The Pomp Letter

To investors,

The Head of the Bank of International Settlement Innovation Hub, Benoît Cœuré, gave a speech yesterday at the 23rd Geneva Conference on the World Economy. The speech was titled “Finance disrupted” and contained a number of interesting insights into how central banks are thinking about new digital technologies. 

The main theme of the speech is that disruption is upon us. Cœuré opened with:

“Let me begin by stating the obvious: we live in an age of disruption. We hear every day about businesses, industries, and governments being disrupted. And, of course, our private lives have been disrupted by the pandemic. But tonight, I would like to talk about a specific type of disruption – disruption arising from technological innovation in the financial sector.”

He went on to explicitly call out that technological progress, and the subsequent disruption, can be both positive or negative:

“They tell us that technological innovation and associated disruptions can be good or bad. New technologies can foster greater efficiency, financial stability and inclusion. But they can also do the opposite, spawning financial instability, loss of privacy, and financial exclusion.”

The speech goes on to highlight three specific areas that the BIS Innovation Hub sees as examples of digital disruption:

* Digitalization disrupting payments and money

* Big data and algorithms disrupting banking supervision

* Changes in market structures

The first thing that jumped out at me is in a speech that discusses financial disruption, and specifically mentioned the digital disruption of payments and money, there was zero mentions of bitcoin. Zero! The speech spends considerable time on CBDCs but it never acknowledges the $1 trillion market cap asset that is now held by 100+ million people globally, almost every large financial institution, and has recently become legal tender in a nation state.

I’m not sure if the omission of bitcoin in the conversation is a sign of ignorance or malice, but it is a stunning revelation into the lack of importance that these legacy organizations put on the digital, decentralized, open monetary network. If hyperbitcoinization ever occurs, historians will point back to speeches like this to highlight how the central bankers were asleep at the wheel.

Next, there is a section of the speech that attempts to put non-central bank attempts at stablecoins in direct opposition of CBDCs. It reads:

“The history of private money initiatives is not a happy read. Whenever faced with the conflict of interest between making their money stable no matter what and making a profit, private issuers have always chosen profits.

This is where central banks come in.

Money is ultimately a public good whose stability and use needs to be protected by the public sector. This is why so many central banks around the world are working on central bank digital currency, or CBDC – essentially, to ensure that the next generation of money continues to serve the public interest.”

Now this talk track is interesting because it is based on two assumptions: (1) private actors always choose profits over stability and (2) central banks always act in the best interest of the public. Both are incorrect. A great example is the last 18 months in the United States. Through both monetary and fiscal policy decisions, the bottom 45% of Americans are drastically worse off than they were before. Official CPI numbers are over 5% and unofficial numbers are close to 10% inflation.

The goal of central banks is to have a stable currency and achieve full employment. We have neither in the United States. Approximately 40% of all dollars in circulation were created in the last 24 months and unemployment stands at more than 5% officially. The central bank is not achieving their goals, while also hurting the most vulnerable in our society.

To top it off, the central bankers have enriched themselves drastically at the expense of the public. We have had multiple Fed presidents who had to step down amid controversy of day trading and personal investing. There are many more central bankers who have made millions of dollars from asset ownership, while they destroyed the wealth of the bottom 45% of Americans. Did the Fed choose the public good over enriching themselves? That is a hard argument to make given the facts that we have today.

Let’s go back to Cœuré speech. The scariest part is when he begins to talk about data and the need for as much of it as possible. Here is exactly what was said:

“They [financial firms] collect enormous amounts of data about our preferences, spending habits and payment history – and those of our peers, who may be similar to us - even before we ask for a service or apply for a loan. By using artificial intelligence and machine learning to study a treasure trove of data – typically more than 1,000 data points – they can determine how much we can borrow and repay. And they do it in part by using information that until recently did not have much financial value, like the model of smart phone someone has, or their browsing habits…..

…..Technology can change this game, by giving supervisors access to a lot more data, structured, unstructured, with better quality and granularity than ever before. It can also give them effective means to extract, query and analyze data. To perform the same cross-check review that I just mentioned, a digitally native supervisor could build integrated platforms to avoid using spreadsheets and PDFs. She could use artificial intelligence tools to crunch the data and apply natural language processing and machine learning algorithms to real-time, typically unstructured data from news and market developments.

The BIS Innovation Hub is doing exactly that. The BISIH Singapore Centre is working with the Monetary Authority of Singapore, the Bank of England and the International Swaps and Derivatives Association on project Ellipse, a prototype which investigates the feasibility of an integrated regulatory data and analytics platform. Tools based on project Ellipse would enable supervisors to digitally extract, query and analyze in real time large and diverse sources of structured and unstructured data that are relevant to the residential mortgage market, and anticipate supervisory action. Looking ahead, we will also investigate ways to use the suptech toolbox to support the green and sustainable finance agenda.”

If I translate this correctly, the BIS wants more financial surveillance. They believe they are entitled to all the data. The more data, the better they can serve the people, right? That is the argument. But what we have found is that no matter how much data they have, the economists are wrong, the forecasts are wrong, and the policy decisions end up being quite negative. According to Stanley Druckenmiller, the Federal Reserve is the greatest contributor to wealth inequality in the US over the last decade.

There is a strong argument that giving the central banks and BIS more data is actually a net negative. It reduces financial privacy and the citizens get nothing in return. All the proposed queries, extraction, and analyzing still doesn’t solve the first principles problem — the debasement of the currency is the only way that the system doesn’t collapse.

Additionally, the shift to a central bank digital currency gives these overlords a new tool in their toolbox. They like to brag about the potential for real-time stimulus payments, which was explicitly mentioned in the speech:

“I believe in fact that CBDC could have a greater impact on fiscal policy. Think of the extraordinary support that some governments provided to the population during the pandemic. Some countries showed great ingenuity in using digital technology to reach those most in need. Others mailed cheques to people while bank branches were closed because of lockdowns and people were told to stay home. Imagine how much easier it would have been to transfer digital money to people's e-wallets in real time.”

And they like to point the finger at private companies for potentially nefarious use cases or motives. But it never seems to register that maybe the group we should be most scared of are the central banks themselves. Why should we trust them? What makes us more confident that they won’t use this increase in access to data in a nefarious way?

Are the central banks willing to commit to avoiding personalized monetary policy? Can we get confirmation that the central banks won’t create money that expires? Do they promise to avoid participating in the creation of a social credit system? Obviously, no one will commit to any of this. They want to keep their options open. And that is exactly why we should be very, very cautious when we see the talking points that are shared by folks like Benoît Cœuré.

The more someone wants to control something, the more skeptical I become. You can be the judge of these comments and their ultimate intentions for yourself. Just don’t wake up decades from now asking yourself “how did we let this happen?” The time to pay attention is now. Hope you have a great weekend. Talk to you soon.

-Pomp

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THE RUNDOWN:

Pro-Crypto Senator Lummis Discloses Bitcoin Purchase Worth Up to $100K: Senator Cynthia Lummis, R-Wyo., just disclosed a sizable bitcoin purchase as the crypto supporter continued to grow her stake in the volatile asset. The Republican senator scooped up the world’s largest cryptocurrency on Aug. 16 worth between $50,001 to $100,000, according to a filing on Thursday. The purchase was disclosed outside of the 45-day reporting deadline set by The Stop Trading on Congressional Knowledge (STOCK) Act. Read more.

Colombian Fintech Movii Raises $15M in Series B Round: Colombian fintech Movii raised $15 million in a Series B funding round to create a bitcoin purchasing service and expand other services, the company announced Wednesday. The round was co-led by payments services company Square and Hard Yaka, an investment fund founded by former Ripple Chief Risk Officer Greg Kidd. Read more.

Tesla moves headquarters from California to Texas: Tesla is moving its headquarters from Palo Alto, California, to Austin, Texas, CEO Elon Musk announced at the company’s shareholder meeting on Thursday. The meeting took place at Tesla’s vehicle assembly plant under construction outside of Austin on a property that borders the Colorado River, near the city’s airport. Read more.

New Chainalysis Report Reveals Who’s Leading the World in Crypto Adoption: Blockchain analytics firm Chainalysis’ forthcoming 2021 Geography of Cryptocurrency report examines crypto adoption in countries and regions across the world, placing the focus on dynamic trends in emerging markets. Starting last year, cryptocurrency use around the world grew dramatically, thanks to a crypto-asset price run partly fueled by large inflows of institutional investments into the space. Between Jan. 2020 and Jan. 2021, the number of crypto wallets in use worldwide increased 45% to an estimated 66 million. Read more.

South Korea’s 20% Tax on Crypto Gains Will Take Effect in 2022: South Korean Finance Minister and Deputy Prime Minister Hong Nam-ki said his country is moving ahead with its plan to tax gains on cryptocurrency trading starting in 2022, according to a report in The Korea Times. The policy, which will levy a 20% tax on crypto gains of over 2.5 million won (US$2,125) made in a one-year period, was originally supposed to go into effect on Oct. 1, but was delayed due to a lack of taxation infrastructure. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Vlad Tenev is the co-founder and CEO of Robinhood.

In this conversation, we discuss financial markets, reducing friction for accessibility, payment for order flow, crypto wallets, the Gamestop saga, and much more.

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!

* Polymarket - Polymarket is the world’s leading information markets platform where you can trade on the most pressing global questions and see unbiased, real-time data on what the market thinks will happen – all on the blockchain. Will Cardano support smart contracts by October? Will the US have more than 100,00 covid cases before 2022? For a limited time, sign up with referral code “Pomp” to get your first trade reimbursed up to $100. Click here to get started!

* 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 a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

* 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

* 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 “pomp2020” 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.

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. 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.

* LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers 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

* Mask Network - The portal to the new, open internet. Building on top of the existing social networks, the Mask extension allows borderless cryptocurrency transfer, decentralized file storage and sharing, decentralized finance, and many other features that were once impossible to interact with on traditional social media. Visit mask.io/pomp and use the extension to start exploring the decentralized application world.

* Okcoin - 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 - 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. 

* Miami Makers Month is a virtual hackathon for hackers, designers, and creators who are passionate about creating apps to benefit the City of Miami. $25k in total prizes will be awarded to developers who build the winning apps on MiamiCoin -- a community-launched platform for innovation built on Bitcoin, and Stacks. Visit MiamiMakers.co to learn more and get involved.

* Masterworks - Masterworks.io is the leading platform for blue-chip art investing with over 185,000 registered users. They have purchased over $180MM in art from artists like Banksy, Basquiat and KAWS.

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 set a goal earlier this year of helping 10,000 people leave their legacy jobs and get a new job within the bitcoin and crypto industry. That may seem like a big number initially, but we were able to create and launch a company that is well on the way to accomplishing that goal. Below is a guest post from CEO Colton Sakamoto on how we are training thousands of people this year to make the transition.

In January of this year, we created a single product to start with — our Crypto Job Board. Since its inception, we’ve helped hundreds of job seekers find work in the industry. One company was able to hire more than 30 employees from the product, which makes up 4% of their global workforce.

In partnering with both job seekers and employers, we noticed a common theme — job seekers felt like they didn’t have a way to stand out from the crowd of other applicants, and employers had a hard time finding candidates with basic crypto knowledge. Enter the Crypto Academy.

In February, we launched our training program, The Fundamentals of Bitcoin and Crypto. The course has helped over 20 students start careers at some of the top companies in the industry, like Coinbase, Gemini, BlockFi, Kraken, Strike, BTC Inc, Anchorage, and more. While most of the students that go through the program are interested in starting a new career, our course surveys have identified three main desired outcomes for enrollees:

* To work in the industry

* To learn more about bitcoin and crypto

* To meet others and join a community

1. Working in the Industry

There are thousands of open jobs in the bitcoin and crypto industry. Most people are unaware of the number of openings and types of roles available. The common misconception is that you need to be an engineer to work in bitcoin and crypto. You do not need to have technical experience to work in this industry – all of our hired program graduates have been non-technical.

Top talent is leaving the legacy world to create a better financial system. We’ve actively worked with the hiring departments at the major bitcoin and crypto companies to form a curriculum that covers the baseline level of knowledge needed to work in the industry. 

Here’s how the certification program helps job seekers find work in the bitcoin and crypto space:

Career events

The sixth and final workshop is hosted by top companies in the industry that actively hire from our candidate pool. We have exclusive events that have been hosted by Coinbase, BlockFi, Strike, Unstoppable Domains, Ava Labs, and more. This gives job seekers front row access to companies and while ensuring they don’t get lost in the shuffle of thousands of other applicants. Crypto Academy alumni are always welcome back to the job fairs for future cohorts.

Resume and Interview guidance

We have a coach that leads deep dives on how to tailor your resume to crypto companies and how to stand out in the application process. Alumni who have landed jobs in the industry regularly come back to join discussion groups and share information about what made them stand out.

Networking 

All cohort graduates remain active in our Slack community. This means all of the hired alums are part of the community and can offer guidance on strategies that made them successful in the job hunt. We also have designated social events where you can meet your other classmates. Cohort members have met their podcast co-hosts, co-founders, and friends through these events.

Certification 

Hiring departments want to see Proof of Work. In a new industry, there are few certifications that can separate you from the competition. We issue an NFT certificate to all course graduates which gives job seekers an accolade that they can put on their resumes.

Meet Allen (@allenHODL on Twitter), who took our program and landed a job at BTC Inc:

“From the very day I found bitcoin back in 2017, I knew I had to find a way to work in the industry. I had little to no industry knowledge and I did not have a single connection within the industry. I was like a deer in the headlights hoping to find a job.

When I found Pomp’s Crypto Course I knew this was my way in. I met a tremendous amount of like-minded people that have now become my friends, both coaches, and classmates. They helped me refine my bitcoin knowledge and pointed me in the right direction.

Since I participated in the course in May of 2021, I have started a podcast (Citizens of Blockchain), began educating others in Twitter Spaces, contribute weekly to the Slack channel the course provides, and most recently, gained employment with BTC Inc to build the bitcoin conference. All of this in 3 months. Were it not for the course I would not be in the position I am today to be working a dream job of mine.

If you’re looking for proof-of-work to show employers, this is it.”

2. Learning more about bitcoin and crypto

Learning about bitcoin and crypto can be challenging. There are tons of really solid free resources available, but the information is often segmented and not fully comprehensive. Podcasts, newsletters, and courses (like the Saylor Academy) are all great, free resources to learn more. However, completion rates for MOOCs (Massive Open Online Courses) are very low (anywhere from 5-15%), and it takes time, dedication, and discipline to learn complex subjects on your own, and your questions may still go unanswered.

Cohort-based courses fix this. Our program includes live workshops hosted by Pomp. You will go through the academy alongside peers that are on the same learning journey as you are. We have Q&A sessions, as well as discussion groups and deep dives throughout the week. 

In addition to the core curriculum covered in Pomp’s workshops, we also cover:

* Technical deep dives on how bitcoin works 

* The Lightning Network

* PoW vs. PoS

* Running a node

* NFTs

* The creator economy and crypto

* Meme creation

* And much more

We host several optional events nearly every day throughout the course of the three weeks of the course. Outside of the main workshops, the course is analogous to a gym membership. You can pick and choose what you want to attend, and tailor your learning experience to match your interests. All sessions are recorded for those who aren’t able to attend live. 

3. Networking and forming a community

If you’re as obsessed with bitcoin as I am, you’ve probably annoyed friends and family once or twice. One of the most common pieces of feedback we get is that people need a community of friends they can talk about bitcoin and crypto with. Every member that goes through our program gets lifetime access to all course materials as well as our Slack community. We have Slack channels for investing, learning, careers, memes, and more. We’ve done several in-person meetups, and host an alumni “family reunion” once per month. Students have found podcast co-hosts, co-founders, and friends through the Academy. 

“I recently completed Pomp's Crypto Academy and couldn't be happier with the experience! From the Coaches to the content, to the Cohort model it exceeded my expectations at every level. The classes were remarkable at adjusting the material to suit any degree of expertise from remedial to advanced. My only complaint is that I didn't do it sooner!” - Anthony Praskavich @Train_Johnson

We have built the most comprehensive bitcoin and crypto education program available. Through 7 cohorts, students have rated the course very highly, with the most recent cohort rating the program a 9.4/10. We’ve helped many students start new careers, and this is only the beginning. If the Crypto Academy sounds like it’s a good fit for your goals, apply here. We hope to see you in cohort 8!

APPLY FOR COHORT 8 HERE: https://www.pompscryptocourse.com/

-Pomp

SPONSORED: Did you know that Unstoppable Domains’ 10 NFT domain endings are now fully integrated with Trust Wallet? Trust Wallet’s 10M+ users can easily send and receive crypto with personalized, readable names like pomp.bitcoin or brad.nft. Ditch your inconvenient, error-prone cryptocurrency address and claim your Unstoppable Domain here.

THE RUNDOWN:

Dapper Labs Acquires Influencer Platform Brud, Launches Unit Focusing on DAOs: Non-fungible token powerhouse Dapper Labs has acquired the influencer platform Brud and is launching a new business dubbed “Dapper Collective” that will focus on helping communities build decentralized autonomous organization via its Flow blockchain. No terms were disclosed, but the compensation was all equity-based, according to Dapper, the company behind the popular NBA Top Shot NFT marketplace. Read more.

Jamie Dimon Says Bitcoin Is ‘a Little Bit of Fool’s Gold:’ Jamie Dimon, JPMorgan Chase chairman and CEO, remains a skeptic of bitcoin, the largest cryptocurrency by market value. “It’s got no intrinsic value. And regulators are going to regulate the hell out of it,” Dimon recently told Axios CEO Jim VandeHei. Dimon said bitcoin will be around long term, but “I’ve always believed it’ll be made illegal someplace, like China made it illegal, so I think it’s a little bit of fool’s gold.” Read more.

Bitcoin Set to Become Legal Payment in Brazil: Brazil’s Federal Deputy Aureo Ribeiro has revealed that Brazilians could soon be able to buy houses, cars and even McDonald’s with Bitcoin. The South American nation is preparing to vote on a cryptocurrency regulation bill which is expected to be presented to the Plenary of the Chamber of Deputies within the next few days. “We want to separate the wheat from the chaff, create regulations so that you can trade, know where you’re buying and know who you’re dealing with,” Ribeiro said. Read more.

Axie Infinity to Raise $150M Series B at $3B Valuation: Blockchain-enabled play-to-earn game Axie Infinity is raising approximately $150 million in a Series B capital round at a $3 billion valuation, according to reporting on Monday by The Information. Citing two unnamed sources “with direct knowledge of the deal,” The Information wrote that venture giant Andreessen Horowitz is leading the round. Read more.

SEC Subpoenas USDC Stablecoin Backer Circle: Circle Financial is under investigation by the U.S. Securities and Exchange, the payments company disclosed Monday. Circle, a key supporter of the USDC stablecoin, said in regulatory filings that it received an “investigative subpoena” from the SEC’s Enforcement Division in July 2021. That subpoena requests “documents and information regarding certain of our holdings, customer programs, and operations,” the filing said. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Raoul Pal is the CEO of Real Vision Group, the world's premier finance and business video channel featuring exclusive in-depth interviews, research, documentaries, analysis and investment ideas from impossible to access guests and the sharpest minds in global finance.

In this conversation, we discuss macro investing, economic stimulus, bond portfolios, bitcoin, ethereum, solana, NFTs social tokens, price predictions, and what institutional investors are doing.

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!

* Polymarket - Polymarket is the world’s leading information markets platform where you can trade on the most pressing global questions and see unbiased, real-time data on what the market thinks will happen – all on the blockchain. Will Cardano support smart contracts by October? Will the US have more than 100,00 covid cases before 2022? For a limited time, sign up with referral code “Pomp” to get your first trade reimbursed up to $100. Click here to get started!

* 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 a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

* 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

* 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 “pomp2020” 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.

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. 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.

* LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers 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

* Mask Network - The portal to the new, open internet. Building on top of the existing social networks, the Mask extension allows borderless cryptocurrency transfer, decentralized file storage and sharing, decentralized finance, and many other features that were once impossible to interact with on traditional social media. Visit mask.io/pomp and use the extension to start exploring the decentralized application world.

* Okcoin - 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 - 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. 

* Miami Makers Month is a virtual hackathon for hackers, designers, and creators who are passionate about creating apps to benefit the City of Miami. $25k in total prizes will be awarded to developers who build the winning apps on MiamiCoin -- a community-launched platform for innovation built on Bitcoin, and Stacks. Visit MiamiMakers.co to learn more and get involved.

* Masterworks - Masterworks.io is the leading platform for blue-chip art investing with over 185,000 registered users. They have purchased over $180MM in art from artists like Banksy, Basquiat and KAWS.

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

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

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

To investors,

We discussed last week the issues related to China’s decision to emphasize their existing ban on bitcoin and cryptocurrencies. This ban has manifested itself in multiple ways, including kicking miners out of the country, outlawing cryptocurrency transactions, and recently blocking access to various crypto websites that show asset prices and charts.

There has been plenty of speculation about what China’s actions will mean for the crypto market, but the more interesting conversation to me is around how every other country is going to respond. Yesterday, Senate candidate Blake Masters put out a tweet talking about this very issue. The tweet took many people by surprise.

Yes, you read that correctly. A potential future Senator is advocating for the United States to purchase a strategic reserve of bitcoin as a response to China’s decision to further ban the technology.

First, this is probably one of the most logical responses that I’ve seen. The United States and China are locked in a forever competition over who will ultimately prevail as the global superpower in the digital age. China’s advantage is a centrally planned, heavily controlled economy and population. The US advantage is our ability to move quickly, be entrepreneurial, and leverage democracy and capitalism.

Second, China works tirelessly to prevent any open technologies from being adopted by their citizens. The best example is the Great Firewall, which prevents the average citizen from accessing most default Western websites. This rejection of the open internet has significantly hurt the people of China, but it has made the government more powerful and resilient. You have to ask yourself if you believe citizens should have access to open technologies or not? You know where I stand.

Third, it has been a great historical decision to embrace the technologies and products that China is trying to ban. Everything from Twitter to Facebook to Google ended up being worth much more in the future.

Lastly, the United States is in the game of being prepared for the future. If we decide that Bitcoin has only a 1% chance of becoming the global reserve currency, then here is the math that we could use to determine what to do from a strategic reserve perspective:

* The FY 2022 fiscal budget laid out by President Biden in May of this year calls for just over $6 trillion. Only 1% of that would be $60 billion.

* The current bitcoin market cap is $792 billion. We know that about 60% of the circulating supply of the digital currency is held by long term holders who are unwilling to sell their bitcoin. That leaves approximately $316 billion of available circulating supply that could potentially be bought and sold at any time.

This means that the United States could attempt to buy $60 billion of bitcoin, which would be 1% of their annual budget and approximately 20% of the tradable circulating supply. Now it would be very difficult to purchase that amount of bitcoin without moving the market or tipping off various market participants.

So let’s say that the US would only be able to purchase $20 billion worth of bitcoin at today’s prices. That would be approximately 465,200 bitcoin at today’s price or more than 2% of the total bitcoin supply of 21 million bitcoin that will ever be available. When you put it in those terms, the United States would be one of the largest bitcoin holders in the world for less than 0.5% of a single year’s national budget.

This seems like a no brainer risk-reward decision. If bitcoin ends up not working out, the US spent a rounding error amount of money. If bitcoin ends up being what bitcoin holders believe it will become, the US will be best positioned out of any nation state to lead from the front in the digital age. Asymmetry is the name of the game in new industries and this idea of the US building a strategic reserve of bitcoin is the ultimate example.

I won’t hold my breath for it to happen, but the math is clear. As Jack Mallers likes to say, Pawn to E4…will the US make the right move?

Hope each of you has a great day. Talk to you tomorrow.

-Pomp

This letter is free to everyone. If you’re not subscribed, join over 194,000 other investors who receive my opinions and insights into bitcoin, business, and finance each morning.

THE RUNDOWN:

Coinbase to Allow US Users to Deposit Paychecks Directly in Crypto: Coinbase will enable direct paycheck deposits, the U.S. cryptocurrency exchange giant announced in a blog post Monday. The nine-year-old, publicly traded company said it will allow users in the U.S. to deposit “as much or as little” of their paycheck at no fee, whether in crypto or fiat currency. Coinbase said that direct deposit would address concerns that making frequent transfers was too time consuming, and will allow users to make investments, earn interest on digital assets or pay for goods and services with greater speed and efficiency. Read more.

Almost a Third of Salvadorans Are Using the Bitcoin Wallet, Bukele Says: Almost a third of Salvadorans are actively using the Chivo bitcoin wallet less than a month after the country adopted the cryptocurrency as legal tender, President Nayib Bukele said in a tweet. Some 2.1 million people are using the wallet, Bukele said in a tweet. That’s more users than any bank in the country, he said. El Salvador has a population of about 6.5 million people, according the CIA World Factbook. Read more.

Jamie Dimon Says 'You're a Fool’ If You Borrow to Buy Bitcoin, and That He Wouldn’t Care If Its Price Increased 10 Times: Jamie Dimon, chairman and CEO of JPMorgan Chase, once again reiterated his opposing stance on cryptocurrencies in a recent September interview. "I think if you borrow money to buy bitcoin, you're a fool," the JPMorgan boss told Times of India. "I don't really care about bitcoin ... I am not a buyer of bitcoin." Read more.

Morgan Stanley Doubles Exposure to Bitcoin Through Grayscale Shares: Major U.S. investment bank Morgan Stanley has more than doubled its shares of Grayscale Bitcoin Trust since April. According to a report from the United States Securities and Exchange Commission, or SEC, filed Sept. 27, the Morgan Stanley Europe Opportunity Fund, which invests in established and emerging companies throughout Europe, owned 58,116 shares of the Grayscale Bitcoin Trust, or GBTC, as of July 31. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Francis Suarez is the Mayor of the city of Miami.

In this conversation, we discuss Miami, bitcoin, local government in the digital age, MiamiCoin, and whether he is going to run for President.

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!

* Polymarket - Polymarket is the world’s leading information markets platform where you can trade on the most pressing global questions and see unbiased, real-time data on what the market thinks will happen – all on the blockchain. Will Cardano support smart contracts by October? Will the US have more than 100,00 covid cases before 2022? For a limited time, sign up with referral code “Pomp” to get your first trade reimbursed up to $100. Click here to get started!

* 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 a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

* 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

* 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 “pomp2020” 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.

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. 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.

* LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers 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

* Mask Network - The portal to the new, open internet. Building on top of the existing social networks, the Mask extension allows borderless cryptocurrency transfer, decentralized file storage and sharing, decentralized finance, and many other features that were once impossible to interact with on traditional social media. Visit mask.io/pomp and use the extension to start exploring the decentralized application world.

* Okcoin - 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 - 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. 

* Miami Makers Month is a virtual hackathon for hackers, designers, and creators who are passionate about creating apps to benefit the City of Miami. $25k in total prizes will be awarded to developers who build the winning apps on MiamiCoin -- a community-launched platform for innovation built on Bitcoin, and Stacks. Visit MiamiMakers.co to learn more and get involved.

* Masterworks - Masterworks.io is the leading platform for blue-chip art investing with over 185,000 registered users. They have purchased over $180MM in art from artists like Banksy, Basquiat and KAWS.

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 hope each of you had a great weekend. At the end of last week, I saw a chart that really confused me. It showed the difference between the CPI Rent Index and the Zillow Rent Index.

These numbers show that Zillow is estimating rents are increasing about 5.5% to 6% annually right now. The CPI Rent Index is showing just under 2% rent growth.

The confusing part of this was that the two metrics, which are supposed to be measuring the exact same thing, are apparently coming in at such different numbers. The Zillow Rent Index is almost 300% higher than the CPI Rent Index. But they weren’t the only ones.

The Apartment Guide rent report published on August 31, 2021 also showed numbers significantly higher than the CPI Rent Index.

The lowest rental increase for the national average was more than 2x the CPI Rent Index number. How could this be?

Well, I started to dig deeper into the data and what I found was honestly shocking. It all starts with the data sets that are being used by the various reports. First, the CPI Rent Index uses the following definition for rent in the CPI:

“The rent estimates used in the CPI are contract rents. They are the payment for all services provided by the landlord to the tenant in exchange for rent. For example, if the landlord provides electricity or other utilities, these would be part of the contract rent. The CPI item expenditure weights also include the full contract rent payment. Rents are calculated as the amounts the tenants pay their landlords, plus any rent reductions tenants receive for performing services on behalf of the landlord, plus any subsidy payment paid to the landlord. Reductions for any other reason are not considered part of the rent.”

So how exactly do they do select which units and/or tenants or landlords to survey? The government uses the 1990 Census data obviously. No, seriously. I had to read this about 50 times before I actually believed it. Here is the exact explanation:

“Using data from the 1990 Decennial Census of Population and Housing, the CPI defined small geographic areas, called segments, within each of the 87 CPI pricing areas. Segments are one or more Census blocks. The Census provided the numbers of renter and owner housing units in each segment and the average rent of the renter units in each segment; BLS estimated the average implicit rent of the owner units in the segment, enabling the CPI to calculate the total spending (rent plus implicit rent) for each segment. The CPI selected a sample of segments in each pricing area using stratified sampling in proportion to total shelter value. CPI agents visited the segments and selected a small number (usually 5) of renter-occupied housing units in each one to represent the segment. For segments that contain largely owner occupied housing units, rental units from segments close to the selected segment to help represent the segment.”

Ok, that seems crazy but maybe we are just overreacting. How many units are included in the national rent index? Must be millions, right? Nope. It is only 32,000 total units. Here is the explanation:

“The CPI Housing survey has about 32,000 renter-occupied housing units. In the 1990 Census, which was the sampling frame for the primary CPI Housing survey, there were about 28.6 million renter-occupied units and 41.3 million owner occupied housing units in the urban United States.”

This is starting to look absolutely ridiculous. But it is about to get even better. If you’re going to report a monthly change in the national rent average, you’re obviously going to survey the units on a monthly basis, right? Nope. The government only surveys the units every 6 months.

“Because rents change rather infrequently, the CPI program collects rent data from each sampled unit every six months. (Price collection is monthly or bimonthly for most other CPI items.) Collecting rent data less frequently allows a much larger sample. The CPI divides each area’s rent sample into six sub-samples called panels. The rents for panel 1 are collected in January and July; panel 2, in February and August, etc.”

Now the government does their best to account for the lack of monthly surveying…by increasing rents by one dollar (lol). I wish that I was making this up. But here is the information directly from the BLS’ fact sheet.

“In addition the CPI adjusts the rent for the effect of aging of the rental units over time. The Housing sample collects the rents from the same housing units every six months. Consequently, each time the CPI observes the rent of a sample unit it is six months older. To account for this aging, an age-bias factor is applied to the current rent; this raises the rent slightly because the older unit is slightly less desirable. For example, a unit with a rent of $900 might have the rent adjusted to $901.”

Alright, in case you weren’t paying attention, here is what we have making up the CPI Rent Index — Approximately 32,000 units across the US that were selected based on the 1990 census data and are each surveyed only twice a year. Sounds like a disaster.

Now what about the Zillow Rent Index? Here is how they describe their methodology:

“Every month, a Rent Zestimate is created for more than 100 million U.S. housing units for which Zillow has sufficient data. The sources of this data include public records (property taxes, transactions), real estate listings and user-generated data. Real estate listing data comes from local Multiple Listings Services and/or direct feeds to Zillow from real estate brokers. User-generated data includes rental listings and for-sale listings posted directly on Zillow, and user corrections to incorrect and/or out-of-date data from listings and public records. Properties enter and leave this ‘universe’ due to many reasons, the most important of which are discussed below.

As the Zillow rental business and our data sources expand, we may become aware of more individual units within a building and add them to our “rental universe.” Periodically, these are retroactively given Rent Zestimate histories using attributes of the unit and the Rent Zestimate model. We take advantage of these retroactive histories in the first calculation of the Zillow Rent Index using our updated methodology.”

Zillow then describes how they don’t take a small sample size of homes within a region, but rather they use every home or unit.

“To create the index, we consider every home within a given region for which we have a Rental Zestimate for that period, then reweight and aggregate those estimates.”

So the government is using 32,000 units that they survey every 6 months and Zillow is using 100 million units that they evaluate every month. You can determine which of these two methodologies you believe are more likely to be accurate :)

This exercise was only done for the rent index, but you can replicate it for pretty much every single CPI number that is presented. The data is bad. The methodology is antiquated. The government is living in the past and refuses to use modern technologies and platforms to capture more accurate data.

It is impossible to make good decisions when you are using bad data. Everything from your understanding of the problems to your belief in the intended outcomes is skewed. This is a very real problem that is provable today.

The Federal Reserve, Treasury, and various politicians are making monetary and fiscal policy decisions on data that is telling them CPI inflation is 5.3%, core inflation is 4%, and the annual change of the rent index is sub 2%. Alternative data sources, which use more robust methodologies and are based on larger data sets, have these numbers at 50% to 300% higher depending on the metric.

Maybe the alternative data sets are accurate. Or maybe they are overestimating to some degree. But what is clear here is that the CPI Rent Index can’t possibly produce an accurate monthly number if they aren’t even surveying the housing units on a monthly basis. Therein lies the problem. Bad data gets you bad decisions. And bad decisions have severe consequences when you are dealing with monetary and fiscal decisions that end up making the rich richer and the poor poorer.

Someone stop the madness. Make it all make sense. Because right now none of this adds up. Hope each of you has a great start to your week. I’ll talk to everyone tomorrow.

-Pomp

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THE RUNDOWN:

US Regulators Looking to Get a Handle on Stablecoins, NY Times Says: Saying the rush to bring stablecoins under regulatory control might be “the most important conversation in Washington financial circles this year,” the New York Times published an explainer article on the type of cryptocurrency and laid out what the author (and perhaps her sources) sees as the top options at regulators’ disposal. Read more.

Biden Administration Plans Cryptocurrency Sanctions to Combat Ransomware: The U.S. government plans to issue guidance and impose sanctions in an ongoing effort to tamp down on ransomware attacks. The Wall Street Journal reported Friday that the Joe Biden administration is planning an array of actions to mitigate ransomware attacks, with a focus on payments. The Treasury Department will announce these actions next week, CoinDesk confirmed. Read more.

Bakkt to Go Public Next Month After SEC Okays SPAC Plans: Bakkt Holdings and VPC Impact Acquisition Holdings have received approval from the Securities and Exchange Commission to complete their merger and push forward with plans to operate as a single publicly traded entity, the companies said in an announcement Friday. VIH shareholders will meet on Oct. 14 to approve the merger, the companies said. Cryptocurrency exchange Bakkt, which is majority-owned by Intercontinental Exchange, has been planning to go public via the merger with VIH, a special purpose acquisition company. Read more.

Christie’s to Sell Some of the Earliest NFTs – And Only for ETH: Christie’s is listing a set of 31 Curio Cards and several other prominent non-fungible token (NFT) projects in a live auction on Oct. 1, furthering its foray into digital art sales. The 254-year-old auction house made history in March when it auctioned a Beeple NFT for $69 million. Christie’s Asia branch is now taking bids for several rare CryptoPunks and Bored Ape NFTs as recent buyer appetite for NFTs approaches manic levels. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Kyle Samani is a Co-Founder and Managing Partner at Multicoin Capital, a thesis-driven investment firm with a global footprint that invests exclusively in the crypto ecosystem. Multicoin Capital manages several billion in assets across hedge funds and venture funds.

In this conversation, we discuss Bitcoin, Ethereum, Solana, crypto investment thesis, and how Kyle sees the future unfolding in crypto.

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!

* Polymarket - Polymarket is the world’s leading information markets platform where you can trade on the most pressing global questions and see unbiased, real-time data on what the market thinks will happen – all on the blockchain. Will Cardano support smart contracts by October? Will the US have more than 100,00 covid cases before 2022? For a limited time, sign up with referral code “Pomp” to get your first trade reimbursed up to $100. Click here to get started!

* 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 a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

* 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

* 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 “pomp2020” 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.

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. 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.

* LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers 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

* Mask Network - The portal to the new, open internet. Building on top of the existing social networks, the Mask extension allows borderless cryptocurrency transfer, decentralized file storage and sharing, decentralized finance, and many other features that were once impossible to interact with on traditional social media. Visit mask.io/pomp and use the extension to start exploring the decentralized application world.

* Okcoin - 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 - 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. 

* Miami Makers Month is a virtual hackathon for hackers, designers, and creators who are passionate about creating apps to benefit the City of Miami. $25k in total prizes will be awarded to developers who build the winning apps on MiamiCoin -- a community-launched platform for innovation built on Bitcoin, and Stacks. Visit MiamiMakers.co to learn more and get involved.

* Masterworks - Masterworks.io is the leading platform for blue-chip art investing with over 185,000 registered users. They have purchased over $180MM in art from artists like Banksy, Basquiat and KAWS.

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 NFT industry has exploded in popularity this year. There was more than $2.5 billion in sales volume during the first half of 2021 and it has only accelerated since then.

Here you can see the weekly NFT buyers through the end of June consisted of both primary and secondary market participants.

And this chart shows that NFT sales had hit a record high in Q2 of 2021.

But all records are made to be broken. OpenSea, the most popular NFT marketplace, saw more than $3 billion in NFT sales volume just during the month of August.

So what exactly is driving all this interest in non-fungible digital files? The short answer is that NFTs live at the intersection of a few different tailwinds. The positive perspective is that digital natives would rather own digital goods than physical goods, which means that we are watching the digitization of the collectibles industry. These digital natives want to use the NFTs as a way to play games, transact with each other, and generally recreate the collectibles industry.

Another perspective is that we are watching the real time creation of a new status game. Each individual that would normally drop $50,000 to $1,000,000 to purchase a car, watch, house, boat, etc is now realizing that you can spend the same money on a digital good and flex in front of more people on the internet. Only so many friends can check out your house and be impressed. But millions of people a month will see your Twitter avatar.

The less exciting perspective is that monetary and fiscal policy has created a manipulated financial environment. This means that many of the traditional assets, like bonds, now produce a negative real rate of return, which forces investors to push further and further out on the risk curve. The only way to drive returns and capture yield is to start doing things that you previously thought were insane. Ya know, like buying JPEG images on the internet for millions of dollars.

In reality, the truth is probably a combination of all of these perspectives. As with most things in life, there is no black and white answers. That is likely a good thing. You can’t argue with the attention and sales volume of the industry, so rather than sitting around complaining about it, you have to decide if you want to participate.

Many of you already know this, but I wrote to you almost exactly one year ago (September 21, 2021) and told you that the next big bet was going to be on digital art. There was approximately $10 million in market cap for digital art at the time and I laid out an argument for why the market would likely see a 6,000x increase in size in the coming years. So far, so good.

But as I’ve watched the NFT industry continue to grow in the last few months, it has become clear to me that I was drastically underestimating how big this whole thing will be. Comparing NFTs to the traditional art market was such an elementary analysis of the market. The non-fungible token industry is a market expanding technology that will eat into not only digital art, but also collectibles, high-end luxury goods, and much, much more.

Additionally, there is new technology that is being brought to life that will only increase the potential market opportunity as we move forward. One example is Ethernity Chain’s new “interactive NFT” with Dallas Cowboys QB Dak Prescott. The team describes the NFT with the following:

“At the peak of the collection is Ethernity’s first “Interactive NFT” with 3 settings set to change during the 2021 football season according to gameplay. Each week, the blockchain-based smart contract will trigger a change between digital trading cards according to Dak’s football QBR rating. This is a first for the Ethernity team, and the first for its community to experience real-time interactivity across its line of NFTs…

…Each week the NFT will change styles according to gamer performance: standard performance of a QBR rating of 60–75 sees Dak in futuristic blue and silver, in throwing motion, ready to lead his team to victory. A red hot performance with a QBR rating of 75+ sees Dak in fiery red being hoisted up by his teammates. A less than stellar performance with a QBR of 50–60 — happenstance in the ups and down of football — sees Dak set in a storm, with lightning striking, looking back, but ready for the next big play.”

Here are the various images that the NFT could embody:

This is the equivalent of your parents or grandparents autographed baseball changing colors whether the team is winning or not. It is the equivalent of a trophy you previously won that sits on your mantle morphing based on some new event that occurs. Obviously, this is nearly impossible in the physical world, but it comes to life easily in the digital world.

Having a collectible for a star athlete or professional sports team that changes based on their performance is just the tip of the iceberg though. Alethea AI, a startup that’s creating “intelligent” versions of NFTs, is taking this entire idea one step further. They recently announced:

“Alethea seeks to distinguish its NFTs by allowing users to embed AI animation, interaction, and voice synthesis capabilities into the digital art — enabling people to even converse with NFTs.”

Wait, what?! This sounds a little insane, right? Well, that is because it is insane. Here is a primitive example of an avatar NFT that has the ability to speak and answer questions.

The NFT isn’t the smartest AI bot that you have ever seen. It obviously needs to improve, but if you squint hard enough you can see a future world that is going to be wildly different than the current state.

So if you look at the NFT market and try to evaluate where it is headed from here, it is hard not to be incredibly bullish on the market cap growing significantly in the coming years. The digital art market will be peanuts in comparison to the totality of NFTs. You’re going to have interactive NFTs, intelligent NFTs, NFTs exclusively built for metaverses, and many applications that we haven’t even thought of yet.

Frankly, it is overwhelming to think through all the possibilities of where this is all going. I spend a lot of time talking about bitcoin in these letters, but that doesn’t mean that significant value is not going to accrue to other parts of the industry. These NFTs are a great example of where I would expect billions, if not trillions, of dollars to be made in the coming years.

If you’re an investor and just starting to learn about this new world, I highly suggest you take the time to get up to speed as quickly as possible. Just as every business had to figure out an internet strategy in the 1990s, every business is going to have to figure out their bitcoin strategy and every business is going to have to figure out their NFT strategy as well. Some will choose to sit it out. But many will choose to participate. As a market observer, I can’t wait to see how everything develops.

Enjoy your weekend. I’ll talk to everyone on Monday.

-Pomp

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THE RUNDOWN:

Mastercard Acquires Crypto Tracing Firm CipherTrace: Payments giant Mastercard has agreed to buy CipherTrace, a firm that scans blockchains for illicit transactions. The surprise acquisition announced Thursday by the companies in a press release gives Mastercard the ability to track over 900 cryptocurrencies. Details of the acquisition were not disclosed. Read more.

SEC Sets November Deadline for Final Decision on VanEck Bitcoin ETF: The Securities and Exchange Commission has once again delayed ruling on VanEck’s bid for a bitcoin exchange-traded fund. The U.S. regulator on Wednesday gave itself until Nov. 14 to approve or reject “VanEck Bitcoin Trust,” one of the earliest bitcoin ETF hopefuls to try its luck this filing cycle, and the first whose judgment day has been delayed three times. Read more.

Giancarlo on Coinbase-SEC Clash: ‘Don’t Apply 90-Year-Old Statutes’: Coinbase’s tussle with the U.S. Securities and Exchange Commission highlights the need for clearer rules for digital assets, according to former Commodity Futures Trading Commission Chairman Chris Giancarlo. In an appearance on CoinDesk TV’s “First Mover” Thursday, the regulatory veteran, nicknamed “Crypto Dad” for his favorable views of the technology, described the current rules as anachronistic and unevenly enforced. Read more.

Former Crypto-Friendly Regulator Quintenz Joins VC Firm A16z: Former crypto-friendly commodities regulator Brian Quintenz has joined venture capital firm Andreessen Horowitz as a part-time adviser. Announced Thursday, Quintenz becomes the latest high-profile addition to the firm, which has backed numerous projects in the tech and crypto industries. The prolific VC firm raised over $2 billion for its Crypto Fund III earlier this summer. Read more.

CFTC’s Berkovitz to Step Down Next Month: Dan Berkovitz, one of the top officials at the Commodity Futures Trading Commission, intends to depart the agency on Oct. 15. Berkovitz announced his departure on Thursday, noting he has worked with the CFTC, Congress and the private sector over the past 20 years on financial markets, including with the Dodd-Frank Act. He has served as a CFTC commissioner since September 2018. In a statement, the regulator thanked his fellow commissioners, the CFTC staff he worked with and the lawmakers whose work involves the agency.Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Dan Tapiero is the Managing Partner and CEO of 10T Holdings. He has more than 25 years of experience investing across asset classes on Wall Street and is one of the most well-known macro investors in the world. Dan previously spent time working with Julian Robertson, Stanley Druckenmiller, Steve Cohen, and many other luminaries.

In this conversation, we discuss bitcoin, ethereum, venture capital, digital asset ecosystem, raising $750 million, institutional investor interest, and billionaire Wall Street investor questions.

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!

* Polymarket - Polymarket is the world’s leading information markets platform where you can trade on the most pressing global questions and see unbiased, real-time data on what the market thinks will happen – all on the blockchain. Will Cardano support smart contracts by October? Will the US have more than 100,00 covid cases before 2022? For a limited time, sign up with referral code “Pomp” to get your first trade reimbursed up to $100. Click here to get started!

* 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 a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

* 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

* 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 “pomp2020” 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.

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. 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.

* LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers 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

* Mask Network - The portal to the new, open internet. Building on top of the existing social networks, the Mask extension allows borderless cryptocurrency transfer, decentralized file storage and sharing, decentralized finance, and many other features that were once impossible to interact with on traditional social media. Visit mask.io/pomp and use the extension to start exploring the decentralized application world.

* Okcoin - 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 - 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. 

* Masterworks - Masterworks.io is the leading platform for blue-chip art investing with over 185,000 registered users. They have purchased over $180MM in art from artists like Banksy, Basquiat and KAWS.

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,

Below is a guest post overview of the Lightning Network from Mitch Klee. You can follow him on Twitter by clicking here.

Lightning network has been on track to change the game for Bitcoin. Drafted in 2015 and launched in 2018 by lightning labs, the lightning network has made leaps and bounds for Bitcoin in multiple areas, some of which are still yet to come. Using native smart contract scripts of Bitcoin, Lightning gives the ability for users to make near instant payments at less than a cent. This low-cost scalability solution brings micro-payments to the forefront of our everyday lives. Historically Bitcoin has had a transaction rate of about 7 transactions per second. Legacy solutions like Visa took 30 years to get to 40k transactions per second, Lightning has the ability to scale to 100k or more.  

Growth of the Past Few Years

Lighting has grown at an incredible rate. Because of the growing ecosystem and open source nature of the technology, many developers are able to build and add value to the payment systems network, bringing new innovations on top of Bitcoin’s Base layer. 

(https://bitcoinvisuals.com/ln-capacity) 

After explosive growth in the bear market, we have seen a building period that culminates in a huge rise in the number of Bitcoin inside lightning channels. The orange line is the number of Bitcoins in channels and blue bars are the dollar amount. This means Bitcoin is being added to more and more channels, giving the network the ability to create more connections and liquidity.

(https://bitcoinvisuals.com/ln-channels)

A good way to understand a lighting channel is to compare it to a bar tab. You keep an open channel (tab) with someone (bartender), and every time you interact (buy a beer), those Bitcoins are sent through the channel. Once you finish the transactions, you close the channel (tab), and that interacts with the base layer of Bitcoin sending it to the on-chain wallet. The beauty of the lightning network, is that even if you don’t have a direct channel with someone, you can find a path through other nodes, making a number of hops to the final destination. 

Scaling with the Lightning Network

Being that Lightning is an open source network, people can opt in and create new functionalities. Umbrel has been a huge contributor for a plug and play way of getting onto the lightning network, making it easy to setup your own node. Other apps like Muun and Strike have made transacting on the lightning network extremely easy, and its only getting better from here.

Bitcoin’s base layer benefits huge from Lightning and transaction fees are reduced largely because of how secure lighting is to use. Previous to 2018, transacting on Bitcoin’s base layer was extremely costly in times of congestion.  With exchanges like Kraken implementing lightning payments, this will save the users, exchanges, and base layer a huge amount of congestion causing a cascade into lightning as other exchanges get more competitive.

Peer to Peer Network and the Creator Economy

It’s not only the plebs and exchanges that see benefits, but content creators as well. Substack just recently announced in partnership with Opennode, they are giving subscribers the ability to send Bitcoin over the lightning network to pay for subscriptions. This is huge for the content creator community. In the future, it may be possible to send micropayments to read single articles, rather than subscribing. Adam Curry’s Podcasting 2.0 has also made waves in the lightning and podcasting community promoting podcasting to what his original vision was, “Value 4 Value”. An app called Sphinx Chat allows you to listen to podcasts, stream sats every minute and even send tips. There has even been talks about Jack from Twitter implanting lightning payments in the app itself. Imagine joining a Twitter Space and being able to tip the speakers sats for useful information, real time. 

Cross Border Payment Technology

One of the biggest innovations using Lightning is in the form of cross border payments. In 2019, Jack Mallers announced a new platform called Strike, which used lightning and Bitcoin infrastructure to implement cross border payments. It converts dollars in real time from your account, sends them over the lightning network instantly and converts back to dollars. So, say you were an immigrant working in the United States wanting to send money back to your family, usually you would have to pay anywhere from 10 – 50% in fees through western union and conversion, just to get that money back home. With strike and the lightning network, you can send that money back for less than a penny.

Lightning and the Future of Bitcoin

As the Bitcoin Lightning Network grows in adoption, Bitcoin is beginning to transform into a high transaction rate currency without borders. Before, Bitcoin’s base layer was the first and most decentralized immutable ledger, but it was slow. Layer 2 is starting to transition us into the world that we all knew was possible. It is faster, more decentralized and boundless. Layer 2 allows Bitcoin to act more like a currency with high transaction throughput. Couple this with the ability to add stacks of code and build technology layers like the internet, and it becomes an unstoppable force. 

That is it for today’s analysis. Hopefully you found this helpful. I highly suggest you follow Mitch Klee on Twitter. You can follow him on Twitter by clicking here.

-Pomp

SPONSORED: Amber Group is a leading global crypto finance service provider operating around the world and around the clock with a presence in Hong Kong, Taipei, Seoul, and Vancouver. Founded in 2017, Amber Group is committed to combining best-in-class technology with sophisticated quantitative research to offer clients a streamlined crypto finance experience.

The platform now services over 500 institutions and 100,000+ individual investors across the Amber Pro web platform, the Amber App, as well as their 24/7 trading desk. To date, Amber Group has cumulatively traded more than $330 billion across 100+ electronic exchanges, exceeding $1 billion in assets under management. In 2019, Amber Group raised $28 million in Series A funding led by global crypto heavyweights Paradigm and Pantera Capital, with participation from Polychain Capital, Dragonfly Capital, Blockchain.com. 

Click here to sign up now.

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, Ethereum, smart contract platforms, Castle Island Ventures, Coinmetrics, geo-political issues, and then we roll the FUD dice.

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!

* Polymarket - Polymarket is the world’s leading information markets platform where you can trade on the most pressing global questions and see unbiased, real-time data on what the market thinks will happen – all on the blockchain. Will the US have more than 100,00 covid cases before 2022? For a limited time, sign up with referral code “Pomp” to get your first trade reimbursed up to $100. Click here to get started!

* 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

* 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 a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

* LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers 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

* 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 “pomp2020” 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.

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. 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.

* Amber - Invest, trade, swap, and earn crypto with Amber App, where new users can receive 16% APR on BTC, ETH, and USD Stablecoins! Click here to sign up now.

* Bubble - Do you have a business idea you’ve been dreaming about, but don’t know how to actually start building it? Use Bubble’s drag-and-drop tool to develop custom, interactive, multi-user web apps in hours. Go to Bubble.io/pomp and the first 500 readers will get their first month free on any of Bubble’s paid plans. 

* Mask Network - The portal to the new, open internet. Building on top of the existing social networks, the Mask extension allows borderless cryptocurrency transfer, decentralized file storage and sharing, decentralized finance, and many other features that were once impossible to interact with on traditional social media. Visit mask.io/pomp and use the extension to start exploring the decentralized application world.

* Okcoin - 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 - 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. 

* Masterworks - Masterworks.io is the leading platform for blue-chip art investing with over 185,000 registered users. They have purchased over $180MM in art from artists like Banksy, Basquiat and KAWS.

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 am often asked about my opinion on bitcoin and the crypto industry. While it is easy to articulate the answers to specific questions, I’ve recently found it difficult to express my macro view of the industry. That all changed on Friday when I read this tweet by Brandon Quittem.

Brandon explained my view of the industry better than I could. After reading the tweet, here is how I would explain my current framework:

* There was a computer science breakthrough in 2008 that solved the double spend problem. That solution (a blockchain) created an inflection point in what was possible in the digital world. Certain attributes like scarcity, immutability, and trust-less transactions could now be applied to all industries.

* The creation of blockchain technology has led to two separate revolutions that are under way. One is a monetary revolution and the other is a technology revolution. While these two revolutions share a similar technology, they are very different in nature.

* The monetary revolution has manifested itself in bitcoin. This is disruption in the purest form. Fiat currencies lack transparency, have variable monetary policies, are highly unpredictable, and require third parties for transactions. Bitcoin is the exact opposite — fully transparent, with a programmatic monetary policy, completely predictable, and removes the need for a third party. The monetary revolution will be winner take (nearly) all, which means that monetary maximalism is the only natural end state.

* The technology revolution has manifested itself in thousands of non-bitcoin crypto assets. There are commodities, equities, and debt.

The identification of two separate revolutions is important because it gives us a framework to discuss the importance of monetary maximalism, while still acknowledging tremendous value accrual to non-monetary assets.

Before we look at the crypto industry, let’s look at the traditional financial system. Investors understand that it wouldn’t make much sense to compare the US dollar to Amazon. They are two different assets. It also wouldn’t make sense to compare Amazon to oil or the US dollar to steel. They are all different types of assets.

The exact same thing is true in the bitcoin and crypto markets. Comparing bitcoin to NFTs doesn’t make a lot of sense. They are two different applications of a technology that are attempting to solve two different problems. The same could be said about comparing Bitcoin’s layer one to any smart contract platform’s layer one blockchain. They are different applications of a technology that are trying to solve different problems.

Let’s dive deeper into each component of this analysis. The monetary revolution is an important one for reasons that we have discussed over the last few years in this letter. We must remember that monetary maximalism is the historical norm, rather than a new idea. US citizens are USD maximalists. European citizens are Euro maximalists. Chinese citizens are Renminbi maximalists. When it comes to currencies, maximalism drives resilience and value.

The same is true for digital currencies as well. The maximalist viewpoint is a product of a market structure that presents outsized reward to the competition winner. As Brandon Quittem said, monetary maximalism is rational. With that said, maximalism is exclusive to the currency category.

The technology revolution has thousands of small teams of entrepreneurs and operators working relentlessly to innovate in various industries. Any level of maximalism, whether from a technology or application perspective, would be highly irrational. The value accrual in this revolution will be similar to the stock, commodity, or debt markets. Thousands of companies accrue value. Thousands of commodities accrue value. And thousands of debt mechanisms accrue value.

Imagine if you were a python maximalist. Or an iOS maximalist. Or an Amazon maximalist. If you picked the right technology or company, you could make money - but you would miss out on the thousands of other assets that also created and captured value. You also would be ignoring the fact that someone can always build faster, cheaper technology. Maximalism in anything but a currency is irrational.

Maximalism is appropriate in currencies. Maximalism is inappropriate in equities, commodities, or debt. Both statements can be true at the same time.

There are still many unanswered questions for those that hold this worldview. What is the proper asset allocation strategy? How should you think of portfolio construction if you’re a pure capitalist who wants to optimize returns? How about if you want to capture an attractive financial gain, while also helping to usher in more good in the world?

The crazy part is that if monetary maximalism ends up playing out how I believe it will, bitcoin will eventually be incredibly stable in value. The price of goods and services will be denominated in bitcoin and the average bitcoin holder won’t see any level of volatility. When this occurs, people will have a choice to simply spend less than they make in an effort to save bitcoin. Or they will be available to invest in other assets to acquire more bitcoin than what they would simply be allowed to save.

As a student of investing and markets, it is hard to see a world where every individual stops investing completely and moves to a saver-only economy. So the more rational outlook is that monetary maximalists will hold the majority of their wealth in a global store of value (bitcoin), while also investing in other opportunities that they believe will help them acquire more bitcoin.

This investment in non-monetary assets will force investors to hold an open mind and ensure no technology maximalism. Innovation happens too quickly to hold a rigid perspective on one non-monetary technology. You can do this with a monetary asset because technological superiority isn’t essential, but you can’t do it with technology assets.

This conversation is hard to have on the internet because it requires the acknowledgement of nuance. You can’t simply say “maximalism is bad!” or “maximalism is good!” You actually have to articulate that both statements are true — it just depends on which revolution you are referring to.

Lastly, my personal focus in recent years has almost exclusively been on bitcoin. The only crypto asset that I hold personally is bitcoin and it makes up 90%+ of my liquid net worth. I’ve made investments in other things, including for-profit private companies, layer two technologies, and even blockchain-agnostic services like insurance or node infrastructure. There is so much opportunity to generate outsized returns in this industry. I still focus on bitcoin though because it isn’t about the money to me. I genuinely believe that bitcoin will usher in a world that creates more freedom, economic prosperity, and opportunity for billions of people around the world.

Just because I focus on one area doesn’t mean that I believe other areas won’t gain value, nor does it mean that I’m actively rooting against those founders, users, communities, or technologies. It just means that I’m following the thing that I’m personally most interested in. When an industry is being created from (basically) scratch, it is impossible for any one investor to be educated on every single sub-vertical. Sometimes knowing where you don’t have an advantage is just as important as knowing where you do.

My guess is that plenty of people will disagree with the framework of monetary maximalism and technology competition. That is fine with me. I’d love to hear the dissenting points of view. Plus, the market is the ultimate referee. If I’m right, I’ll see it in my portfolio. If I’m wrong, I’ll be financially hurt.

That is the beauty of a capitalistic society. I’m excited to see how it plays out. Hope each of you has a great start to your week. I’ll talk to everyone tomorrow.

-Pomp

SPONSORED: Unstoppable Domains allows you to replace cryptocurrency addresses with a single, easily-readable name like mine, Pomp.crypto. Instead of worrying about getting 1 character wrong in a long string of random letters and numbers, get your own Unstoppable Domain here.

THE RUNDOWN:

PayPal Brings Crypto Service to UK Customers: PayPal is extending its crypto service to the U.K., allowing customers to buy, sell and hold four different cryptocurrencies on its platform. Users will be able transact in bitcoin, ether, litecoin, and bitcoin cash for as little as £1 ($1.40), PayPal said. The rollout is the first expansion of PayPal's crypto offering outside the U.S. The process will begin this week and should be available to all eligible customers within the next few weeks. Read more.

Inside Afghanistan’s Cryptocurrency Underground as the Country Plunges Into Turmoil: Farhan Hotak isn’t your typical 22 year-old Afghan. In the last week, he helped his family of ten flee the province of Zabul in southern Afghanistan and travel 97 miles to a city on the Pakistani border. But unlike others choosing to leave the country, once his relatives were in safe hands, Hotak then turned around and came back so that he could protect his family home – and vlog to his thousands of Instagram followers about the evolving situation on the ground in Afghanistan. Read more.

How Bitcoin Is Preparing For An Explosive Bullish Break: On Saturday Benzinga ran a poll on Twitter asking whether people think Bitcoin would hit $50,000 this weekend. As of Sunday afternoon 71% of respondents chose ‘yes.’ Although Bitcoin may need a few days for further consolidation as the apex cryptocurrency looks to be preparing for another run north. Read more.

OKEx Establishes $10M Fund for GameFi Projects: Crypto exchange OKEx said it is launching a $10 million fund to help develop GameFi, or “play-to-earn,” projects. The cash will come from the exchange's $100 million OKEx BlockDream Ventures fund, which invests in blockchain projects, the company said. GameFi introduces financial mechanisms into games, allowing users to make money by playing. Read more.

Sweden’s Government Forced to Return $1.5M in Bitcoin to Drug Dealer: The Swedish government has been forced to return over $1.5 million in bitcoin to a drug dealer after its value surged while he was in custody. Authorities in Sweden seized 36 BTC from the drug dealer, worth just under $150,000 at the time of his prosecution two years ago, according to a report Friday by U.K. newspaper The Telegraph. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Graham Krizek is the Founder and CEO of Voltage, which provides simple bitcoin infrastructure to everyone.

In this conversation, we discuss the Lightning Network, how it works, why it is so valuable, current progress, the importance of infrastructure, and how products are leveraging Lightning.

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!

* Polymarket - Polymarket is the world’s leading information markets platform where you can trade on the most pressing global questions and see unbiased, real-time data on what the market thinks will happen – all on the blockchain. Will the US have more than 100,00 covid cases before 2022? For a limited time, sign up with referral code “Pomp” to get your first trade reimbursed up to $100. Click here to get started!

* 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

* 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 a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

* LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers 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

* 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 “pomp2020” 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.

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. 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.

* Amber - Invest, trade, swap, and earn crypto with Amber App, where new users can receive 16% APR on BTC, ETH, and USD Stablecoins! Click here to sign up now.

* Bubble - Do you have a business idea you’ve been dreaming about, but don’t know how to actually start building it? Use Bubble’s drag-and-drop tool to develop custom, interactive, multi-user web apps in hours. Go to Bubble.io/pomp and the first 500 readers will get their first month free on any of Bubble’s paid plans. 

* Mask Network - The portal to the new, open internet. Building on top of the existing social networks, the Mask extension allows borderless cryptocurrency transfer, decentralized file storage and sharing, decentralized finance, and many other features that were once impossible to interact with on traditional social media. Visit mask.io/pomp and use the extension to start exploring the decentralized application world.

* Okcoin - 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 - 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. 

* Masterworks - Masterworks.io is the leading platform for blue-chip art investing with over 185,000 registered users. They have purchased over $180MM in art from artists like Banksy, Basquiat and KAWS.

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,

Western Union is one of those businesses that the average American has heard of, but doesn’t pay attention to on a daily basis. The approximately $9 billion market cap company is essential for the people of more than 200 countries and territories that rely on their transfer rails to send money back and forth to family and loved ones.

One of the countries that no longer has access to Western Union is Afghanistan. This is because the company decided to suspend all services to the embattled country until the current situation is better understood. Yes, you read that right. The money transmitter that is one of the two most popular services in the country has decided to shut down operations at the exact time that the average citizen needs help the most.

Afghanistan receives just under $800 million a year in remittances and it makes up approximately 4% of GDP. These aren’t massive numbers from a global perspective, but they are incredibly meaningful to the people on the ground that rely on Western Union for financial access.

It was infuriating to see this statement from the business. Rather than capitulate and shut down operations, they didn’t even attempt to increase agent capacity to deal with an increase in demand for their services. But it is useless to get mad. There is nothing that you or I can do about these types of situations.

Instead, the only solution is to build a better system. That is exactly what Jack Mallers and Strike are doing, which is interesting because Jack released a video today that shows how valuable his product has become.

You can click here to read his entire Twitter thread that explains how the technology works. To the untrained eye, this transaction may look like any other financial payment on your favorite fintech app. But let’s unpack exactly what is happening.

Jack’s technology and users are able to immediately transact with Bitnob users, although the two companies don’t know each other, nor do they have any formal relationship. This is like Cash App allowing you to send money to Venmo. It would never happen in the legacy world. The systems aren’t built on open standards. They are walled gardens. Which brings us to the next point.

Jack was able to immediately connect to Bitnob’s node right after they connected to the Lightning Network. He now has the cheapest, most instantaneous remittance option between the US and Nigeria. Strike didn’t build that. Bitnob didn’t build that. It was built by bitcoin and the Lightning Network over the last decade. Absolutely incredible.

The Lightning Network is an open system that anyone can plug into. No one can censor you. No one can shut you down. You don’t need millions of dollars in venture capital to build your own network. You don’t need to strike business development deals. You don’t need to hire thousands of employees.

You can simply set up a Lightning node and immediately have access to a global payments system that offers superior functionality to any legacy platform. Now compare the two different systems — Western Union vs Bitcoin and Lightning.

You can’t. One is a thing of the past and the other is a peek into the future. They are headed in two different directions. But guess what the best part is? That regardless of the technical superiority of the Lightning Network, the critical component is that it is censorship resistant. No one can decide to cut off a country’s access. No one can stop you from sending or receiving value on the network.

Bitcoin doesn’t solve every problem in the world. However, it does solve the remittance problems that many Afghan citizens are experiencing right now. That doesn’t begin to address all of the challenges that these people are dealing with right now, but it at least addresses the money issue.

It is no secret that I believe Jack Mallers is building one of the most valuable technology companies in the world. Strike is innovating in a place where the average entrepreneur and operator doesn’t yet understand how to play. That is the best time to be building. Make sure you don’t blink — this is going to happen very fast :)

Have a great weekend. I’ll talk to everyone on Monday.

-Pomp

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THE RUNDOWN:

A16z Leads $4.6M Investment in Yield Guild Games: Decentralized gaming startup Yield Guild Games has raised $4.6 million in a funding round led by venture capital firm Andreessen Horowitz, YGG announced Thursday. Other participating investors included venture capital firm Kingsway Capital, Infinity Ventures Crypto, Atelier Ventures and the gaming entrepreneur Gabriel Leydon. Read more.

Wells Fargo Launches Passive Bitcoin Fund for Wealthy Clients: Wells Fargo on Thursday registered a private bitcoin fund with U.S. regulators, becoming the latest mega-bank with an indirect crypto investment vehicle for its wealthiest clients. A source familiar with the matter told CoinDesk the new fund is passive, a break from earlier reports that Wells Fargo would pitch wealthy investors with an actively managed offering.Read more.

Coinbase to Add Over $500M in Crypto to Current Holdings: Coinbase will be purchasing more than $500 million in cryptocurrency to add to its holdings, the exchange giant’s CEO and co-founder Brian Armstrong tweeted on Thursday. Armstrong wrote that the firm had "received board approval" to add these assets to its balance sheet. He also wrote that Coinbase would invest 10% "of all profit going forward in crypto." He added that he expected "this percentage to keep growing over time as the cryptoeconomy matures," and that he hoped to "operate more of our business in crypto."Read more.

Binance US Taps Joshua Sroge to Be Interim CEO: Joshua Sroge has become Binance.US’s interim CEO, replacing Brian Brooks, who resigned unexpectedly earlier this month from the U.S. arm of crypto exchange Binance. Sroge joined Binance.US in January 2020, serving as its CFO. Read more.

Galaxy Digital Launches DeFi Index Tracker Fund: Galaxy Digital, the listed cryptocurrency trading firm run by Mike Novogratz, has launched a decentralized finance (DeFi) index fund, a passively managed vehicle that tracks the performance of the newly launched Bloomberg Galaxy DeFi Index. Announced Thursday, the Galaxy DeFi Index Fund seeks to provide institutional investors access to returns based on the performance of DeFi tokens. It offers exposure to major decentralized lending and exchange platforms like Uniswap, Aave, Maker, Yearn and others. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Codie Sanchez is a reformed journalist, turned institutional investor to cannabis investor and advisor, to now Founder at Contrarian Thinking and Cofounder of Unconventional Acquisitions.

In this conversation, we discuss cash flow, buying businesses, angel investing as a scam, mental toughness, due diligence checklists, and much, much more.

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!

* Polymarket - Polymarket is the world’s leading information markets platform where you can trade on the most pressing global questions and see unbiased, real-time data on what the market thinks will happen – all on the blockchain. Will the US have more than 100,00 covid cases before 2022? For a limited time, sign up with referral code “Pomp” to get your first trade reimbursed up to $100. Click here to get started!

* 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

* 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 a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

* LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers 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

* 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 “pomp2020” 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.

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. 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.

* Amber - Invest, trade, swap, and earn crypto with Amber App, where new users can receive 16% APR on BTC, ETH, and USD Stablecoins! Click here to sign up now.

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* Mask Network - The portal to the new, open internet. Building on top of the existing social networks, the Mask extension allows borderless cryptocurrency transfer, decentralized file storage and sharing, decentralized finance, and many other features that were once impossible to interact with on traditional social media. Visit mask.io/pomp and use the extension to start exploring the decentralized application world.

* Okcoin - 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 - 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. 

* Masterworks - Masterworks.io is the leading platform for blue-chip art investing with over 185,000 registered users. They have purchased over $180MM in art from artists like Banksy, Basquiat and KAWS.

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

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

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

To investors,

There was a fairly interesting series of events yesterday that went largely unnoticed by people who aren’t deep in the weeds of the bitcoin and crypto industry. A research partner at Paradigm, Sam Sun (known as Samczsun), discovered a potentially critical security flaw in the code of SushiSwap's MISO platform.

The details of this white hat rescue are fairly technical in nature, so I won’t bore this audience with the exact details. You can read more about the sequence of events by reading Samczsun’s write up. The key takeaway is that over $300 million worth of ETH was exposed to a potential exploit and could have been stolen. After reading through the various analysis of the situation, I had two main takeaways.

First, Samczsun wrote an opening paragraph to his analysis that I thought highlighted a great point:

“A common misconception in building software is that if every component in a system is individually verified to be safe, the system itself is also safe. Nowhere is this belief better illustrated than in DeFi, where composability is second nature to developers. Unfortunately, while composing two components might be safe most of the time, it only takes one vulnerability to cause serious financial damage to hundreds if not thousands of innocent users. Today, I’d like to tell you about how I found and helped patch a vulnerability that put over 109k ETH (~350 million USD at today’s exchange rate) at risk.”

This idea of safe components do not equal a safe system is really good. You can apply it to many aspects of life, but software code may be one of the most complex applications of this rule. As we know, the more complex a system, the higher the likelihood that vulnerabilities will exist.

Complexity is a weird topic. To the uneducated, complexity appears to be a signal of sophistication and intelligence. But as the experienced know, complexity is actually the exact opposite of sophistication in most cases. The famous line from Blaise Pascal applies here — “I would have written a shorter letter, but I did not have the time.” The same thing goes with software code to a degree. The more time someone has, the cleaner and more efficient it can become.

This brings me to my second takeaway. So much of the progress that is being made across the industry is being done at an incredible speed. Rightfully so, most developers are focused on innovation and experimentation. They are seeking new and profound ways to apply the various technologies that have become available over the last 10 years or so. The downside to this approach is that speed is historically a direct trade-off with security and resilience.

The faster that developers innovate, the higher the likelihood that vulnerabilities will be introduced into software. Sometimes that trade-off is acceptable. Other times it is not. Knowing the difference is important.

One framework to apply to this analysis would be a spectrum of innovation speed to security. Let’s start with bitcoin as an example of the extreme pursuit of security. The bitcoin core developers have an arduous, methodical, and intentional development process. There is over $800 billion of economic value that is at stake. If we have to go slower from an innovation standpoint, it is worth the continued achievement of the ultimate security. You can see the end result of this approach in everything from the decentralization of miners and nodes to the software review process. Resilience and security over everything.

The other end of the extreme is a pursuit of innovation and speed over everything. There are various altcoins and protocols that are attempting to invent new technologies or applications. They can’t win on a first mover advantage and they can’t win on the most secure or decentralized, so they choose to pursue a strategy of innovation. It is a rational strategy. These projects don’t have a lot of economic value at risk, which means the cost of making a mistake is minuscule compared to bitcoin.

These are the ultimate extremes in the industry. Do you value security and resilience as the most important aspects of a protocol or do you value speed and innovation? The interesting answer to that question is that each path is valuable for a different kind of desired end result. If you are building something that requires decentralization (like a transparent, programmatic monetary policy for a digital currency that has aspirations to become the global store of value) than security is the single most important thing. If you are building something that requires speed of innovation, like an application built on top of a smart contract platform, than you aren’t as worried about security and resilience in the early days.

Remember, we are still so early in all of this. The industry is only 12 years old and majority of companies or projects have only been around for 3-4 years. That is nothing in terms of lifetime in the technology sector. There will be immense mistakes made, similar to what we saw a few days ago with a $600 million defi hack. But that doesn’t mean that every platform will have vulnerabilities, nor does it mean that speed of innovation should be pursued more aggressively than security and resilience.

One of the reasons that I’m personally interested in bitcoin, and spend the majority of my time on it, is that I believe it has grown to become the most resilient and secure computing network in the world. It has true staying power. There is a very high likelihood that bitcoin is still around in 50 or 100 years. That type of resilience can be incredibly valuable if you’re a long term thinker. My plan is to hand my bitcoin to my grandchildren, so resilience and staying power is of the upmost importance to me.

So far, so good. Lastly, it is cool to see people like Samczsun in the world. There are not many people who would discover a $300 million exploit and their first reaction is to call the project and work with them to fix the issue. We need as many good people as we can get in this world.

Hope each of you has a great day. Talk to you tomorrow.

-Pomp

SPONSORED: Unstoppable Domains allows you to replace cryptocurrency addresses with a single, easily-readable name like mine, Pomp.crypto. Instead of worrying about getting 1 character wrong in a long string of random letters and numbers, get your own Unstoppable Domain here.

THE RUNDOWN:

Bridgewater, Citadel, Even Tennessee’s Treasury Among Coinbase COIN Whales: Some of the biggest names on Wall Street and even a handful of U.S. states ended Q2 with multimillion-dollar bets on Coinbase, possibly the ultimate crypto proxy stock. A review of regulatory documents reveals that a parade of megabanks, including Goldman Sachs, JPMorgan, CitiGroup and Bank of America; asset managers such as Millennium Management, BlackRock, Miller Value Partners and Bridgewater; and even states such as Tennessee’s Treasury, have told securities regulators they held COIN on June 30. Read more.

UK Police Recover $22M in Stolen Crypto From Scammers: U.K. police have seized $22.2 million in cryptocurrency and made two arrests after specialist officers learned of a scheme in Greater Manchester that led to the discovery of USB sticks containing significant amounts of ethereum. The police allege that victims were tricked into depositing their savings into what they thought was an online savings and trading service using Binance Smart Chain.Read more.

US Mortgage Lender UWM Plans to Accept Bitcoin Payments: United Wholesale Mortgage plans to accept cryptocurrency payments – likely bitcoin – later this year in an apparent first for the U.S. mortgage industry, according to the Detroit Free Press. The Michigan-based lender will start by taking bitcoin but is looking into ether and other cryptocurrencies as well, CEO Mat Ishbia told the paper. “We’re going to walk before we run,” he said while emphasizing UWM wanted its crypto service to be first to market. Read more.

Ex-Goldman Sachs Traders Raise $4M for DeFi Risk Management Startup: Ondo Finance, a protocol meant to accelerate decentralized finance adoption among institutional investors by minimizing risk, has raised $4 million in a funding round led by Pantera Capital. CoinFund, Protoscale Capital, The LAO and Digital Currency Group (the parent company of CoinDesk) also participated in the round. Read more.

Steve Aoki Has Secured Funding to Pilot His NFT TV Show: DJ Steve Aoki is doubling down on his stop-motion short “Dominion X” after the non-fungible token (NFT) project’s near-instant sellout earlier this month. The festival staple has secured financing for a “proper pilot” episode of his trippy, music-infused collaboration with Stoopid Buddy Stoodios, the Seth Green production company best known for Robot Chicken, according to his publicist Mike Jones. He declined to provide details of the financing. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Chrisman Frank is the co-founder and CEO of Synthesis, a new educational experience for children aged 8-14 that focuses on teaching problem solving and critical thinking skills.

In this conversation, we discuss the Synthesis story, Elon Musk, critical thinking, independent thought, first principles, the broken education system, and why Synthesis is better than classrooms.

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!

* Exodus is an absolute game changer in the crypto wallet space. With over 100 assets supported, one-click built-in exchange, Trezor hardware wallet integration and 24/7 customer support, this is a no brainer for both newcomers and crypto heavyweights. Download Exodus on desktop, iOS, and Android using my code http://get.exodus.com/pomp

* 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

* OKEx is a leading crypto exchange known for providing the most options for crypto traders and investors. Whether you want to trade spot, futures, options or swaps, OKEx gives you institutional-grade tools and a best-in-class trading engine. The platform offers credit and debit card funding options and supports 40 different fiat currencies, including EUR, CAD, GBP, TRY, INR and RUB, to name just a few. You can invest, trade, and earn yield, all within one place at okex.com. OKEx is not available to customers in the United States. 

* Choice is a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

* Unstoppable Domains makes crypto easier by replacing your address with [AnyName].crypto. They allow you to send and receive over 70 cryptocurrencies, including BTC, ETH, and LINK with a single blockchain domain. Go to unstoppabledomains.com and get [YourName].crypto to make your crypto life easier.

* 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

* 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 “pomp2020” when you sign up for one of their metal cards today.

* Public Rec is on a mission to make comfort look good. Their fan-favorite Flex Short is the ultimate crossover short you’ll need all summer long. From the beach to the gym, this quick-drying short has you covered. Comfort starts with a better fit. Free shipping. Free returns. Visit www.publicrec.com/pomp and use POMP at checkout for 10% off!

* 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.

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. 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.

* Revolut is a finance app in the US and UK, that say they're the simplest way to access crypto. Sign up today at Revolut.com/pomp and make 3 card transactions to get $15, which you can exchange for any tokens Revolut supports. As usual, when you move your money from fiat to crypto your capital is at risk. See T&C's for details. Revolut is a financial technology company. Banking services provided by Metropolitan Commercial Bank, Member FDIC. Cryptocurrency services provided directly by Paxos Trust Company, LLC.

* Did you know nearly 338 million dollars worth of NFTs were sent last year? And in 2021 that number is growing faster than ever. Looking to make your first NFT? Check out NEAR’s fast, scalable, low-cost, open-source platform. Learn why NEAR is the infrastructure for innovation at near.org

* Amber - Invest, trade, swap, and earn crypto with Amber App, where new users can receive 16% APR on BTC, ETH, and USD Stablecoins! Click here to sign up now.

* LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers 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

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,

Yesterday was the 50th anniversary of President Nixon taking the US dollar off the gold standard. While you may be familiar with the basics, there is quite a bit to unpack from that historic moment.

First, let’s take a look at what Nixon’s exact comments were when he decided to execute this idea.

You can read more of the speech here:

The language used here was important. There was reference to the American economy being the strongest in the world, the importance of defending the US dollar against speculators, the promise of temporary action, and of course - the confirmation that the US dollar would be stable and immune from being devalued.

Cute idea, but historically this has been proven to be one of the worst policy decisions in history. Don’t believe me? Our friends over at River have collected a few charts to highlight the impact:

Just incredible to see the impact of the United States going off the gold standard. Remember, President Nixon said that “inflation robs every American, every one of you.” That is correct. But while he was referring to pre-1971 conditions, he should have foreseen how destructive his decision would be.

It is interesting to look back on the 50 year anniversary and realize that we currently are experiencing 5.4% CPI and 4.3% core inflation numbers. These are basically the highest they have been in decades.

There are currently 78% of Americans who live paycheck-to-paycheck and 45% of Americans who hold no investable assets. These are the people who have suffered at the hands of poor policy decisions. While disheartening, the free market appears to have created a brand new global competitor — bitcoin.

There is no need to replace the US dollar in the short term, so bitcoin is likely to serve as the global store of value for decades to come. The transparent, programmatic monetary policy of a digital currency that has decentralized infrastructure is too powerful an idea, especially when compared to the backdrop of continued insane monetary and fiscal policy decisions. The legacy organizations are doing just as much to market an alternative store of value as any bitcoiner could dream of.

As Niall Ferguson wrote in a Bloomberg Opinion piece this morning, “If we have learned nothing else from the past half-century, it is surely that the best way to win a race with totalitarian rivals is not to copy them, but to out-innovate them. Make the wrong decision at this historic turning point, and we shall be interrupting a much bigger bonanza than Nixon did.”

If you have any material amount of wealth, you are not able to preserve it by holding US dollars, bonds, or gold. All are producing negative real rates of return. You essentially are left with bitcoin or equities, which leads you to consider an allocation to bitcoin given the high degree of volatility that will likely serve to outperform equities over a long enough time period.

We are living in weird, weird times. President Nixon kicked off the fiat experiment in 1971 and 50 years later, we are watching the global adoption of a potential solution to that problem. There is still a lot of work to do. Plenty more people to educate around the structural disadvantage they have as they pursue financial security in the legacy system. But….slowly we continue to head in the right direction.

Stay alert out there. Make sure you are educating yourself as best you can. The uncertainty and chaos of markets can be calmed by further understanding of history. Hope your week is off to a great start. I’ll talk to everyone tomorrow.

-Pomp

SPONSORED: It's no secret I hold Bitcoin as majority of my portfolio. But even I know you have to diversify into other asset classes like elite investors. 

You need an asset that won’t get murdered by the Fed's money printing and Biden's $6T stimulus plan. In my search for other alternatives, I found something game-changing. It's an art investment platform that lets you invest in multi-million dollar paintings by artists like Basquiat and Banksy.

Art as an investment excites me because, like BTC, its supply is not only fixed but can decline. 

Contemporary art prices outperformed traditional inflation hedges like gold and real estate, while crushing S&P 500 returns by 174% from 1995-2020. 

 Take a look at investing in art. I hooked it up and partnered with Masterworks, so you all can get to the front of the line with this private link.

Podcast Sponsors

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

* Exodus is an absolute game changer in the crypto wallet space. With over 100 assets supported, one-click built-in exchange, Trezor hardware wallet integration and 24/7 customer support, this is a no brainer for both newcomers and crypto heavyweights. Download Exodus on desktop, iOS, and Android using my code http://get.exodus.com/pomp

* 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

* OKEx is a leading crypto exchange known for providing the most options for crypto traders and investors. Whether you want to trade spot, futures, options or swaps, OKEx gives you institutional-grade tools and a best-in-class trading engine. The platform offers credit and debit card funding options and supports 40 different fiat currencies, including EUR, CAD, GBP, TRY, INR and RUB, to name just a few. You can invest, trade, and earn yield, all within one place at okex.com. OKEx is not available to customers in the United States. 

* Choice is a new self-directed IRA product that allows you to buy Bitcoin with tax-advantaged dollars, while still holding your private keys. You can go to retirewithchoice.com/pomp to sign up today.

* Unstoppable Domains makes crypto easier by replacing your address with [AnyName].crypto. They allow you to send and receive over 70 cryptocurrencies, including BTC, ETH, and LINK with a single blockchain domain. Go to unstoppabledomains.com and get [YourName].crypto to make your crypto life easier.

* 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

* 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 “pomp2020” when you sign up for one of their metal cards today.

* Public Rec is on a mission to make comfort look good. Their fan-favorite Flex Short is the ultimate crossover short you’ll need all summer long. From the beach to the gym, this quick-drying short has you covered. Comfort starts with a better fit. Free shipping. Free returns. Visit www.publicrec.com/pomp and use POMP at checkout for 10% off!

* 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.

* Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. 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.

* Revolut is a finance app in the US and UK, that say they're the simplest way to access crypto. Sign up today at Revolut.com/pomp and make 3 card transactions to get $15, which you can exchange for any tokens Revolut supports. As usual, when you move your money from fiat to crypto your capital is at risk. See T&C's for details. Revolut is a financial technology company. Banking services provided by Metropolitan Commercial Bank, Member FDIC. Cryptocurrency services provided directly by Paxos Trust Company, LLC.

* Did you know nearly 338 million dollars worth of NFTs were sent last year? And in 2021 that number is growing faster than ever. Looking to make your first NFT? Check out NEAR’s fast, scalable, low-cost, open-source platform. Learn why NEAR is the infrastructure for innovation at near.org

* Amber - Invest, trade, swap, and earn crypto with Amber App, where new users can receive 16% APR on BTC, ETH, and USD Stablecoins! Click here to sign up now.

* LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers 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

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