Brock Pierce - Crypto-Currency Partners Partner

Brock Pierce

Brock Pierce is a partner at Crypto-Currency Partners. He is a founder of GoCoin, Investor in BitFury, Chairman on Mastercoin board and on the Board of Directors for Bitcoin Foundation.


Interview with Brock Pierce on Bitcoin Venture Investing

Trace Mayer:  Welcome back to Bitcoin Knowledge Podcast.  We have a tremendous interview with Brock Pierce.  He is co-founder of GoCoin, Managing Partner at Crypto Currency Partners; and also on the board of directors of the Bitcoin Foundation.  Welcome.

Brock Pierce:  Thanks, Trace.  Good to see you.

Trace Mayer:  Brock, you’re invested in over 30 different companies.  Can you perhaps tell us a little bit about what got you interested in the space and some of these companies you’re invested in, why are you invested in them specifically?

Brock Pierce:  Well, I guess, I'm doing a lot of things in the space because I believe the block chain is going to change the world.  I don't know exactly what or how and when, but I feel that we’re on the cusp of something enormous and I want to participate.

And if I had a very strong opinion about the one thing that was going to be, I think, they call it the greatest opportunity of the space, I would be doing that one thing.  But because I don't know, I’m trying to participate in every aspect of the ecosystem that I consider to be a place for value creation whether that be the mining segment, the payment segment, the wallet segment.

Trace Mayer:  Yeah.  Because you’re --

Brock Pierce:  The API middleware platforms, the site change.  So I'm participating across the board in all the best companies and best themes I can find.

Trace Mayer:  Yeah.  So can you name a couple of them, like, BitGo, BitFury?

Brock Pierce:  Yeah.  Investor in BitGo, BitFury, Chain, Blockstream, BlockCypher, Coinsetter, Kraken, GoCoin, Zoomhash, ZenBox, Blade, FreshPay --

Trace Mayer:  Yes, so just all across the board.  What area do you find the most potential value to be created in this particular ecosystem?  I mean, is it going to be the exchanges or they’re just kind of the generation one companies or is it something that's just entirely new that nobody's even conceived of yet? Like, 20 years ago nobody would have thought of an Uber application with the Internet

Brock Pierce: Yeah, I think, some of the biggest ideas to come haven't even probably been thought of yet.  I still feel we're kind of in the first phase of the industry's development which is just building out the basic infrastructure, the bridges, roads, tunnels. That we're ripping a page out of history and looking at how the existing financial world works and build the essential services that are needed maybe with a lot less counterparties and unnecessary intermediaries, but what are those essential first services.

And so that’s where most of the bets are being made today, but yeah, clearly there’s going to be some very big things that we've never thought of that are going to come at some point in the future and hopefully I see that early enough and I get a chance to participate.

Bitcoin Venture Investing in Asia

Trace Mayer:  Now you’ve done quite a bit over in Asia from what I understand.  Can you tell us a little bit about what you've done over in Asia not just bitcoin specific but then also like how you kind of applied this new industry of bitcoin venture investing with your Asian experience?

Brock Pierce:  So I've been in the, call it digital currency space since ‘99, 2000 and that happened in connection with the video game industry.  You have these new emergings for persistent worlds.  Think, Second Life, World of Warcraft, Everquest etc., and these persistent worlds allowed for you to accumulate assets and transfer those other players in the game and it took a lot of time to acquire.

So I recognized that these things had value and so I started making the markets for, call it these digital assets inside of these games before any game company in the world were selling the sort of stuff.  I took that business from probably zero to a hundred million in revenue over the first couple of years in the early 2000s.

I had more buyers than I had sellers.  So I needed to figure out how to get more inventory, so I went to China and taught the Chinese how to mine digital currency.  So I build the supply chain of 400,000 people that would play video games professionally to sell to me that then I would distribute in the Western markets.

So I rolled up that industry in Asia, specifically in Korea as well.  My business there still does a billion dollars a year.

Trace Mayer:  A billion?

Brock Pierce:  Yeah.  Virtual currency exchange.  We got 99% market share with that business in the games industry.

Trace Mayer:  Yeah.  Because, I mean I think people kind of really underestimate how large the game market is and I mean these are games like StarCraft.  I mean it's like bigger than football over there.  I mean you have this gigantic --

Brock Pierce:  The e-sports will --

Trace Mayer:  -- like tournaments?

Brock Pierce:  -- surpass the NFL, I think in the next twelve months.

Trace Mayer:  Really, the e-sport will surpass the NFL --

Brock Pierce:  Like you have --

Trace Mayer:  -- in terms of viewership or what?

Brock Pierce:  Yeah.  Yeah.  Well, if you saw Twitch just got sold to Amazon for roughly a billion dollars.

Trace Mayer:  Right.

Brock Pierce:  It’s basically a streaming channel to watch people play video games against each other.

Trace Mayer:  Yeah.  League of Legends hold big tournaments at like Staples Center in Los Angeles.  They sold out every seat in the stadium in under 10 minutes.  That's faster than any music artist or performer in history.

Brock Pierce:  And so --

Trace Mayer:  This stuff is incredibly cool trend that I've been following and participating in for over a decade and in Asia this had been happening for a long time.

Brock Pierce:  Yeah.

Trace Mayer:  I mean Korea when you turned on your television 10 years ago.  Primetime broadcast.  It wasn't American Idol.  It's two people playing StarCraft or HeadsUp.

Brock Pierce:  Yeah.  So, I mean like the World Series barely got any ratings, right?

Trace Mayer:  Yeah.

Brock Pierce:  And yet everybody's watching like these massive Proteus versus Zurich battles or something.  It’s --

Trace Mayer:  Yeah.

Brock Pierce:  And, I think, it's because it's an aspiration sport.  When you watch a physical sport most of time you go, “Oh, I'm a fan of this because of my city whatever” but that could never be me.

When you watch someone play poker on television or if you watch someone play video games, there's no sort of limitation that appears to be obvious that would prevent you from being that person.

So I think it has that sort of participatory, highly aspirational sort of aspect to it that I think it’s the same reason that poker became very popular as people started seeing the world series of poker on television and things of that nature.

Trace Mayer:  Just being part of this generation, I think it also might just be part of the information age culture in general.  Like, during the Industrial Age, we built tools but those tools mainly multiplied the power of our muscles, whereas in the Information Age, we're building tools to multiply the power of our minds.

We're moving away from these mostly physical sports to these mental sports --

Brock Pierce:  Yeah.

Trace Mayer:  You know, it's really just showing the demand and the importance that the mind itself is playing in the Information Age because now a mind can impact the world in such a highly leveraged way through hundreds or thousands of computers or the infrastructure that we've got.  It really is quite amazing like what impact that single mind can have on the world in general.

Brock Pierce:  Completely agree.

Trace Mayer:  During the Information Age, like Shakespeare, Guettard, da Vinci or Copernicus.  I mean the only tool they had was the Gutenberg Press to spread their ideas.  It took 150 years to get the scientific journal and yet now we have things like GitHub and HTTP, TCP/IP, SMTP.

All these Internet protocols and now bitcoin venture investing that are laying the foundation for the spreading of ideas and being able to influence on just a massive scale.  Is that kind of what you've seen in bitcoin venture investing?  I mean is Bitcoin really kind of a capstone protocol, in that sense, of being able to extend the human experience

Brock Pierce:  The way that I like to describe it in short as I talk about the Internet that we use today is the Internet of information.  This is the Bitcoin or the block chain is the Internet of value.  One is a communications protocol, one is value exchange protocol and the impact on the world around us.

I mean, one allowed for information to flow anywhere in the world very rapidly.  When you can start to move value instantaneously and securely all over the world the impact on the world around us would probably be more significant than the internet.

Trace Mayer:  Yeah, in geography --

Brock Pierce:  I mean it’s fundamentally rewiring the foundation of the world we live on.

Trace Mayer:  And changing like the whole way we organize society; much less based on geography but instead ideology or on ideas.

Brock Pierce:  Yeah.

Trace Mayer:  So I mean it's like we're living through --

Brock Pierce:  Exciting times.

Trace Mayer:  Such an exciting -- it really is.  It's a fundamentally exciting time that’s –

Brock Pierce:  And we’re participating in it.

Trace Mayer:  Yeah, we get to create all of this.  We get to build the world that we want to see in the future.  When you look at bitcoin, you talk about this Internet of Value.  You're involved in things like Mastercoin, MaidSafe.

Are we just going to be like subservient to algorithms or computers? Are they going to put humanity out of business?

I mean, the forced population peaked around the turn of the 20th century because forced labor became so inefficient as we move into the Information Age with the rise of the robots with machines that are the cashiers or now the Lowe’s now has a machine that you go up and ask questions that finds the light bulb for you.

Brock Pierce:  The singularity is near.

Trace Mayer:  You're able to check into your hotel with Starwood’s now without even talking to the front desk, you just do it via your app.  Can you speak to a little bit about that and like the role Bitcoin's playing in all of this?

Brock Pierce:  Yeah.  I mean can I envision a future where we eliminate ourselves as a species as a result of technology?  Sure.

I mean, the singularity is near and is a system like the block chain would that be an instrumental sort of a critical function needed for that future to occur?  Yeah.

Trace Mayer:  For those digital autonomous corporations or for --

Brock Pierce:  Yeah.  We need something like this to do that, yeah.  With the right artificial intelligence then built on top? Yes, in theory.  But, I mean it won't happen in my lifetime so.  Somebody else's problem.

Trace Mayer:  That's still science fiction.

Brock Pierce:  It’s out there, but yet I could envision a future, a number of them or something like that could occur, but it doesn't keep me up at night.

Trace Mayer:  I mean not necessarily that we'll get replaced by the machines, by the algorithms, but just this concept that the science fiction writers they go find these ideas and in a lot of ways the future is here, it's just not evenly distributed.

We're living in a science fiction world now.  The sheer scope and amount of technology that we have, it's what used to fuel the Sci-Fi writers of just twenty years ago.  Or the Sci-Fi writers like running out of material or --

Brock Pierce:  I think, there will always be more material, but yeah.  I mean science fiction is wonderful for that reason.  I mean a lot of the coolest predictions about the technologies that we're using today, they were dreamed up and invented by the science fiction writers that were envisioning some future and these things eventually have been developed.

No, I think there are still plenty of future technologies to be invented that are not yet here.  What have I read recently that's interesting?  Do you read anything, any new science fiction lately?

Trace Mayer:  Well, like in The Good Wife.  You know, the lawyer says, “Oh, I bought my first Bitcoin today.”  She's like it just didn't feel real.  And he says, well, real is going to change.

Brock Pierce:  Yeah.

Trace Mayer:  I mean you come from a background where you're selling these like digital shields and swords in these virtual worlds and these virtual games and yet in a lot of ways the swords and the shields are just as real if not more real than physical objects that we've got in our hands.

Brock Pierce:  Yes.

Trace Mayer:  Is there just a whole different paradigm through which this digital generation, these digital natives see the world compared to the older generations?  Is that perhaps what's causing some of the friction with regulation in bitcoin venture investing, for example?

Brock Pierce:  Well, I mean clearly reality is essentially our own perception of it and the lives that we led and the world we lived in shapes our view of the future and clearly the kids of today are just born into using these things and they don't have to have any of learning curve.

They don't have to unwire anything.  At least, my generation, I feel fortunate enough that I was only born in the eighty's and I grew up on having computers and I grew up having access to the Internet.  But, yeah like my daughter today, at the age of two, I mean she can run an iPad better than I could.

Trace Mayer:  Yeah.

Brock Pierce:  In a world of like the gaming stuff and it was a very interesting observation going back 10 whatever plus years ago and for a lot of the people living inside of these worlds that life and the time that they spent in that environment was more important to them than their analog sort of real-world lives.

That digital asset was more important than almost any physical asset they had because to them that's what matters.  That was the thing they cared about.  Maybe they were not happy with the mundane life they might have been living, but in this place they were Superman.  They were a hero.

They were able to live their dream.  Live out this alternative reality that they found more fulfilling than the one that they had in sort of the real world.

Trace Mayer:  Yeah, I think Star Trek had a whole episode on Holodeck addiction.

Brock Pierce:  Yeah.

Trace Mayer:  You know, like living inside these virtual worlds.  But it makes you wonder like, “Well, how do you even distinguish the real from the virtual?” especially as our lives get more and more intertwined with these technologies.

For example, if you lose your cell phone or if you get cut off from your email account there's a very real sense of loss that's there.  You know, I mean because we use these tools like Dropbox and Evernote and Basecamp and Twitter and e-mail.

All of these are tools that we use to extend our self and extend our consciousness just like we extend our consciousness with our arms or hands or feet.  We're all cyborgs in a sense.  With Bitcoin we're able to interface with this digital reality at an even more fundamental basis in terms of subjective value there.

In terms of being able to put a price or value on things.  Do you see that having any particular impacts on society in general?  You think we're in a lot of ways going to be losing our humanity, losing our ability to conversate or tell stories with each other?  I mean like how is it going to change how our anthropologists going to be looking at us?

Brock Pierce:  Well, it's already changed.  I mean you walk into most restaurants and you look at the people at the table.  How often do you see a couple sitting down and they're both on their phones and not actually talking to each other.

Trace Mayer:  Texting around or whatever.

Brock Pierce:  Yeah.  People live their lives on Facebook these days.  I mean real human interactions are becoming less and less frequent.  And you’re seeing more of these.  It's almost voyeuristic kind of just following everyone's lives and dribs and drabs and the world is certainly changing.  I'm not sure it's a bad way.

I mean what we're seeing is kind of collective consciousness for me.  All of us like you said, something was figured out.  If I'm working in a lab trying to solve some important problem there’s a discovery I have it might take five years for that to get to someone else in another lab trying to solve the same problem.

Now all of that information flows freely.  You're getting the sort of global collective consciousness in the speed at which we can accelerate in terms of our learning in the impact and the things that we can invent, the things that we can do to change the world are happening at ever-faster and faster rate.  But yeah sometimes maybe it's a good idea to go -- shut off your phone and to go to the forest for a month.

Trace Mayer:  Well, a lot of people listening to this podcast maybe they're thinking, “Well, what entrepreneurial endeavor can I use Bitcoin for?”  And with the multi-signature technology and the escrowing, the distributed trust, distributed consensus being able to form those trust bonds no longer do we have to have these centralized third parties with credit cards in there to perhaps give the trust like when you check into the hotel and you have a charge placed against your credit card or at least a hole placed on it so that in case you cause any damage we can now do all that through the block chain and we could reorganize so many different aspects of society whether it's online dating or organizing groups or meet-up groups, things of that nature.

I mean there's so many different ways that we could apply this technology to make the Uber model more efficient, or Airbnb or CouchSurfing all of these things.  What would you like to see an entrepreneur build with the block chain technology applied to it?

Brock Pierce:  Well, one of the things I'm very excited about is a few people making place in the space whether it be Tether or BitReserve or Ripple and Stellar to an extent, is I actually am a big fan of this concept of putting fiat currency on the block chain, specifically take a place like the Philippines.  And the Philippine government just couple weeks ago announced they want to put the peso on the block chain and create the ePeso.

In the Philippines out of 100 million people you've got 5 million credit cards and debit cards, not unique people, total.  That’s probably two or three million people.  So what you're looking at is probably somewhere less than 5% of the population of that country is banked by our standards.  The official numbers probably like 25%.  Like 5% of the population of these places.

The minute you put that currency on top of the applications that we've been building here, the Filipino population can be banked overnight.  It won’t need decades of infrastructure rebuild and they would arguably have better financial infrastructure than we have here.

So you think about the developing world this is a situation now where it can catch up and reach parity with the developed world in a matter of months or years instead of decades.  And again, arguably have better infrastructure and this is back to the area of trust.

The big problem in most of these places probably only a quarter of the world's population as the ability to transact online today because all the payment systems that are used require trust.  If you're in Africa or if you're not from a first world sort of country, you're not likely able to easily buy anything online because the merchants or someone in that stack doesn't trust you.

Eliminating the need for trust is going to allow all of the world's population to participate in the Internet economy.  I think that's the main thing that what we're doing here and how it's going to serve and help people is billions of people's lives around the world are going to improve immensely as a result of the infrastructure we're able to give them soon, arguably today.

Trace Mayer:  Wow.  So we just have billions of people that some of them are very smart and they're going to be able to now participate and add value.  They might come up with the cure for cancer.  They might have some solution that they creatively come up with for some problem in our life and it's going to increase the overall wealth and well-being of everybody on the planet, is what I'm understanding you're saying?

Brock Pierce:  Yeah.  You take a look at a place like Africa and there’s many issues that we could identify in Africa.  I would argue that the underlying problem is the basic financial infrastructure.

I believe if you solve that problem and you give people the power to take care of themselves, a lot of those other issues start to solve themselves.  And I think it's just we live very blessed lives.  We’re very, very fortunate to have been born where we are and with family and eventually friends.

We lived blessed lives and most of the world does not have that.  Giving them the basic tools that we take for granted, I think, is the thing that's going to impact lives as much as anything.  And yes, once you give people that ability then they can go do the amazing things to change the world, but when you're just trying to figure out how to survive that day, you’re not likely going to do any of those great things that might impact other people's lives possibly.

Trace Mayer:  Well, there we go.  I think we've kind of run out of time.  We've had an excellent interview on kind of the philosophy and the science fiction and we have a visionary here thinking about the future and working to make it real with so many different companies in the Bitcoin venture investing space.

Founder of GoCoin, Investor in BitFury, Chairman on Mastercoin board, Board of Directors for Bitcoin Foundation --

Brock Pierce:  Too many titles.

Trace Mayer:  Too many titles.  Brock Pierce, thanks for being with us.

Brock Pierce:  Or not enough.  Thank you, Trace.

Written by Brock Pierce on December 21, 2014.