For this week’s episode, Jacquelyn interviewed Charlie Shrem, founder of the Bitcoin Foundation, general partner at Druid Ventures and host of the Charlie Shrem show. Before all that, he was the co-founder and CEO of BitInstant which was a bitcoin payment processor that started in 2011. Shortly after founding the company, he was charged with operating an unlicensed money-transmitting business, and for allegedly attempting to launder over $1 million through the now defunct dark web marketplace Silk Road. He spent a little over a year in a low-security prison as a result. Now, Charlie is a vocal advocate for clearer crypto regulation, he’s a crypto investor, podcaster, and even a movie producer.
Welcome to Chain Reaction.
A podcast that unpacks and dives deep into the latest trends, drama and news in crypto with some of the biggest names in the industry to break things down block by block for the crypto curious.
For this week’s episode, Jacquelyn interviewed Charlie Shrem, founder of the Bitcoin Foundation, general partner at Druid Ventures and host of the Charlie Shrem show.
Before all that, he was the co-founder and CEO of BitInstant which was a bitcoin payment processor that started in 2011. Shortly after founding the company, he was charged with operating an unlicensed money-transmitting business, and for allegedly attempting to launder over $1 million through the now defunct dark web marketplace Silk Road. He spent a little over a year in a low-security prison as a result.
Now, Charlie is a vocal advocate for clearer crypto regulation, he’s a crypto investor, podcaster, and even a movie producer.
We discussed how the bitcoin and crypto ecosystem have changed (and stayed the same) over the past decade as well as how his incarceration shaped his view on the industry.
We also talked about:
Chain Reaction comes out every Thursday at 12:00 p.m. ET, so be sure to subscribe to us on Apple Podcasts, Spotify or your favorite pod platform to keep up with the action.
Jacquelyn Melinek 0:01
Hey everyone, its Jacqueline melanic Welcome to chain reaction, a show that unpacks and dives deep into the latest trends, drama and news with some of the biggest names in crypto breaking things down block by block for the crypto curious. Today's guest is Charlie Shrem, founder of the Bitcoin Foundation general partner at Drew adventures, and host of the Charlie Shrem show. So he's also a podcaster. Before all of that he was the co founder and CEO of bit instant, which was a Bitcoin payment processor that started in 2011. Shortly after founding the company, he was charged with operating an unlicensed money transmitting business, and for allegedly attempting to launder over a million dollars to the now defunct dark web marketplace, Silk Road. As a result, he spent a little over a year in a low security prison. Now Charlie is a vocal advocate for clear crypto regulation. He's an investor podcaster, as we mentioned, and even a movie producer. So a lot going on there. Charlie, welcome to the show.
Charlie Shrem 1:01
Thanks for having me. It's great to be here.
Jacquelyn Melinek 1:03
Yeah, I love to start episodes with asking our guests. Can you tell me about one of the most interesting people in the crypto industry you've met or talked to in the past 12 months? And what did you learn from them?
Charlie Shrem 1:15
One of the most interesting people that I've probably spoken to in the crypto industry in the last 12 months is I was having a call with one of my old friends. Brock Pierce, who was one of the early was a child actor ended up taking over the Bitcoin Foundation for many years and also ran for president and got like 1% of the vote a couple of years ago. And he's also pledged to give away like all of his billions of wealth to all charity and everything. And we we had a conversation about what had happened with Sam bank and fried and I asked him for like that caught you angry because you're out here actually pledging your wealth to do really positive things you have put your money into multiple VC funds have seated, you know, most of the people in the crypto space, my fund included, we're all Bitcoin and crypto people that have come back and taken any money that we've made and try to reinvest it into how when that happened, it kind of like put a dent into that idea that people can just want to give away money without wanting anything in return that like Jewish idea of class it and, and we talked about that. And that, you know, one of the most interesting conversations I've had in a while.
Jacquelyn Melinek 2:18
Yeah, I feel like a lot of that comes back to like the ethics and genuineness of some people in the industry. There are good actors, there are bad actors, you know, and you've been in this space for over 10 years, which is a lot longer than most people can say, I would love to know what about this industry has changed the most for you. And on the other end of the spectrum, what has kind of stayed the same?
Charlie Shrem 2:39
I'm gonna start with what stays the same because of something that happened this morning, as I'm noticing there's a huge amount of like grassroots efforts in the Bitcoin community to get a new soft fork Pass, which is Bitcoin improvement protocol 300. And there's been like 50% of the Bitcoin developers are for it. 50% are against it. But what they stay the same in the Bitcoin community and like the larger ethos of the crypto community, because all crypto people all crypto focus, I say we believe that we're still Bitcoiners at heart, there's like an ethos that Satoshi that we can continue that going in. So what has stayed the same is how the community still wants to make change. It's so grassroots happening in discord channels, podcasts like this chat groups, you can tell the power lies with the masses of people, as opposed to like very few people at the top. And so if that soft fork were to happen, you need major players like Coinbase, big exchanges, all miners to all want to agree to it at that moment in time that they're going to follow. As we saw with the previous Bitcoin civil war in 2017. They're not going to make the mistake again, of like making a statement of their position, they're going to follow the community up until the last second. So that's what stayed the same. Bitcoin is such a crypto of such a still grassroots thing. You notice I use like Bitcoin and crypto separately. And there's a reason for that. Yeah. But as what remained different is obviously the people the beliefs, the first two years of bitcoins existence from like 2010 to 2012. The people that you know, I kind of call us we were like involved in the last days of Satoshi we all kind of joined the days that Satoshi was like leaving, he was like kind of one foot out of the door because he kind of felt that way the last couple of months. And so Bitcoin wasn't worth anything back then. And it wasn't really intended to get everyone rich, it was supposed to like you can have a lot to be a part of the community, and how much you owned was never about how much power you had in the community. It was more about like how much contribution you give. And so that has changed a lot. The community is different now, in terms of like, what drives people, but they're still have that early heart. They're still out there. And there's still that. So it ebbs and flows. It's still so new, it's like only 13 years old Bitcoin.
Jacquelyn Melinek 4:46
Yeah. And I mean, early days that was just made to be a peer to peer transaction network. And obviously, it's evolved to so much more. How did you even get into the space to begin with?
Charlie Shrem 4:56
So I was a junior in college, I went to Brooklyn College and it was working with my cousin and like a warehouse, we had an electronic startup. And it was just like, it's kind of like I never felt that was like any special in any way. I was just going to college. This was the who was going to school business management or something or an economics which and this was like the great recession that we just had went through 2007 2008. So I'm going to school for something and the TV's telling me that I'm never going to have a job in that industry ever again. Tough time. Yeah, I'm working in the warehouse. I'm taping boxes, I'm shipping things out doing whatever any college kid does. And I'm just hanging out in chat groups, because this was my social world, these chat groups. And so that was how I grew up. And so I was just hanging out in one of these groups. And someone came in there and just started talking about Bitcoin. And it was late 2010. And I didn't really think it was very cool, unique. But then, you know, he was like, kind of this was in a free node chat group where Satoshi had started the Bitcoin IRC network. So all the early Bitcoiners like that first Bitcoin hard fork that happened, where it almost broke, there was all this stuff was solved and fixed and chatted over IRC. So I was in a different IRC chat. It was like a very 90s era way of chatting and someone came in there and I didn't really think Bitcoin was very cool, unique at first, I'm like, well, here's a downloadable product. First, I'm like checking for viruses. Because this is back when we were scared of downloading stuff from random people like Limewire checking. Already, here's the friction, who's gonna want Bitcoin, no one's gonna download this thing, then they didn't work, you have to like, like Satoshi have to explain to you how to open a port on your router to allow oncoming connections. Once you did that, then now your your software was mining Bitcoin. So you're earning like one bitcoin an hour, just for keeping the software running. And you also had an address? And that's how you can send and receive Bitcoin to people. So you just saw or you turn the software on? I'll get a Bitcoin and I can send it to some other person, who are these people? Why do I care? Like, where's where am I gonna get their addresses from? I don't know, anyone. There's like seven people in the world, why should I care? We have PayPal. But then I was explained that, Hey, Charlie, there's this other file on your computer. It's like a data file, open that up. And I opened that up and what was happening in real time, that file was never finished downloading, it was being updated constantly, because they were a couple of dozen other people around the world that were transacting on this Bitcoin network. And as long as I had my software running, I was maintaining on my local computer, a copy of their transactions. So I'm like, oh, Pay Pal is not maintaining this ledger. Now. Everyone's maintaining this ledger. And that's when it really clicked with me about the future of bitcoin and how everything can immediately I'm thinking bloggers in Syria and the Arab Spring in this whole thing, like what the future could be?
Jacquelyn Melinek 7:40
Yeah, I think a lot of things have changed over time from that period, I remember back then I was probably in middle school or high school, I have to like do the math. But I remember it from the Silk Road days. I'll leave it at that. But you've talked in the past about how you've been arrested. And we did our research on that we kind of looked into that. And you said how it kind of shaped your view on the industry. I was wondering if you could tell us a little bit more about that. And then also, like what brought you back to this space after kind of being burned by it? Well,
Charlie Shrem 8:12
before I went into prison, I feel like at any point in that, at some point in every person's life, if they're lucky, they'll go through some like heavily humbling experience, death of a family member at a young age. And I say very lucky, mid prison, maybe going to the army, something where it's like, you're literally your life is out of the hands of yourself, and you're completely out of control. And you have to live in a highly uncomfortable moment, and you're at the lowest of your low when you go when I before that moment. For me, I was 23 years old was 24. When I went to prison, I had had the belief of this like, we need to be anarchists, we need to build this whole nother system, take down the Fed, like this whole crypto anarchist world, but there are still a couple of people that still kind of like subscribe to, I didn't understand the way the world worked. I walked around like, my shit didn't stink, I would basically say and you could find clips of me in the media saying like, it doesn't matter how big and bad the government is. We're building Bitcoin and Bitcoin is going to be a new system that people can come over to, and we can control the world. And boy, was I naive, I was dumber than a box of rocks at the time because you don't know what you don't know. And when I went into prison, here I am with 500 other people who have like just made crazy mistakes and you meet each individual person and everyone like myself, we want to tell our story. So unlike TV shows, and prison, everyone is open. They want to tell you their story. A lot of the times it's like you don't want to hear about it you just they get offended if you don't want the talking, but there's a lot of tidbits of information you learn how the world really works. And so I came out I wasn't sure if I was going to enter the industry or not. In fact, I didn't buy a smartphone for many months because I wanted to like be completely off the radar and off the grid is living at my now my wife but she was my girlfriend at the time. We were dating before I went to prison and she left act trying to like take care of me every week and send me money because my family had disowned me when I got out. I didn't let anyone know, I was kind of weird, I was confused. I was like, felt a lot of different feelings, figuring out what the future will be. But then I noticed that the crypto community was still in this like huge bear market, and they didn't really know what was going on. And there were still a lot of these like, anarchists that were still running the show a little bit. And so people weren't hitting the red flag, I just went to prison for you. So you can learn the mistakes that I made, don't repeat my mistakes. And I came out and I saw people repeating my mistakes. And we were lucky Bitcoin almost died. That year, Silk Road, Mount Gox, Charlie Shrem. All in a couple of months, it all collapsed, there was a chance that Bitcoin would have never come out on the other side. And the fact that it was even just hanging by a thread in 2016, when I got out of prison, was not going to let that happen again. So really went out in a very big way reached out to everyone I knew. I reached out to every CEO of every Bitcoin exchange, every crypto company, I know everyone, and we sat down, we talked. And actually it was, it wasn't sure what I was going to do for work. That was my friend Anthony Diorio, who was the founder of Aetherium, who ended up saying, Hey, Charlie, I need you to run my my bitcoin wallet company, Jack's, which was a top wallet still is we were the first multi coin wallet actually that ever existed, we support with first wallet that supported multiple different Kryptos instead of just Bitcoin or Aetherium. This was 2016. And so I was chief operating officer for that company for six months. And in my role, I had to like, publicly reach out to everyone else again. And so everyone in the industry knew I was back and accidentally, yeah, when I got that smartphone, I turned on telegram. And then when telegram sent everyone a message that you're like, registered, you know, yeah. Oh, you're out. You're out. Yeah, it was like flipping out. So it's like a party. He was great.
Jacquelyn Melinek 11:57
I think it's interesting. You brought up the part about how a lot of people were like, is Bitcoin dying? Is this after the Mt. Gox situation and everything else you mentioned, I feel like in recent months, conversations I've had maybe people don't feel this way or act this way on Twitter, or x or whatever you want to call it. But some people were like, genuinely concerned in the US about the state of crypto given the SEC and general enforcement hammers on the industry in the US. I mean, globally elsewhere, it might be a little bit of a different story more positive. But yeah, in last week's episode, we talked about grayscales recent victory in their lawsuit against the SEC. And that seems to be a positive notion for the crypto community or Bitcoin as well, you know, I know you'd like to separate the two So Bitcoin and crypto, but I would love to know what like what you think that means for Bitcoin and crypto ecosystem as a whole
Charlie Shrem 12:47
thank God for judges, because because they're not politician judges, yeah, some judges, but even my judge, like, my judges sentence to me, like, the government wanted to make a statement and get put me away for 30 years, and the judge read through the case and said, Whoa, this kitchen and get more than a year, year and a half, I'm not going to ruin his life. And so I think, without judges, this country would be in a very different place, we'd be able to allow our politicians to do whatever they want regulators to do whatever they want, and everything like that. But I'll be honest with you, every single day, I have fear that this thing will just trickle to slow death. We have to continue showing demand. We have to continue showing use cases, we have to continue showing growth. We have to prove out the reasons that crypto should even exist smart contracts, software, technology, AI web three, we can use these buzzwords, but if we're not going to, like create products and services that either save people a lot of money, or make them a lot more money so they can put more food on their family's table than what are we doing here in the first place? That's what I don't lose sight on. But a lot of people do. But yeah, every day, there's that fear. This is the crazy thing. I underestimate the power of the magic of like falling in love with Bitcoin and crypto. So every judge, every politician has a son or a daughter or a cousin or a brother or a sister who is like mining Bitcoin or crypto, right. So there's like a huge grassroots. There kids being born today. There are kids that are 1011 years old that are listening to this podcast, 12 years old, even that didn't grow up in a world without the coin ever existing. Bitcoin has always existed for them. That's its validation right there. So how can you sit here and be a regulator in trying to like pummel something that has existed for kids lives forever? Now, that has brought so many people that has made you know, these are kids now who have been born and their families work in crypto, their mom and their dad work in crypto, they have their jobs in crypto. Yeah. And so like this is what's putting them through school. This is a real legitimate industry, and it doesn't make sense how they go out. You go to the rest of the world to go to Switzerland. Bitcoin and crypto is on subway ads and like it's embraced by the government, they're in such a positive way. And they're working through their problems. And they're figuring out and it's become like, this is the major difference. The rest of the world Bitcoin and crypto is not political here, it is probably going to be like the most political, like the in the top 10 of things that we're going to care about politically in the 2024 election. Like it's just going to become such a like, political thing. And it shouldn't be
Jacquelyn Melinek 15:27
right. I think it's in a phase of too big to fail going off that cliche. So yeah. And I also think, yes, it will be politicized. But maybe down the line, it won't be like think of back in the early days, the internet, how they would like, politicize that. And Wi Fi was like a hot topic where they wanted to, like regulate Wi Fi. And that sounds like such a silly idea nowadays, you know, so I feel like, over time, we'll see more of an evolution where people kind of do get that like a ha moment, and like their kid or their family and friend, or someone, like you mentioned, introduces it to them in an understandable way. And I know for me, at least, like when I tell people about my job, they're like, Oh, how's that going? Are you gonna lose it? And I'm like, Okay, let me re explain this to you, you know, like, I'm not going to lose my job. There's so much more than like, price go up price go down in situations. But let's say you could wave your magic wand. What does your ideal regulated crypto ecosystem look like in the US? Like, what do you want them to get? Right? And what do they need to do in order for us to just be like, Okay, we got a regulation, let's move forward,
Charlie Shrem 16:31
you have this, like, the biggest problem that I see is even from an industrial point of view, from a retail point of view, from a single person point of view, buying and selling crypto, from a smart contract point of view, from a mining point of view, if you try to like encompass everything together and like how, like a simple solution that could solve everything in the US. And this is also like, what would open up the floodgates of ETFs? What would open up the floodgates of like institutional money investing in startups building, I think as the accredited investor mechanism, most of us are not accredited investors, we have no way to go out and buy specific types of securities, you need to have a net worth of like, I think, above $2 million, or whatever it is, it's like less than one out of every 10 Americans, they want to put every crypto into that category. And then when that happens, not only are cryptos who can buy and sell it is only these very wealthy people. Yeah, it's limited, but at the same time, how it's tracked. And I like the accredited investor system. I think the SEC does a great job protecting investors, like myself, we're in stocks, we're in bonds, we're in equities, those protections and regulations are preventing another type of 2008 from happening. So I'm not against those regulations. But I'd love to see some like system where you can be like, like that threshold can be lowered, or what the Jobs Act did when Obama did with the Jobs Act was he like, allowed a small amount of fundraising to happen through like IndieGoGo and crowdfunding and stuff like that? And like you had like companies like masterworks can go out and sell pieces of paintings to individual people, well of master works can sell individual pieces of paintings to individual people. Why can't Kryptos be sold to individual people? That's the situation that we're in right now. It's unfair. You can go out anyone to go out and buy securities, through the Jobs Act of individual like paintings. And you can buy individual pieces of vineyards, you can buy individual pieces of whiskey companies, you can buy all sorts of like private market type stuff, but they want to put crypto into the super accredited investor. There's got to be a compromise here. And if it wasn't political, there would be
Jacquelyn Melinek 18:35
Yeah, no, I agree with you on that front. Okay, we're gonna take a quick break before we get into the rapid fire segment.
And we are back now it's time for our rapid fire segment where Charlie, I will ask you some questions. You'll get the gist of it pretty fast paced, quick answers. Yeah. So you ready? Yep. Sounds great. What's one character trait you carry with you that you developed during your incarceration?
Charlie Shrem 19:05
One? One trait that I carry with me from my incarceration with prison? I like a good one or a bad one.
Jacquelyn Melinek 19:13
That's for you to answer. Find a good and a bad one.
Charlie Shrem 19:15
Yeah, good, good, good traders. I try to carry humility with me. But the bad trade ism unbroken.
Jacquelyn Melinek 19:24
Would you start another company in the future?
Charlie Shrem 19:27
If you asked me a couple of weeks ago, I would say no, but yes, let's change. I just see, I'm sitting on on the board of the Investment Committee of our VC fund, and I'm seeing the companies that are being pitched to us constantly that we're being invested in. And they're amazing. And these, we may 14 investments since May. And our entrepreneurs, every single one of them are just tremendous. But I see products that are not being pitched to me and services that are not and I'm like, where are these companies? Where are these gaps? And if someone doesn't start them soon, I'm gonna have to go out and do it and I'm not the only I'm feeling this way. Brian Armstrong just tweeted yesterday, these top 10 companies that need to be started, I would start right now for the CEO of Coinbase. And other people are feeling the same way too. We're at that, like, diamonds are made under pressure. And we're like at this like pressure point of energy within the crypto ecosystem and that we're gonna see like a lot of things change going off
Jacquelyn Melinek 20:21
that do you think the crypto space is underfunded, fairly funded, or over funded right now?
Charlie Shrem 20:27
I think it's perfect. I think there's like a perfect because money was cheaper. And now when interest rates went up, there's a healthy amount of like, little money's not as cheap anymore, it's a lot harder to come by people are investing with lower valuations. And they're asking a lot harder questions. So I think it's like a perfect supply demand equilibrium.
Jacquelyn Melinek 20:46
Does that apply to the Bitcoin ecosystem as well,
Charlie Shrem 20:49
the Bitcoin system has been seen. And this is for anyone listening, if you have a Bitcoin scaling startup right now, or like Bitcoin is almost as hot as AI in the VC world, because there are a lot of funds that have specifically are investing a mandate that this money has to be invested in a specific thesis. If you fit those checklists of the VC funds that you're pitching, they will invest in you. And they have to invest in Bitcoin companies right now. There's a huge amount of scaling support from Bitcoin developers to make changes, you're gonna see smart contracts and stuff like that come to Bitcoin within the next year, probably a year and a half. So now everyone's building out the code. We even made a couple investments in that space, too. So yeah,
Jacquelyn Melinek 21:26
the next question, maybe that answers the question is, what sector are you most excited about investing in right now? Okay, so
Charlie Shrem 21:32
I'm really excited. I know it's cliche. And everyone's like, Oh, ai ai. But the missing piece it what's really cool about smart contracts is that I'm going to go ramble a little bit here is that what Satoshi invented and metallic really added on to the creator of Aetherium was this idea of like, you can have this this piece of code that operates in a Turing complete way, which means it can ask an answer all of its own questions, it can, it can never break, it's never going to stop running, it's always going to continue to go back to start. And it'll continue to operate on its own indefinitely, forever. And you can deploy that into this like blockchain ecosystem. That was crazy, because now this needs like smart contract, like little robots are operating on everyone's computers in real time. But now that you add AI to that, and you can add in like learning processes, that is super cool. And we're seeing a huge amount of like, Blockchain analytic companies that are, like Nansen type of companies that are Supersite is one and they're like, in a really cool way, connecting all of the blockchain stuff that we've done, and the AI stuff we've done. So you can like just talk to blockchains without having to know what they mean or how they all work. This is gonna lead into where you have a wallet, and you won't have to select the blockchain, you won't have to select the toe, everything will just work as one, but it'll all be decentralized on the back end, you need AI for that to happen.
Jacquelyn Melinek 22:55
Aside from Bitcoin, what other blockchains do you find interesting?
Charlie Shrem 22:59
Yeah, so I find Aetherium super interesting. I find like, I have to be very hesitant to like call out specific blockchains other than Bitcoin and Aetherium because then people may it's not
Jacquelyn Melinek 23:09
financial advice, just like things you find interesting, you know,
Charlie Shrem 23:13
see that I'm really trying to drive change lately and scaling mid layer, which is like another Bitcoin like, like level two, um, really interface. For those who don't know, it's a Coinbase kind of took a cue from by Nance and launched their own blockchain called base.
Jacquelyn Melinek 23:29
Our listeners know, we've covered
Speaker 3 23:32
crypto there, they're learning. It's awesome. But yeah, I'm really into basically the people are building on
Charlie Shrem 23:38
base. And what what by Nance has taught us is that blockchains need a steward for the first like five or 10 years of its existence. And then they can be like, gently pushed into decentralization, if you will. And so by, you know, by Nance says Coinbase, like, Wait, we have this whole American like global like builder, investor community, why don't we launch our own blockchain and like, support it in a lightweight? And what's really cool about it is that, yeah, they've allocated a lot of money to invest in startups. But they're not just like, they're acting almost like an apple app store. There's like certain guidelines, like Apple doesn't say, Oh, I don't like your speech in your app. So I'm not going to let it they just kind of create guidelines to how to manage the user experience. That's what Coinbase is doing. They need to make sure the user experience because before Apple in the app store, we were scared to download apps on our computers on our phones. But now we're you know, it's a different world. So we need that we need that same moment for blockchains and Kryptos. People need to not be scared anymore. It needs to be not a hard thing to do.
Jacquelyn Melinek 24:40
When by Nance launched the chain like BSC or b&b or whatever they're calling it now. It was really interconnected with finance. And now they're kind of like, No, we're totally separate. And maybe they are maybe they aren't, and I know Coinbase is I can imagine is going down the same route. I know Jesse Pollack, who was the head of protocols at base. He's now called the crew either at bass, so like the title change, I feel like that might be a shift that we'll see in the coming months. But talking about bass I've seen you've been pretty vocal about Frontech on Twitter. And for those who don't know, Frontech is built on bass. And it's basically like a decentralized social media application where you can buy quote, unquote, keys used to be called shares of your friends. At its peak, it did really well in like early August, and we're recording this in the beginning of September. And since then, there's been like a 95% Dip in daily transactions. So I'm curious your thoughts on that? And is there a chance in your mind that it can bounce back? Or is this just another experiment that went up and down and kind of lost steam?
Charlie Shrem 25:44
Yeah, we saw so many speaking of steam, there was an early similar company called steam it and a blockchain called steam. Your listeners know was founded by him. So yeah, yeah, I tried to do very similar type of things. And then over time, if you can't correct the mistakes, and there's like a very Wargaming aspect, like a socio economic aspects of like how people kind of like, treat money and stuff, then it breaks. That's why like, even video games are very hesitant to add financial aspect to it, because it can break the game. So okay, so what I like about Fintech is that it's exciting for a normal person, I can walk out this door, and I can show any person on the street front tech, and they will immediately understand what it is how it works. You're buying keys of people, when you buy their keys, you can enter a private chat room with them. It's just an amalgamation of like, all these different types of things that we're already used to doing between like all social networks, where we have free and ones that we pay for, and it just like kind of combined, so it's not really like isn't anything new. It's just that that with crypto, and it looks good. They've since added a lot of features since their launch. And that was a mistake, they should have had a lot more features added at launch. To begin with. What I think they did right was is they have no token, they have not created a token out of thin air. So all the Ethereum that's transacted on the front Tech Network of buying and selling keys of people are money that everyone has brought to the table. So when you register a friend ticket account, you have to deposit like 20 or $30 worth of Ethereum. And from that you're buying your own key, and then that's it first. So that's how you start off and what that does is it doesn't create money out of thin air. That is where every blockchain has failed when it's tried to like create money give it to people to try to like gain users like Steam every block even a theory like every blockchain with an airdrop, even Bitcoin to some extent, right? Like Bitcoin again, you get a lot of Bitcoin for nothing. So every blockchain is launched, where it's like at the beginning, all the early people get the early money, and then everyone, it's not the case of fintech. So anyone who comes on now,
Jacquelyn Melinek 27:48
isn't it kind of like, it's been argued a little bit as like a Ponzi scheme, because it's like, oh, if I make an account, and then I get my fans to join, and then they buy my shares, and my shares go up, like, how do you kind of argue against that?
Charlie Shrem 28:02
That's like everything. It's like the stock market. That's regular crypto to the idea here. Yeah, the idea is here is that they're not buying a token, that's promising future value. Yes, people are speculating on people's keys, you buy my key, it may go up in value, but I'm not rewarded. By my key price going up, I get rewarded as a creator, by how many people are by transaction fees of buying and selling my keys. So some people would argue you want a very low price constantly, because then people are constantly buying and selling your keys. So yes, you need to constantly bring in your creators, and even me talking right now, people may see I'm gonna go buy Charlie's key, it may make my price go up, I own some of my own keys. But then like, there's no real incentive for me other than I make some transaction fees. But when you're buying my key, there's an immediate value to like, there's a transaction happening and you're, I have to immediately prove value to you. I have to like, have a reason for you to maintain wanting to hold my key. And if I don't do that, then you're gonna leave. It's kind of like same thing. Trintech is the same thing as Twitter subscriptions. There's no difference you're buying? It's that's all it is.
Jacquelyn Melinek 29:12
That's a good analogy. That's the same thing. Because like people are getting access to your premium stuff, they could talk to you directly. I'll take that.
Charlie Shrem 29:18
That's, there's no difference in front. That's, that's why I'm excited about it. And so for all the negatives about it, yes. But here we've it's been hard to come by an excitable product to show our friends and family. Why the hell we're still in this space. I'm showing people friend Tech because like, that's all they're not in crypto like you and I and our podcast listeners. They're not in it every day so they don't see it and hear it. They think that it's crickets out there.
Jacquelyn Melinek 29:43
Right. Okay. That's a fair take. I feel like we could talk about this for a while. But we unfortunately do have to wrap this up soon. So Charlie, my last thing for you is Can you leave us with a piece of advice, or a quote that you love?
Charlie Shrem 29:55
I guess so much advice, but the best quote that I always try to remember is you don't know What you don't know. And there's so much about every decision that we make, and everything that we think we know. And so you will be so much more successful in life. If when you're talking to people, you don't have that belief that you know everything. I hope that I've conveyed to you enough of like, although I'm giving you my answers, I could be wrong and about everything that I said, I probably am. And I'm totally okay with that. In fact, when I'm wrong, and when I learned, we learned learn new things. Now, I'm not going to say here that I don't have an ego sometimes, that when I don't have a drink or two, I'm not pissed that like we're all no one's perfect. Like that, that memory in our head. That's what I learned from prison. Everyone who was in prison, were people that believe they still believe that they knew everything, there's sitting in there. And this guy's teaching me how to rob a bank, and he's in jail for robbing a bank. Like, what? There's no logic in that of getting life at it. And you can learn a lot from people. So you know, unfortunately, the recidivism rate is like 80%. So 8% 80% of people go back. But that's my advice to people is like, just try to keep an open mind about everything for as long as you can, because our brains get closed as time goes on. And our hearts heart and
Jacquelyn Melinek 31:09
I think that's so important, especially nowadays, when it's like one opinion or nothing. So definitely agree with you on that front. Charlie, thank you so much for coming on the show today. It was absolute pleasure.
Charlie Shrem 31:20
This was awesome. Thank you so much.
Jacquelyn Melinek 31:26
We'll be back next week with conversations around what's going on in the wild worlds of web three with top players in the crypto ecosystem. You can keep up with us on Spotify, Apple Music or your favorite pod platform and subscribe to our companion newsletter, also called chain reaction. Links to the newsletter and stories we talked about can be found in our show notes. And be sure to follow us at chain underscore reaction on Twitter. Chain Reaction is hosted by myself Jacqueline melanic and produced by Maggie Stamets with assistance from Nishad Kulkarni and editing by Kel Bryce Durbin is our Illustrator and Henry pick Yvette manages TechCrunch audio products. Thanks for listening in. See you next time.
Transcribed by https://otter.ai