The Pomp Letter

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 150,000 other investors today.

To investors,

The more things change, the more they stay the same. I spend my day talking to entrepreneurs looking to build the next great innovation, investors seeking alpha in some hidden market opportunity, or individuals who are explaining how the world is evolving in a way that no one quite understands yet.

These conversations are fascinating. They give me a view into the future. What technology is being built? How will it change the way that people or organizations conduct their daily activities? What are investors thinking? How will capital flows change? On a day-to-day basis, it can almost be overwhelming. So much innovation, so little time.

But is that really true?

I’ve been spending more time thinking about the long term. Zooming out in a way. Where did we come from? What is happening today? And how does that impact where we are going? These questions don’t have a single right answer, but instead can usually be boiled down to my personal interpretation of the set of facts that I have.

More frequently though, I am concluding that very little has actually changed over the last few decades. Here are a few examples of what I mean:

* Innovation — this body of work is driven by the activity and movement of intellectual capital. When engineers, entrepreneurs, and innovators begin to all work on the same industry in a given time period, there is incredible progress made. These innovation cycles follow similar paths. You have early adopters and late adopters. Boom and bust cycles. Excitement and disappointment. The easiest way to find innovation is to simply follow the talent.

* Investment alpha — the best investors are constantly seeking asymmetry. This lopsided risk-reward payoff can be found by believing in technology and innovation trends before the masses. You have to allocate your capital somewhere that others don’t yet believe has value, while also being right. If you do something different and are wrong, that just makes you an idiot. Additionally, following the intellectual talent, particularly young people, can help to easily identify where innovation is happening, and innovation leads to outsized returns.

* Capital flows — many investors spend too much time trying to outsmart the market, when in reality they simply need to understand the human psychology that drives capital flows. Take inflation as an example. It doesn’t matter if inflation actually occurs or not. If people fear inflation, capital will flow to inflation-hedge assets. If you move your capital before the masses, you will capture a return once the bulk of capital starts to flow. The psychology of markets is still the main driver behind price movements of various assets.

These are just three simple examples that I use to highlight that almost nothing is different this time around. Sure, the technology is different. Some of the players are different. But the core principles of building companies and investing capital have not changed.

An unfortunate story that proves the point is Bill Hwang and Archegos Capital Management. For those that don’t know the story from last week, Bill is a well respected investor who had billions of dollars in assets. Today he has almost nothing left. According to CNBC, here is what happened:

“Archegos held large and leveraged bets in U.S. media stocks ViacomCBS and Discovery, as well as a few Chinese internet ADRs including Baidu, Tencent and Vipshop. Some of the positions were held via total return swaps, a type of derivative that allows investors to take big, levered stakes without disclosing those positions publicly.

These bets started to go south after ViacomCBS’ $3 billion stock offering through Morgan Stanley and JPMorgan earlier in the week fell apart. It triggered a domino effect where prime brokers rushed to exit the positions on Archegos’ behalf and resulted in a massive margin call.”

Bill Hwang lost billions of dollars. Big financial institutions like Nomura and Credit Suisse lost billions of dollars. Frankly, this is the equivalent of financial carnage. So what does this have to do with my point that nothing is different? Even in the good times, lack of risk management and the use of too much leverage can be fatal. This story is as old as time.

As I’ve thought more about the exciting advancements today, it has brought me back to the book that always grounds me in the long-term view of the world: Mark Spitznagel’s The Dao of Capital. Here are just a few of my favorite quotes from the book:

* “No one should expect that any logical argument or any experience could shake the almost religious fervor of those who believe in salvation through spending and credit expansion.” - Mises

* "The whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence: The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy." - Henry Hazlitt

* "Underlying Mises' observations throughout was the basic unruliness of market prices, of their inherent subjectivity — a subjectivity that stems from the perceptions, needs, tastes, and impatience of humans." - Spitznagel

* "Civilizations advance through the accumulation of highly configured capital, which does not thrive amid extreme volatility and destruction; on the contrary, capitalism wants stability — but also the free competitive transferral of resources" - Spitznagel

Free markets and competition lead to innovation. Innovation leads to progress. Progress leads to returns. Returns lead to more investment. The circle of life for financial markets. This is the way. But the more things change, the more they stay the same.

It is easy to get caught up in the day-to-day changes. Zoom out every so often. Remember that we are all playing a game that will last for decades. The goal is not simply to win today, this week, this month, or even this year. The real players know that they have an advantage if they can survive forever.

Long term thinkers have the upper hand. It takes emotional intelligence and control, but if you can keep your focus on the select few things that move the needle for your goals, you have a fighting chance. And ultimately, a fighting chance is all that any of us can ask for.

Have a great day. I’ll talk to everyone tomorrow.

-Pomp

Do you want to work in the Bitcoin and crypto industry? Do you run a business that has open roles to fill? I recently launched the industry-leading job board focused on our industry. We have hundreds of open roles at companies like Coinbase, Gemini, BlockFi, and many others.

Get a Job or Post a Job here: http://www.pompcryptojobs.com

THE RUNDOWN:

Lagarde Says ECB Could Have Digital Currency Within Four Years: European Central Bank President Christine Lagarde said her institution could launch a digital currency around the middle of this decade if her fellow policy makers give the project the green light this summer. “We need to make sure that we do it right - we owe it to the Europeans,” Lagarde said in a Bloomberg TV interview on Wednesday. “The whole process - let’s be realistic about it -- will in my view take another four years, maybe a little more.” Read more.

NBA Top Shot’s Dapper Labs Raises $305 Million in Latest Round: Dapper Labs, the company behind the popular NBA Top Shot digital collectibles platform, said it closed a $305 million funding round with backing from a roster of professional athletes and media personalities. The latest financing injection -- with endorsements from Michael Jordan, Will Smith, Kevin Durant and Stefon Diggs, among others -- brings the company’s total capital raised since February 2018 to $357 million, according to Roham Gharegozlou, the company’s co-founder and chief executive officer. Read more.

Michael Jordan Joins $305M Investment in Firm Behind NBA Top Shot: Dapper Labs announced a $305 million funding round Tuesday from another batch of National Basketball Association stars and a venture capital firm backing its runaway hit, NBA Top Shot. Kevin Durant, Michael Jordan, the investment firm Coatue and a deep bench of 30 athletes plus the rapper 2 Chainz have piled into the non-fungible token (NFT) firm, the startup said. Citing a person with knowledge of the situation, USA Today reported the funding round places Dapper’s current valuation at $2.6 billion.Read more.

NFL Player Taylor Rapp Is Launching an NFT to Fight Anti-Asian Hate: A young defensive back with the Los Angeles Rams is the latest pro athlete launching a non-fungible token, hoping to use the sale to raise money, and awareness, to combat the wave of anti-Asian hate crimes this year. Taylor Rapp, the free safety entering his third season in the National Football League, completely lacks the star power of a Rob Gronkowski or a Patrick Mahomes, marquee players who leveraged their splashy brands into multimillion-dollar NFT sales earlier this month. Read more.

Bakkt Digital Wallet, for Bitcoin to Starbucks Points, Goes Live After Long Delay: Bakkt is launching its digital wallet app with companies such as Starbucks among its roster of merchant partners. The app drew 500,000 users in its invitation-only trial run prior to its public launch Tuesday, Bakkt said in a press release. The app was announced in October 2019, with plans to launch in the first half of 2020. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Anthony Di Iorio is primarily known as a co-founder of Ethereum and an early investor in Bitcoin. Di Iorio is the founder and CEO of the blockchain company Decentral, and the associated Jaxx wallet. He also served as the first chief digital officer of the Toronto Stock Exchange.

In this conversation, Anthony and I discuss:

* early days of bitcoin

* co-founding Ethereum

* how to compound impact

* Decentral and Jaxx

I really enjoyed this conversation with Anthony. Hopefully you enjoy it too.

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!

* Remote makes it easy for companies of all sizes to employ global teams. We take care of international payroll, benefits, taxes, company stock options, and local compliance, so you can focus on growing your business. Learn more about Remote and their new Remote for Startups program at remote.com.

* If you own crypto in a lot of places like me you know how difficult it can be to keep track of it all. Whether you keep your crypto on hardware wallets, mobile wallets, exchanges, liquidity pools, or somewhere else, CoinStats lets you track it all in one place on your iPhone, Android, Apple Watch, or computer. Try it for free or go to coinstats.app/pomp and get 40% off your premium subscription.

* OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. 

* 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 where indoor comfort meets outdoor style. Their best-selling All Day Every Day Pant is a more stylish alternative to sweatpants, and a more comfortable alternative to jeans. From the couch to the gym to the grocery store, and everywhere in between, Public Rec has you covered. Comfort starts with a better fit. Free shipping. Free returns. Visit www.publicrec.com/pomp and use POMP10 at checkout to get 10% off!

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

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

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

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 145,000 other investors today.

To investors,

Today I am announcing an investment in Synthesis, which is the education spin-out from the school that Elon Musk custom built for his own children.

The traditional school system teaches our children rote memorization and measures success based on end of year test results. This is not the best way to prepare young children for the real world. The system leaves children lacking critical thinking skills, along with problem solving, independent thought, creativity, and teamwork experience.

Elon Musk realized this years ago and decided to build a school on the SpaceX campus for his own children. Musk partnered with Josh Dahn to create Ad Astra, which became the educational experience that he believed would be best for the children that he wanted to raise. Ad Astra (now known as AstraNova) uses simulations, case studies, fabrication and design projects, labs, and corporate collaboratives to develop students that are enthralled by complexity and solving for the unknown.

The only problem is that the AstraNova experience was only available to a select few families who could get into the program. But Josh Dahn, the co-creator of AstraNova, wanted to bring this game-changing educational program to the masses.

Enter Synthesis.

Josh Dahn has teamed up with Chrisman Frank, an early employee at ClassDojo, to create a software based solution that puts children ages 7-14 through the one-of-a-kind program. These children are taught critical thinking, problem solving, leadership, creativity, independent thought, and teamwork. Simply, Synthesis prepares children for the real world in a way that the traditional education system does not.

Listen to this 10 year old kid talk about his assessment of a situation, his team’s resources, and his decision to pass the leadership position to the best suited team member. Most adults can’t do this:

The lack of critical thinking and problem solving skills being taught in our education system should be a national emergency. Rather than complain about it, the team at Synthesis is doing something about it. Josh and Chrisman have put together an incredible team, including former teachers like Ana Lorena Fabrega and others.

If you want your child to be more proficient and better prepared for the real world, you should consider signing up here: https://www.synthesis.is/

The company has been growing incredibly fast. They have seen 50% monthly compounded growth since the start of November and are now doing over $1 million in annual run rate. More than 85% of all students stay in the program after 90 days. The takeaway? Synthesis works.

I’m joined in this round by a list of other incredible investors, including Alexis Ohanian, Austen Allred (founder of Lambda School), Sam Teller (Elon's former chief of staff and partner at Valor Equity), Katie Wells (known as Wellness Mama), David Perrell, Austin Rief (founder of Morning Brew), my friend and former Facebook colleague Jonathan Gheller, and many others.

We have assembled an incredible team of operators and investors with one simple mission — educate your child with the problem solving and critical thinking skills that will prepare them for success in life. If that sounds compelling to you, you really should consider giving it a try.

Sign up your child for Synthesis: https://www.synthesis.is/

If it is good enough for Elon Musk and his kids, it is probably good enough for you. Have a great day and I’ll talk to everyone tomorrow.

-Pomp

Do you want to work in the Bitcoin and crypto industry? Do you run a business that has open roles to fill? I recently launched the industry-leading job board focused on our industry. We have hundreds of open roles at companies like Coinbase, Gemini, BlockFi, and many others.

Get a Job or Post a Job here: http://www.pompcryptojobs.com

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Synthesis is an innovative new way for young students to learn critical thinking and problem solving skills. Pomp was so fascinated with the program that he invested. This episode is with Josh Dahn, Chrisman Frank, and Ana Lorena Fabrega.

In this conversation, the Synthesis team and I discuss:

* Challenges is legacy education

* Why critical thinking and problem solving is so important

* How Josh started a school with Elon Musk

* What Synthesis is doing

I really enjoyed this conversation with the Synthesis team. Hopefully you enjoy it too.

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!

* If you own crypto in a lot of places like me you know how difficult it can be to keep track of it all. Whether you keep your crypto on hardware wallets, mobile wallets, exchanges, liquidity pools, or somewhere else, CoinStats lets you track it all in one place on your iPhone, Android, Apple Watch, or computer. Try it for free or go to coinstats.app/pomp and get 40% off your premium subscription.

* OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. 

* 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 is working to make the internet operate how it was originally intended, which means anyone can publish anything from anywhere. You can go to unstoppabledomains.com and claim your censorship resistant domain 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.

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

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

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

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 140,000 other investors today.

To investors,

There has been a lot of discussion recently about the bitcoin community’s communication tactics. Insiders believe that bitcoiners are some of the most educated minds on finance, technology, and innovation. They literally can’t believe that so much information is available for free to be consumed by anyone on the internet.

Outsiders see something very different. They see a group of people who appear to be religious zealots that only know how to communicate via memes, laser eyes, and aggressive tweeting. Here is the funny thing — both are correct.

The bitcoin community is filled with people who have dedicated years to understanding the intersection of multiple disciplines, including economics, finance, technology, cryptography, geopolitics, game theory, and many more. Not only have they acquired the knowledge, but they have had those ideas tested in the intellectual arenas of Twitter, Reddit, Telegram, etc.

Simply, bitcoiners have done their homework and they come prepared.

But bitcoiners also have a very unique way of communicating with people. While there are podcasts and email newsletters, much of the information is actually shared through internet culture. Where else will you find someone telling a billionaire to “have fun staying poor!” or someone telling a legend of Wall Street “Ok, boomer!”

To the outsider, this appears to be disrespectful, non-constructive, and a misstep for a group of people who are hoping to gain widespread adoption. These outsiders are put off by the bitcoiner antics at times, while believing the community will be the single point of failure in other situations.

The outsiders don’t understand the genius of the bitcoin community though. Bitcoin, and by proxy the bitcoin community, is competing with the most respected establishments in our society. Whether we are talking about the Federal Reserve, the Treasury, the US government, or large financial institutions, these organizations pride themselves on being the elite. They wear their suits and ties with an air of arrogance that is only acquired after an education at an Ivy League school and enough cocktail parties to fill a lifetime.

So why would bitcoin try to out class the elites? Well, it shouldn’t.

Just as an insurgency increases the odds of prevailing on a combat battlefield by employing non-traditional tactics, the bitcoin community has chosen to play a game that the elite can’t participate in.

Bitcoiners are conducting an information insurgency.

They are quite literally controlling the public narrative through an overwhelming amount of content that has no reliance on traditional distribution methods. Up until recently, the only time that journalists or television shows wanted to speak with bitcoiners was to ridicule, mock, and attack them.

The bitcoin community ignored those short term challenges and instead built a direct relationship with the mass population. Twitter. Reddit. Telegram. Podcasts. Instagram. Facebook. Email. You can’t exist on the internet for 24 hours without coming in contact with content that is created by this community.

So why are things like laser eyes so important? Easy — the memes are the message. You are watching information warfare conducted in a way that can’t be responded to by the elite and the establishment. What is the Federal Reserve going to do? Start firing off memes, gifs, and ALL CAPS BULLISH USD TWEETS??

No chance. The incumbents, from the government to the Fed to the banks, can only sit by passively and get bombarded day in and day out with the content. If they choose to acknowledge it and respond, they will only legitimize bitcoin and the surrounding community. If they continue to ignore it, bitcoiners will control the public narrative and continue recruiting more and more people to see their world view.

This is fascinating to watch because this information insurgency will likely be analyzed in retrospect as one of the most important psychological operations in human history. Millions of strangers on the internet are coordinating to meme a financial asset into retail investors’ portfolios, corporate balance sheets, financial institutions’ product roadmaps, and eventually central bank reserves.

Wait, what? Yes, read that again. The bitcoin community is using internet culture and speaking the language of digital natives to gain traction against the stuffy elites. Half the people running these establishments don’t know what a meme is, let alone have a coherent response on how to deal with what is happening. In fact, many of the older folks in the bitcoin community are against these tactics as well.

They constantly tell bitcoiners that they will have to wear suits and ties to meetings. They explain that bitcoin won’t be accepted until the laser eyes and memes go away. The alleged toxicity is seen as a bug, not a feature. But regardless of what insiders or outsiders say, bitcoin continues to gain traction through the information insurgency.

This is because ultimately institutions, regardless of how elite or traditional they are, will always be made up of humans. Those humans are susceptible to human psychology. Everyone wants to be accepted by the cool kids. They want to have fun. It pains them to see young people running laps around them, while their bosses are telling them to remain calm and stay above it all.

That isn’t how the internet works. The young people inside these organizations and establishments know that. Go talk to the interns and entry level positions at Goldman Sachs, JP Morgan, the Federal Reserve, or any political office. They’ll all tell you the same thing when the door closes — they’re bitcoiners and they have a pseudonymous account on Twitter. They’ll explain how they are trying to get their bosses or older colleagues to see the future. To see the bitcoin way.

So what the institutions don’t understand is that the bitcoin community has already won. Bitcoiners have infiltrated their ranks. They are the trojan horse. Each bitcoiner is rising in the ranks. They’re gaining power and influence. The institution may not know it, but there are wolves in the hen house and the institutions let them in!

We have bitcoiners who have infiltrated the Senate. We have bitcoiners who have infiltrated Congress. We have bitcoiners everywhere.

Regardless of their role, they are participants in the information insurgency. For example, we have Senators and Congressmen who have laser eyes on their Twitter profile pictures. We have people reading the terminology “shitcoin” into the Congressional record.

Have fun staying poor. Drop gold, buy bitcoin. Pay me in bitcoin. No keys, no cheese. Long Bitcoin, Short the Bankers. The virus is spreading.

Each meme carries a psychological impact that continues to recruit new bitcoiners. The establishment can’t respond. They can only complain, which makes them look even more archaic and out of touch. Who cares what they say, right? If they step out of line and take an anti-bitcoin stance, there are millions of bitcoiners there ready to pounce with a barrage of information, examples, memes, and gifs.

Frankly, it is unfair. No one should be asked to fight against this insurgency. Bitcoiners are too powerful. They don’t rely on gatekeepers. They don’t need the media’s permission to speak. Bitcoiners control the narrative. Bitcoiners have bigger audiences. Bitcoiners grow bigger, stronger, and more decentralized every day.

You can’t kill an idea, especially one who’s time has come. The information insurgency is upon us and the legacy institutions, and their leadership, are outmatched on the battlefield. Good luck to them. They’re going to need every ounce of it as they continue to be beaten down by the intellectually and creatively superior challengers.

Nobody has more fun than bitcoiners on the internet. I’m just proud to be a small part of this amazing community. Hope each of you has a great weekend. Talk to you on Monday.

-Pomp

Do you want to work in the Bitcoin and crypto industry? Do you run a business that has open roles to fill? I recently launched the industry-leading job board focused on our industry. We have hundreds of open roles at companies like Coinbase, Gemini, BlockFi, and many others.

Get a Job or Post a Job here: http://www.pompcryptojobs.com

THE RUNDOWN:

Robinhood’s Vlad Tenev Talks Crypto Growth in ‘Fireside’ Chat: Robinhood is working to expand the capabilities of its crypto trading platform and repair the reputational damage it suffered in the wake of the retail trading frenzy over GameStop, the online brokerage’s CEO Vlad Tenev said in a video of what the company called a “fireside chat” posted on YouTube Thursday. Sitting in front of virtual backdrop featuring a fireplace, Tenev said the company has plans for growth in the crypto space and is working to ensure that an oft-requested “wallet” feature is safe before introducing it. Read more.

Powell Says Central Bank Digital Currency Must Coexist With Cash: Potential central bank digital currencies would need to be integrated into existing payment systems alongside cash and other forms of money, Federal Reserve Chair Jerome Powell said. “A recent report from the Bank for International Settlements and a group of seven central banks, which includes the Fed, assessed the feasibility of CBDCs in helping central banks deliver their public policy objectives,” Powell said Thursday in prerecorded video remarks delivered to a payments conference in Basel, Switzerland. Read more.

NFT Frenzy Buoys Stocks, Lifting Auction Houses and Game Makers: A grab bag of obscure stocks are soaring after unveiling plans to get involved in the exploding digital-art scene being powered by NFTs. Non-fungible tokens, or NFTs, are cryptographic assets used on computer ledgers referred to as blockchains, similar to the network that powers Bitcoin. They make it possible to track ownership and sales prices, as well as the number of copies in existence through each unique identifying code. They burst onto the mainstream consciousness last week when the artist Beeple’s “Everydays: the First 5,000 Days” sold for a record $69 million. Read more.

SEC Publishes VanEck’s Bitcoin ETF Application, Kicking Off Decision Clock: The U.S. Securities and Exchange Commission (SEC) acknowledged VanEck’s 19b-4 Form for its bitcoin exchange-traded fund application on Monday, formally kicking off its 45-day window to make an initial decision on the proposal. If approved, the ETF would be the first open bitcoin exchange-traded product in the U.S., though there has long been demand for such a product from the crypto community. Historically, the SEC has rejected every bitcoin ETF application, including VanEck’s past efforts, citing the potential for market manipulation and a host of other concerns. Read more.

The US Government Sold Some Bitcoin – And the Winning Bidder Got a Bargain: A key reason bitcoin‘s price has doubled this year, according to many analysts, is so few holders want to part with the cryptocurrency: “more buyers than sellers,” as the old Wall Street adage goes. Unless you’re the U.S. government, which this week sold some bitcoin for dollars. The amount was tiny in relative terms – not even an entire bitcoin, just 0.7501 BTC, worth a little over $40,000. Compare that to the current federal budget deficit, projected during the current fiscal year to exceed the record $3.1 trillion reported for 2020. A veritable drop in the bucket. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Narek Gevorgyan is the founder of Coin Stats, a cryptocurrency research and portfolio management app available for iOS, Android and Desktop with over 500,000 active portfolios tracked worldwide.

In this conversation, Narek and I discuss:

* Crypto portfolios

* Importance of user experience

* Decentralized finance

* Coin Stats growth

* Where Narek sees the market going in the next few years

I really enjoyed this conversation with Narek. Hopefully you enjoy it too.

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!

* If you own crypto in a lot of places like me you know how difficult it can be to keep track of it all. Whether you keep your crypto on hardware wallets, mobile wallets, exchanges, liquidity pools, or somewhere else, CoinStats lets you track it all in one place on your iPhone, Android, Apple Watch, or computer. Try it for free or go to coinstats.app/pomp and get 40% off your premium subscription.

* OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. 

* 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 is working to make the internet operate how it was originally intended, which means anyone can publish anything from anywhere. You can go to unstoppabledomains.com and claim your censorship resistant domain 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.

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

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

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

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 140,000 other investors today.

To investors,

There was blood in the streets a year ago. March 12, 2020 will be a day that financial investors will never forget. Bitcoin fell over 50% in a single day. Every other asset was in a free fall as well.

Circuit breakers were tripped every few hours it seemed. Investors were full of fear. They couldn’t sell every liquid asset in their portfolio fast enough. The pandemic had hit full stride. The NBA was shutting down. Countries around the world were going into lockdown. The S&P 500 dropped 7% the second it opened. The Dow Jones was down over 8%. Oil and gold were both suffering a similar fate.

It was ugly.

But not everyone was scared. The liquidity crisis was actually quite obvious to those who understood how investor psychology and markets interact. The morning of March 12th I wrote a letter to each of you titled “The Liquidity Crisis Will Drive Monetary Stimulus, Which Will Force The Adoption Of Sound Money Properties.”

I started the letter off with the following:

“We are watching history unfold. There will be books written about the events that are transpiring in financial markets right now. Every day feels like a month. Fear and panic are dominating the minds of most people. As I wrote earlier this week though, like most things in life — this too shall pass.”

Next, I highlighted a simple framework for investors to think through what was happening:

* COVID-19 has officially been labeled a pandemic by the World Health Organization. The necessary response requires social distancing and shutting down of large gatherings or various forms of economic activity.

* The virus is grinding economies around the world to a halt.

* The structural flaws in various markets are exposed when economies slow down, including too much leverage and lack of liquidity.

The key piece to preparing investors for what was about to happen in the coming days was the identification of the liquidity crisis. Some people saw fear. But fear is a psychological concept and a liquidity crisis is a market structure manifestation of the fear. I went on to write:

“Unfortunately, we are watching a liquidity crisis play out in real-time. These liquidity issues are well understood structurally, but feel much worse than expected when they occur in reality. A liquidity crisis means that investors all rush to the exit doors at the same time, but there are so many more sellers than buyers that investors actually have a hard time offloading their assets for cash. Quite literally, investors begin aggressively lowering the price they are willing to accept for each asset in exchange for the cash which they are desperately seeking right now.

This is why you are seeing any asset with a liquid market tanking so hard right now.”

As if that wasn’t enough to grab people’s attention, I went on to show what had happened to gold during the 2008 financial crisis.

“During the 2008 global financial crisis, gold dropped in price by more than 30% leading into the depths of the real pain. This isn’t because gold is a bad store of value or that it had lost safe haven status after 5,000 years. It is because gold has a liquid market and investors needed liquidity over anything else.”

“Even though gold fell 30% during the 6 month liquidity crisis, the asset still went from approximately $650 in 2006 to over $1,800 in 2011. Why? Because people ran to gold when they feared that the United States would default on debt, that the US monetary policy measures were a bad idea, and/or that inflation was rising. Simply, gold served as a store of value and safe haven asset over the full timeline of the crisis, but it succumbed to the liquidity crisis during the worst 6 months.”

So let’s take a look at what actually happened to Bitcoin during the liquidity crisis. Simply, it was in free fall just like every other asset.

The difference is that bitcoin is a more volatile asset, so while other assets went down 15-30% in price, bitcoin was down 50%. As I always say, volatility is not inherently bad. It is a positive thing when it works in your favor and a negative thing when it goes against you. You need volatility for prices to move upwards if you’re long. But the week of March 12, 2020 was a bad volatility period for the holders of the digital currency.

Here is the funny thing though — if you Zoom out and look at bitcoin’s price chart from about a year before the liquidity crisis till today, you can barely even see that 50% drop in price.

As we continue to discuss in this letter, long term holders have a significant advantage over the weak handed short term traders. Humans are emotional. We succumb to fear and greed. But if you have deep conviction in a thesis and refuse to allow the short term price movements to affect your decision making, you will do fairly well over the long term.

My favorite analysis is the holistic comparison of various assets across financial return, volatility, compound growth, and sharpe ratio.

The folks at casebitcoin.com highlight just how attractive of an asset the digital currency has become. Lastly, don’t forget about the safe haven status that everyone was contemplating over the last few years. The big question was what would happen to bitcoin in a market downturn? Would it survive? Would it thrive?

We now have the answer to that question — Bitcoin was the single best asset that you could have held during the market uncertainty and chaos. The return, sharpe ratio, and overall reduction of risk in a portfolio are unrivaled. Pretty crazy to think about in hindsight.

Bitcoiners have done the work. They understand the asset and the market. The conclusion of bitcoin’s dominance is not that of a religious zealot, but rather the product of a deep analysis of all options. They are being proven accurate in that analysis, which can be frustrating to those who reached a different conclusion years ago. That doesn’t mean that it is over though. Bitcoin is actually just getting started in all likelihood. Time will tell how far into this journey we really are.

Have a great start to your week. I’ll talk to everyone tomorrow.

-Pomp

SPONSORED: Last week, you might have heard that the art market went—as they say in business school—absolutely bonkers. Christie’s cashed in on the mania, setting a new record of $69.3 million for a jpeg, er, digital artwork. The takeaway? Art investing has hit the mainstream. But if you’re anything like us, putting your money in real, tangible art by blue-chip artists makes a lot more sense.

For one thing, contemporary art prices have outperformed the S&P by 152% from 1995–2020 according to data from Masterworks. They were the first platform to let you invest in paintings by the likes of Basquiat, Kaws, and Haring. But what about returns? They’ve got that too: they recently sold their first painting, a Banksy work, for a cool 32% annualized return to investors.

With results like that, it’s no wonder there’s over 25,000 people on the waitlist. Just use my special link, tell them we sent you, and you’ll be good to go.

THE RUNDOWN:

Australia’s Government Allocates $5.3M for Blockchain Pilot Projects: The government of Australia has allocated AU$6.9 million (US$5.3 million) to the Department of Industry, Science, Energy and Resources (DISER) to investigate the role blockchain technology could play in regulation. The money will be spent on two pilot projects intended to show how cost reductions in regulatory compliance are possible with the use of blockchain, ZDNet has reported. Read more.

Ripple Execs Ask Court to Block SEC Requests for Personal Financial Records: Two senior executives of Ripple have asked the court to quash requests for access to their personal financial records by the U.S. Securities and Exchange Commission. In a letter to the Southern District Court in New York on Thursday, Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen asked Judge Sarah Netburn to block subpoenas sent to multiple banks seeking eight years’-worth of their financial information. Read more.

Argo Blockchain Takes 25% Stake in $40M Crypto VC Fund: Crypto venture capital firm Pluto Digital Assets has raised a $40 million fund with U.K.-listed Argo Blockchain as its lead investor. In an announcement Wednesday, Pluto said it now has $50 million in assets under management after launching earlier this year. Argo Blockchain will be maintaining a 25% stake in the new fund with an investment of $10 million. Read more.

Start9 Labs to Build on Its Self-Sovereign, Private Internet Solutions With $1.2M in Funding: Start9 Labs recently closed a $1.2 million funding round spearheaded by Collider Ventures, Ten31 and Erik Voorhees, CEO of the decentralized exchange ShapeShift. The money will drive additional Embassy developments including additional apps for its decentralized app store, further open-source development by contributors and the “killer of all messaging apps.” Read more.

Binance Faces CFTC Probe Over US Customers Trading Derivatives: Cryptocurrency exchange Binance is being investigated by the Commodity Futures Trading Commission to determine if U.S. residents traded derivatives on it in violation of U.S. rules, Bloomberg reported. Binance hasn’t been accused of any wrongdoing and the CFTC may not bring an enforcement action, according to the report, which cited people familiar with the matter. Bloomberg also did not outline a time period for this alleged trading.Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Zach Herbert is founder and CEO of Foundation Devices, which is building open devices for a sovereign internet powered by Bitcoin.

In this conversation, Zach and I discuss:

* Hardware wallets

* Open source wallets

* Apple

* Google

* Decentralized internet

* Restricting innovation

* Future Foundation products

I really enjoyed this conversation with Zach. Hopefully you enjoy it too.

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!

* If you own crypto in a lot of places like me you know how difficult it can be to keep track of it all. Whether you keep your crypto on hardware wallets, mobile wallets, exchanges, liquidity pools, or somewhere else, CoinStats lets you track it all in one place on your iPhone, Android, Apple Watch, or computer. Try it for free or go to coinstats.app/pomp and get 40% off your premium subscription.

* OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. 

* 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 is working to make the internet operate how it was originally intended, which means anyone can publish anything from anywhere. You can go to unstoppabledomains.com and claim your censorship resistant domain 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.

* Use PrimeXBT - an award winning trading platform where users can trade Bitcoin and other top cryptocurrencies with leverage. They offer one of the best commissions structures in the industry as well as tight spreads on all Bitcoin trades. It also has some great features, including a copy trading module and more. Register with the link below and use promo code "Pomp" to get a 50% deposit bonus: http://u.primexbt.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

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 135,000 other investors today.

To investors,

The United States Senate narrowly voted in favor of the American Rescue Package over the weekend. The $1.9 trillion stimulus package is being presented as a savior for the citizens still suffering from the COVID-induced economic crisis, but the actual impact of the package is likely to be a net negative.

Before we get started, here is a quick overview of where the $1.9 trillion is reportedly going:

* Stimulus checks: Individuals making less than $75,000 and married couples making less than $150,000 will receive direct payments of $1,400 per person. The bill will also provide $1,400 per dependent.

* Unemployment benefit boost: The bill extends unemployment programs through early September, including the $300-per-week federal supplement provided in the last stimulus plan passed in December.

* Child tax credit: For 2021, the bill would temporarily expand the child tax credit, which is currently worth up to $2,000 per child younger than 17. Under the legislation, the tax credit would be as much as $3,600 for children up to age 5 and as much as $3,000 for children 6 to 17.

* Local government: It would provide $350 billion for states, local governments, territories and tribal governments, and it contains $130 billion for schools. It also includes funding for colleges and universities, transit agencies, housing aid, child care providers and food assistance.

* Small business: The bill contains funding to help businesses, including restaurants and live venues, and it includes a bailout for multi-employer pension plans that are financially troubled.

* Vaccine: The legislation includes $160 billion for vaccine and testing programs to help stop the virus’s spread and ultimately end the pandemic. The plan includes money to create a national vaccine distribution program that would offer free shots to all U.S. residents regardless of immigration status.

There is plenty more in the $1.9 trillion stimulus package but you get the idea. The new administration is being heralded as the savior of the low and middle class. It is being praised for sending minimal amounts of money to small businesses (less than $50 billion for restaurants, venues, and other small businesses). We, the American people, are even being told that the government has cut poverty!

No, seriously. The Washington Post published an article over the weekend titled “Biden stimulus showers money on Americans, sharply cutting poverty and favoring individuals over business.” How these journalists know that the stimulus package, which hasn’t even been implemented yet, has cut poverty is confusing to me. They must be able to see into the future.

Obviously, no one can see into the future. No one knows exactly the impact of this stimulus package. Some people claim it will help the people who need it most. Others believe it will lead to higher levels of inflation, which disproportionately hurt the lowest socioeconomic classes.

One thing we should all be able to agree on is that the Washington Post headline is pure propaganda. These journalists have become a mouthpiece for the state. Showering money on Americans. Sharply cutting poverty. It sounds like a third-world dictator wrote these headlines in an attempt to tell their citizens that everything is going to be alright.

The truth is that the new stimulus package drastically reduces the number of people who are eligible to receive stimulus checks. The cap used to be anyone who made up to $100,000 but that has been cut by 20% down to $80,000. The unemployment insurance boost was originally $600, but it got cut down to $300 in the extension at the end of 2020. The Biden administration proposed a $400 per week extension, but that was cut by 25% in the last few hours leading up to the Senate vote.

So if one hyperbolic headline includes showering money and cutting poverty, the other extreme could read “Biden Stimulus Withholds Money From Those In Need To Bail Out Failing Local Governments and States.” Wait, what? Think about this — the stimulus package includes $360 billion in relief for state, local, and territorial governments. That is almost 20% of the entire allocation of capital in this measure.

While $360 billion may sound small, the total cost of the stimulus checks would be $245 billion if we gave a $1,400 stimulus check to each of the 175 million who make less than $75,000 a year. Add in $300 unemployment insurance per week for the 10 million Americans who are out of work and you could fund the $3 billion of unemployment insurance for almost 10 months before you had given more money to the people, rather than to local and state governments.

So for those keeping track at home, the government gave more money to bail out poorly run local and state governments that shut down their economies than they gave the actual citizens that everyone is claiming they are helping. Sounds a lot like they are showering money on the government, rather than the people.

Now on the topic of cutting poverty, there is no denying that the personal savings rate and the income rate have exploded during the pandemic. In hindsight, we made everyone sit at home and then handed them money. There wasn’t much for them to do with that money other than save it.

But these statistics suggest that everyone is making more money and everyone is wealthier post-pandemic. This isn’t how we should interpret the data though. Take this excerpt from the New York Times in September 2020 that analyzed previous data:

American families shored up their savings substantially between 2016 and 2019, according to Federal Reserve data released on Monday, but wealth inequality remained stubbornly high — and that was before the coronavirus pandemic took hold.

Median net worth climbed by 18 percent in those three years, the Fed’s Survey of Consumer Finances showed, as median family income increased by 5 percent. The survey, which began in 1989, is released every three years and is the gold standard in data about the financial circumstances of households. It offers the most up-to-date and comprehensive snapshot of everything from savings to stock ownership across demographic groups.

The figures tell a story of improving personal finances fueled by income gains and rising home prices, the legacy of the longest U.S. economic expansion on record, one that had pushed the unemployment rate to a half-century low and bolstered wages for those earning the least. Yet many Americans had less in savings than they did before the last recession a decade ago and yawning gaps persisted — the share of wealth owned by the top 1 percent of households was still near a three-decade high.

Nearly all of the data in the 2019 survey were collected before the onset of the coronavirus. Economists worry that progress for disadvantaged workers has probably reversed in recent months as the pandemic-related shutdowns threw millions of people out of work. The crisis has especially cost minority and less-educated employees, who are more likely to work in high-interaction jobs at restaurants, hotels and entertainment venues. Inequality appears to be poised to widen as lower earners fare the worst.

Employment remains sharply depressed compared with before the pandemic, leaving many households in a more precarious position. Stock market indexes have rebounded, which should help to support household wealth, but the benefits will mostly accrue to the rich. Only about half of Americans hold stocks, the survey showed.

So even though personal income and personal savings rate increase, it doesn’t mean that the wealth inequality gap is closing. In fact, you could argue that the only indicator of whether the wealth gap is closing or widening is what percent of Americans hold investable assets.

What people forget is how bad the wealth inequality gap in America is. According to the St. Louis Fed, the bottom 50% of Americans own only 1% of the wealth, including 13.4 million families that have a negative net worth. It doesn’t matter how many stimulus checks you send to those 13 million families, it won’t pull them out of the dire situation that they currently are in. The checks help, but let’s not kid ourselves — they do not cut poverty.

So why exactly do I believe this stimulus package is a net negative for the bottom 50% of Americans? Simply, the benefit of a stimulus check and unemployment insurance is drastically outweighed by the negative impact of inflation, both in consumer goods and asset prices.

All the academics, millionaire bloggers, and wealthy hedge fund managers get real mad when you start to disprove their narrative that the government is cutting poverty and showering money on people. Here is a generalized view of the problem:

* Each socioeconomic class experiences different levels of inflation. The richest hold investable assets and are less likely to purchase consumer goods most affected by inflation. The lowest socioeconomic classes hold no investable assets and are more likely to purchase inflationary goods.

* The official inflation numbers are widely inaccurate. The official data says less than 1.5% inflation, but the Chapwood Index claims 7-12% depending on the city and Shadow Stats claims over 6% inflation as well.

* These large stimulus packages flood the system with liquidity, which drives asset prices much, much higher. (Zero interest rates help significantly here too).

* Those holding investable assets get wealthier and those not holding investable assets become poorer.

It is that simple. The purchasing power of the U.S. dollar is being eroded away based on historical trends, but these massive stimulus bills (which now total almost $6 trillion in a year) accelerate the problem. As I said, the second the Senate voted positively for this bill, the government is further enriching the wealthiest people in America, while simultaneously pushing the bottom 40% of Americans into a worse financial situation.

I don’t want to present problems without solutions. That feels unfair and intellectually dishonest. So how do we solve the problem?

First, we have to help small businesses, the unemployed, and those who are struggling financially due to the economic crisis. We don’t do that by creating new money to inject into the system, but rather by reallocating the government budget from bad investments to good investments. The U.S. government wastes an ungodly amount of money each year. From defense to pork, there are hundreds of billions of dollars that can be reallocated for those in need.

I know people will argue that those activities will be difficult and arduous. Of course, they are. But just because something is hard doesn’t mean we shouldn’t do it. Politicians have been working on this latest stimulus bill for months, which would have been plenty of time to figure out a reallocation strategy as well.

Next, we have to significantly overhaul the financial education in our country. The lack of financial education must be a national emergency. Just as we are racing to roll out vaccines, we must race to educate our citizens on the dollar’s depreciating purchasing power, the value in holding investable assets, and why saving majority of your wealth is a losing strategy. This education will arm citizens with the tools necessary to improve their financial position.

Lastly, we should ruthlessly prioritize what is most important. Are we more interested in bailing out governments or are we more interested in helping people? Do we want poorly-run companies like airlines to be bailed out or do we want to bail out individuals? Will we cheer on the violation of our freedoms with lockdowns or will we encourage entrepreneurs and business owners to do what they do best: problem-solve.

The current situation is disappointing. We have a government that destroyed our economy, forced the most vulnerable in our society into a worse financial position, and are now showing up with a bad solution. It is like setting a house on fire and then showing up pretending to be the firemen ready to put out the fire.

Printing more money will not solve this problem. It will actually exacerbate it. The mainstream media won’t call it out because they have become mouthpieces for the state. The Wall Street hedge fund managers won’t call it out because they get rich off this nonsense. Instead, the responsibility falls on the independent thinkers.

There are no contrarians left on Wall Street. There are no contrarians left in finance. They’re all sheep. They take the information that is force-fed to them by the propaganda machine and repeat it religiously. Showering money. Cutting poverty. No inflation. Government good. Bitcoin bad.

It is almost comical. My promise to you, the reader, is that I will always say the uncomfortable truth. I have significantly invested in bitcoin, which I believe will be the big winner in all this, which means that I will profit greatly off what is transpiring in the stimulus package. That doesn’t mean that I think the government is doing the right thing, nor does it mean that I think it will actually help the people who need it most.

However, it does mean that I recognize what is happening, what the consequences will be, and have positioned myself financially to not only be protected from the madness, but also to benefit from it. Each of you has the power to educate yourself and do what you think is best. Don’t wait around for anyone to save you. They’re not coming. You must do your own research. Think for yourself. And ensure that you aren’t exclusively exposed to any one way of thinking. Diversify your inputs to diversify your conclusions.

Hope everyone is having a great start to their week. Talk to you tomorrow.

-Pomp

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 135,000 other investors today.

THE RUNDOWN:

Norway-Listed Aker to Put 100% Bitcoin in Treasury Reserves of New Investment Unit: Oslo stock exchange-listed Aker ASA has set up a new company dedicated to investing in bitcoin projects and companies. In an announcement Monday, the holding company focused on energy, construction and fishing said its new entity, Seetee AS, will keep all its liquid investable assets in bitcoin and will also enter the bitcoin mining industry. Read more.

JPMorgan Sends Its Private Clients a Primer on Crypto: JPMorgan has sent a report to its private banking clients to educate them on the risks and opportunities of investing in crypto. The report, which was produced in February 2021 and obtained by CoinDesk Friday, has been distributed to clients of JPMorgan Private Bank, which requires a minimum balance of $10 million to open an account. Read more.

19 Inspiring Quotes From Female Titans Who Dominate Their Industry: In honor of International Women’s Day today, Polina compiled 19 quotes by the female titans who have propelled our society forward. Check it out here. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Beeple is one of the world’s greatest digital artists. He started as a graphic designer and animator, but has seen his digital art NFT grow to become worth millions of dollars per piece.

In this conversation, Beeple and I discuss:

* Digital art

* Creator tools

* NFTs

* Alternative asset classes

* The concept of everydays

* Physical tokens

* His ideation process

* The recent Christie’s auction

I really enjoyed this conversation with Beeple. Hopefully you enjoy it too.

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!

* If you own crypto in a lot of places like me you know how difficult it can be to keep track of it all. Whether you keep your crypto on hardware wallets, mobile wallets, exchanges, liquidity pools, or somewhere else, CoinStats lets you track it all in one place on your iPhone, Android, Apple Watch, or computer. Try it for free or go to coinstats.app/pomp and get 40% off your premium subscription.

* OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. 

* 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 is working to make the internet operate how it was originally intended, which means anyone can publish anything from anywhere. You can go to unstoppabledomains.com and claim your censorship resistant domain 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.

* Use PrimeXBT - an award winning trading platform where users can trade Bitcoin and other top cryptocurrencies with leverage. They offer one of the best commissions structures in the industry as well as tight spreads on all Bitcoin trades. It also has some great features, including a copy trading module and more. Register with the link below and use promo code "Pomp" to get a 50% deposit bonus: http://u.primexbt.com/pomp

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

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

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

To investors,

Bitcoin has unique properties that continue to prove valuable in the market. This value leads to increases in demand, which drive the US dollar price higher. As the price goes higher, previous bitcoin bears are forced to re-evaluate their prior analysis.

Some of the bears continue to conclude that bitcoin is over-hyped at best and worthless at worst. It is unclear if they reach the same conclusion because they truly believe their analysis or if it is the product of a lack of intellectual rigor. Either way, plenty of prior bears are still bearish today.

There are a few people, and I mean a select few, who have been previously skeptical of bitcoin publicly and are now changing their mind. The latest person to do this is Jeffrey Gundlach, the founder of DoubleLine Capital. For those of you who don’t know Gundlach, he is known as the bond king and has been a gold bug for years.

The revelation came from one of his tweets yesterday:

The idea of Bitcoin: The Stimulus Asset has a nice ring to it. But what is more interesting to me is that Gundlach’s analysis is not a statement on bitcoin exclusively, but rather a three pronged analysis of the US dollar, gold, and bitcoin. This is exactly how someone should think of these assets — each can serve as a store of value in different environments or time periods.

Over the last 12 months though, holding bitcoin was a better decision over dollars or gold. In fact, it is becoming increasingly clear that gold is seeing outflows at the same time that bitcoin is seeing inflows. Bloomberg’s Lynn Thomasson explained it well by saying “Gundlach’s comments are another sign the investment case for Bitcoin is winning over institutional money managers and possibly siphoning cash from the gold market. Historically, traders have turned to the precious metal as a way to play rising inflation expectations. But over the past year, it has been range-bound and gold exchange-traded funds have seen outflows.”

While the chart is clear that gold is losing and Bitcoin is winning, that doesn’t necessarily guarantee causality. It is hard to argue against the data and results though.

Investors have a short memory unfortunately. If they did not, you would remember people were yelling and screaming about Bitcoin’s correlation to traditional assets during the start of the economic crisis in March of 2020. As I wrote at the time, we were not seeing sustainable correlation, but rather a liquidity crisis where all assets would sell off together.

As predicted, assets eventually were bailed out by government and central bank intervention. We saw an aggressive recovery and eventual decoupling of correlations that trended back to the historical non-correlation for bitcoin.

The question that I keep asking myself is “how long will gold bugs hang on to their gold while they watch the digital store of value gain market adoption?” The short answer is that no one actually knows. Some people are likely to bail in the short term because of the US dollar price of bitcoin. Some people will take time to critically think about their world view and then change their mind. And a few people are more focused on being “proven right” than actually “being right.”

Ultimately, everyone capitulates though. Bitcoin is the hardest, soundest money the world has ever seen. That may sound like a bombastic claim, but it is proving to be more accurate with each passing day. Remember, changing your mind when you receive new information is a sign of intelligence. We should encourage people to do it.

The real sign of stupidity is watching the market, and related data, tell a story that is impossible to ignore, yet you sit idly by submerged in your ignorance. Gold has done a fantastic job for thousands of years. We live in a digital world now and the old solution just doesn’t cut it anymore. You don’t send all of your communications via physical letters anymore. You’re intelligent enough to use email, text message, and phone calls.

Holding on to your gold is the equivalent of physical letters. Does it get the job done? Yes, in the most basic sense, but it is drastically inferior to the digital application of communication. This is what the world is waking up to and realizing at almost the same time. The world’s richest entrepreneurs and investors. The largest financial institutions. They all see the writing on the wall and they’re trying to figure out how they want to participate.

It is a beautiful thing to watch. Bitcoin doesn’t care though. It continues to produce block after block after block of transactions. Enough to process nearly $15 billion of on-chain transaction volume in the last 24 hours. That puts it on a path to $5+ trillion annualized transaction volume, which is approximately 50% of Visa and MasterCard.

Just as everyone eventually capitulates, bitcoin will eventually eclipse these monolithic payment networks. It is just a matter of time. Have a great day. I’ll talk to everyone tomorrow.

BONUS: If you want a job in the bitcoin and crypto industry, there are thousands of open roles at http://www.pompcryptojobs.com

-Pomp

SPONSORED: Even with 50% of my net worth in bitcoin...I know that portfolio diversification is important. And if you’re looking to invest outside of crypto then you should check out blue-chip art. Like bitcoin, there is a fixed supply of paintings that decreases every year as works get donated to museums and foundations (+ the Fed can’t print Picassos...). According to Citi, contemporary art returned 13.6% per year over the last 25 years - that’s 52% better than the S&P 500!

The 1% have dominated the art market for years. Because blue-chip paintings cost millions of dollars, there hasn’t been a way for regular investors to get into this exclusive asset class. Thanks to Masterworks, everyone can invest in blue-chip art from artists like Basquiat and KAWS at a fraction of the price. 

So if you’re sitting on some parabolic gains, it doesn't hurt to shave off a few Satoshis and diversify into one of the oldest and safest asset classes in the world. The best part? Pomp Letter subscribers can skip their 14,750 person waitlist today.* 

*See important info

THE RUNDOWN:

First Bitcoin ETF in North America Is Launching in Canada: The first exchange-traded fund tracking Bitcoin in North America begins trading in Toronto on Thursday, in a potential milestone moment for both the cryptocurrency and ETF industries. The Purpose Bitcoin ETF provides exposure to the world’s largest cryptocurrency by investing directly in “physical/digital Bitcoin,” issuer Purpose Investments Inc. said in a statement. The fund will be available both in Canadian dollar and U.S. dollar units. Read more.

Jeffrey Gundlach Says Bitcoin May Be a Better Bet Than Gold: DoubleLine Capital LP chief and long-time gold bull Jeffrey Gundlach has changed his mind on the metal and considers Bitcoin a better trade. Gundlach tweeted he’d been a long-term gold bull and U.S. dollar bear, but has turned neutral on both. Bitcoin may well be “the stimulus asset,” he said, a reference to the cryptocurrency’s rally amid a wave of cash pumped into the financial system during the pandemic. Read more.

Tesla Tapped Coinbase for $1.5B Bitcoin Buy: Coinbase’s institutional trading wing handled electric car-maker Tesla’s $1.5 billion bitcoin investment earlier this month, according to The Block. The report illustrates Coinbase’s growing role as corporate America marches deeper into crypto. Coinbase handled MicroStrategy’s early allocations; The Block reported it has five Fortune 500 firms as clients. Read more.

Coinbase, Readying for Public Listing, Gets $77B Valuation From Nasdaq Private Market: Cryptocurrency exchange Coinbase, which is preparing to trade publicly in the next few months, is being valued at $77 billion, based on trading of the company’s privately held shares on a secondary market. Those shares in the largest crypto exchange in the U.S. are changing hands on the Nasdaq Private Market at $303 a piece, according to two people with knowledge of the auction. That implies a total company value of about $77 billion – greater than Intercontinental Exchange Inc., the owner of the New York Stock Exchange. Read more.

US Lawmakers Looking Into China’s Role in GameStop Pump: U.S. lawmakers are set to question a trader named Keith Gill and the chief executives of Reddit and Robinhood about their roles in the GameStop frenzy at a congressional hearing later this week. But some have another concern: whether China is involved. Several Republican lawmakers on the House Financial Services Committee plan to examine Reddit’s ties to Chinese tech conglomerate Tencent and Robinhood rival Moomoo, according to a Politico report. Moomoo is a wholly owned subsidiary of Futu Holdings, which is also backed by Tencent. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

James Peyer, PhD is the Founder and CEO of Cambrian Biopharma, a Distributed Drug Discovery Company developing therapeutics targeting the biology of aging. Cambrian builds, finances, and manages a pipeline of therapeutics.

In this conversation, James and I discuss:

* Nine hallmarks of aging

* Molecular damage

* How to add healthy years to your life

* Prevention vs reversal of diseases

* Distributed drug companies

I really enjoyed this conversation with James. Hopefully you enjoy it too.

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!

* If you own crypto in a lot of places like me you know how difficult it can be to keep track of it all. Whether you keep your crypto on hardware wallets, mobile wallets, exchanges, liquidity pools, or somewhere else, CoinStats lets you track it all in one place on your iPhone, Android, Apple Watch, or computer. Try it for free or go to coinstats.app/pomp and get 40% off your premium subscription.

* OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. 

* Want to sell your wonderful internet business? Tiny partners with founders to give them quick, straightforward exits that protect their team and culture. We’ll make an offer within a week, close the deal within a month, and keep your business operating for the long term. Get in touch at tinycapital.com, and we’ll let you know within a couple of days.

* 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 is working to make the internet operate how it was originally intended, which means anyone can publish anything from anywhere. You can go to unstoppabledomains.com and claim your censorship resistant domain 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.

* Diginex is the first company with a cryptocurrency exchange to be listed in the US. Their ticker is Nasdaq: EQOS, and they are the first crypto company that you can buy stock in. They also have a crypto exchange called EQUOS, which has been built to institutional standards, but is available to everyone. You can trade Bitcoin and Ethereum spot, as well as Bitcoin perpetuals, and get a 5% discount on all fees, by signing up using http://www.equos.com/pomp

* Money On Chain brings Bitcoin to mass adoption with solutions to meet the needs of different types of users: a fully bitcoin-collateralized stablecoin (DoC), a bitcoin on steroids (BPro), and a dizzying bitcoiner option for lovers of leveraged trading (BTCx). All this, without requiring the delivery of private keys. Money On Chain - Bringing bitcoin into the mainstream.  Visit moneyonchain.com/pomp to learn more.

* Use PrimeXBT - an award winning trading platform where users can trade Bitcoin and other top cryptocurrencies with leverage. They offer one of the best commissions structures in the industry as well as tight spreads on all Bitcoin trades. It also has some great features, including a copy trading module and more. Register with the link below and use promo code "Pomp" to get a 50% deposit bonus: http://u.primexbt.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

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 120,000 other investors today.

To investors,

The world now knows what many of us have known for awhile — the game has changed. That is my takeaway from what has transpired around Wall Street Bets and Game Stop. This isn’t something that took hold overnight, but rather the culmination of a number of trends that have been evolving and accelerating for a decade.

First, let’s start with the psychology. There is a deep disdain in western society for the hedge funds and banks who constantly profit at the expense of the little guy. Whether it is the 2008 housing crisis, naked short selling, or hedge funds front running trades, the average citizen feels like they are constantly at a disadvantage. Many times they are hurt and don’t even realize they were participating in the game.

Read this Reddit post that was surfaced by Alexis Ohanian:

This feeling of pain manifested itself in 2008 with the Occupy Wall Street movement in Zuccotti Park. The people may have dispersed from the park since then, but that feeling of being screwed by Wall Street never disappeared.

The feeling has actually been exasperated by the Federal Reserve and our elected officials. They continue to intervene in markets and conduct market manipulation via quantitative easing. The dollar is being devalued at an incredible rate, but nobody seems to care about that. This punishes the 45% of Americans who own no investable assets. They feel like they can’t get ahead. They feel like everything is getting more expensive, but they’re not making more money.

Well, they’re right. That is exactly what is happening. People have been screwed from a system structure that is built to reward investors and punish savers. All this market manipulation and intervention inflates asset prices and devalues savings.

So you have millions of people who are psychologically scarred from the past combined with a continued feeling of being left behind. But the internet steps in and creates a lifeline — the access to information, communication tools, and financial markets has suddenly increased significantly in the last decade. You don’t need a Bloomberg terminal and a legacy brokerage account to play the game.

You don’t have to go to Harvard or Wharton to be invited to the hedge fund idea dinners. You don’t need to wear a suit and tie for someone to listen to what you have to say. Instead, you can live anywhere in the world and research and learn on the internet. You can freely communicate with like-minded folks. And the barrier to accessing financial markets has dropped to nearly zero.

When you arm the every day person with information, communication tools, and access to markets, you create a scenario where the crowd can face-off against these institutions that have played a rigged game for so long. Except there is one problem — the second that the tide starts to turn, the game is being shut off.

Quite literally, the hedge funds and financial institutions are crying because they’re losing money. What a joke. They presented themselves as genius stewards of capital, but are currently being exposed by random people on the internet that go by user names “DeepFuckingValue” and “Roaring Kitty.” You absolutely love to see it.

This morning it got even worse. Not only is the legacy financial world up in arms about all this, but Robinhood disabled the ability for most of their users to trade the very stocks that everyone is piling into. Discord kicked Wall Street Bets off their platform last night. Excuse my language, but what the f**k is going on???

As I always say, the pirate either dies or lives long enough to become the establishment. The very companies that prided themselves on being anti-establishment are falling right in line the second that they actually have to prove their courage and conviction. They’re not on retail investors side. They’re on whatever side protects their business. That is their right and we have to respect it. But we don’t have to like it and we don’t have to continue to give them our business.

So where do we go from here?

This is the best marketing campaign for the future digital, decentralized financial system. Bitcoin is throwing the middle finger to central banks. Decentralized exchanges are telling centralized peers to kick rocks. Digital assets that trade 24/7/365 without manipulation or intervention is where we are all heading. Whether you’re rich/poor, American/Chinese, smart/dumb, or informed/uninformed, you will be allowed to participate in the markets.

We aren’t going to be using wealth as a proxy for intelligence anymore. We are going to have free markets where people wager capital on future outcomes of asset prices. If you’re right, you win. If you’re wrong, you lose. That is it. Forget all this market manipulation and intervention. The legacy institutions won’t like it but they don’t have a say in the new world. Welcome to your decentralized future.

There is still a lot of work that needs to be done to realize this vision, but we are well on the way. Robinhood can halt trading of various stocks. Markets can trigger circuit breakers. But no one can shut down Bitcoin. No one can stop decentralized exchanges. It isn’t about hoping that people and companies do the right thing anymore. It is about building technology that can’t do anything but the right thing. The right thing 100% of the time.

Free markets have been a thing of yesteryear for awhile in the United States. The little guy didn’t have a way to fight back. As they have gained access to information, communication tools, and investing, the deck gets more and more stacked against them. That won’t last long though. The new decentralized world is going to be a hell of a sight to see.

Sit back and enjoy today. The internet is doing its thing. And there ain’t anything better than that. Talk to everyone tomorrow.

-Pomp

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 120,000 other investors today.

THE RUNDOWN:

Silver Lake Co-Founder Tells Davos Cash Is Used Far More in Crime Than Bitcoin: Glenn Hutchins, co-founder of global technology investment firm Silver Lake, countered the widely held view that bitcoin is mostly used for illicit activity when speaking at the World Economic Forum summit in Davos, Switzerland. Hutchins said the belief ignores the immutable nature of the blockchain technology underlying bitcoin, reported Finextra on Tuesday. Read more.

Miami Uploads Bitcoin White Paper to Municipal Website: The city of Miami on Wednesday uploaded a copy of the Bitcoin white paper to its municipal website, joining a growing chorus of governments and companies now hosting bitcoin’s original blueprint. Mayor Francis Suarez emphasized his commitment to "turn Miami into a hub for crypto innovation" in his tweet announcing the upload. He's been pumping the U.S. city's potential as a landing ground for California tech expats for weeks on social media. Read more.

Fed Chair Powell: ‘We’d Welcome Higher Inflation:’ U.S. Federal Reserve officials voted Wednesday to keep monetary conditions at historically loose levels while waiting for the economy to heal. Chairman Jerome Powell said he doesn’t want to put a timeline on tapering the U.S. central bank’s $120 billion-a-month in asset purchases. Read more.

Mark Cuban on Bitcoin, NFTs and What Comes Next: ‘The Upside Is Truly Unlimited:’ Mark Cuban is best known as the billionaire owner of the Dallas Mavericks, a staple on Shark Tank, and – in some circles – an occasional commentator on bitcoin. “Watching the cryptos trade, it’s EXACTLY like the internet stock bubble. EXACTLY,” Cuban tweeted in January, on the heels of BTC’s jump above $40k. Many saw the thread as bearish on bitcoin, or even bitcoin-hostile. Read more.

American Cancer Society Launches $1M Cryptocurrency Fund: The American Cancer Society (ACS) has launched a cryptocurrency fund to support cancer research. The non-profit organization announced Tuesday it has partnered with cryptocurrency donations platform The Giving Block to launch the fund, setting a fundraising target of $1 million by early 2021. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Rahul Rana is an Associate at Lux Capital and the Author of “Making Moonshots."

In this conversation, Rahul and I discuss:

* What a moonshot is

* Why they are important

* How the best entrepreneurs go after moonshots

* Why iterative progress in science and technology is not enough

I really enjoyed this conversation with Rahul. Hopefully you enjoy it too.

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!

* If you own crypto in a lot of places like me you know how difficult it can be to keep track of it all. Whether you keep your crypto on hardware wallets, mobile wallets, exchanges, liquidity pools, or somewhere else, CoinStats lets you track it all in one place on your iPhone, Android, Apple Watch, or computer. Try it for free or go to coinstats.app/pomp and get 40% off your premium subscription.

* OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. 

* Want to sell your wonderful internet business? Tiny partners with founders to give them quick, straightforward exits that protect their team and culture. We’ll make an offer within a week, close the deal within a month, and keep your business operating for the long term. Get in touch at tinycapital.com, and we’ll let you know within a couple of days.

* 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 is working to make the internet operate how it was originally intended, which means anyone can publish anything from anywhere. You can go to unstoppabledomains.com and claim your censorship resistant domain 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.

* Diginex is the first company with a cryptocurrency exchange to be listed in the US. Their ticker is Nasdaq: EQOS, and they are the first crypto company that you can buy stock in. They also have a crypto exchange called EQUOS, which has been built to institutional standards, but is available to everyone. You can trade Bitcoin and Ethereum spot, as well as Bitcoin perpetuals, and get a 5% discount on all fees, by signing up using http://www.equos.com/pomp

* Money On Chain brings Bitcoin to mass adoption with solutions to meet the needs of different types of users: a fully bitcoin-collateralized stablecoin (DoC), a bitcoin on steroids (BPro), and a dizzying bitcoiner option for lovers of leveraged trading (BTCx). All this, without requiring the delivery of private keys. Money On Chain - Bringing bitcoin into the mainstream.  Visit moneyonchain.com/pomp to learn more.

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,

One of the biggest misconceptions I hear repeated about Bitcoin is regarding the energy consumption needed to run the decentralized computing network. The theory goes like this — Bitcoin consumes a lot of energy, so Bitcoin is bad for the environment.

In reality, this couldn’t be further from the truth. Bitcoin is actually one of the greatest financial incentives to transition the world to clean energy. There are two components to this analysis:

* Bitcoin miners are seeking out clean energy as their core power source

* Bitcoin miners are helping to divert the environmental impact of non-clean energy

Let’s start with the first component. Bitcoin miners have a very simple business model. They consume power, run a specialized computer, and earn Bitcoin in exchange for running the computer/software. This is obviously generalized, but you get the point.

The mining business model has two variables — the cost of power that the miner consumes and the price of the Bitcoin that is earned. The miner can not control the price of the Bitcoin that is earned, so they must solely focus on reducing the cost of the power they consume in order to become more profitable. Due to this constraint, Bitcoin miners are financially incentivized to find the cheapest power available to them.

James Ellsmoor wrote in Forbes in 2019 that “according to a new report by the International Renewable Energy Agency (IRENA), unsubsidized renewable energy is now most frequently the cheapest source of energy generation.” So now that unsubsidized renewable energy is the cheapest form of electricity to consume, Bitcoin miners have been racing to set up operations that can benefit from this cost arbitrage.

Remember, the miner doesn’t care where the power comes from. They simply want the cheapest power available. So what was I talking about when I said the second component was that Bitcoin miners are helping to divert the environmental impact of non-clean energy?

Methane.

The International Energy Agency is reporting that methane emissions are down 10% for last year, but Fatih Birol had a great summary of why this is not as encouraging as it seems:

The reason why everyone is focused on methane is because it is really nasty stuff. Birol goes on to explain:

He finishes his analysis by saying that responsible operators should address these methane emissions immediately.

The good news? Bitcoin mining companies like Great American Mining are stepping in with a win-win solution for these responsible operators. According to their website, “Great American Mining monetizes wasted, stranded and undervalued gas throughout the oil and gas industry by using it as a power generation source for bitcoin mining. We bring the market and our expertise to the molecule. Our solutions make producers more efficient and profitable while helping to reduce flaring and venting throughout the oil and gas value chain.”

Want to see what that looks like in practice? Behold this beauty.

Great American Mining, and many other companies around the world, are racing to help the greatest methane emitters to capture the negative side effects of their work and turn it into the soundest money the world has ever seen.

Bitcoin isn’t bad for the environment. In fact, Bitcoin is very, very good for the environment. The University of Cambridge reported at over 75% of miners use renewable energy and now there are solutions to turn methane emissions into mining as well.

It is important to think for yourself during a paradigm shift. Many people from the legacy world will constantly share information that is built on outdated mental frameworks. They can’t fathom the future. Always do your own research. Question everything, including what is written in this letter each morning. You are responsible for educating yourself and forming your own opinion.

I’ve done the work on Bitcoin mining and the energy sources used. My conclusion has me more excited about the future of the Bitcoin network. More miners. More hash rate. More decentralization. And ultimately, more value.

Have a great start to your week. I’ll talk to everyone tomorrow.

-Pomp

THE RUNDOWN:

Goldman Sachs to Enter Crypto Market ‘Soon’ With Custody Play: U.S. banking powerhouse Goldman Sachs has issued a request for information to explore digital asset custody, according to a source inside the bank. When asked about timing, the Goldman source said the bank’s custody plans would be “evident soon.” Goldman’s digital asset custody RFI was circulated to at least one well-known crypto custody player toward the end of 2020. Read more.

CoinLab Cuts Deal With Mt. Gox Trustee Over Bitcoin Claims: Creditors seeking to regain Bitcoin lost on the Japanese exchange Mt. Gox in 2014 have a chance to get their digital assets back before legal claims are settled. CoinLab Inc. said an agreement with Nobuaki Kobayashi, the trustee to the Mt. Gox bankruptcy, and MGIFLP, a unit of Fortress Investment Group LLC, will allow creditors to consider an offer of as much as 90% of the remaining Bitcoin tied up in the bankruptcy. Read more.

Bitcoin Worth $1.2M Seized From India Hacker: Indian police have seized bitcoin worth around 90 million rupees ($1.2 million) from a Bengaluru, Karnataka-based hacker who managed to breach governmental and other websites. Bengaluru Joint Commissioner of Police Sandeep Patil confirmed the bitcoin was seized from a hacker with the surname Srikrishna who used the alias "Shreeki," according to India Today. Read more.

How Miami Mayor Francis Suarez Is Luring Tech Players From Silicon Valley and New York: Miami Mayor Francis Suarez has been working on fomenting a tech boom in Miami for more than a decade, reasoning that it could bring higher-paying jobs for Miami residents, while also positioning the city at the forefront of innovation and the tech industry for years to come. Here’s his playbook. Read more.

Russian Opposition Leader Alexei Navalny Detained at Moscow Airport: Russian opposition leader Alexei Navalny was detained at a Moscow airport after returning from Germany on Sunday, the prison service said. The prison service said he was detained for multiple violations of parole and terms of a suspended prison sentence and would be held in custody until a court makes a decision in his case. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Isaiah Jackson is the author of the best selling book “Bitcoin and Black America.” He is one of the most underrated people in the Bitcoin ecosystem and is constantly educating one of the most important communities for mainstream adoption.

In this conversation, Isaiah and I discuss:

* Bitcoin

* The plight of black Americans in the legacy financial system

* Why decentralization and pseudonymity are advantageous

* Why Isaiah is writing a second book

I really enjoyed this conversation with Isaiah. Hopefully you enjoy it too.

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!

* If you own crypto in a lot of places like me you know how difficult it can be to keep track of it all. Whether you keep your crypto on hardware wallets, mobile wallets, exchanges, liquidity pools, or somewhere else, CoinStats lets you track it all in one place on your iPhone, Android, Apple Watch, or computer. Try it for free or go to coinstats.app/pomp and get 40% off your premium subscription.

* OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. 

* Want to sell your wonderful internet business? Tiny partners with founders to give them quick, straightforward exits that protect their team and culture. We’ll make an offer within a week, close the deal within a month, and keep your business operating for the long term. Get in touch at tinycapital.com, and we’ll let you know within a couple of days.

* 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 is working to make the internet operate how it was originally intended, which means anyone can publish anything from anywhere. You can go to unstoppabledomains.com and claim your censorship resistant domain 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.

* Diginex is the first company with a cryptocurrency exchange to be listed in the US. Their ticker is Nasdaq: EQOS, and they are the first crypto company that you can buy stock in. They also have a crypto exchange called EQUOS, which has been built to institutional standards, but is available to everyone. You can trade Bitcoin and Ethereum spot, as well as Bitcoin perpetuals, and get a 5% discount on all fees, by signing up using http://www.equos.com/pomp

* Money On Chain brings Bitcoin to mass adoption with solutions to meet the needs of different types of users: a fully bitcoin-collateralized stablecoin (DoC), a bitcoin on steroids (BPro), and a dizzying bitcoiner option for lovers of leveraged trading (BTCx). All this, without requiring the delivery of private keys. Money On Chain - Bringing bitcoin into the mainstream.  Visit moneyonchain.com/pomp to learn more.

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

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

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

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 110,000 other investors today.

To investors,

This weekend it became apparent that centralization is now a significant business risk. We saw specific social media posts taken down, social media accounts banned from multiple platforms, apps removed from the App Store, cloud computing services refuse service to companies, and websites removed from the internet. If I was a conspiracy theorists, I would have a strong argument for an Orwellian view of the world. 

Fortunately, I don’t want to waste our time together this morning talking about what happened in the last 3-4 days. You can read that on news websites. I am more interested in thinking through where we go from here. The answer I continue to come back to is quite simple — the world is about to be disrupted by decentralized services.

We will see decentralized websites, decentralized mobile apps, decentralized social networks, and much more. The risk of a centralized organization imposing their will, regardless of the validity of that decision, has become too great to ignore now. It was previously believed that decentralization was only a fascination of those who were paranoid, but now we are seeing that it is becoming a business imperative at a breakneck speed.

This transition won’t happen overnight. It also won’t only be about decentralization. We are likely to see a significant rise in privacy technologies, along with decentralization. These renewed focuses will leverage technology to equalize power on the internet. The days of large centralized companies overseeing their dictatorships without fear of being held accountable are over. The people can’t change the status quo, but they can vote with their feet and start using new technology stacks.

These new decentralized, privacy-centric tech stacks will take time to build. It isn’t about building a new front end. We literally have to rebuild everything at this point. You can’t simply rely on Amazon’s AWS. You have to leverage Amazon, Google, Microsoft, and self-hosting in combination with each other to drastically improve the resiliency of what you’re building. You have to allow for the natural adoption of these new technologies and products, so that they can reach true decentralization.

Any shortcuts that someone takes will jeopardize the very decentralization and privacy that is going to be sought now. Developers and entrepreneurs will have to do the work. Investors will have to fund the work. And users will have to adopt the work. 

This mission is too big for any one person. A global shift is underway and it is likely to impact every company, every industry, and every product. Why are people going to use communication products where companies spy on their every word if there is a product that has feature parity, dense network effect, and also happens to be privacy-centric? (Hello, Signal!)

The age of decentralization is here. The age of privacy is here. As I tweeted yesterday:

Those in power don’t realize the significant miscalculation that they just made. I have already had an influx of founders and developers pitching me on the decentralized products they want to build. Most aren’t going to be successful, but a select few have a chance. 

Technologists are fed up with the wide ranging use of power being exhibited here. We live in a world where everyone is trying to one up each other with shock and awe. I’ll see your “fascism” and raise you with a “domestic terrorism!” I’ll see your “insurrection” and raise you with a “private companies can do whatever they want!”

That is the thing — private companies can do whatever they want. And they are reminding us of that. But in doing so, they are also reminding millions of people that there can be a better world. A world where no single person or organization gets to dictate what information we receive. No single person or organization gets to choose who gets amplified and who gets silenced. The power of choice was striped from the user and is now being monopolized by the platform creators.

This is not the promise of the internet. The upstarts have thrived enough to now have successfully become “the man.” But as the saying goes, “you either die a hero or live long enough to become the villain.” That is what is happening right now. The beloved tech giants are becoming villains. 

This will lead to a rise in new challengers. This is the circle of life in technology. If you can’t influence the status quo, just disrupt it. And I think that is exactly what we need at this point. We can leverage technology to take the power back from these monopolies and allow the user to choose who and what to consume. 

Bitcoin has obviously been a decade ahead of this trend. It is decentralized. It is privacy focused. And it allows the user to be in full control without the constant babysitting, and potential censorship, of a centralized overlord. Simply, Bitcoin is so beautifully designed that we have all been underestimating it. 

If you’re working on something related to decentralization, privacy technology, or Bitcoin, I would love to talk to you. These are three of my biggest investment focuses for 2021. We will look back over the next few years and see the past few days as a turning point. Technologists are springing into action. I can’t wait to see what they build. 

-Pomp

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THE RUNDOWN:

Grayscale Holds Over 3% of Bitcoin, Sees Pension Interest: Grayscale Investments LLC’s new chief executive officer says the world’s largest manager of digital assets expects increased interest from institutional investors such as pension funds and endowments to continue to fuel its rapid growth. The Grayscale Bitcoin Trust has become a bellwether for digital asset investors after accumulating more than 3% of the total supply of the largest cryptocurrency. Read more.

Morgan Stanley Boosts Stake in Bitcoin-Laden MicroStrategy to 10.9%: Morgan Stanley now owns 792,627 shares of MicroStrategy, bringing its total ownership in the company best known for holding over $2 billion in bitcoin to 10.9%, according to a filing made with the U.S. Securities and Exchange Commission. Read more.

White-Knuckle Bitcoin Rally Powers Crypto’s Best Week Since 2017: Cryptocurrencies are on course for their biggest weekly surge since the last bubble in Bitcoin peaked about three years ago, ahead of a spectacular crash. The Bloomberg Galaxy Crypto Index, which includes Bitcoin, Ether and three other digital coins, has rallied about 43% this week, the most since December 2017. Bitcoin jumped to another record on Friday, with prices approaching $42,000. Read more.

Dan Larimer Announces Departure From EOS Builder Block.One: Serial blockchain entrepreneur Dan Larimer has left Block.one, the company that raised $4 billion to build the software behind the EOS blockchain. Larimer, who co-founded the company and had served as its chief technical officer since April 2017, announced the move on Block.one social network Voice.com on Sunday. Read more.

Apple Suspends Parler From App Store, Amazon Kicks It Off Web Hosting Service: Apple has suspended Parler, a conservative social media service, from its App Store, saying the app’s owner hasn’t done enough to deal with threats of violence on the platform. Meanwhile, Amazon dealt the service a potential death blow by kicking it off its web hosting service, citing the same reason, BuzzFeed News reported. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Cliff Hudson is a business executive best known for serving as chairman of the board and chief executive officer of Oklahoma City-based Sonic Corp. He also served as a trustee of the Ford Foundation and is a past chairman of the board of the National Trust for Historic Preservation.

In this conversation, Cliff and I discuss:

* Scaling businesses

* Building a brand

* Intellectual curiosity

* The value of being a master of none

* Why flexibility and adaptation is so important

I really enjoyed this conversation with Cliff. Hopefully you enjoy it too.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

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* Want to sell your wonderful internet business? Tiny partners with founders to give them quick, straightforward exits that protect their team and culture. We’ll make an offer within a week, close the deal within a month, and keep your business operating for the long term. Get in touch at tinycapital.com, and we’ll let you know within a couple of days.

* 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 is working to make the internet operate how it was originally intended, which means anyone can publish anything from anywhere. You can go to unstoppabledomains.com and claim your censorship resistant domain 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.

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

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

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

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 100,000 other investors today.

To investors,

I have been talking to a lot of friends about inflation lately. The great debate in finance and investing is whether we will see high levels of inflation after the trillions of dollars in quantitative easing over the last 12 months or so.

Those who believe we won’t see inflation have relied on two separate, yet related, arguments. First, they will point to the official Consumer Price Index (CPI) inflation numbers.

As you can see in this chart from the US Bureau of Labor Statistics, CPI has been relatively rangebound between 2.5% and 0% since 2008-2009. The belief is that despite the monetary interventionism conducted by the Federal Reserve and our elected officials, inflation has not been prevalent in the daily lives of Americans over the last decade.

You can extrapolate this historical argument to then say that there will be low levels of inflation moving forward, regardless of what the Fed does. This leads to the second argument.

The second argument is that the world is moving towards a more technology-enabled world, which should create a deflationary tailwind. Technology forces the cost of labor down. Technology forces the cost of production down. And technology could potentially create a constantly decreasing impact of inflation in the eyes of those who support this argument.

So according to these folks, whether the Fed chooses to print trillions or they choose to sit on their hands, inflation will remain relatively low. It isn’t a big worry. While I acknowledge there are some important points to each argument, I disagree with the conclusion.

We can start with how inflation impacts a population — there is no single inflation number for the various socioeconomic groups. For example, the top 20% of the socioeconomic ladder experience lower levels of inflation than the bottom 20% of a population. Some of that is due to the percent of investable assets each group has and some of it is due to the types of goods and services that they each consume.

The second thing is that people in different geographic locations experience different levels of inflation. Someone in New York City is unlikely to have the same experience as someone who lives in Lincoln, Nebraska.

So how can we understand what is happening with inflation?

The best indicator of true inflation I have found is the Chapwood Index. The creator, Ed Butowsky, set out to more accurately measure inflation because he was tired of seeing a large percentage of Americans falling further and further behind in their financial lives. His initial assumption was that Americans were living their lives with the goal of beating 2% inflation, but that inflation was actually higher, therefore creating a scenario where people could never get ahead.

This summary from the Chapwood website is crucial to understanding the issue:

“It exposes why middle-class Americans — salaried workers who are given routine pay hikes and retirees who depend on annual increases in their corporate pension and Social Security payments — can’t maintain their standard of living. Plainly and simply, the Index shows that their income can’t keep up with their expenses, and it explains why they increasingly have to turn to the government for entitlements to bail them out.

It’s because salary and benefit increases are pegged to the Consumer Price Index (CPI), which for more than a century has purported to reflect the fluctuation in prices for a typical “basket of goods” in American cities — but which actually hasn’t done that for more than 30 years.

The middle class has seen its purchasing power decline dramatically in the last three decades, forcing more and more people to seek entitlements when their savings are gone. And as long as pay raises and benefit increases are tied to a false CPI, this trend will continue.

The myth that the CPI represents the increase in our cost of living is why the Chapwood Index was created. What differentiates it from the CPI is simple, but critically important. The Chapwood Index:

* Reports the actual price increase of the 500 items on which most Americans spend their after-tax money. No gimmicks, no alterations, no seasonal adjustments; just real prices.

* Shines a spotlight on the inaccuracy of the CPI, which is destroying the economic and emotional fiber of our country.

* Shows how our dependence on the CPI is killing our middle class and why citizens increasingly are depending upon government entitlement programs to bail them out.

* Claims to persuade Americans to become better-educated consumers and to take control of their spending habits and personal finances.

The inaccuracy of the CPI began in 1983, during a time of rampant inflation, when the U.S. Bureau of Labor Statistics began to cook the books on its calculation in order to curb the increase in Social Security and federal pension payments.

But the change affected more than entitlements. Because increases in corporate salaries and retirement benefits have traditionally been tied to the CPI, the change affected everything. And now, 30 years later, everyone knows the long-term results. Ask anyone who relies on a salary or Social Security or a pension and he’ll tell you his annual increase in income doesn’t come close to his increase in expenses. What comes in is less than what goes out — a situation that spells disaster for average Americans.”

Now that we understand the issue with CPI numbers, what exactly are the true inflation numbers in major American cities?

Yikes! The Chapwood Index shows that the average inflation over the last 5 years is between 8.1% and 12.9% in the top 10 cities. That is a big difference between the 2% inflation assumptions that people make.

One way to think about this is if you are simply generating 8% a year in stock market returns on average, your investment returns are not keeping up with the real rate of inflation in these cities. That is a major problem for the top 50% of Americans who have investable assets, let alone a death sentence for the financial health of the bottom 50% of Americans who hold no investable assets.

I bring up this idea of true inflation vs the CPI numbers because it is the single most important thing that is impacting the finances of tens of millions of Americans. The continued devaluation of our currency is enriching those who hold investable assets, but punishing those who simply save their wealth in cash. The system is working as designed. It is a feature, not a bug.

Savers are punished and investors are rewarded. This is the number one reason why I am bullish on something like Bitcoin. It is the single greatest protector of wealth in the world. There is extreme volatility in the short term, but over a long period of time, Bitcoin shines. It does a great job of preserving purchasing power and avoiding the perils of fiat currency devaluation.

As more people become aware of this structural advantage, I believe we will see a cascade of capital flows into the asset. What looks like a speculative asset to some today is actually the parachute that they desperately need. It is just a matter of time until the mainstream citizen is educated on this topic. Those who understand it early, and have the courage/conviction to act, will be in a better position than others.

It is nuts to think about 10% inflation levels happening in the United States. We don’t need a hyperinflationary event to drive Bitcoin adoption. We simply need the status quo to continue.

Have a great start to your week. I’ll talk to everyone tomorrow.

-Pomp

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 100,000 other investors today.

THE RUNDOWN:

Bitcoin Falls Over 10% as Record-Breaking Rally Loses Steam: Bitcoin is pulling back from its record highs. The cryptocurrency briefly dipped below $30,000 Monday, just two days after breaching that level for the first time. The price of bitcoin rallied to a fresh all-time high over the weekend, topping the $34,000 mark. That move was followed by a surge in smaller cryptocurrencies such as ether, which passed the $1,000 mark for the first time since February 2018. Read more.

Bitcoin Could Quadruple in 2021, Fundstrat's Tom Lee Says: Following a strong 2020 that saw bitcoin march to all time highs for a gain of around 300%, 2021 could be even stronger. That's according to Fundstrat's Tom Lee, who said in an interview with CNBC on Wednesday that he sees bitcoin surging another 300% next year. Read more.

NFT Art Sales Reached All-Time High of $8.2M in December: The total trading volume of non-fungible token artwork hit an all-time high of $8.2 million in December 2020, according to cryptocurrency art analytics platform CryptoArt.io. With the lights turned off in museums and galleries due to the coronavirus pandemic, sales of physical art plunged in 2020, but sales of NFT-based art have taken off, reaching an all-time high in December, according to CryptoArt.io data. Read more.

DeVere Group CEO Sold Half of Bitcoin Holdings at Christmas Highs: Nigel Green, CEO of U.K.-based financial advisory firm deVere Group, has said he sold 50% of his bitcoin holdings over Christmas as the cryptocurrency’s price surged to new highs. In a blog post late last week, Green said that as bitcoin neared $25,000 per coin, he made the decision to sell half his holdings, explaining, "it's better to sell high and re-buy in the dips." Read more.

Bitcoin Worth $1B Leaves Coinbase as Institutions ‘FOMO’ Buy: On-chain data shows big money continues to chase bitcoin amid the frantic bull run. That’s a sign of institutions catching the “FOMO” bug, according to one analyst. Institution-focused Coinbase Pro exchange registered an outflow of over 35,000 bitcoin worth more than $1 billion early Saturday, according to data source CryptoQuant. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Josh Richards is one of the most famous TikTok stars in the world. He has recently started to spend most of his time as an investor and entrepreneur. This conversation unpacks the transition.

In this conversation, Josh and I discuss:

* How Josh built his large audience

* Where his income comes from

* Why he is interested in entrepreneurship

* Types of businesses Josh is investing in

I really enjoyed this conversation with Josh. Hopefully you enjoy it too.

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!

* OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. 

* Want to sell your wonderful internet business? Tiny partners with founders to give them quick, straightforward exits that protect their team and culture. We’ll make an offer within a week, close the deal within a month, and keep your business operating for the long term. Get in touch at tinycapital.com, and we’ll let you know within a couple of days.

* 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 is working to make the internet operate how it was originally intended, which means anyone can publish anything from anywhere. You can go to unstoppabledomains.com and claim your censorship resistant domain 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.

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