Episode 136 - Marks on the Markets: Is the Fall of FTX the Fall of Crypto?
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FTX has fallen, taking the ‘King of Crypto’ with him. Breaux Walker, Fintech Crypto Investment Banker, and Jake Thomsen, Partner at Sovereign's Capital join the podcast to talk about what the fall of the FTX empire means for the world of cryptocurrencies.
Breaux and Jake dive into risk, regulation, venture capitalists, and tokenomics in this timely episode. They also tackle questions like: how can Faith Driven Investors think about crypto? What are global problems that blockchain technology is uniquely positioned to address? And what does it look like to be a person who seeks to love and serve in a place that has been defined by greed, and naivete?
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Faith Driven Investor is dedicated to helping Christ-following investors, fund managers, and financial advisors proactively look for ways to use capital to impact the world for God’s glory. Get connected to other like like-minded investors at faithdriveninvestor.org/
All opinions expressed on this podcast, including the team and guests, are solely their opinions. Host and guests may maintain positions in the companies and securities discussed. This podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization.
Episode Transcript
Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it.
John Coleman: Hello and welcome back to the Faith Driven Investor podcast and our monthly Mark's On the Market Session. I'm John Coleman, your host for today and I'm really excited about the podcast today. Obviously in the news at the moment are cryptocurrencies, crypto exchanges and all types of Web 3.0 related technologies and the incredible distress that's sweeping through the markets right now, at least partially as a result of the collapse of FTX and Alameda trading, two of the biggest institutions in that area. This is a fascinating topic. It's a topic where there is a ton of intersection for a Faith Driven Investor in particular. And I'm really excited to introduce the two folks we have with us today. One is my guest slash co-host. One of my partners at Sovereign's Capital, Jake Thompson, who leads our venture capital investing segment. The handsomest man in faith driven investing and a big advocate of Web 3.0. And Jake, it's awesome to have you on co-hosting today.
Jake Thompson: It's awesome to be here even though you've just lost all credibility for everyone involved here. But thank you, John. It's good to be with you.
John Coleman: It is in audio podcast, Jake. So they're just taking me at my word.
Jake Thompson: Fair enough.
John Coleman: And we're excited to welcome as a guest a gentleman who's had just a wealth of experience in this space. Breaux Walker, Breaux is the managing director at Architect Partners. He's a partner at RJ FinTech International. He's effectively an investment banker in the crypto space, has deep experience both in China and the United States, and a deep history in the corporate world, in startups and in finance dating back to I think, Breaux, you started your career at Merrill Lynch, if I understood that correctly, and so very pleased to have you on today and benefit from your expertize.
Breaux Walker: Thank you, John and Jake, for having me. It's a great pleasure.
John Coleman: Well, why don't we I mean, just to kind of jump into it, I know will break down the broader marketplace here shortly. But what the heck is going on with FTX? I think everybody is seeing this today and their founder, Sam Bankman-Fried, and how that seems to have set off just an incredible amount of distress in the ecosystem. How do you describe what's happening with FTX right now Breaux?
Breaux Walker: So I think the background of Sam and his group and the origin of FTX, you know, you look for origin stories in companies and you look for the DNA of the team. I think no one should be surprised, having known that this group has been thriving on risk and taking risks, including leverage, since they came out of school and probably even they were playing poker in school to pay their tuition. So I think looking at the background of this company, the fact that they were enablers and merchants of risk, their entire history should leave people wondering why they didn't consider the risks of the organization, the exchange and structure previously, and especially in terms of the fact that there were no third party regulators overseeing that risk. So this company came up this exchange came up in this group because there was Alameda Research, their trading group prior to FTX came up as a group of traders basically that were really willing to take on a significant amount of risk to be able to make additional sort of margins in crypto back in 2018 and 19. And they just continued that trend all the way up until a few weeks ago where, you know, I think people's eyes were opened to it and to what actually they were doing. And so I don't think there should be any surprise if someone did just like the next layer of diligence and the next layer of kind of asking of questions. But the problem was that the euphoria of the price increases and the euphoria of the market, you know, run up really as is the case in many markets, not just crypto, people sort of neglect to ask the next level of questions. And that's my general view of what happened.
John Coleman: And to potentially mischaracterize it. I mean, part of the problem, right, was the interaction of these two entities, the exchange and the trading company, and that, you know, the exchange kind of functioned like a bank or a trading platform where you had customer assets and those customers might be lending against those assets, etc.. But it looks as if Alameda trading wasn't simply trading on its own book, but it was actually using customer assets to trade in these risky strategies, potentially without permission, which is one of the big topics under discussion. And that, you know, for a typical investor, that's mind blowing because you could never consider a bank doing that, for example. And yet in this unregulated space, it appears that the lack of governance within those two organizations or by regulators allowed something to happen that created this kind of systemic risk within both entities. Is that a fair characterization?
Breaux Walker: It really is. But I think to say that this is an exclusive FTX problem is really not necessarily the case. I mean, we've had exchanges, reputable exchanges such as Coinbase, Gemini, etc., have their own issues, not of this magnitude. They were insider internal issues or issues that would not have ever occurred at a regulated securities exchange. So, yeah, this is a larger issue, but many of the exchanges have had similar issues because they lack regulation and oversight, especially.
Jake Thompson: And Breaux, walk us through a little bit of the scene to blow up just a couple of weeks ago. Is there some crypto Twitter? And then there's got to be some news outlets that broke the story by the beginning of the story. Goes back much further. You mentioned back 2018, but it seems that even this past summer a lot had happened. The crypto industry that started to show some of the fissures in the foundation of this space of these exchanges. You talk a little bit about maybe how some of the other headlines we've heard recently, how those are connected. And if you see that being indicative of a true contagion in this space, in which case there might be other shoes to drop? Or is there almost a virus in the herd? And it's almost on calling that we guess. Where are we in that whole spectrum?
Breaux Walker: Well, the answer to that question could be very lengthy. So trade cartel, I think the rumblings about FTX have been out there for a long time and I would just characterize it under the umbrella of too good to be true or how are they making their money when their fees are so low? And we don't know and there's no transparency on their other business activities. So, you know, the smartest people I know in crypto and mostly the people I rely on are people come from tradfy actually people who are come from bulge bracket investment banks like the El Al Cash and Bank of America, people who actually come from traditional finance because they're very skeptical by nature. Traditional crypto people in general are optimists and sort of can be Pollyanna. So I think, you know, this connection between Alameda and FTX really has been known in the community for a long time. It was masked under this sort of they're a benevolent market maker mantle. But, you know, the fact that nobody talked about openly in whispered corners of crypto, in conversations, conferences, there was a lot of discussion about, yeah, this is doesn't smell right at all. There's something wrong here. They're they're making too much money and whatnot for the fees they're charging. They must be trading, you know, they must be doing proprietary trading somehow in some way. So it's been known and this is one of the problems with the industry, I think, as a whole, the this lack of transparency that we pride ourselves on and we say we're open and everything. So yeah, it has a long way to go before that's actually the case.
Jake Thompson: Well it reminds me, having been in banking back in 2007, 2008, a lot of what was going on there, subprime mortgages, where you had this assumption, well, as long as housing prices are going up, that's going to cover over a host of sins, so to speak. And you started seeing different applications that weren't getting all the income information and the rest. That just became more normal than it should have. But the market made it so it was okay because it kept going up. Then, of course, the Warren Buffett quote, right when the tide goes out, you see who's swimming naked. And it seems like there's some of that that was going on here. But I want to differentiate, too, if it's indeed worthy of differentiation between the governance and these individual organizations within crypto and in web 3 technology inherently. Because I think we're seeing a lot of folks are saying, see, told you. So this crypto web 3 thing is just inherently riddled. There's no way to really make this work. Is that what we are seeing? What exactly broken? Is that really a pockmark on web3 technology itself?
Breaux Walker: I don't think it's [...] a web3 technology itself. I think what it's pockmark is the acknowledgment by the Web3 community slash blockchain slash crypto that individuals and some level of centralization are still individual conflicts of interest, meaning people in the middle of these technologies or platforms or, you know, just the need for some level of interaction creates this sort of level of, you know, the ability to corrupt it. Put it that way, it's not as automagically as we need it to be and it's not as transparent as we need it to be. So it's similar to like A.I., where I've done a lot of work, some other ones. I mean, until we find a way to have a transparent sort of AI value supply chain or whatever, there's always going to be the ability for an individual to bias or to corrupt that technology, which in its pure sense is great and web3 and blockchain. And this is like a whole. We could talk for a long time about how, you know, when somebody designs a blockchain, obviously there can be bias in there or there can be fraud designed into it after it's set up. Yeah, it records things, you know, transparently and automagically and all that, but it can be set up for fraud or gamed in other ways. So I think the Web3 community needs to really admit that we're not there yet. On the dream of Web3, it's more like with all these 2.1 and 2.2 and a lot of baby steps right now. So that's the main problem. I think challenge we have is like just being realistic with the larger community about what we can and can't do today.
John Coleman: One, just a lot of the symptoms you'd expect to see from a potentially dysfunctional market were there and people ignored them because it had been going up. You know, it's we'll get to coins and currencies maybe a bit more in a moment. But I just think about all the lending that was going on. For example, even when rates were really low and you were getting a couple percent in typical fixed income, you know, you'd be promised ten or 12 or 15% sometimes lending rates on your cryptocurrency and you just don't get rates that high without risk. Right. I mean, they were kind of promise as an almost riskless investment. And of course, that's not true. And we're seeing that kind of house of cards, as Jake said, as the tide goes out, really collapsing at the moment. You know, a lot of venture capitalists have been active in this space recently and a lot of venture capitalists are losing a lot of money at the moment alongside consumers. Where have the VCs made mistakes and where do you think VCs go from here with regards to Web 3.0?
Breaux Walker: Well, I think they needed to be more responsible in terms of obviously their diligence. I mean, that's kind of an obvious statement at this point. Let's be real. I think some of them knew what was happening, a small percentage, I'd say, and was hoping for sort of a greater fool theory to happen or that somehow these issues would work themselves out as the prices of the coins went up, the asset class as a whole. The second thing is that, you know, they needed to be more transparent about what the tech can do today, what it can't do, its weaknesses and all of that. So I think people like, you know, A16 and whatnot got butchered a lot by the crypto community because they weren't quote unquote purists. But you know, the point is, I think the fallout of this and, you know, Luna and all this is like there is not a pure model out there. There's not a pure technology that exists today because any of these so-called decentralized systems or whatever can be corrupted today. And until we figured that out, nobody can stand on their high horse and say, hey, we're decentralized or A16 is doing these sort of centralized things because everybody is centralized today. Every single project protocol is a centralized point of failure or choke point.
John Coleman: Jake, you're investing in this stuff right now. I mean, how are you thinking about it at the moment?
Jake Thompson: Yeah. So we are not doing a ton of web3 just because we think so much of it has been characterized by a run up that is unsustainable. But we're very, very interested in those companies that may otherwise be thrown out with the bathwater. Breaux, you mentioned kind of Web 2.1, 2.2, etc.. I think there are a lot of what folks would call Web 2.5, right? These bridges from our current Web, it's incredible how many more of these terms we can be introducing here, but it's not quite the totally distributed type of model. So we're really interested in looking at the pickaxes, the shovels of this space. Right. Talk to a company even earlier today that's trying to put together a CRM for Web three companies. Right. Because there's not a lot of way to access all the data that's coming on chain, those kinds of companies we're really interested in. And it's so unique just thinking through the lens of VC, because one of the VCs biggest dreams is a huge category, right? Where you can bet on companies is going to be a rising tide. And even if they're holding the boat right, the boat is going to rise for a while. And while there was for my take a whole lot of FOMO that was going on and that's just wrong and self-centered and the rest. Right. And yet we all fall victim to it from time to time. There was a lot of very rational decisions being made of saying, well, this could be even bigger than the Internet. Let's put ourselves back to 1993. We would invest in a few companies in a category that gets so big. Well, I have much more margin for error, so I can invest in companies with slightly less governance or some issues here or there. And that's going to be okay right now when people started turning a blind eye, to your point Breaux, I think there are a lot of issues there, too, a lot of VCs we're making that rational choice, because if you didn't invest right, FTX is famous for some stories where some investors would say, well, you don't really have any board without side investors. You have no governance, right? You have no this or that. I suggest you put those things together and maybe I'll invest in much less colorful language. They essentially said, go take a hike, right? Where the only way you can get a piece of what seemed like a leader in a category defining space wasn't going to have governance, and you wouldn't be allowed to have access to it if you insisted on that. So VCs were in a tough spot, but I think that's in the calculus that might have been more rational than at first blush.
John Coleman: When it was some of this stuff where it's like things that were almost characterizes endearing. Then when you look back were just such clear signs of disaster. I think one of the stories out of Sequoia, right, was that they were interviewing SBF, Sam Bankman-Fried about the investment and he played World of Warcraft or some multiplayer game like Fortnite or something the whole time, and they were fawning over that at the moment. And in retrospect you go, Oh my gosh, this guy was totally unequipped to run anything of any sophistication that required, you know, maturity and professionalism. I just think that that will change as well. I think the standard that will be set for founders and for the maturity of founders and for the people that they put around them, I think has got to change. And you mentioned something, Breaux, at the beginning where some of the best people in the space are actually traditional finance people now. And I have a feeling you'll see some of that traditional finance infrastructure begin to insert itself here if the industry wants to sustain itself.
Breaux Walker: Well, it's interesting to see at the sort of low point or recent low point of exchanges that JPMorgan has said that they're coming in with an exchange. I mean, this is really an obvious thing. You know, if you think about the timing and what not, some people might think, well, that's great. But no, it's actually that's what we need. You know, more of that from those type of people.
John Coleman: Can I pivot a bit and then I want to come back to regulation actually at the end, because I do think that you've mentioned it a couple of times, Breaux, and it's a topic that we need to address before we get into that. You know, exchanges aside, most people's exposure to this market is actually holding points, right? They may have a coin in a wallet somewhere like Coinbase, which you mentioned. They may have used exchanges, but really they're paying attention to the price of Bitcoin or the price of Ethereum or these other coins that they may hold. You know, I think the latest stat I saw recently was that there were 21,000 different crypto coins out there. And I was talking with a friend. My personal perspective just to get this started was that we're going to end up with kind of five or ten really successful coins out of that 21,000 and that many of them will go away. But what's your perspective right now on the coin marketplace, which has declined quite a lot, and what you expect for the kind of short term and long term there?
Breaux Walker: Well, I don't know if the first part of your comment was a question about the regulation, but I really want to spend a bit of time on that because I find that's really a major malfeasance on the part of our regulators. I mean, if people are not called, you know, in on their lack of, you know, without passing laws, but at least their direct kind of confrontation of what was obvious fraud or at least kind of obviously too good to be true kind of investment product offerings, you know, to U.S. investors, you know, then that's really a bad thing. I mean, that's just not a confidence builder for investors going forward. Whatever else happens to SBF or happens to the private entities involved, the fact that these guys have been able to plaster their advertisements all over sports arenas and whoever missed that in the government should be fired right away. I mean, you know, it's one thing to let them kind of act under the radar and kind of around the edges and try and get some private investors from Canada or whatever. It's another thing for them to advertise during the Super Bowl. And, on you know FTX, so the fact that they're going after like Tom Brady and, you know, Steph Curry, whatever, yeah, that's ridiculous in my mind. The guys in the government, the people in the government that allowed this to happen and allow those ads to go through and didn't issue massive fines for people basically offering securities on national TV and Super Bowl halftime to widows and orphans and, you know, across the heartland. Yeah, that that's just unexcusable. So that's where the anger, the, you know, punishment definitely needs to be directed in my mind, because by any other standard in the FCC or any other regulatory regime, those are the people that are kind of in. The gatekeepers and need to be responsible. So I think that's just a major problem that they've somehow like as politicians are good at doing it deflected this on everybody else. But whatever happens to all the other people and private entities, they've got to be held accountable for the way they let this get out of hand and out of control. To investors, all this, you know, they're going to do whatever they can do to make money as long as it's legal. And that's another problem. There's too much of this stuff is not illegal today. That's a different but related problem. So I don't know if that's your question, but you triggered me kind of, John, with your first part of your question, because I just can't believe the tough law that these regulators and government have and all of the vitriol and all of the anger and everything is directed at people who were self-interested and most of them doing nothing illegal at all. Well, is that their fault? Or the people who, you know, we pay and are sitting in places of power to protect us? You know, it's misguided right now, in my view.
John Coleman: Well, let's finish this topic then and come back to coins. You know, one of my perceptions and Jake, I would love your reflections is that part of the challenge here is just knowing who's in charge of regulation right. Is that the SEC? Is that the Fed? Is that the IRS? You know, there are different agencies that are involved which causes confusion. Part of the challenge is the space is so new and rapidly evolving that regulators are having a tough time keeping up with it. And then there is a I'll call it a reported or seeming conflict where certainly, you know, Sam Bankman-Fried was the second largest donor to one of America's political parties last year. And his parents have worked very closely with certain key regulators, running agencies right now and things like that. And there's just, I think, a whiff of impropriety over the whole thing where there has just been a lot of money flowing around the ecosystem in the sense that politicians have been complicit in this because of that money. I mean, Jake, you know, you've heard kind of Breaux's comments. How do you think about regulation in this space? What's the problem and what's the path forward?
Jake Thompson: I think it's everything that you mentioned, John. It's so complex in a bunch of ways. And you look at some of these hearings of regulators even going after big tech companies. Right. And it's obvious that there's not a baseline understanding of technology, of basic terms, how it all fits together. So even the number of folks that want to go after figurehead and we're talking about centralized finance here, it's easy to point to SBF. But then you have other organizations that are totally decentralized, right, where the owners are, those that have the tokens and vote on governance and the rest. And it is truly decentralized, which maybe would have addressed the problems we're talking about. But if the regulators going after saying, okay, we're going to clamp down on this or what does that look like? Right. You are the foundation that helped the launch of token but is now distance itself is very hard to find what the head of some of those are. And I think for that reason you see the regulators really stepping in much after the fact. Right. Maybe there'll be some movement on exchanges now. But what we are seeing is movement on the ICOs that were happening in 2017, 2018, right where now we're seeing the fallout. It's much easier to say here are the damages. And it is amazing. And Breaux, I agree with you. Investors are going to act in their self-interest. There is some finger pointing we can do to those who just made decisions that were not rooted in common sense. Right. The number of people who are coming back and saying, well, I lost all this money who insure this in the federal government, who is there an FDIC for crypto? Who is that again? Well, no, this has nothing like that. And so it's just such a nation industry. It doesn't help that, at least from my perception, the average age of those that are deeply involved in crypto, it's they haven't seen market cycles, they haven't been in traditional finance, right. Sam Bankman-Fried I think is 27, 28 years old. And so there is a lot that is happening fresh as an industry. A lot of people, this is their only experience in it as is really hard to wrap your arms around it.
John Coleman: Well, and it's one place where in traditional finance what has been the standard for some time even though it works very imperfectly as we've seen is self regulation. Is the financial institutions actually proposing ways in which their ecosystem should be restricted to help regulators come up with the right framework? And from my point of view, I feel like that's almost got to be the next step where the binances of the world and the coin basis of the world and others actually begin to step up and offer more constructive recommendations on what limits the industry should place on itself and what regulators should do otherwise. You're right, Jake, they're either going to be hopelessly behind or they're going to become hopelessly restrictive. Right. Which would be bad, I think, for all the participants in the ecosystem.
Jake Thompson: I think you see Gensler and others that are looking to have a pretty iron hand now and roll over this. We are starting to see this is a big encouragement to me, folks like Vitalik Buterin, who is one of the co-founders of Ethereum. Right, starting to work with another leader of Binance, the largest exchanges out there to say, what does it look like? Do you have an algorithm that can audit some of these things that we're talking about so you can push the on button and say, Yep, your liabilities, write all the Bitcoin, say or there we can actually account for Unchained. So you're good to go? I think it will take those who understand this with the push of the regulators, not necessarily the knowledge of the regulators to be able to put something constructive around the industry. As you noted John.
John Coleman: Well, maybe to circle back to our coined topic now, Breaux, if you don't mind looking a lot of Bitcoin or Dogecoin. Am I in big trouble? What should I do?
Breaux Walker: No, I. I agree with your sentiment that there will be far fewer coins out there. You know, obviously, most of them have no utility or simply speculative kind of gambling tokens, put it that way. So I think the ICC, you know, it's clear that most of them are securities. They have absolutely like I said no utility. They're simply there for people to speculate on. So I think whether by market forces or by regulatory forces, most of them will go away and we'll get down to a very small number over time that will grow as people find new utility for blockchain and actually do real projects that are invested in and regulated. But really, those bars are very, very high. And, you know, I think the regulators will wipe out thousands of them and whatever. So it'll be a much smaller number and then from there will grow. I happen to be after a lot of thought over the summer when and Ethereum Maximalists and I feel like it's good for the industry and people will like this. A lot of people and you know my wife's company [solana] I hope that she doesn't watch this or whatever, but I feel like that's the bet. You know, for smart contracts, if Ethereum doesn't survive and thrive and get stronger and faster and cheaper, although, I think the rest of the industry. Yeah. I don't have much hope for the second and third and a quote unquote Ethereum killer by now. Three years later, you know, if you wanted to kill them, you had your chances. And it's not now, you know, they made the POS transition and whatnot. And so I think that will have a lot of sort of projects under Ethereum and different utilities around. But I consider that to be sort of the world wide web standard of crypto going forward. And I say that because there will be there will be sort of tokens underneath and projects under that, but it will all be under ethereum or it should be in my mind.
John Coleman: Jake, what do you think this flight to quality and recovery looks like? I know you're sitting on your board eight right now hoping for a dramatic recovery in the NFT space. What do you think is coming?
Jake Thompson: No No unfortunately, not at board eight you know, I'm encouraged by a number of projects that were seemingly strong but even had governance issues. And I'll mention one called helium that got a whole lot of press, had incredible investors from coast to coast. And the short of it is there are hardware devices all over the country. I mean, there are a million of them now. And it creates a mesh network for 5G, for Internet access, for Internet of Things. Right. The scooter going by. And it was a really neat tokenomics model. Right. And that's just how the tokens and the business model and all the stakeholders, how it all works together. But even that, right, a lot came out as this was starting to crumble as far as policy and advertisements, even just the amount of money that went to the founders. And I'm a believer in that project, so I say that with some grace, but I think even the excellent project like that, there was some issues, some frailties that we saw that are starting to be fixed now. I'm very encouraged by the corollary of VC, where what we used to be priced most is growth and now it's more profitability, right? It's more unit economics. I think we're seeing that in the crypto space so that you will see a handful of those projects that will continue on to grow as point. Maybe some are under Ethereum, some are under tokens like Solana. I'm a big believer in that layer two space, right? Ethereum, there's still a lot of issues in terms of making it cheaper to transact on it. And there are these solutions at all. Since you take it off the dream chain, do all the transactions needed and bring it back. I think if I were investing in a token, not investing advice, of course, but if I were investing in a token and checking out of space, I think that layer two is one of the more interesting right now. But I think the space in one year will look a whole lot cheaper than it is now. And I think that's largely the result of a forest fire. Right. Which is painful to time. It turns out it's healthier for the forest in the longer term.
John Coleman: So I want to pivot now. This is the Faith Driven Investor podcast and I know Breaux you have been particularly thoughtful about the crypto ecosystem and Web 3.0 as it relates to people of faith. Would you mind just touching on how does a person of faith approach this market, and what do you think is good about this for people of faith? And how should we be thinking about investing in and driving forward this ecosystem?
Breaux Walker: Well, again, another potentially very long answer, because I've thought about this a long time. And since I came into crypto in China, where I lived for many years in 2015, 2016. So, you know, I think there's a huge benefit to peer to peer, you know, direct to your other Christians, let's say, or even if they're customers. But I think peer to peer technology has a ton of applications, you know, and I think the allure of that is part of what's driven the crypto sort of, you know, craze and whatnot. And that is that people see the benefits, whether it's a cost benefit or actually unlocking a relationship or transaction that wasn't possible before because there was an intermediary that would have blocked out or made that transaction impossible. So I think, you know, there's a lot of ways to do this. I think in developed countries, let's say in the U.S., there's definitely ways to use crypto and blockchain for churches, let's say, or, you know, organizations of faith to, you know, better bond their membership and to better help their membership to exchange, you know, anything they want. I would say something of value because it doesn't have to be monetary value, but it could be books, you know, it could be Christian books, it could be anything tickets to see, you know, a certain speaker. So I think there's a loyalty slash community building mechanism here that is very strong. It's very private. You know, obviously, people are worried about government. More and more people are making inroads into their lives and their privacy. And so there's a privacy aspect here that is there that doesn't exist, but it's more of a, you know, the idea of tokenomics in building these coins. And you mentioned, you know, I think was it Shiba or Doge or whatever is really building a sense of community around something of value. You know, people laugh. In the beginning I laughed at Doge even. But you know, these communities feel that there's a value or values that they share and the token was just a representation of that. So, you know, it's like, you know, just going to Disney World or whatever, does that add some long term meaningful value or whatever in your life? It's debatable, but people would say buying the coin and sharing the coin and sending the gift, they felt they benefited in some way from it. So there's a lot of to be taken from the doge and that shiba coins for Christians and building communities and churches and whatnot. Same thing. Even if you're a business owner in terms of like building loyalty with your customers, you can use loyalty in crypto and blockchain is actually a very suitable kind of application as well. Obviously talking about fintech and more of a cross-border, you know, getting funds to a minister in Venezuela, for example, I mean, in Cuba where I go a lot. So I did a lot of sort of Bible smuggling and things of that nature in my youth. And I think that was the first thing I thought about, you know, in China when I lived there, I didn't really dare much to do stuff like that then because I had a lot more to lose as a adult with kids and stuff. But, you know, the Christians in China need our support, you know, really drastically and there are millions of them. So there's a lot of ways to flow funds and not just funds, but Christian materials, books. They're starving for all that, you know. So I see it as a the ability to kind of go around governments that are repressive to help people. I'll say people, but it could be believers, nonbelievers or whatever. But that to me is very exciting.
John Coleman: Jake, I want you to weigh in on this, too. But I will say the first time I felt like I really understood the appeal of Bitcoin back when Bitcoin was the next thing, whatever point version of the web that was. Jake I'm not sure. Maybe it was 1.87 or something. Was someone from a developing market who explained, Look, Americans are going to be very slow to understand why crypto currencies and coins matter because you have a relatively just society, a stable legal system and a stable currency. And he said he was from Argentina and he said, look, with the way our currency moves and the government manipulates it, Bitcoin, as much as that it's volatile, is still much safer than our local currency. And he said, if you speak to other people in developing markets, whether it's because their currencies are unstable, whether it's because they live in restrictive regimes, as you mentioned, like China, where the party has clamped down and so much of people's lives, this ability to operate independent of them and to have a financial life independent of your government does enable greater freedom for people. And certainly, as you mentioned, enables greater. Support for ministries that might be excluded, for example. So I do tend to think there's a very redemptive purpose for this marketplace. In addition to all the community building and everything else that you talked about, and hope it doesn't become overshadowed by some of the challenges that we're seeing now. But, Jake, maybe if you don't mind wrapping us on this topic, because I know you're thinking about this a lot.
Jake Thompson: Yeah. As Sovereign's Capital we invest, we've got a thesis around inherent blockchain. Technology needs to solve a core problem. Right? And so we've got a whole framework for that. But I'll mention three examples. One is exactly you guys are talking about where there's not a trusted intermediary. Right. And you need to have something that's truly trustless. Another one would be micro-transactions, right? Where it's too expensive to send a certain amount across the traditional infrastructure, but crypto allows do that very easily. Third, want to be where creators are creating and can be involved in some of the upside of what they're rather than platforms taking that like we see today and the subprime what you guys are saying about how we support the church in the body of Christ globally, I think uses all those in really compelling ways. But I'd say even more motivating for me is not necessarily specific uses because I think the space is going to grow so much over time. Right. Like any startup, you kind of invest in the people first because you don't know what the company, what the industry is going to look like. And I just get really excited about followers of Christ who are entering the space to be a faithful presence in a place that has been defined probably more by greed and a very sincere desire to love and serve. Right, but not necessarily having a strong core of why we're doing that, what that means, but also a naivete to and believers are going in there looking to love their neighbor, to understand what God has for his creation by being able to be in places like there's an entire group of folks who are CEOs of household name projects within crypto. And there's a WhatsApp group has hundreds of people that are in those types of positions that you wouldn't always know. And I just get excited about that faithful presence being out there as a space of all. So I encourage anyone to get involved as they feel called to it.
John Coleman: Well, I want to wrap today. This has been a fascinating and vibrant discussion, Breaux. We always end by asking people just what God is teaching them in their lives right now through Scripture, and wanted to give you an opportunity just to let people know what's in your heart from what God has been teaching you lately.
Breaux Walker: Yeah, that's a great question. So I met with a couple of friends yesterday and I'm working on helping them also with some crypto advisory and whatnot. And we prayed, you know, after talking about all the crypto stuff or whatnot. And for me, you know, and not to tie this back into crypto because I know you didn't ask that question directly, but I think it is direct as I told the Christians in crypto group as well, you know, I really want to leverage this technology and and whatnot to really spread God's love and that could be sending blankets to communities or food or whatever. Again, back to what I did a lot of in my youth. And so for me, it's like the God is love message and how can we use the crypto and blockchain to really spread that love? That's kind of what I'm praying a ton about now is not just the message, but how to manifest that, how to use the tools at my disposal, at our disposal to try and turn that into action. You know, kind of what the Lord would do if he were here with crypto and blockchain is how does he use it to spread as much love and blessings to people in need? So that's kind of what I've been focused on for the last few months.
John Coleman: That's a good word, Breaux, and a good way to end the podcast. We're really grateful to you for spending time with us, Jake. We're mostly grateful to you for spending time with us as well.
Breaux Walker: [....].
John Coleman: I know you guys have done a phenomenal job helping to demystify what's been a relatively confusing space today, and we'll see how this continues to develop. But it is really exciting right now. It's a really interesting space and we're grateful that you came on and shared with our listeners how to navigate it. Thanks so much.