EP61: When a Bitcoin Entrepreneur Goes to Prison
w/ Charlie Shrem
My guest today is Charlie Shrem, Bitcoin pioneer, founder of BitInstant, Founder of the Bitcoin Foundation and serial entrepreneur.
Ever since I met Charlie at the 1st Latin American Bitcoin Conference (in 2013), I was super impressed with how he saw the world. He’s a young guy, still in his mid-20’s, and his mind is constantly looking for ways to build and create value for others. The true mindset of an entrepreneur and I noticed it right away.
- Why Bitcoin is the Austrian School of Economics in ACTION!
- How Entrepreneurship helps others create, retain and utilize their freedoms
- How money is formed in prison
- Why community coins, like Steem, are so significant
In high school, Charlie found that he was proficient with computers and created a business around solving computer and printer problems. In college he saw the success of Groupon and created a similar business where he would sell excess inventory from local warehouses. In his senior year of college, while studying Economics, Charlie found Bitcoin…and it changed his life.
As a self-proclaimed student of the Austrian School of Economics (www.mises.org), which of course he didn’t learn about from his college professors, Charlie saw Bitcoin as the Austrian School in ACTION! Common criticism is laid on the Austrian School in the form of “sure, this sounds great in THEORY, but where has it been put into practice?” Bitcoin was finally the opportunity and real-life example that Charlie had been waiting for.
The Bitcoin Problem: In 2011, there weren’t many good places to buy/sell Bitcoin. A company called TradeHill was one of the prominent exchanges, but they were slow and prone to wire issues. Losing bank accounts and wire routes were very common for early Bitcoin companies, especially exchanges.
The BitInstant Solution: Seeing this problem, Charlie decided to build a company, BitInstant, to help alleviate the wait times to buy Bitcoin. He could fund his corporate account at Tradehill, and introduce new access points for clients to place orders. Instead of taking weeks to purchase Bitcoin, it now took only a few hours. Rather than wiring to Tradehill directly, you could fund your BitInstant account from ~1M locations in the US including Walmart, 7-11, CVS and Walgreens. Talk about convenience!
There were two problems:
- BitInstant became so popular that Charlie barely graduated from college with his Economics degree.
- The US government didn’t like this new Bitcoin currency and ended up charging Charlie with operating an unlicensed money transmission business (aka moving money without getting our overlord’s permission).
Charlie was sentenced to >1 year in federal prison…basically for being a cutting-edge, digital entrepreneur who offered people a faster, cheaper and more convenient way to buy the digital goods that they wanted. Another victimless crime.
One Year Later
Charlie is out and once again a “free” man. While in prison, Charlie saw how the underground prison economy works, the incentives, the purposeful actions and how money was formed. Is this more evidence of the Austrian School’s focus on human action rather than equation after boring equation used by the Keynesian school?
We chat about how he was able to keep his sanity, the importance of the Bitcoin community’s support and how he kept his entrepreneurial mindset engaged.
He recollects on how money was formed [in prison] out of consensus rather than depending solely on a barter-only system. “Money Mack’s” and “Food Mack’s” were the currency of choice, and we discuss why. As long as people want to exchange goods and services with one another, money will find a role.
Now that Charlie was able to move, communicate and interact as he wished, it was time to start building again. Not long after he was set free, Charlie found an interesting platform called Steemit (www.steemit.com) which was a community-based blockchain which incentivized social engagement and content creation. Quickly finding the value, he got to work creating a new and improved markup editor to solve a few of the inconveniences associated with the platform. He’s now one of the most popular bloggers on the site with a huge following.
Charlie’s most recent entrepreneurial project is called Intellisys Capital which is using the blockchain to sell ownable shares of a portfolio of company stock. Since its blockchain-based, you can quickly and easily show that you own the shares (unlike in the current stock shares world) and get paid dividends in crypto-assets (such as Bitcoin, etc). Never a dull moment in the life of Charlie Shrem!
Remember, Bitcoin is an opt-in/opt-out currency. If you think that it will benefit you, in any way, then you are welcome to join our community. If not, then no hard feelings and best of luck to you. We have no desire to force you to do anything.
“By becoming an entrepreneur and building a company, you help preserve freedom by offering to the people a way to practice their freedoms.”
“I’m not into that End The Fed stuff; I don’t want to end anything. I just want to create, build and give people the opportunity and choice through market-based competition.”
“If you can remove your fear of failing, you can do anything that you want.”
“People look to the political process to preserve their freedoms, and that’s fine, but the real way to preserve your freedoms, and practice them, is to become an entrepreneur.”
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