An advocate for and participant in the Bitcoin space since 2011, Charlie was the founder of one of the first U.S. bitcoin exchanges, a builder of, investor in, and adviser to many crypto projects, and the voice of one of the leading crypto podcasts. We sat down with Shrem to get his take on everything from the evolution of Bitcoin over the last decade, to how to tell the difference between winning crypto projects and deceitful crypto scams, to what makes a great “untold crypto story,” to what the future holds for Bitcoin, halving and all.
If you’d rather watch this interview than read it, find it on the SFOX YouTube channel.
SFOX: Welcome, everyone, to SFOX’s interview with Charlie Shrem. We’re so excited to have you, Charlie.
Charlie Shrem: I’m happy to be here.
SFOX: You were one of crypto’s first users, back when crypto was just Bitcoin. How did you first come across Bitcoin, what drew you into it, and what inspired you to start investing in it?
Charlie Shrem: That’s a good question. You know, it was a very different world back then. There was no crypto; it was just Bitcoin. There wasn’t a community; people weren’t really theorizing about the future because they were focusing on the now and playing around. It was like a big social experiment.
I found out about Bitcoin in a chat room — almost everyone back in those days found out about Bitcoin in a chatroom or whatever — and that led us to another chatroom, and that other chat room was pretty much the whole Bitcoin community back then. And so that’s where I found out about it, and that’s where I hung out.
I was still in college, but my first foray into Bitcoin was selling airline vouchers on the Bitcoin forum for bitcoin. So that was like my hustle; back then, everyone had a hustle: you were contributing to the community; you were contributing to this small economy of buyers and sellers, and the medium of exchange was Bitcoin. That’s what it was, and it was awesome.
SFOX: So, as you just said, you started getting into Bitcoin when you were still in college, which is something of an unusual thing. I mean, when I was in my senior year of college, I was doing things like working my thesis and thinking about what my postgraduate job was going to be; you, on the other hand, were hustling and building your stake in the Bitcoin community!
What were you thinking? What inspired you to do that?
Charlie Shrem: I was in school and I had a startup that I was doing — electronics; it was pretty boring — but I was just doing it to earn a paycheck to basically pay my way through school. And you’re right: I didn’t even know what my career was going to be. I mean, I majored in economics, but how do you work as an economist? I’m not going to work for the Federal Reserve, right? I didn’t want to sit in a research facility all day doing math; I don’t want to do any of that. And I love business — I’ve always been a businessman since I was a kid — so I was trying to figure out what would be my thing.
I very quickly realized that I’m, like, psychologically unemployable, so I very quickly realized that whatever I do, I’m going to have to do it on my own. And so that’s why I started that first startup when I was in school, and then I got into Bitcoin when I was about to graduate. So I really didn’t have to worry about what my career was going to be.
SFOX: Tell us about the process of founding BitInstant. You started it from your college dorm; you went through the whole process of raising money for it; it became not just one of the first U.S. BTC exchanges, but one of the most popular ones, too. What was it like to go from thinking about what your career was going to be to suddenly being thrown into the world of managing a bitcoin exchange?
Charlie Shrem: So, I didn’t know anything about compliance. I didn’t even know what the word “compliance” was, so it was like being thrown into a whole new world.
I remember the scene: I was sitting in my cousin’s living room on my laptop, and he’s just making some barbecue or whatever, and I’m 20 years old registering for FinCEN. I’m barely reading the questions. “Who is the compliance officer?” Well, I’m the only employee, so, “Charlie Shrem, Chief Compliance Officer.” “Will you file suspicious activity reports?” “Yes.” I didn’t know what I was doing!
They probably should not let random people just register for FinCEN as a money service business. But that’s what it was back then, you know?
SFOX: You started out as one of the first people paving the way in Bitcoin. Now, as we enter this second decade of crypto, it’s not just Bitcoin: it’s a ton of different coins; there are tons of different businesses. Given the breadth and depth of your experience in the sector, what are some of the most significant ways that you’ve seen it evolve?
Charlie Shrem: That’s a good question, and there’s a lot of different answers based on what we’re talking about.
For example, the community has changed: you could almost chart the changes in the community over time. And, obviously, the price has changed. So there’s a lot of those factors that have changed. But then also, just the overall lingo and the terms, you can chart those, too: it went from just Bitcoin to Bitcoin and altcoins — this was before Ethereum.
An altcoin was an alternative to Bitcoin. It wasn’t a negative term. We should actually try to reclaim that term because it’s not a negative term. A lot of copywriters and copyeditors for new crypto companies don’t like to use the word “altcoin” because they think it’s a negative concept — but it’s not, and it was never meant to be. It’s actually an extremely accurate term.
Nowadays, what I do on Twitter and stuff is I separate the two: Bitcoin and crypto, for me, are two separate things. There’s Bitcoin and that industry, and there are the things that work in and around Bitcoin, and then there’s crypto, which is kind of like “everything else.” No other community has reached the level of Bitcoin at this point; even the Ethereum community is significantly dwarfed by the Bitcoin community. But I think that if there were a community after Bitcoin that I could call its own thing, it would be Ethereum, followed by Litecoin — and then you have other big communities like Tezos and Hedera Hashgraph that are growing, and it’s nice to see those.
It’s nice to see these individual, non-hostile communities because there are other big communities, like the Ripple community, that are so hostile. The Dash community used to be hostile, but I like the Dash community now. They’ve become a really nice community: they realized what their goals are, and they’re all kind of doing their own thing. And so I’m bullish on that.
SFOX: As you just pointed out, a lot of the Bitcoin- and crypto-verse can suffer, sometimes, from hostility and negativity. Sometimes, it seems, these communities will dismiss other people who think differently than they do or support different coins than they do as just “shilling” or otherwise not knowing what they’re talking about. Do you have any recommendations or insights as to how people who are involved in the crypto world can avoid that kind of negativity and hostility and build the overall sector in a positive way?
Charlie Shrem: That’s a very good question.
I see a lot of people get discouraged. I’ve had a lot of friends, even, who were in this space early on and aren’t involved anymore because, like you said, you can get jaded by all the negativity. It’s a real fear, and it’s sad when I see that happen. But at the same time, you see so many more people joining now. The hostility in the civil war and the tribalism — it really is such a small minority.
I almost separate my Twitter now: I’m going to create a list of all those vocal, tribal, minority people and just turn them on and off whenever I feel like it. At the same time, you don’t want to live in an echo chamber; you don’t want to live in a bubble. So, you should always know what’s going on — but if the negativity gets to be too much, don’t lose sight of what’s really important.
SFOX: As you look to the future of the crypto sector, do you think that different blockchains and cryptocurrencies will be able to coexist peacefully?
Charlie Shrem: One thousand percent, and anyone who says that they can’t, in my opinion, is wrong. Everything can coexist — but it depends: you look at some coins that are openly hostile to Bitcoin, like Bitcoin SV, and there’s no reason for that.
SFOX: But in the absence of open hostility, you believe that there’s a way for altcoins and bitcoins to coexist in the future?
Charlie Shrem: Yeah, one hundred percent.
SFOX: Which three people in the Bitcoin and crypto worlds have been the most influential to you, and why?
Charlie Shrem: Oh, it really depends on what point in time we’re talking about — and I don’t like this question because whenever I name people or companies, other people come back to me and say, “Why didn’t you name me??”
I love people who are not just talking heads: I love people who are builders. I love people who work and say, “I want to build; I want to do things” — you know, builders, builders, builders. Those are the best.
You have a lot of people who are just talking heads. I do a podcast, but I’ve also built a lot, and I build now. Look at Anthony Pompliano: he’s investing, he’s building, and he runs a great podcast. In fact, I love all of the other podcasts in the crypto space because the people behind them are not just talking heads: they’ve built businesses and contributed in a positive way when there’s a lot of negative people in the space.
I always give people this piece of advice — I even my wife this advice. She’ll say, “Oh, this guy trolled me,” or whatever — but she’s so seasoned now, anyway, that it doesn’t really bother her; she’s been in this space for seven years at this point — she’s the real O.G.! But a lot of people will get discouraged very easily, or they’ll get pissed off and answer the trolls. I always give them the following advice: whenever someone’s trolling you, click their profile and see who they are. How many followers do they have versus people they are following? What have they done? Who are they? Do they have a public name? All these questions, if you can’t answer them, then don’t even try — just forget it.
SFOX: One of the projects you’ve founded is CryptoIQ, which provides crypto information and news curation. Given what you were just saying how there are so many pundits and talking heads out there — not to mention simply misinformation about crypto and Bitcoin — how do you go about curating that and figuring out how to separate the wheat from the chaff?
Charlie Shrem: We launched CryptoIQ in 2017 as an internal community that people can pay to join. We have staff — including Ronnie, who’s sitting right here next to me — in our offices in Florida and also in the rest of the world; they’re in these chat rooms, in the newsletters, and we have multiple curated chat rooms that deal with different subjects and are moderated to handhold people who are new to crypto.
Have you ever seen The Wizard of Oz? Remember how whenever she would have a problem, the fairy godmother would show up? I want CryptoIQ to be that for people in crypto. Obviously, we need to charge people for that. And so we’ve been doing it for two years, and it’s great: our members love it; it’s under the radar; we’re building the business; it’s growing.
It’s really those businesses that you don’t hear a lot about that are the ones that are very successful. Look at SFOX: you guys have been around a very long time, but you guys don’t need to have billboards out there because your users love you, you provide a great service, and you’ve been doing it for a while. That’s the type of business that I like.
SFOX: In other words, your advice is to look for the places with a track record that speaks for itself when you’re trying to separate the wheat from the chaff?
Charlie Shrem: Yeah. The biggest metric you should always look for in crypto is the length of time they’ve been around.
I’ll give you an example. I just got an email today from someone who’s interested in me joining as an LP in their next fund. I clicked, I did all the research — I need to do a lot more due diligence, but I looked at the research, and I was looking through it, and their first fund launched in 2014. This is their fourth one. And they showed the metrics — one of their funds is down 90 percent, but that’s okay because bitcoin is down 90 percent or whatever it is — but I like how transparent they were. I like how, you know, the funds were up, and they were down, but now they’re all up. And I like how no one really knows about this fund, but all the companies that they’ve invested in are companies that you and I know of, and they’ve just been around forever.
The length of time that you can continue to be successful in this space is a huge metric. That’s a huge metric — for me, at least.
SFOX: You were one of the founders of the Bitcoin Foundation and served as its Vice-Chairman. What’s your perspective on the role of foundations for blockchains, and for crypto more broadly? Do you think that they’re necessary in order for a blockchain to succeed, or you think they’re merely a “nice-to-have”?
Charlie Shrem: A lot of projects and tokens launch foundations as legal structures… That’s a question I don’t really know how to answer because I sometimes don’t understand why they’re there creating these hodgepodged, very complicated situations — but that’s neither here nor there.
The Bitcoin Foundation was conceptualized with a very specific goal in mind, and that goal was to bring the nascent, fledgling Bitcoin community together in terms of resources. So the idea was basically that all the companies in the space would join the foundation and they would contribute a few thousand dollars each per year that allows for a budget to be spent on something like a billboard.
The Bitcoin Foundation actually started with me and Gavin sitting in a cafe together in Austria. I was sitting with Gavin, I was 20 years old, and I said, “Gavin, I want to run a conference.” And he said, “Well, I want to get paid as a developer.” And I said, “Well, why don’t we start something where you can get paid as a developer and I can run a conference?” And that’s literally how the Bitcoin Foundation was launched.
The first and best thing about the Bitcoin Foundation ever did was launch that first Bitcoin conference, Bitcoin 2013, in San Jose. After that, it all went downhill.
SFOX: So it sounds like the advice is: “Don’t just launch a foundation for the sake of it; rather, have a specific purpose in mind.”
Charlie Shrem: Foundations can very easily get power-hungry. There’s too much centralized power in them.
SFOX: …Which could then end up being antithetical to the purpose of the underlying, decentralized technology.
Charlie Shrem: Yeah, exactly. But I can appreciate the need for industry associations, and I’m a big fan of them — like the Bitcoin Mining Association, or the Florida Bitcoin Business Association, which I’m also a founder of here in Florida.
SFOX: Is there any common myth or misconception about Bitcoin or crypto that you’d like to debunk or clarify? As a toy example, imagine a pure Bitcoin maximalist who thinks that only Bitcoin will survive and there’s no value in altcoins. Do you take that to be a myth or otherwise misleading?
Charlie Shrem: I mean, there is a select group of people who believe in Bitcoin maximalism, but that group is very small. If you ever go to these super-Bitcoin-maximalist conferences, there are only a few hundred people there. So, don’t get blocked out by the noise, and don’t fall for scams like Richard Heart’s HEX and shit like that.
SFOX: So, it sounds like your advice is not to get misled by vocal minorities.
Charlie Shrem: Yeah.
SFOX: How can people who are just getting immersed in Bitcoin or crypto differentiate between scams and legitimate projects?
Charlie Shrem: Obviously, any company or project that’s offering any guaranteed returns or even talks about returns at all, you should completely avoid. Any coin or token that talks about returns, completely avoid.
Now — this is a funny one — if you see a company that’s excited about offering 8 percent returns per year, that’s a legit business; those are like real returns. I mean these distributed finance companies offering, like, 8 percent on your money. Those are not scams because that’s very easily attainable.
SFOX: Let’s switch gears and talk about China. Back in the O.G. Bitcoin days, China was a really big deal: there were companies like BTCC that were very prominent. Then, as Bitcoin grew, China became a little bit less dominant. Then, going into the end of last year, with comments from President Xi Jinping about the value of blockchain, there seems to be renewed interest in China and Bitcoin. Do you have any perspective on what role China will or won’t play in the future of Bitcoin?
Charlie Shrem: China’s going to play a huge role for the future of Bitcoin, as will India and all countries where citizens feel disenfranchised and don’t have stable monetary policy. The places where crypto is going to succeed the most, in my opinion, are places where the financial infrastructure is not very good. Someone said something to me yesterday: he said, “Everyone is looking for Bitcoin’s killer app, but we’ve known what it is since Day One: it’s finance. So, why are we trying to do other things? We have the killer app already.” I’m kind of, somewhat, in agreement with that. That’s not to say that there aren’t other killer apps, but at the same time, distributed finance is an awesome product that came out of the sector.
And it’s funny: you talk about some of the good that came out of the bad, and I believe that the distributed finance industry came out of the ICO bubble. After the bubble, you had a need not only for people who had made all these gains but also for all these companies that needed to hedge the money that they’d gotten and borrow against it. So, the distributed finance industry came from the ICO bubble.
SFOX: That’s interesting; I’d never thought about it that way.
Charlie Shrem: Me neither, until just now!
SFOX: Well, there you go!
As you look around crypto and bitcoin right now, what’s happening that excites you the most?
Charlie Shrem: I like to see more products and services built on top of the industry. I’m very selective of the sponsors for Untold Stories. So if you go to UntoldStories.com, you can see who my sponsors are, and I purposely don’t allow products and companies that are scams or that do tokens that I don’t like. So, look at my sponsors; they’re all building something really cool.
I just added a new company called CryptoTaxAudit and it’s such an amazing, cool product. I don’t mean to plug him, but the concept of what he did was creating this new crypto audit model. Basically, he’ll audit you, and if it’s all good and nothing needs to be changed in your tax returns, then in the future, if you ever get audited by the IRS, whatever cost or lawyers or involvement you incur, they pay for everything, they do everything; you never have to do anything. And if there are things that need to be fixed, they know how to fix your tax returns and do it in a way that allows you to have amnesty. So that’s pretty cool, too.
SFOX: You mention Untold Stories: it’s a great podcast, and the concept of exploring “untold stories” from the crypto space is so simple but so interesting. How did you get started with this podcast? How did you decide on the format? What do you think makes for an interesting story in the crypto space that’s worth telling?
Charlie Shrem: Oh my God — Give me an example of what you mean!
SFOX: Well, as long as we’re doing plugs, let’s think about when you brought Danny Kim, SFOX’s Head of Growth, onto Untold Stories and talked about SFOX. When you bring on a guest, how do you decide what stories are worth asking them about and exploring? There’s so much information out there about crypto and Bitcoin now, and everyone has a story to tell, whether that story is scammy and uninteresting or something that genuinely contributes value to the overall sector and gets people interested. So, as a podcast host who decides whom to invite as guests and what questions to ask them, how do you manage to tease the best stories for your audience that they really care about?
Charlie Shrem: The show is highly produced. Guests will be booked sometimes months out — like, I’m already booking into April right now — and I’m probably in the studio recording four or five days per week. And I have a physical studio — I don’t like records from home or anything, I go to an audio studio.
From the moment a guest is booked, the show starts to get researched. We research the guests; we research who they are. The team puts together five or six pages of content about each guest. And then I write the show: I go through all the research and formulate subjects, thoughts, ideas, and different topics. I always ask myself, “What does my guest know more than me about??” Most of the time, that’s easy to figure out because all my guests are just brilliant people. And then I like to focus on that because if I’m learning something, then the listener is learning something, too. That’s what I try to focus on.
If you listen to the interview we did with SFOX, you’ll see that I’m learning as I’m interviewing. And everyone likes learning from stories, so I’m learning from stories as I’m interviewing, too. It’s really cool.
SFOX: I think it’s really cool, too, and the work that you and your team put into those episodes really shows, so thank you for that.
Charlie Shrem: Thank you. And it really, really is a team. At the end of the show, I do credits, and I name everyone specifically. How many people work on the show? It’s like eight people — a lot of people work on the show. Between the audio engineers, the content writers, the producers, the salespeople — I mean, everyone. 75 percent of the income from sales goes directly, automatically, towards paying the salaries of all those people.
SFOX: As you look forward to 2020, what do you think will be the defining story in crypto or Bitcoin for the year?
Charlie Shrem: I think the defining story for crypto we’ll see we’ll start to see now is how, although we went through this bear market for the past two years, where is the industry? And I feel like if you look at every other metric besides price, you’ll see that we are healthier now than we were two years ago. Even in that bear market, the industry’s size — not in terms of a price, but in terms of the number of people who were going through it — is huge. I mean, how many people work for SFOX? How many companies are there in the industry? Multiply those numbers — it’s a huge number of people who are here day in and day out. And so the lesson I think that we’ve learned now is that bear markets are not bad. They’re the time for building; they’re the time for growing.
Satoshi almost tried to — and this has been successful so far — bake the bear markets into the industry with the halvings. And then, you know, with the halving that’s coming up this May, there’s still that question of, “Will the price go up at the halving?” There’s still that insecurity because the price increase is not guaranteed; if it were guaranteed, then Bitcoin would be a scam.
SFOX: Let’s talk more about the halving. Everyone in crypto has their own pet theory about how it might affect BTC’s price, or why it matters, or why it doesn’t. What’s your take on whether or not the upcoming halving matters and why?
Charlie Shrem: This is probably the third Bitcoin halving that I’ve witnessed. What’s probably funny is that around 60 days out from a halving, there’s a fear that the halving won’t work. Have you ever seen those old movies like Indiana Jones, where he goes into an old Egyptian tomb and pushes a stone and a door opens? That stone hasn’t been pushed in, like, a thousand years. There’s a section of the Bitcoin code that’s only triggered every four years, and there’s a fear that all the updates and changes that we’ve made will have made something break. And it’s kind of fun because it puts people on edge a little bit. But also, the speculation around the halving gets crazy, and volatility gets crazy, too; if you’re a trader, it’s actually very fun to swing-trade around that.
SFOX: We’ve talked about Untold Stories, and we’ve talked about CryptoIQ. You are a man of many hats: are there any other projects that you’re working on right now?
Charlie Shrem: Honestly, besides Untold Stories and CryptoIQ, no. I’m really focusing on just those two projects the most right now. I do some consulting, but honestly, it’s mostly these two companies right now.
SFOX: Given how broad the crypto space is and how much it’s grown, how do you decide which opportunities are worth pursuing?
Charlie Shrem: If there’s any compliance involved, I’m out.
SFOX: How’s that for an honest answer!
Charlie Shrem: Yeah, I’m not even going to become, like, a barber. I’m not going to cut hair because I’d need a license for that.
SFOX: Fair enough!
Charlie Shrem: Thank you for having me, and for doing this. I appreciate it.
SFOX: Oh, it’s our pleasure. We’re happy to have you!
What are you really curious right now about crypto or Bitcoin?
Charlie Shrem: I’m a geek when it comes to consensus algorithms. A lot of the scientific things about Bitcoin and crypto, a lot of the socio-economic factors… I like to study humans in real-time. I like to geek out and see human interactions and scenarios play out that follow different theories that we know, but also interactions that don’t follow the theories that we know. Bitcoin and crypto are perfect examples of that because Bitcoin is the largest socio-economic experiment the world has ever seen. You’re taking all these mathematical and economic theories, and then you’re taking all this information that we don’t know about us as humans and how our brains talk to other humans and how we act and react — especially when it comes to money, value, validation, and things like that. So, to see these things play out in real-time, I know I go down the rabbit hole. It’s something that I love to follow and it excites me a little bit.
SFOX: As you think about the future of crypto and Bitcoin, what, if anything, do you think needs to change in the sector in order for real mass adoption to be achieved?
Charlie Shrem: I honestly get this question a lot, and I don’t really think anything needs to change. I think we’re on a good course. If you were to tell me seven or eight years ago where we’d be now and what the industry looks like, I would never have believed it — you know I mean? So, I think we’re on a great course. I think we’re doing all the right things. I think the people, the companies, how we deal with regulations, how we deal with governments… It’s all seventy-five percent good. That’s good enough for me.
SFOX: What’s your favorite crypto book?
Charlie Shrem: Obviously, Bitcoin Billionaires, by Ben Mezrich.
SFOX: If you could be any animal in the world, what would you be, and why?
Charlie Shrem: I’ve actually thought about this answer once before, and I don’t remember what I said. But maybe I would want to be an eagle or something, so I could just fly and eat birds and stuff? I don’t know, I haven’t thought about it! I don’t want to be an animal!
SFOX: You’re happy being a person?
Charlie Shrem: Yeah!
SFOX: What’s the best way for our readers to connect with you?
Charlie Shrem: The best way to connect with me is to follow me on Twitter. I’m very accessible. If you go to UntoldStories.com, my email is right there. I try to read every email; I try to respond to it, even if I don’t like or agree with what you’re saying. Sometimes I don’t respond on Day One, but I’m pretty good with that — I’m actually really good with that. You’d be so surprised at the nuggets of information and stuff that I get from an email where 90 percent of the email was the stupidest thing I’ve ever read — but the other 10 percent was brilliant.
SFOX: That seems to be a good encapsulation of what you were saying earlier about separating the wheat from the chaff in crypto, too, right: there are those nuggets of insights and you just have to know how to sift through everything to get to them.
Charlie Shrem: Exactly.
SFOX: Charlie, from all of us at SFOX, thank you for taking the time to chat with us and for having Danny on Untold Stories. It’s been so great to get your perspective on everything crypto and Bitcoin.
Charlie Shrem: Thank you for having me. And keep on doing what you guys are doing — you’re celebrating, what, your five-year anniversary soon? What’s the story?
SFOX: Yeah, we started in 2014.
Charlie Shrem: That’s unbelievable. Congratulations. Any Bitcoin or crypto company that’s celebrating a five-year anniversary, let me know. I want to be a part of it.
Thanks to Charlie Shrem for sharing his views on the trajectory of Bitcoin, the most interesting crypto stories, and the contributions he’s made — and continues to make — to the crypto sector.
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