A few people replied with anecdotes or clarifications, which Jack responded to. The first was a reminder of how bad hyperinflation can be:

The second example was around the hyperinflation experienced in Nigeria:

My absolute favorite one though is economist Steve Hanke who reminded everyone that the current measurement for true hyperinflation is absurd (50% month-over-month inflation):

It doesn’t count if inflation is 49% month-over-month. It doesn’t count as hyperinflation if the people of the country literally can’t afford food to the point where they are literally willing to attempt to overthrow their governments.

Why is the number 50% month-over-month? No one knows. Just a random round number that academics came up with to prove their value. The truth is that the entire concept of hyperinflation is technically just high, runaway inflation. If you were living in a country that had 10% month-over-month inflation, you would be trying to escape immediately.

Now that we have established that the exact definition of hyperinflation is illogical and the mob is more interested in tweet dunks than facts, let’s bring this back to Jack Dorsey’s comments.

I think most people are completely missing the point on this situation. Jack Dorsey sits on top of one of the most important and accurate data sets in the world to measure true inflation.

Think about this. Square has a suite of products that gives them a multidimensional view of what is happening in the economy, how the price of goods are changing, and any differences between demographics, location, or income levels.

Most people don’t realize how many products Square has:

* Square Reader (physical device that allows mobile phones to process payments)

* Square Register (more traditional register for merchants)

* Virtual gift cards

* CashApp (consumer mobile app for banking services & investing)

* Square Capital (financing to merchants)

* Square Payroll

* Square Financial Services (bank charter)

* Credit Karma Tax (acquired and integrated into CashApp)

* Afterpay (Square acquired the “Buy now, Pay later” giant)

So, quite literally, Square is sitting on one of the most robust data sets in the world to measure inflation within the United States. They have direct integration with more than 100,000 merchants at the point-of-sale (Reader, Register, Afterpay, etc). They have over 30 million monthly active users on CashApp and more than 7 million people using a CashCard (gives them exact transaction data). Square also has the payroll data of many companies across industries and geographies through the Square Payroll product.

This robust, real-time data set is highly compelling when compared to the CPI data set and calculation methodology. I don’t want to divert into a takedown of CPI, but this description from Investopedia around the controversy of the index is enough to inform those of you that are unaware of the issues:

“Originally, the CPI was determined by comparing the price of a fixed basket of goods and services spanning two different periods. In this case, the CPI was a cost of goods index (COGI). However, over time, the U.S. Congress embraced the view that the CPI should reflect changes in the cost to maintain a constant standard of living. Consequently, the CPI has evolved into a cost of living index (COLI).

Over the years, the methodology used to calculate the CPI has undergone numerous revisions. According to the BLS, the changes removed biases that caused the CPI to overstate the inflation rate. The new methodology takes into account changes in the quality of goods and substitution. Substitution, the change in purchases by consumers in response to price changes, changes the relative weighting of the goods in the basket. The overall result tends to be a lower CPI. However, critics view the methodological changes and the switch from a COGI to a COLI as a purposeful manipulation that allows the U.S. government to report a lower CPI.”

My main point here is to call out the fact that Square likely has a much more robust, accurate, and real-time understanding of the true inflation numbers across the United States. There is a strong argument that the US government, the Fed, and Treasury should all ask the payment and fintech companies to help them determine the real inflation rate, rather than continuing the charade of CPI.

The CEO of a $100+ billion company that is ranked as one of the 400 largest companies in the United States has come out publicly to insinuate that his data is showing inflation significantly higher than the official numbers. Rather than ask him to explain it to us more, a bunch of the establishment puppets on the internet began attacking him. They literally don’t know what his data says, yet they attacked him relentlessly.

This is the state of dialog in 2021 though. It is easy to get conditioned to listen to the crowd. You have to fight the urge. Square has better data. They have more real-time data. It is also a much more holistic picture of the economy than anything a single government organization has.

I wish that Jack Dorsey and Square could open source the data or release it publicly. There are likely strategic and competitive reasons why they won’t do that. But it doesn’t mean that we shouldn’t hope to see it happen. As Keith Rabois told me on Twitter, Square has been building this data set for more than a decade.

It is crazy to think that we could have more accurate data right under our nose but people would rather dunk on technologists on the internet. The funny thing about all this? If Jack Dorsey and Square released this data, it would become the standard almost overnight. People would stop looking at the CPI data and start looking at the real-time data sets that more accurately reflected what was occurring.

If only we could be so lucky. Hope each of you have a great start to your week. Talk to everyone tomorrow.

-Pomp

SPONSORED: Arculus is the crypto cold-storage wallet that combines the world’s strongest security protocols with an easy-to-manage app. Unlike other storage solutions that are less secure and more difficult to use, Arculus doesn’t compromise security or usability. You can store, swap, and send your crypto all with a simple tap of your Arculus Key™ card. Order the safer, simpler, smarter crypto cold storage solution at getarculus.com today.

Podcast Sponsors

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

* 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!

* App Sumo is giving away their entire $1 million Black Friday marketing budget to creators! If you have an ebook, online course, template, or any other digital product — this is for you. List your product on AppSumo between September 15th - November 17th and the first 400 products to go live will receive $1,000. The next 2,000 to list a product and go live get $250. And everyone who lists gets entered to be one of 10 lucky winners of $10k! Go list your product today to cash in on this amazing deal.

* Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp

* 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

* AG1 by Athletic Greens is the category-leading superfood product bringing comprehensive and convenient daily nutrition to everybody. One scoop of AG1 contains 75 vitamins, minerals and whole food-sourced ingredients, including a multivitamin, multimineral, probiotic, greens superfood blend. They are giving readers an immune supporting FREE 1 year supply of Vitamin D AND 5 free travel packs with your first purchase if you visit athleticgreens.com/pomp today. 

* 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 is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.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

* Arculus is the crypto cold-storage wallet that combines the world’s strongest security protocols with an easy-to-manage app. Unlike other storage solutions that are less secure and more difficult to use, Arculus doesn’t compromise security or usability. You can store, swap, and send your crypto all with a simple tap of your Arculus Key™ card. Order the safer, simpler, smarter crypto cold storage solution at getarculus.com today.

* 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. Godownload the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users.

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 was confirmed yesterday that the Houston Firefighters Pension Fund has officially become the first pension fund in the United States to purchase, and directly hold, bitcoin in their portfolio.

As many of you will remember, two public pension funds from Fairfax County in Virginia previously invested in the first two Morgan Creek Digital funds. They were the first public pension funds to allocate to the industry. These were venture funds that had approximately 15-20% invested in bitcoin.

After Fairfax, there was only one other pension fund that I’m aware of that had invested in the industry - the Municipal Employees’ Retirement System of Michigan allocated to Dan Tapiero’s 10T Holdings growth equity fund.

Each of these three public pension funds were investing in venture capital style funds, even if they had some bitcoin exposure, simply because there was no clear framework for them to safely place the digital assets directly in their portfolio. Does bitcoin go in their currency allocation? Maybe commodities? Or maybe it is digital real estate? There has been no clear answer. So venture funds made sense because everyone understood that the allocation went in the venture capital bucket.

This is all changing though. Bitcoin and cryptocurrencies are maturing to the point where public pension funds, along with financial institutions and corporations, are all comfortable holding the assets directly. They understand which bucket in their asset allocation to put them into. And the infrastructure is now available where institutions don’t have to worry about custody, insurance, or accounting support.

The market has matured significantly since 2018. Even with all this progress though, it is still a big moment when the very first public pension puts bitcoin on their balance sheet. Eventually every pension fund is going to do it. I’ve been saying this for years.

In this letter from December 24, 2018:

The retirement of hundreds of millions of corporate and government employees around the world depends on these pension funds’ ability to pay the individual a set amount of money post-retirement. Unfortunately, many pension funds are facing a significant crisis — it does not look like they will be able to pay their future obligations.

The difference between the obligations and the resources allocated to pay them is actually widening. This is driven by a decreasing worker to retiree ratio. Workers pay into the pension fund (think of this as revenue for the pension fund) under the promise that the fund managers will grow the capital and be able to pay the employee’s pension post-retirement. Once an employee retires, they begin to draw their pension (think of this as expenses for the pension fund) and will continue to do so until they die.

The gap between revenue and expenses is getting worse because of lower birth rates (fewer people entering the workforce) and longer life expectancy (the retirement age stays fixed so people are entitled to their pension for longer). Each of these trends is expected to continue, and possibly even accelerate, which will put additional pressure on pension funds to come up with the capital needed to fulfill their obligations.

I then went on to explain why bitcoin was a potential solution:

“There are numerous potential solutions to address the problem. One is to increase the amount of contributions from workers (increase revenue) and another is to grow pension funds’ capital by investing it at higher rates of return. To identify the right answers, each fund hires an actuary to model a pension fund’s future outlook. These actuaries look at demographic data, life expectancy, investment returns, levels of contributions or taxation, and payouts to beneficiaries.

The most important number is the “actuarial assumed rate of return,” or the target return on invested capital that is necessary to have enough resources to pay out future obligations to retirees. This assumed rate of return is typically between 6-8% annualized. As this number is adjusted up or down, the current workforce is directly impacted. Some estimates show that a decrease from 8% to 7% from the actuarial assumed rate of return would require workers to contribute up to 10% more to the pension. Not exactly an exciting idea for those currently working.

Either way, pension funds have to do something different. The definition of insanity is to continue doing the same thing and expect a different result. Take the California Public Employees’ Retirement System, the largest public pension fund in the United States, who has over $300 billion in assets. They are less than 70% funded (they don’t have enough money to pay all of their obligations in the future based on their current assets) and in 2016 the fund reduced their assumed rate of return from 7.5% to 7%. This new target is still higher than the 10-year annualized performance of 5.1% though.

Instead of lowering the assumed rate of return, which requires increased contributions from the current workforce, CalPERS and other pension funds should buy Bitcoin and other cryptoassets.”

The argument has always been simple. Bitcoin is a non-correlated, asymmetric asset that would allow a pension fund to make a small allocation, while still having an outsized impact on the portfolio. This was true when bitcoin was around $3,500 and it is true when bitcoin is trading around $65,000 today.

We still have a long way to go in educating public pension investment teams, their investment committee board members, and the general public who is made up of pensioneers. But we’re making great progress towards the inevitable end. Pension funds are not going to be able to fulfill their obligations, so they have to do something different.

I like our chances. The Houston Firefighters Pension Fund should get immense congratulations for their courage and conviction in this decision. Hope each of you has a great day and I’ll talk to everyone on Monday.

-Pomp

SPONSORED: Arculus is the crypto cold-storage wallet that combines the world’s strongest security protocols with an easy-to-manage app. Unlike other storage solutions that are less secure and more difficult to use, Arculus doesn’t compromise security or usability. You can store, swap, and send your crypto all with a simple tap of your Arculus Key™ card. Order the safer, simpler, smarter crypto cold storage solution at getarculus.com today.

THE RUNDOWN:

Peter Thiel Tells Crowd Where He’d Look for Elusive Bitcoin Founder Satoshi: ​Peter Thiel told a crowd of a few hundred people assembled at a Miami conference where he’d look for clues about the real identity of Satoshi Nakamoto, the now almost mythical pseudonymous founder of Bitcoin -- a beach in the Caribbean. “My sort of theory on Satoshi’s identity was that Satoshi was on that beach in Anguilla,” the technology billionaire and self-described libertarian said Wednesday, recounting an early meeting with the founders of E-Gold Ltd., a now defunct digital currency that was indicted by the U.S. Justice Department in 2007. “I met them on the beach in Anguilla in February of 2000. We were beginning the revolution against the central banks on the beach in Anguilla. We were going to make PayPal interoperable with E-Gold and blow up all the central banks.” Read more.

Bitcoin’s Inflation Narrative More Compelling Than ETF Fever, JPM Says: This week’s launch of the ProShares Bitcoin Strategy Exchange-Traded Fund may have aided the cryptocurrency’s recent price surge to an all-time high, though the perception of bitcoin as an inflation hedge over gold is probably a bigger factor, a JPMorgan strategist wrote Thursday. In its first two days of trading, BITO amassed assets of over $1 billion, according to ProShares. Read more.

Robinhood’s Waitlist for Crypto Wallet Has More Than 1M Customers: The waitlist for Robinhood’s crypto wallet is now more than one million customers long, Robinhood CEO Vlad Tenev said at CNBC’s Disruptor 50 summit on Thursday. Robinhood announced last month it was planning to roll out a crypto wallet in early 2022 that would allow customers to trade, send and receive cryptocurrencies, as well as transfer them to hardware wallets. Read more.

Walmart Has Quietly Begun Hosting Bitcoin ATMs: Walmart, the world’s largest company by revenue, is letting customers buy bitcoin at dozens of its U.S. stores. Shoppers can purchase the cryptocurrency at Coinstar machines inside the retailer’s cavernous big box stores. A CoinDesk editor verified that the service works, buying a small amount of BTC at a Pennsylvania Walmart on Oct. 12. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Kevin O’Leary is a Canadian businessman, author, politician, and television personality. He is a Shark on ABC’s hit show Shark Tank and has had numerous previous business successes, including when he sold The Learning Company to Mattel for $4.2 billion in 1999.

In this conversation, we discuss bitcoin ETF, monetary policy, inflation, fixed income managers, international money interest, regulation, decentralized finance, and stablecoins.

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!

* 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!

* App Sumo is giving away their entire $1 million Black Friday marketing budget to creators! If you have an ebook, online course, template, or any other digital product — this is for you. List your product on AppSumo between September 15th - November 17th and the first 400 products to go live will receive $1,000. The next 2,000 to list a product and go live get $250. And everyone who lists gets entered to be one of 10 lucky winners of $10k! Go list your product today to cash in on this amazing deal.

* Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp

* 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

* AG1 by Athletic Greens is the category-leading superfood product bringing comprehensive and convenient daily nutrition to everybody. One scoop of AG1 contains 75 vitamins, minerals and whole food-sourced ingredients, including a multivitamin, multimineral, probiotic, greens superfood blend. They are giving readers an immune supporting FREE 1 year supply of Vitamin D AND 5 free travel packs with your first purchase if you visit athleticgreens.com/pomp today. 

* 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 is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.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

* Arculus is the crypto cold-storage wallet that combines the world’s strongest security protocols with an easy-to-manage app. Unlike other storage solutions that are less secure and more difficult to use, Arculus doesn’t compromise security or usability. You can store, swap, and send your crypto all with a simple tap of your Arculus Key™ card. Order the safer, simpler, smarter crypto cold storage solution at getarculus.com today.

* 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. Godownload the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users.

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 best entrepreneurs and investors seek efficiency. They are in a constant search for how they can do more with less resources. You see this in capital allocation decisions, supply chains, headcount, and strategic efforts. Invest the least amount of resources to get the highest amount of impact.

One of the biggest arbitrage opportunities in this pursuit is for an individual or entity to plug into the bitcoin network. When you plug into the network, you are essentially hiring millions of volunteers around the world to come work for you. They work 24/7/365 and you have to pay them nothing.

These volunteers are writing software code, securing the bitcoin network, building infrastructure, scaling payment rails, providing liquidity, conducting global marketing campaigns, and much, much more. Everyone is rallied around a single idea — usher this new digital currency to global adoption.

If you wanted to hire millions of people around the world to work for you, it would cost billions of dollars. You would have to build a massive company to support them all. You would deal with a daily nightmare of coordinating that many people to all work together. There are very few companies in the world that employ more than 1 million people.

But the Bitcoin team is more than 100 million strong.

The community has leveraged an economic incentive to coordinate immense resources globally. We have built the strongest computer network in the world. We created a trillion dollar asset out of thin air. We have taken over mainstream television, newspapers, and media outlets. Bitcoin has become a global brand with awareness that would normally take billions of dollars to create.

These assets and people are all willing to come work for you at a moments notice and they’ll do it completely for free. You just have to plug into the bitcoin network.

Do you want to hire thousands of software engineers? Plug into the network. Do you want to hire one of the world’s best marketing teams? Plug into the network. Do you want to hire a world-class security team? Plug into the network. Do you want to hire a central bank to protect your purchasing power? Plug into the network. Do you want to build a global brand? Plug into the network.

This is true for technology companies and non-technology companies alike. Take Tahinis Restaurant in Ontario, Canada. They have 8 locations and employ a relatively small team, but they have built a global brand that results in bitcoiners from around the world traveling to Ontario to come eat at their restaurant. How did they do it? They simply plugged into the network. The team behind Tahinis purchased bitcoin on their balance sheet (plugging their capital into the network!) and then got on the internet and told people about it. Bitcoiners took care of the rest.

This is the beauty of the network. Once you plug in, Bitcoiners will take care of the rest. We have seen the community throw their support behind individuals, institutions, corporations, and even nation states. When you plug into the network, you’re hiring millions of people around the world to start working for you.

We will protect your purchasing power. We will build your brand. We will support your software. From all corners of the Earth, Bitcoiners will join your team.

The single most important decision a company can make right now is when and how they plug into the bitcoin network. It is the highest ROI chess move that you can make. Hire millions of people and pay them nothing. You just have to gain the courage and conviction to do it.

Plug into the network. We’ll take care of the rest.

-Pomp

THE RUNDOWN:

US Treasury Department Says Cryptocurrencies Could Undermine Sanctions: The U.S. Treasury Department said on Monday in a report that cryptocurrencies could undermine the effectiveness of U.S. sanctions. The report, which followed a six-month review of U.S. sanctions against countries with whom it is at odds or suspects of being behind illegal activity, noted that “digital currencies, alternative payment platforms, and new ways of hiding cross-border transactions all potentially reduce the efficacy of American sanctions.” Read more.

Australia Has Third Highest Rate of Crypto Adoption in the World: Australia is more bullish on cryptocurrencies than most other countries around the world, according to a survey published by comparison site Finder on Sunday. The survey, based on the site’s Cryptocurrency Adoption Index, measures the growth of crypto globally through a regular survey of over 41,600 individuals across 22 countries. Finder’s survey found Australia has the third-highest rate of crypto ownership at 17.8%, beating out countries such as Indonesia (16.7%) and the city of Hong Kong, a special administrative region of China (15.8%). Read more.

DraftKings Steps Further Into Crypto With Plans to Become Polygon Validator: DraftKings tapped Polygon for its marquee non-fungible token release with Tom Brady’s Autograph back in August. Now the sports betting giant is going all-in on the Ethereum layer-2 solution with a partnership that could make it one of the blockchain’s largest governors. Read more.

Invesco Drops Efforts to Launch Bitcoin Futures ETF: Would-be bitcoin exchange-traded fund (ETF) issuer Invesco is pulling out of the race to issue a bitcoin futures product. The company said Monday that it would no longer attempt to launch an ETF linked to bitcoin futures, a day before a competing product by fellow issuer ProShares begins trading. Read more.

Former SEC Official Expects More Bitcoin ETF Approvals: Lisa Bragança, a former U.S. Securities and Exchange Commission branch chief, said in an interview that she expects the SEC will approve more exchange-traded funds. “I’m expecting that the [SEC] will allow additional ETFs to get registered because they don’t want just one, they want customers to have lots of choices,” Bragança said. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Eric Balchunas is Senior ETF Analyst at Bloomberg and James Seyffart is the ETF Research Analyst at Bloomberg Intelligence.

In this conversation, we discuss ETFs, Bitcoin, Futures vs Spot, ETFs vs Trusts, Grayscale, the SEC, and future capital inflows.

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!

* 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!

* App Sumo is giving away their entire $1 million Black Friday marketing budget to creators! If you have an ebook, online course, template, or any other digital product — this is for you. List your product on AppSumo between September 15th - November 17th and the first 400 products to go live will receive $1,000. The next 2,000 to list a product and go live get $250. And everyone who lists gets entered to be one of 10 lucky winners of $10k! Go list your product today to cash in on this amazing deal.

* Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp

* 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

* AG1 by Athletic Greens is the category-leading superfood product bringing comprehensive and convenient daily nutrition to everybody. One scoop of AG1 contains 75 vitamins, minerals and whole food-sourced ingredients, including a multivitamin, multimineral, probiotic, greens superfood blend. They are giving readers an immune supporting FREE 1 year supply of Vitamin D AND 5 free travel packs with your first purchase if you visit athleticgreens.com/pomp today. 

* 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 is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.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

* Arculus is the crypto cold-storage wallet that combines the world’s strongest security protocols with an easy-to-manage app. Unlike other storage solutions that are less secure and more difficult to use, Arculus doesn’t compromise security or usability. You can store, swap, and send your crypto all with a simple tap of your Arculus Key™ card. Order the safer, simpler, smarter crypto cold storage solution at getarculus.com today.

* 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. Godownload the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users.

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 is knocking on the door of a new all-time high in US dollar price as I begin to write this letter. The market structure for the asset has been quite clear for months now. The long-term, strong hands were accumulating as much bitcoin as they possibly could, while short-term, weak hands were selling their bitcoin.

Approximately 85% of all bitcoin in circulation has not moved in the last 90 days. The last time that occurred was in October of 2020, which was followed by a 600% increase in price in under 6 months. No one knows what will happen moving forward. I wouldn’t want to be short a volatile asset like bitcoin right now though.

With that said, the price of the asset is just one story. There are a few other interesting developments that I wanted to discuss this morning.

Square is a bitcoin company?

Let’s start with Jack Dorsey and Square. They announced a potential interest in building hardware to support the bitcoin network.

There were two main takeaways that I had when I read through Jack’s Twitter thread on the topic.

The big conclusion I reached was that we are about to watch Jack Dorsey transform Square into one of the world’s leading bitcoin companies. He already put the digital currency on the balance sheet, created an easy on-ramp for CashApp users to purchase bitcoin, announced intentions to build a hardware wallet, and hired a team to build “an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services.”

These actions are not the sign that someone is a tourist in the industry. Each of them is fundamentally difficult, yet could have a profoundly positive impact on bitcoin and the eventual billions of users. Today, Square is a $115 billion market cap company. It wouldn’t be hard to see a multi-trillion dollar company if Dorsey was able to successfully build the largest publicly traded bitcoin company in the world.

My second big takeaway from this announcement was that Square is explicitly talking about system design thinking that would require them to start with re-engineering silicon chips. Yes, you read that right. A software company that has grown incredibly fast is now talking about crossing over into one of the hardest manufacturing verticals in the world. No one can claim that this team lacks ambition!

There is no promise that Square will figure out the right strategy, nor that they will actually pull the trigger on this. But the thought exercise alone is a sign of how important the company believes bitcoin will become. They aren’t the only ones who think the digital currency is important though.

Mark Cuban is a bitcoiner?

Mark Cuban responded to a tweet that I wrote on Saturday about bitcoin embodying the American ethos. As expected, many people in the bitcoin community began bashing him for uttering any word that could be construed as negative towards the digital currency.

Eventually, Mark Cuban and a bunch of others (Preston Pysh, Peter McCormick, Lyn Alden, myself, etc) ended up in a Twitter Spaces for a live conversation. More than 15,000 people were tuned in to hear the back-and-forth.

Many of the people in the conversation were upset with Mark about previous comments he had made about other crypto assets or they felt like he didn’t fully understand bitcoin. While some of that may be true, I heard something slightly different in Mark’s comments. On multiple occasions the billionaire stated that he believed bitcoin to be a great store-of-value and owned the asset in his personal portfolio. One quote was “It's the best store of value on the planet, that's why I own it.” He even tweeted that bitcoin was the best store-of-value at one point on Saturday too:

There is nuance to Mark’s view which is important to understand. He believes bitcoin is a great store-of-value but doesn’t see a high probability that it will be used as a medium of exchange globally. In comparison, bitcoiners put a higher probability on the global medium of exchange, but both camps agree on the store-of-value argument.

This leads me to a big takeaway that I had from this conversation. Mark Cuban is a bitcoiner. He understands bitcoin in great detail, including what makes it valuable, why users are flocking to it, and what the biggest challenges are. The problem in the eyes of the bitcoin community is that Mark Cuban does not believe as much as they do.

This is equivalent to a religion where the orthodox or purist population gets mad at those pursuing the same religion in a heterodox way. Both groups are believers, but they differ on the nuance and detail. If you scroll through Twitter and see the reaction from many people in the most toxic corners of the industry, they are calling Cuban a moron, an idiot, and a fraud. Remember, this all directed at a guy who publicly is stating that he believes bitcoin is the greatest store-of-value in the world.

To make things even more interesting, the gigachad of all bitcoiners - Michael Saylor - appears to agree with Mark Cuban.

So on one hand you have bitcoiners attacking Mark Cuban but praising Michael Saylor. Rather than allowing the hypocrisy to go unnoticed, I think it is worth calling out. My guess is that Michael Saylor and Mark Cuban, along with majority of bitcoiners, agree on much more than they ever realized.

Which brings me to my last point — the best way to learn is by listening. There is a pattern of a small group of bitcoiners to lash out aggressively at people that they disagree with. If you don’t believe exactly what this group believes, they will yell and scream. They’ll get real mad. And they’ll attack you relentlessly.

It makes no sense. There is no common ground established when people do this. There is no education or learning that occurs. Rather than creating an environment where someone can change their mind, you create an environment that forces people to dig their heels in as a defense mechanism. Frankly, we don’t have time for these types of immature antics.

The bitcoin community is attempting to accomplish the impossible. We need as many people on our side as we can get. We should see these situations as an opportunity to recruit a new proponent, instead of looking for a chance to dunk on someone. It isn’t easy. I am no better than anyone else at this. Honestly, I love having fun on the internet and have dunked on plenty of folks in the past. But as I’ve thought about it more, we need to be as welcoming as possible.

The rebuttal to this message from the toxic corners of the bitcoin community will be that toxicity acts as a protective mechanism for the protocol. This is a misplaced idea though. The protective mechanism is not the toxicity, but rather the willingness of bitcoiners to stand up and say something every single time someone misspeaks or acts in an abrasive way. The willingness to defend is the defense mechanism, not the toxicity.

In fact, I would go as far as to say the toxicity stems from many people’s inability to communicate effectively. Just as a child yells and screams for attention, many people in the community are vying to one-up each other in terms of toxicity. That doesn’t make you honorable. It just makes you an a*****e. The true test of a warrior is whether they can win the war without ever fighting the battle.

As the great Sun Tzu famously said, “The supreme art of war is to subdue the enemy without fighting.” He also said, “Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting.” And finally, Sun Tzu stated, “Confront them with annihilation, and they will then survive; plunge them into a deadly situation, and they will then live. When people fall into danger, they are then able to strive for victory.”

There is no point in being confrontational. Our end goal is not earning a debate victory, but rather in gaining a comrade. When optimizing for acquiring a comrade, the tactics must be different. I have confidence that we will learn this over time as a community. It is a learned skill, and one in which every person much put effort into mastering (definitely including me!).

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

-Pomp

SPONSORED: Gains in the number of crypto wallet holders have doubled over the past year⁠—bringing millions of new users into the crypto space. In a major win for global crypto adoption, Unstoppable Domains and their alliance of 32 wallets and exchanges around the world just made moves to eliminate the stress of sending crypto for 40M+ crypto users⁠; a great sign that wallet adoption rates will continue to accelerate.

This global initiative aims to make Unstoppable's '.wallet' NFT username a universal standard. This .Wallet Alliance is creating a solution to address the largest pain point in crypto payments: taking the hassle and fear out of sending crypto by simplifying the user experience.The Unstoppable .Wallet Alliance will work together to integrate support for '.wallet' domain ending amongst its 32 founding members and future partners to accelerate decentralized peer-to-peer transactions.Global mass adoption of crypto is finally here—don't miss it.Ditch your inconvenient, error-prone cryptocurrency address and claim your username for the web3 future.

THE RUNDOWN:

SEC Approves Bitcoin Futures ETF, Opening Crypto to Wider Investor Base: After years of trial and error by would-be fund sponsors, cryptocurrency investing is finally opening up to the masses with the tacit U.S. approval of a bitcoin futures exchange-traded fund. The Securities and Exchange Commission greenlighted bitcoin futures ETFs in a first for the industry on Friday, after the regulator’s five commissioners met on the issue. ProShares, which filed for its Bitcoin Strategy ETF this past summer, may be the first to launch next week. Read more.

Grayscale Said Close to Filing to Convert Bitcoin Fund Into Spot ETF: Grayscale Investments plans on filing an application to convert the world’s biggest bitcoin fund into a spot ETF early next week, according to a person with knowledge of the matter. The investment firm had intended to file its application to the Securities and Exchange Commission as soon as the agency allowed efforts by competitors for a futures-based bitcoin ETF, said the person. That happened late Friday. Read more.

Tribe Capital to Launch $75M Crypto Fund: Tribe Capital, a venture capital firm with investments in Kraken and FTX among others in the crypto sector, is launching a $75 million crypto fund, sources familiar with the initiative told CoinDesk. The fund initially sought to raise $50 million but strong interest from investors raised the total, according to the sources. Read more.

Square to Consider Building a Bitcoin Mining System: Payments service provider Square is looking to develop a bitcoin mining system, the company’s CEO Jack Dorsey tweeted on Friday. “Square is considering building a Bitcoin mining system based on custom silicon and open source for individuals and businesses worldwide,” Dorsey wrote. In his threaded tweets, Dorsey wrote that mining needs to be more distributed and energy-efficient, and that silicon design is too concentrated into just a few companies, leading to reduced supply. Read more.

Canadian City Becomes First to Heat Buildings Through Bitcoin Mining: North Vancouver announced Thursday it would become the world's first city to be heated almost entirely by bitcoin mining, an innovative way to tackle climate change by creating valuable cryptocurrency coins and usable thermal energy at the same time. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Jacob Helberg is a senior adviser at the Stanford University Center on Geopolitics and Technology and an adjunct fellow at the Center for Strategic and International Studies (CSIS). Jacob is also the author of Wires of War, a fantastic book on technology policy, China, and U.S. national security.

In this conversation, we discuss US-China relations, technology, national security, Gray Wars, and why the US must start taking this much more seriously.

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!

* 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!

* App Sumo is giving away their entire $1 million Black Friday marketing budget to creators! If you have an ebook, online course, template, or any other digital product — this is for you. List your product on AppSumo between September 15th - November 17th and the first 400 products to go live will receive $1,000. The next 2,000 to list a product and go live get $250. And everyone who lists gets entered to be one of 10 lucky winners of $10k! Go list your product today to cash in on this amazing deal.

* Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp

* 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

* AG1 by Athletic Greens is the category-leading superfood product bringing comprehensive and convenient daily nutrition to everybody. One scoop of AG1 contains 75 vitamins, minerals and whole food-sourced ingredients, including a multivitamin, multimineral, probiotic, greens superfood blend. They are giving readers an immune supporting FREE 1 year supply of Vitamin D AND 5 free travel packs with your first purchase if you visit athleticgreens.com/pomp today. 

* 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 is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.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

* Arculus is the crypto cold-storage wallet that combines the world’s strongest security protocols with an easy-to-manage app. Unlike other storage solutions that are less secure and more difficult to use, Arculus doesn’t compromise security or usability. You can store, swap, and send your crypto all with a simple tap of your Arculus Key™ card. Order the safer, simpler, smarter crypto cold storage solution at getarculus.com today.

* 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. Godownload the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users.

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

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 190,000 other investors today.

To investors,

Bloomberg reported last night that insiders have confirmed the SEC will not oppose the Bitcoin Futures ETF applications that are set to begin trading on Monday. This led to a short term price appreciation of bitcoin, along with quite a bit of excitement on Twitter.

It is important to remember that the ETF is not approved and trading….until it is approved and trading. There is always the chance that someone steps in at the last second and tries to prevent the inevitable from happening. Barring that attempt being successful, the Bitcoin Futures ETFs will bring the first bitcoin-related ETF structure to American financial markets.

The journey to a bitcoin ETF started back in 2013 with the first ETF application from Cameron and Tyler Winklevoss. Now eight years later we are on the doorstep of the very first approval. As the saying goes, the best things take time.

But is the Bitcoin Futures ETF actually the best thing?

Honestly, probably not. The approval of a bitcoin “spot” ETF would be better from investors, both from a price tracking and fee structure standpoint. But beggars can’t be choosers in the beginning. So we are likely going to see the Bitcoin Futures ETFs trading at the start of next week.

The crazy part about this entire thing is that the government will now be complicit in two actions that contribute to significant bitcoin price appreciation. During Q2 of 2020, they printed trillions of dollars right into the bitcoin halving. This type of market manipulation sent investors seeking safety in inflation-hedge assets, which led the professionals, such as Paul Tudor Jones, to describe bitcoin as “the fastest horse.”

Remember, bitcoin is completely unaware of any macro economic forces. It doesn’t know, nor does it care, if people are printing money or if they are decreasing interest rates. Bitcoin’s network continues to produce block of transactions after block of transactions without fail. That is the beauty of a decentralized, open monetary network.

But the government is not done yet.

The SEC appears poised to approve the Bitcoin Futures ETF at a very opportune time for bitcoiners. Approximately 85% of bitcoin’s circulating supply has not moved in the last 90 days. There is extreme illiquidity in the market, so if demand were to increase because of an ETF approval, the price is likely to rocket upwards in an insane way. Add in the fact that we are still experiencing persistent levels of 5%+ inflation and you can quickly see why there are so many forces pushing investors into bitcoin.

The equation is simple — a highly illiquid asset is going to increase access to large capital pools while being overlaid with a macro backdrop that has investors scurrying to every corner of financial markets to find inflation-hedge assets.

This is an absolutely gorgeous setup. The best part? It has been available to anyone in the world for years.

There were no insiders. No one was able to get access in the private market at the expense of the public market retail investor. There were no special deals. It all came down to whether someone was willing to put in the work, educate themselves, and have the courage and conviction to convert their assets to digital sound money. Some people did it. Others thought they were too smart for the market.

Ultimately, bitcoin is the most free market asset that we have. It is being repriced in real-time by investors. A decentralized, digital, open monetary network is worth multiples of the current $1 trillion in my personal opinion. But what do I know? I’m just a random volunteer on the internet who plugged into the bitcoin network and is doing my best to help us advance along to a better world.

Hope each of you has a great end to your week. I’ll talk to everyone on Monday.

-Pomp

TODAY’S SPONSORS:

Arculus is the crypto cold-storage wallet that combines the world’s strongest security protocols with an easy-to-manage app. Unlike other storage solutions that are less secure and more difficult to use, Arculus doesn’t compromise security or usability. You can store, swap, and send your crypto all with a simple tap of your Arculus Key™ card. Order the safer, simpler, smarter crypto cold storage solution at getarculus.com today.

Gains in the number of crypto wallet holders have doubled over the past year⁠—bringing millions of new users into the crypto space. In a major win for global crypto adoption, Unstoppable Domains and their alliance of 32 wallets and exchanges around the world just made moves to eliminate the stress of sending crypto for 40M+ crypto users⁠; a great sign that wallet adoption rates will continue to accelerate. This global initiative aims to make Unstoppable's '.wallet' NFT username a universal standard. This .Wallet Alliance is creating a solution to address the largest pain point in crypto payments: taking the hassle and fear out of sending crypto by simplifying the user experience.The Unstoppable .Wallet Alliance will work together to integrate support for '.wallet' domain ending amongst its 32 founding members and future partners to accelerate decentralized peer-to-peer transactions.Global mass adoption of crypto is finally here—don't miss it.Ditch your inconvenient, error-prone cryptocurrency address and claim your username for the web3 future.

THE RUNDOWN:

Bitcoin Futures ETF Won’t Face SEC Opposition at Deadline: The Securities and Exchange Commission is poised to allow the first U.S. Bitcoin futures exchange-traded fund to begin trading in a watershed moment for the cryptocurrency industry, according to people familiar with the matter. The regulator isn’t likely to block the products from starting to trade next week, said the people, who asked not to be named while discussing the decision. Read more.

Cathie Wood’s Ark, 21Shares Team Up on Bitcoin Futures ETF Application to SEC: Noted investor Cathie Wood’s Ark Investment Management and investment-product firm 21Shares are part of a new application to the U.S Securities and Exchange Commission to list a bitcoin futures exchange-traded fund. The Wednesday filing was submitted by Alpha Architect ETF Trust, with 21Shares listed as the fund’s sub-adviser. Ark Investment will provide marketing support, but not make investment decisions or provide investment advice, the filing said. Read more.

Coinbase Proposes US Create New Regulator to Oversee Crypto: Crypto exchange Coinbase wants the U.S. government to create a new regulator to oversee the cryptocurrency industry. Unveiled Thursday, Coinbase’s Digital Asset Policy Proposal suggests Congress pass legislation to regulate Marketplaces for Digital Assets – its term for crypto exchanges that offer custody and trading services, as well as borrowing and lending services – and create a registration process for those entities. The exchange also proposed that the crypto industry establish a self-regulatory organization for crypto businesses. Read more.

Coinbase Jumps After Sign-Up Numbers for NFT Marketplace Revealed: Coinbase shares rose 6% Thursday after reports that the crypto exchange’s new non-fungible token marketplace has a waiting list of more than one million people who signed up on the first day it was announced earlier this week. As of Thursday morning, the waiting list was at 1.35 million, which is four times the 300,0000 users that OpenSea, the world’s largest NFT marketplace, has, according to a note from financial services firm BTIG. Read more.

Second Biggest Mortgage Provider in US Stops Accepting Crypto Payments: United Wholesale Mortgage, the second largest mortgage lender in the U.S., has stopped accepting cryptocurrency for home loans, the company announced on Thursday. In August, the company said it would start offering the crypto payment option via a pilot program to gauge demand for this service. It was the first mortgage lender to do so. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Nic Carter is a Partner at Castle Island Ventures and a Co-Founder of CoinMetrics.

In this conversation, we discuss bitcoin mining, renewable energy, Texas, inflation, and debunking FUD.

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!

* 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!

* App Sumo is giving away their entire $1 million Black Friday marketing budget to creators! If you have an ebook, online course, template, or any other digital product — this is for you. List your product on AppSumo between September 15th - November 17th and the first 400 products to go live will receive $1,000. The next 2,000 to list a product and go live get $250. And everyone who lists gets entered to be one of 10 lucky winners of $10k! Go list your product today to cash in on this amazing deal.

* Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp

* 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

* AG1 by Athletic Greens is the category-leading superfood product bringing comprehensive and convenient daily nutrition to everybody. One scoop of AG1 contains 75 vitamins, minerals and whole food-sourced ingredients, including a multivitamin, multimineral, probiotic, greens superfood blend. They are giving readers an immune supporting FREE 1 year supply of Vitamin D AND 5 free travel packs with your first purchase if you visit athleticgreens.com/pomp today. 

* 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 is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.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

* Arculus is the crypto cold-storage wallet that combines the world’s strongest security protocols with an easy-to-manage app. Unlike other storage solutions that are less secure and more difficult to use, Arculus doesn’t compromise security or usability. You can store, swap, and send your crypto all with a simple tap of your Arculus Key™ card. Order the safer, simpler, smarter crypto cold storage solution at getarculus.com today.

* 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. Godownload the Matrixport App and enjoy a welcome offer of  30% APY on USDC for new users.

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