This post is part of CoinDesk's 2019 Year in Review, a collection of 100 op-eds, interviews and takes on the state of blockchain and the world. Anthony Pompliano is the co-founder of Morgan Creek Digital.
Anthony "Pomp" Pompliano is one of bitcoin’s biggest boosters. His Twitter feed is a hurricane of crypto-news, self-promotion and inspirational quotes for hodlers of heavy bags. He ends every week with a summary of bitcoin’s biggest accomplishments, always including the un-ironically cheerful: “bitcoin still not dead.”
This past year, Pomp served as crypto’s ambassador to traditional finance in appearances on CNBC’s Squawk Box. He also defended bitcoin against notable skeptic Shark Tank's Kevin O’Leary. Just this week, he called out Mark Cuban for saying bitcoin has “no chance.”
Pomp’s playing the long game. Not only will bitcoin survive, but it will become the world’s reserve currency, he believes (optimistically).
CoinDesk caught up with Pompliano to discuss the year in crypto, how to strike successful investments, and the ups and downs of being a public figure in crypto.
You’ve been a prominent figure in the space for a while now. In your opinion what were some of the most pivotal moments in crypto for 2019?
If you go back to the beginning of the year, I think the most significant events were the bottoming of the bear market, Libra and the significant advancements made in China. However, I think the most significant advance in crypto was made in institutional adoption, which doesn’t mean institutions like banks coming aboard, but institutions like university endowments, hospital insurance the real asset allocators. They have come in in a material way.
Why are these players coming around to crypto now?
I think there is a separation between blockchain and bitcoin, and they’ve gotten comfortable with blockchain. There’s still discomfort with bitcoin. It’s becoming clear we’ll have an automated world, and in order for that to happen you’ll need digital assets. Blockchain is just the way to keep track, it’s an accounting system. I think that’s why we’ve been successful raising capital. There’s a belief in blockchain fitting into other technology trends that investors are already buying into. This isn't anything different. It is actually just enhancing trends people are already buying into.
Could you spell out how crypto fits into the trend of automation and technological adoption.
For us, it's a foundational component of the technological change taking place. I always joke, we never have anyone come into our office and say ‘Hey, we’re building a Microsoft Excel Company.' If you think about automation of micro-transactions or high frequency transactions between a bunch of connected devices, there's no way current way to keep track of it all. If you need interoperability between systems, these public open source, permissionless ledgers allow you to do that in a really interesting way. Our investment thesis on the technology is just that blockchain will be pervasive, and to get ahead of it now rather than wait 10 years. So it's really flipping it on its head and saying, 'it's not so much about the technology, as it is finding these great companies that happen to use this one piece of technology.'
What was Libra's effect on investment sentiment?
Libra is actually a pretty good idea. From a sentiment standpoint, there's three things. One, it’s forced central banks and regulators around the world to think through their approach to cryptocurrencies. Second, the response in the United States hasn’t been as positive as we would have wished. There’s been a lot of negative backlash, almost like a helicopter parent approach. The third thing is it’s really drawn a stark line in the sand between Libra and bitcoin. I think that's helpful because it shows the value of bitcoin for people, because now they have something to compare it to.
Do you think any of the backlash against Libra is is justified?
I actually think regulators should be less worried about Libra and more worried about digital currencies created by the banks. Facebook will be one of 100 corporations that governs Libra. The only way for a decision to be made in Libra is for multiple corporations, across continents, in different industries, some for-profit some nonprofit, to come together and make a decision. So it’d be really difficult for one player to be nefarious, because your consensus is among all of these players.
Compare that to J. P. Morgan or Wells Fargo to making decisions alone. They're the only ones that are in control. My fear with the banks is they’ll launch a digital currency. It'll be adopted internally to move capital around. It’ll move to their corporate partners. It’ll gain some retail traction. You'll start using it to buy things. Then one day in the future, they’ll just unpeg it from the dollar. They only have to make that decision themselves. I get that people are upset, but the nuances of the structure are more important than just a binary this is good, that is bad.
The Chinese government is also working on its own digital currency. Recently members of the Federal Reserve have come out saying they’re researching a U.S. dollar backed stablecoin. How does this fit into your worldview?
The U.S. today is in a defensive mindset where they're trying to protect the monetary supremacy they have. I just published an article, arguing that the U.S. is suffering from an “innovator's dilemma.” We’ve had it really good for a long time, but when this new technology comes out, if we don't act, it will disrupt us. So the rational thing to do is to create a digital dollar. To do exactly what China is doing, but let it stand for the democratic and capitalistic ideals we hold sacred. I still think that bitcoin ends up winning out over a very long time period.
Do you think bitcoin’s ultimate success is reliant on mass consumer adoption?
It’s like religion. Missionaries go to some far-off land to tell people about this God that they've never heard of before. And once they hear the word of God, they become believers. Maybe. But more likely, we’re going to get to a situation where you need a decentralized, non-censored, non-seizable, non-inflatable, or non-debaseable asset. And when you go looking for it, you'll find bitcoin. I believe bitcoin’s best ally is just time. And as more people get put in situations where it could be valuable to them, they will opt in.
What have you learned from all the time you've been investing in digital assets?
There are three big things. One: This time is not different. All of the traditional investment lessons are true here as well – don't be emotional, have a long time preference, dollar-cost averaging – all of that remains true regardless of the asset. Second, be comfortable with non-consensus opinions. In 2016, 2017 we were public about being negative on the ICO market, and that turned out to be the right bet. Lastly, and this comes from someone who is incredibly bullish, I'm probably underestimating how big this is. That's not specifically true for bitcoin, but for the entire industry. Who would have thought in 1985 that the internet would become what it is today? Even the biggest bulls couldn’t have seen it. I think we generally underestimate what's possible over a long period of time.
Speaking of not seeing things in perspective, was there anything that happened over the past year that completely took you by surprise?
The whole Libra situation in general. That they moved so quickly to announce it. The backlash against them. And two, the institutional adoption. We all thought that it was going to come, but the pace at which a lot of these institutions are coming to bitcoin and blockchain is pretty incredible.
What do we overlook in the media as far as this industry?
It's the issue of human nature, right? Bitcoin is the largest, most volatile, most liquid market with a price attached to it. It's also the longest standing and it represents the ethos of the industry are. A lot of times when people are talking about bitcoin, they use it as a stand-in for the entire industry. There's plenty of other stuff that doesn't get talked about as much as it should. But there's also a lot of other shit that gets talked about that probably shouldn’t.