The Civic CEO and cofounder explains how his upbringing in South Africa and his experience at former company Gyft led him to launch a startup focused on identity. It was also at Gyft that he realized how enthusiastic the bitcoin and cryptocurrency crowd is and how a business could harness that enthusiasm to grow its user base. We discuss why the ICO craze has only just gotten started and how cultural differences could make the scams and speculation worse than in previous bubbles. Plus, Lingham explains what risks in bitcoin investors aren’t pricing in and why he believes the odds of a split in bitcoin are currently greater than 50%.
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Show notes
Bitcoin oracle Vinny Lingham on why bitcoin is overpriced Civic More on ICOs The risks of a split in BitcoinTranscript
Laura Shin:
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My guest today is Vinny Lingham, four-time entrepreneur, the Founder and CEO of blockchain identity startup Civic, a shark on South Africa’s Shark Tank, and a Bitcoin Foundation board member, and Vinny’s also been nicknamed the Bitcoin Oracle for his uncannily accurate Bitcoin price predictions. Welcome, Vinny.
Vinny Lingham:
Thank you, Laura, good to be on the show.
Laura Shin:
So, heads up, everyone, that we are on the 44th floor of a hotel, the Marriott Marquis, where Consensus was held, and despite our kind of like perch over the city, you might occasionally hear sirens in the episode. I just wanted to warn you. So, Vinny, you made a number of big announcements here at Consensus, but let’s start with the basics. What does Civic do?
Vinny Lingham:
Thanks, Laura. So, Civic is a blockchain-based identity platform. What that really means is that we’ve used the blockchain to reimagine how identity would work in the real world, and we’re doing it by giving people the ability to store their personal information, their ID information, and anything really around personal data, health records, etcetera, on their mobile device, secured by the biometric tools, like Touch ID, that’s on a mobile device, and no one else gets to see the information unless they explicitly give permission for it, and so that means that information is not stored on Civic’s servers.
It’s a fully decentralized model. Everyone in the world could be storing their personal information on their devices, and we would have none of it, so we can’t get hacked, and you can’t lose your information through Civic because we don’t store any of that data, and we’re doing that because we think it’s important that people have control of their information and then can use it to gain access to places where they need to go, so, potentially through an airport or going online, logging into a website, replacing two-factor authentication, etcetera. So, we see a ton of use cases, what we’ve done is we’ve just launched our product, which allows you to log into websites using your phone, scanning a QR code, password-less entry, and ultra-secure.
Laura Shin:
So, walk me through what that looks like, like if you are going to an airport and you need to prove who you are, how does that work for Civic?
Vinny Lingham:
Sure. So, that’s kind of the long-term dream we have is that because the ID information in your phone is so secure and locked down that, you know, governments around the world will start accepting Civic IDs and Civic accounts in the future. We’re not there yet. We’ve just launched, and so right now we’re focusing on, really, the cryptocurrency community, so the web developers, the cryptocurrency sites, and exchanges where instead of having to do KYC, which is know your customer, and where you provide the exchanges with your passport, your driver’s licenses, and all this information about them, really, multiple times, every time you open up an account, we’re trying to make it simple so that you do it once, the information’s verified, digitally signed and certified on your device, product keys are placed on the device, and there’s a hash on the blockchain, on the Bitcoin blockchain, which confirms that the owner of the key is the owner of the information.
So, when you go to the next site to sign up, if you’ve already provided your information once, they can trust that the information hasn’t been changed, and therefore you can log in and you can sign up and not have to go through a full KYC again. So, it’s really more of a reusable KYC model, but it also means you can just log into websites without a username and password, and by having the app and authenticating through the app, you could gain access, and the good thing about that is because the sites that integrate with us are not storing a username and password for you or an email address and password, if they get hacked, the hacker can’t view that information elsewhere to gain access to your other accounts.
Laura Shin:
One thing was, so, you were talking about KYC, which is know your customer, so what information is it that consumers need to give when they’re signing up for Civic?
Vinny Lingham:
So, when you sign up for Civic, there are multiple levels of accounts. The basic account really is just email and phone number, and that’s not a verified account. That’s just a basic Civic account. That also means that when you go somewhere, people don’t have to send you an email where you have to type in the code or click the link. They don’t have to send you a text message, you type in the code again. It’s already done, so the website who receives that information from you knows that Civic has verified that that’s your email, that’s your phone number, and as long as you’re willing to give that information to them, they don’t have to have you re-verify it.
Laura Shin:
Wait, so that’s like if you travel and you want to check your bank balance or something at the moment, then your bank knows that it’s still you?
Vinny Lingham:
With Civic, there’s two types of accounts. You have a basic account, where we only verify the email address and the phone number, and you have a verified account where we verify your email address, your phone number, your address, your first name, middle name, last name, your social security number, and really any other information that the website may need about you, and so verified accounts are a very high level of trust, and basic accounts have got some degree of trust because that’s just an email and a phone number, but in both cases, when you’re logging into a website, they can choose what information they want from you and what level of trust that they really want from Civic to verify if you are who you say you are.
Laura Shin:
So, which types of accounts would I use just like the basic account to log in with, and then which type of accounts would I use to verify an account with?
Vinny Lingham:
So, if you’re applying for a bank account, you would probably need a verified account because no bank is just going to accept a phone number and email address. They want to know that your first name, last name matches, your email address matches, your physical address, social security number, etcetera. So, if we can provide them with that information as being really verified, it makes it a lot cheaper and easier for them to open the account for you, versus having to go through an entire process where you have to submit a driver’s license, potentially, and passport information, and that’s what you have to do right now for exchanges, and so we’re trying to make it a lot more easy and more secure to do that.
Laura Shin:
And then when would I use the basic account with just the email address and phone number?
Vinny Lingham:
So, for basic accounts, if you were signing up for a social network website or something, you know, that doesn’t really require a high degree of knowledge, you know, creating an account on a forum, etcetera, they just really maybe even want just your email address, and the best part about the basic accounts is they can also be used for something called private logins, and that means that they, the site accepting your private login, will take no information from you at all.
So, you can sign up for an app or website, give them nothing except a unique token so that they’ll remember you when you come back, but they don’t know your email or your phone number, and you can test the service out, and if they decide in the future, well, you know, after the seventh day of a free trial maybe, we now need to know your email address and phone number, they can then request it from you at that point, and then you can decide whether you want to disclose the information. So, I mean, I think I’m one of many people who have a problem with going to these sites and apps and having to sign up and give all my information just to check out an app, and so we think that the Civic protocol makes it really easy for people to just try things out, and if you don’t like it, they can leave, and the site can’t contact them. It has no information.
Laura Shin:
So, at the moment of onboarding, how does Civic know that I’m really who I am? Like, what if I’m a fraudster trying to impersonate, you know, my target?
Vinny Lingham:
Right, so in terms of onboarding, we’ve been doing this for a while. So, last year we launched an identity theft protection product, which allows us to really verify your identity, and we’ve been testing this and had a lot of success in making sure that we can verify people’s information. So, yes, it’s entirely possible that someone can fake being you, and they can kind of enter your information, but they’d have to have access to your email, most likely, and your phone number. There’d have to be some records matching.
We send a postcard to your house to make sure that you actually live at that address. It’s got to match public records. So, we go through quite an extensive verification process, and we adapt that process based upon the country we go into and public records availability, but by and large, the process we go through is the same process that banks and exchanges go through already, so all we’re doing is we’re making sure that, to a high degree, we can validate that you are who you say you are, and it may not be a hundred percent, but it’s going to be a lot better than a light-touch background check.
Laura Shin:
What types of partners do you envision and like how will you get them to adopt Civic?
Vinny Lingham:
So, that’s one of the reasons why we’re doing a token sale. We felt that Civic needs to be something which is a community-based movement, and we wanted to create a platform where people can really get involved and help us change the world and ensure data privacy and security, and it’s really, it’s a fundamental tale of, I think, the cryptography world and this freedom of information and this knowledge of how unsecure our data is everywhere, and so by structuring the token sale in such a way where you can get tokens as part of the network, so we’re issuing a billion tokens, they’ll be used for smart contracting and data transfers, etcetera, and many other things, but in order to get tokens, you can do two things.
You can buy them in the token sale, or you can earn them, so as a developer, if you choose to integrate Civic, you will be receiving tokens for driving traffic, getting people onboard, and depends on the partnership we have, you will earn free tokens and be part of the network, and obviously we have only have a fixed number of tokens, so it’s going to go to the people, early on, who help us build the network and get to scale, and that’s one of the best reasons I think we’ve thought about in terms of reasons for why a token sale makes sense. How do you involve the community? So, Civic will own one third of the tokens, and two thirds will be sitting in the community, and people can choose to buy or earn or both.
Laura Shin:
And so I understand how you’re going to use the tokens to build the network, but then like once the network’s kind of like sufficiently large enough, will the tokens have a function then?
Vinny Lingham:
Well, the tokens have a function effective from day one, you know, once we launch the marketplace because the tokens act as a smart contracting system. So, right now, Civic is the only ID verification service in the network, so to speak, so we’re the ones doing the verification, but the plan and the partnerships we’re busy forging right now are for large institutions to come in, they may have 10, 20 million customers, and give their customers their data and allow that customer to use it on other websites through the Civic network, and those websites who then receive the data can validate it that it was validated by the…let’s say, for example, a bank.
If a bank gave you your personal information on the app or through Civic, said, look, you can now use this, Laura, to log into a website or to open up a securities account or to, you know, apply for medical insurance, whatever it is, you could have a situation where the recipient, so let’s say, for example, let’s say a different financial institution says, well, we trust this bank, instead of us doing a whole process on you and spending 10, 20 dollars, they’re asking for a 1 dollar fee or 50 cent fee, we’re going to pay them that 1 dollar fee and we’re going to let you open your account instantly because the keys match, your information matches, we’re pretty certain that that’s you.
Laura Shin:
So, then you basically have both of these banks as your partner.
Vinny Lingham:
Right.
Laura Shin:
And you’re kind of like the facilitator of ensuring that the information from the first bank is all kosher and that, okay, it matches what the second bank would require?
Vinny Lingham:
Secure. Exactly, and so you take it to the next level, I mean, when you have multiple institutions on this platform, you can drive the costs of KYC and ID verification right down. I mean right now the world’s spending tens of billions of dollars on verifying the same people over and over and over, and if we make it reusable, it can be a lot more simpler, easier, faster, and more secure.
Laura Shin:
And then to go back to how you were saying the tokens can be used in smart contracts, what’s an example of what that would look like?
Vinny Lingham:
So, let’s say, for example, your profile may have…it’s called attestations, so it may have three companies. One company would say, one bank would say, this is Laura and we’ve verified the social security number. You may have a health record. You may have 2 or 3 other bits of information, who knows, and when you do a transaction with another organization and they need to get some of this information from you, there needs to be, you know, a way of…the smart contract will ensure that the person who verified the information gets paid for verifying the information.
Laura Shin:
Oh, I see.
Vinny Lingham:
And it may have to be split up between multiple parties, and they’re in different countries, so there’ll be different currencies and etcetera, so, and then the contract has to execute, so, in a way that’s private because you don’t want necessarily the one party to know where your attestations came from because there’s a privacy issue there. So, the smart contracting system is basically ensuring that when a transaction happens that the tokens get split up between the right parties, the transaction happens, the data is handed over, it’s verified, it’s checked, and it’s all done and secure, and a settlement of tokens happens at both ends.
Laura Shin:
What’s interesting about what you’re saying is that in this case, these are like B2B payments, essentially, but your token sale is going to be to the crowd, so what are the ways in which the tokens kind of move between consumers and the business layer?
Vinny Lingham:
Sure.
Laura Shin:
Where is the B2C aspect?
Vinny Lingham:
So, the B2C aspect for consumers is there’ll be services that Civic will provide, so background checks, maybe, credit reports. We do ID verification protection services right now, and you could pay for those services using these tokens, and we would accept these tokens as a way of paying for services that we’re offering the consumers in our network, as well, but it’s largely focused on the B2B. It’s largely focused on developers because think about it this way. If you have tokens which operate on the network and you write smart contracts which you want to execute, and you want to lower your KYC costs, you find other companies that are willing to accept these tokens and execute the smart contracts with them on the networking using the tokens.
Laura Shin:
So, you’re hoping a lot of developers buy in your ICO.
Vinny Lingham:
Well, they don’t have to buy. They just need to sort of develop on our platform and integrate with Civic and integrate with our network.
Laura Shin:
And then the tokens, they don’t necessarily need to own them, themselves?
Vinny Lingham:
No, so part of the early adoption cycle is getting especially the crypto community developers behind us and integrating and help contributing to building Civic and building the network, and by doing that, we will allocate tokens to them.
Laura Shin:
Okay.
Vinny Lingham:
So that part of the, you know, one third, one third, one third, is a third of the tokens are going to be given away for partners who come on and strengthen the network by bringing users on board, by bringing integrations, ways of transferring data, etcetera. So, yeah, if we have partners coming onboard that have millions of users and wanted to reduce their KYC cost and their verification cost that would add a tremendous amount of value to our network. So, we would give them a grant of tokens based on the volume they’re going to build in the network, and so that’s how we strengthen the network, so think of it as strategic partnerships that build the network and tokens as well.
Laura Shin:
Oh, interesting. Oh, that’s really interesting, to give away tokens as part of your business partnerships.
Vinny Lingham:
Yeah, and these tokens are valuable because there’s a limited amount of them. So, if you want to be on the network, you need the tokens, and as a company, if you come onboard early and you get a healthy allocation of tokens, you may never need to pay for KYC services for a long time because, you know, you’ll also be earning tokens when people are using the data for the existing customer base. So, there’s a strong incentive for early adopters with what we’re doing right now.
Laura Shin:
Okay, and then how does Civic, itself, make money? It seems like you’re making money from the tokens, but then are you taking credit for the transactions?
Vinny Lingham:
So, we write smart contracts for these tokens, and when you execute these smart contracts, there’ll be a percentage of the token that goes to us.
Laura Shin:
Wait, a percentage of the tokens, meaning of the transaction?
Vinny Lingham:
Yeah, so if it was a transaction where one token was exchanged for an information exchange, there may be a percentage of that token which would execute to our wallet as part of the transaction.
Laura Shin:
Okay. Oh, interesting. So, one other thing that I was just curious about is you’ve been active in so many different ways in cryptocurrency, but why did you decide to focus on identity?
Vinny Lingham:
So, at my previous company, Gyft, we found that identity was a massive problem. People were using stolen credit cards. The fraudsters are very difficult to catch, right, and the reason is because it’s not really a card problem because, you know, the argument from the card networks is that, well, it’s card not present, so you can’t verify who the person is, and so the merchant takes the chargeback and he gets the hit, and that’s really…the issue is that we haven’t really, as a society, solved personal presence, how do you know and how can you digitally confirm someone is who they say they are if they’re not physically there, and we’ve gotten to the point now where, I mean, let’s be honest, even if someone’s physically there, we’ve had people walk into banks with a stolen driver’s license and pretend to be someone else. I mean it doesn’t work, right?
So, we need a better solution, and so identity’s one problem that hasn’t been solved. I think the blockchain is well-suited to that, Bitcoin blockchain and other blockchains, potentially, as well. We focus on the Bitcoin blockchain, and one of the things that I think we feel strongly about in the company is the sort of bigger, great ambition is that, you know, I’d like to see democracy change on Earth. I’d like to see us get to the point where voting for a president is inclusive of everyone, not just people who can afford to take the day off and go vote, and I’m from South Africa, I grew up under apartheid. When Nelson Mandela was released, I witnessed how, you know, people were standing in line for days to go vote, and it’s kind of crazy, right?
So, I come from a world where I was born without a vote, and so as a mission, like, if I could give voting to the world, it would be amazing. If I could let people vote on their mobile phones in any part of the world where they are…like, if you’re traveling while your elections are on in the country, you can’t really participate. There’s a way of doing it, but it’s really cumbersome, and voting is not secure. I mean people, you know, elections get hacked. Good luck hacking the Bitcoin blockchain, you know? So, if we could get to the point where you could use tokens as a way of voting, if you could use Bitcoins or any other crypto to vote, it would be very interesting because the results would tabulate in real time. You’d have results. You’d have guaranteed no double spin, guaranteed no double votes.
So, that was like the origin for the company, Civic, and then we thought about the problem more and more, and we realized to solve that problem, we actually have to solve identity first, and because when I spoke to lawmakers around voting, digital voting, sure, the technology exists, and you can argue the current take is pretty bad and it’s prone to hacking, and yeah, blockchain take is great, but the real issue is that I think lawmakers just don’t have faith in the fact that identity is digitally secure and sound, and so they would not be willing, for years, I mean, the one conversation I had with a state representative was that, yeah, well, we could probably get there in about 8 to 10 years’ time, and that’s probably about right, but in between now and then, you’ve got to get to the point where digital identity is actually solved, so then it becomes kind of a no-brainer to use a way of digitally voting, and so that’s kind of a long-term vision for the company.
Laura Shin:
Oh, interesting, and on the backend, now, are you using Bitcoin or Ethereum or a private chain?
Vinny Lingham:
We’re using Bitcoin. We felt Bitcoin was the most secure and nonpartisan type of coin out there that’s global, you know, it’s in every country, the nodes are propagated everywhere. It’s just it’s, you know, obviously there’s a pending hard fork that may be coming soon. There’s some other issues there, but we think that the long term, the security, and it’s more the neutrality of Bitcoin kind of serves the purpose for voting versus having, you know, for example, you could go with Ethereum, but then there actually are the personalities behind Ethereum, and there’s a foundation, and there’s some form of centralization there if you think about it.
Whereas Bitcoin, I mean, yeah, sure, you have core developers and you’ve got mining centralization, but largely I think everyone realizes that Bitcoin is something which is just purely…the technology itself is neutral, so there’s no argument from one government that, you know, it would not be…it could be taken over by another government, necessarily, and I think we would have a bit of an arms race if that happened because everyone sees Bitcoin as a global asset versus controlled by one person or persons, right now. I mean you could argue otherwise, but I think, to a large extent, I think it’s pretty neutral.
Laura Shin:
A lot of these token launches are happening on Ethereum, but are you doing yours on Bitcoin?
Vinny Lingham:
So, we’ll be issuing a pre-token using Ethereum, so ERC-20. That’s because the smart contracting system is not ready and the marketplace is not ready. Obviously, we’re rolling that out now, but it’ll be ready in about I would say, conservatively, I’d say Q1, and we expect to have it ready by then, but the reason we’re doing that, the reason we’re not using, necessarily using ERC-20 going forward, long-term, is that we’re built on Bitcoin. So, when we saw what RSK was doing and with smart contracting and…
Laura Shin:
On Bitcoin?
Vinny Lingham:
On Bitcoin, and because our systems are built in Bitcoin, it just makes more sense for us to use RSK and not have to try and integrate into Ethereum and then have a bridge between the two.
Laura Shin:
Wait, the RSK, when is that launching?
Vinny Lingham:
Well, they’re already live on testnet, on a testnet right now, and it seems like everything’s going well.
Laura Shin:
Okay.
Vinny Lingham:
So I think, you know, in the next couple of months we’ll have something there, and then we’ll test it, and as long as we feel that it’s secure and robust, we’ll roll it out with them. We should be the first token sale that runs on RSK, but here we’re confident they can pull it off, but we, for now, we are issuing an ERC-20 token, and we’ll take it from there.
Laura Shin:
So, but one thing that you said was you’re issuing a pre-token? I don’t know what that means.
Vinny Lingham:
So, a pre-token is basically, look, the token’s not going to be functional in the sense that you can’t really use it for the smart contracting, because it isn’t even built in. We haven’t written the smart contracts for the ERC-20 token, but you’ll be able to, at the time, exchange that for the final token, and for some reason if we decide to stay with ERC-20 or there’s some issues, we would basically use that token going forward, but we’re pretty confident that the RSK team can execute and get us ready in time to deploy with our platform, so we were expecting to be on RSK and be the first.
Laura Shin:
Okay.
Vinny Lingham:
And I think it’s also good for Bitcoin. I mean I’m a big Bitcoin believer and supporter. You know I think Bitcoin has the power to change the world, and I’d love to see us doing smart contracts on top of Bitcoin. I’d love to see us using Bitcoin for a variety of different use cases other than, you know, money transfers and payments, and I’d like to see us get there. So, we’re going to keep pushing on that, and if for some reason we hit a limitation, we just can’t make it happen, sure, we’ll use other technologies, but for now I think Bitcoin can get there.
Laura Shin:
So, just a couple more things about this, though, like sometimes they say that if you launch a token, you should do it when your network’s already functional, so that way it like reduces the chance your token will be deemed a security, but do you feel like you’re running that risk doing it this way?
Vinny Lingham:
Not at all. I mean most people are running token sales and ICOs right now in the back of a whitepaper with no tech, and we’ve spent two years building our platform, nearly, and we’ve got all the infrastructure up and running, we’ve got the verification processes…it works. It functions, and so the last part is really writing the smart contracts and integrating it into the backend. So, I’d say that the platform is nearly ready, a few more months to go, so I don’t think it is…you know what we’re really selling right now is a product.
It’s a, you know, you could use the product today, and so we’re selling network access to the product where you could start monetizing your customer data and earning revenue from it, and so that network access is what we’re packaging as a token and we’re selling. So, we’ve also been very, I’d say, circumspect about how we do a token sale versus every other sale out there, and a lot of people have set up offshore companies and foundations and you know Virgin Island trusts and whatever, all this fancy, you know, tax-structuring mess. We’ve thought about this very long and hard.
We’ve spoken to our attorneys. Perkins Coie have been advising us really well on the process and working with the lawyers as well, and yeah, we could’ve done all that. We could’ve gone through this, and maybe it would’ve been okay from a legal perspective, and maybe we could’ve saved a whole bunch of money on taxes, but the reality is we’re not some sketchy offshore company trying to take money and hide it from taxes and do all sorts of fancy stuff.
We’re actually just building cool tech, and we think that we can change the world, and so, at the end of the day, we decided to keep it as what we are, a venture-capital funded Delaware C-Corporation with a board, with, you know, all the structures, done this before. We’re going to pay the taxes as we need to. The money flows into the company, into the US. It’s regulated from a…you know we’re a US company, and we’re based in Palo Alto. What you see is what you get. We’re not going to do anything fancy or crazy, and in doing so, we think, you know, we’re going to walk the straight and narrow line, and maybe we don’t save as much or we don’t raise as much or whatever it is, but you know it’s more important that we do it the right way, we think.
Laura Shin:
Okay, and I also wanted to ask you why did you not go for VC funding this time? I totally understand the function of the token and all that, but like I know, you know, initially you were VC funded.
Vinny Lingham:
Oh, we are. We are VC funded.
Laura Shin:
Okay, right, but then now you’re choosing to raise money another way. Why did you go that route?
Vinny Lingham:
So, we’ve raised 5.75 million dollars in funding so far. We actually have announced all of it, but yeah, it certainly should be public by now, and so we’ve raised a bunch of money, and it’s a good, healthy amount of money for getting a company to the point where you’ve got a product launch ready. It’s very difficult building tech in our space because, remember, we’re dealing with a lot of regulation with regards to identity, consumer information, data. We’ve had to re-architect it so we can effectively store everyone in the world’s information on their own devices, and this is a lot of security that goes into that and a lot of thought and tech, and it’s taken us a while to build it. So, when it came to the next stage, well, we could go raise money from a VC, and let’s say we go and raise some money from VC, what does a VC do for our business, if you think about it?
This is a grassroots-level, community-driven, I mean, we need lots of small developers, medium developers, cryptocurrency players, exchangers, etcetera, playing with us, and we need to figure out a way to get these guys incentivized to move to a better, more secure system, because money in the bank itself isn’t going to get us there. I mean you’ve got to get the community to support this. People need to see this is a better way of logging into websites, protecting their privacy and security, and so, you know, also speaking of VCs, you know, as I do in Silicon Valley, up until a month ago, two months ago, Bitcoin blockchain had died…you know, I mean, they treated it like 1999, right, or 2000, the big bubble crash, and they paid no attention to it.
So, I spend most of my time in VC meetings educating these guys and helping them to bring in more people to educate them, and at the end of the day, I don’t think they quite get it, and now they’re, you know, on a treadmill trying to catch up and figure out what’s going on in this ICO space, and it’s sad, but it’s taken…you know this is years of experience that people in the crypto community have had understanding this and how it works, and now VCs are trying to play catch-up, and so, you know, I’d rather take a view that working with the community and building something which everybody benefits from and people will understand it, so we’re targeting the crypto community first, will become the early adopters, and that would basically then encourage mass market adoption over time because people will understand why this is important and of value, and it’s always just better to have hundreds of thousands of people who are part of a network versus one VC.
Laura Shin:
This is such an interesting conversation, but we’re going to take a break just for a second for an important word from our sponsor, ONRAMP, and then we’ll talk more about your background before Civic, and also we’ll talk more about Bitcoin and crypto in general.
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I’m talking with Vinny Lingham, CEO and Cofounder of Civic. So, let’s go into your background. How did you get into Bitcoin?
Vinny Lingham:
So, when I was running Gyft, my previous company, and we launched in late 2012, we got hit by a ton of credit card fraud, I mean, in the thousands of dollars, and then some days like five grand in a day from people overseas and whatnot, and it was tough because you’re a startup and you have a very tough budget. We hadn’t raised that much capital, and so we had to figure out how do we get past all this fraud and how do we…because the more we turned the fraud filters up, the less sales we had and the more problems we would have with customer support.
So, it was a fine line trying to balance and making sure chargebacks were not a big issue, and then around January or February of 2012, I think it was January, I started chatting to a friend of mine, one of our advisors, and he was talking about Bitcoin, and I kind of heard about it before, and I dismissed it, the usual cycle, and the price was back up again. I was like, okay, let me go buy some. So, I wound up buying some coins from Wences, Patient Zero for Bitcoin in Silicon Valley.
Laura Shin:
That’s Wences Casares, CEO of Xapo.
Vinny Lingham:
Yeah, and this is back in 2012, and I’d known Wences for many years because I was part of Endeavor, the entrepreneur foundation organization, and so, you know, Wences was, yeah, if you know Wences, he was always on fire about Bitcoin, and yeah, I watched the run up to 255 bucks and watched it crash down to like 50. This was a very exciting and interesting time, did a bit of trading, made some money, lost some money, kind of broke even in the end, and but I was hooked, like this was going to be the next big thing, and I decided to plug Bitcoin into Gyft, and so we worked with Tony Gallippi from BitPay and we integrated, and my developers thought I was crazy, my VCs thought I was nuts, and I even had bet one of my developers that we would have more than a thousand dollars in sales in the first day, and he didn’t believe it, so I won a bottle of wine from him, but we did.
I mean we broke a thousand bucks on the first day, and eventually we were doing hundreds of thousands of dollars a month and eventually millions a month in Bitcoin sales, and so, you know, when we sold the company to First Data, we had grown the business tremendously on the back of Bitcoin, but we really started seeing more payments through credit cards and PayPal, and we took something which is really…Gyft was really a crypto-community focused product, and we took it mainstream. So in the end, you know, Gyft probably was doing less than 10 percent of its total volume on Bitcoin. In the beginning, it was doing 95 percent.
Laura Shin:
Oh wow.
Vinny Lingham:
But that helped us get all the merchants onboard because we had volume, whereas we wouldn’t have had volume just with the credit cards, and so Bitcoin was instrumental, actually, in getting Gyft from a niche audience to the mainstream audience where now it’s probably the biggest online gift card site.
Laura Shin:
Wait, so, I’m so confused by that, like 95 percent of the gift cards being bought on Gyft were being paid for with Bitcoin?
Vinny Lingham:
Initially, because we were just targeting the Bitcoin community, right?
Laura Shin:
Oh.
Vinny Lingham:
So, we had everyone from the Bitcoin community coming and using us, and it was a way of spending your bitcoins and going shopping and buying stuff at all the great stores that we had, and it helped us attract more stores because we had this…you know I’d rather have like 10 thousand super loyal, excited, happy customers than millions of people who don’t really do much, and so the theme of the crypto community is they’re very passionate, and so when they see a great service, they tell their friends, they get involved, and that’s kind of why we’re doing the same thing with Civic. We want the community to get involved. I want, you know, a million crypto enthusiasts to understand the technology and how we’re protecting their privacy and their data telling their friends about it and taking the product mainstream. So, that’s why I’m kind of using the lessons I learnt from Gyft in Civic and engaging the community on this.
Laura Shin:
And people basically were…they were holding Bitcoin and they couldn’t like spend it at Amazon, so what they were doing, or I don’t know. Who were some of your top retailers?
Vinny Lingham:
I mean Amazon, Starbucks, Target, we had all these big retailers, still do. When I say we, Gyft does.
Laura Shin:
Oh wow, okay, and so since they wanted to shop at those stores but they couldn’t spend…
Vinny Lingham:
Yeah.
Laura Shin:
Oh, I see. Wow.
Vinny Lingham:
Yeah, so we opened up 55 thousand new retail locations to anyone that held Bitcoin, really, back in the days. So, you could go to any of those stores, download the Gyft app, buy a gift card, and we would have zero fraud.
Laura Shin:
Oh wow, oh right, and no chargebacks.
Vinny Lingham:
No chargebacks, and so we were very happy to take the money, and our margins were much higher, and then we introduced loyalty points, which incentivized the network even more, and so we built a network effective on that. So, we’re kind of doing the same thing with tokens. So, we’re giving tokens to reward users and partners and making everyone feel part of the network and so engaged in the crypto community with something which they’re comfortable with, so tokens, and that’s why we do the token sale. So, this is a natural evolution of what I learnt at Gyft and applying to Civic, and already within, you know, just announcing the platform and getting it out there, the response has been phenomenal.
Laura Shin:
So, let’s talk more generally about Bitcoin and crypto.
Vinny Lingham:
Sure.
Laura Shin:
I want to talk about your reputation as the Bitcoin price oracle. How did you get into the business of Bitcoin price prediction?
Vinny Lingham:
Well, I’ve never been in the business of price prediction. I kind of got dragged into that part, but I mean I was in the business of giving fundamentals and talking about fundamentals and advice, so when I said at the CoinSummit conference in 2014, Bitcoin had gone up, and I was watching the data from the backend at Gyft, and I could see when people spend and when they don’t spend based upon the price, and so I had a lot of insights that I’d deemed from how consumer behavior followed the price, and so when I sat down at this conference, I think it was March or April of 2014, everyone was like punch drunk, like, they were, oh, Bitcoin was like 800 bucks or whatever it is, 700, 800 bucks, and they all thought it was going to go to 2,000 that year.
Like, I asked the whole room, and everybody said 2,000, and the funny thing is like the year before that, I was at the San Jose Bitcoin Conference, where Bitcoin was 100 bucks or something, and everyone thought it’s not going to go up that much, and I said 1,000. So, we hit 1,000 the previous year, and I kind of got the, wow, Vinny, how’d you know, and then I said, okay, well, it’s going to go down, and it’s going to go sideways for a long time until these issues resolve, and I pointed out…I wrote a blog post about the fundamentals of people spending the money, merchant adoption, lack of onramps for Bitcoin, etcetera, you know, like a fear to buy Bitcoin, etcetera, and so I was able to make predictions based upon market fundamentals, which I understand, which I communicated in my blog post, and then about 12 to 18 months later, Bitcoin kind of bottomed down to the 200s or around about there, and then it started climbing back up again, and then I felt that, okay, the fundamentals changed again.
So, I wrote another blog post called Bitcoin Awakens, and that was about a year ago, at about the 450 mark, and I said, well, the reasons why I think Bitcoin will go to over 1,000 bucks in 2016, and basically hit there, I mean, within a couple hours to spare. Depending which exchange you look at, it was like by New Year’s Eve, 1,000 bucks, and you know along the way, just my tweets, like I was able to call certain false runs of Bitcoin getting started and whatnot and having fun with Ryan Selkis and you know because they all said, oh, this is the next big run, and I was like, no, it’s not, and you know I spoke about the halving and the effect that would have and how we would go sideways for a while again. So, I’ve made a number of good predictions of Bitcoin.
The one prediction which I made, which people kind of, you know, hold me to is the fact that at 1250, at the ETF announcement, I said, look, the ETF’s not going to happen, which it didn’t, and I said the price is going to tank and it may not recover very quickly, and I had a price talk, and I said, look, I mean, it was just a talk. I was like, okay, on the upside, I think Bitcoin goes to 2,000 or whatever the number was if the ETF’s approved, but if it doesn’t, it’s going to tank to like 850, and it dropped down to 880, and I actually thought it would go below 850 and maybe it might even stay there, but my prediction was 850, and I get so much shit for it not hitting the 850 number. Like, people don’t understand. Like, that was more directional. It was like, hey, it’s going to go…and the fact that it broke 900 and went down is like pretty close.
Laura Shin:
Yeah, but to my mind 850 and 880, that’s fine.
Vinny Lingham:
Yeah, exactly, so then I got a lot of crap on Twitter. I started just muting people because like Twitter’s not a place for debate.
Laura Shin:
Oh yeah. No, it’s not. I like to read the threads.
Vinny Lingham:
Yeah.
Laura Shin:
But like I try not to engage too much, but wait, so I want to ask, like, you know, when you were saying that you felt like the market fundamentals weren’t there in 2014, but then things changed, so what are some of the things that did change about…was it, I guess, a year ago? Like, what did you see then that you felt like was going to enable the price to rise?
Vinny Lingham:
Well, I definitely felt that the halving coming up would have an impact.
Laura Shin:
Which was like just about a year ago.
Vinny Lingham:
Yeah.
Laura Shin:
It was like 11 months ago or something.
Vinny Lingham:
Well it was June, July last year.
Laura Shin:
Oh, July? Okay.
Vinny Lingham:
Yeah, so about a year ago, and that would have an impact and would create a spike, and I mean there were just a number of other things like, you know, global market instability. I wrote about the currency commodity, Bitcoin as a store of value. The one thing I’ve said to people is that if Bitcoin moves up too fast, it’s going to create bubbles and crashes, and people don’t want to listen, so we’re going to be in that phase again, so…
Laura Shin:
So, is that what you think is going on now?
Vinny Lingham:
Well, first of all, I think that the…I did not expect Bitcoin to go over the 1250, 1300 mark, and if it did, I knew it would run because that’s typically what Bitcoin does.
Laura Shin:
And you didn’t think it would go past that this year?
Vinny Lingham:
I didn’t think it’d go past 1300 this year, well, until the skating issue is resolved and the hard fork is resolved.
Laura Shin:
Oh, okay.
Vinny Lingham:
So, that’s why I didn’t believe that…and I also believe that by the price being kept lower that we’d have quicker resolution on the skating debate, because at some point, it’s not profitable to keep mining. So, I had a whole, you know, a little bit of a…I went on a limb on that one, but all that happened, essentially, was the price kept rising, and people don’t care about the technical fundamentals of Bitcoin, and so now we have a situation where transactions below a hundred bucks don’t make any sense because the fees and you know? It’s not in a healthy situation.
Everyone knows that, so _____ 00:40:07 coming in and people are running that, and I don’t like to see that, and even though Bitcoin might probably double, 1250, I mean, I publicly sold at 1250 because I felt that was a short-term, you know, cap, we’ve had a run, and the reasons for the run, I’m not so sure are necessarily sustainable, but what it did do is it brought confidence back into the market and the broader markets, and now you have people who have no idea what Bitcoin is buying Bitcoin, and well, I’ve seen the story play out before, and we’ll see how high it goes before it comes back down again.
Laura Shin:
And so where do you think this investment is coming from, from people who don’t really know what’s going on?
Vinny Lingham:
Yeah. Yeah. I think it’s from…
Laura Shin:
And who are they?
Vinny Lingham:
Well, I mean, tons of friends contact me. They wouldn’t know a bitcoin from an ether, like, they have no idea what they’re doing, and they…Vinny, should I buy, should I? I’m like I’m not giving you advice anymore. I’m just going to sit back and see what happens, and look, the way I look at it is I’ve always been a level-headed, reasonable person through the years, and when things are like out of whack on the downside, people think I’m crazy, like, Bitcoin, a thousand bucks, are you nuts, Bitcoin going up 3X, are you nuts? And everyone’s got different personal risk and appetite, so when it comes to personal risk and appetite, I mean, I had a ton of my net worth, you know, double digits sitting in Bitcoin at 1250, and I just didn’t feel comfortable with the way it all was, and I reduced my holding significantly.
I sold like 90 percent of my coins, but what I have left is still a decent amount of money, but for my personal risk appetite, and now it’s effectively doubled, so 20 percent, whatever it is, you know, it’s a decent amount of money, and I’m happy to support Bitcoin, but I wasn’t comfortable with the price, given the risk, and if you look at, again, the reasons for the run, some of the fundamentals, you’ve got fiat that can’t go into exchanges, you’ve got…I mean, right now, in I think Bitfinex, 360 percent a year interest to lend dollars to people who are going long on Bitcoin. I mean at some point the stuff…and I saw this happening in 2013 as well, and it happens and the stuff unwinds, and so it’s kind of like musical chairs. When the music stops, if you don’t have a chair, you’re going to be, you know, the party’s over.
Laura Shin:
So, you think the bubble’s going to pop this year, and what’s going to happen?
Vinny Lingham:
It may never pop. I mean it may never pop. The reality is that markets, they can stay rational for long periods. I mean look at the traditional financial markets. You’ve got bonds which are in a bubble, you’ve got…there’s a lot of…I mean with capitals cheap worldwide, everything gets inflated. I mean people in Japan can borrow yen for zero percent interest and go buy Bitcoin. So, what’s going to happen? The price keeps going up. The velocity of price increase is more my concern. The faster it goes up, the faster it can come down, and the other thing which people forget is that when new money comes into the system, these aren’t long-term holders. People come in and just speculate. They’re selling their houses. I’m seeing these stories again, just like it was four years ago, and they’re putting all their money into Bitcoin.
Laura Shin:
Really?
Vinny Lingham:
Yeah, and what happens when the price drops 20 percent? Well, then it drops another 20 or 30 percent because people panic, sell the market because they’re holding too much, and now they can’t service their debt. Like, this stuff always ends badly, and so when you look at the market right now, I’m just, I’m biding my time and kind of like half-joking. Like, I bought one ether at 185 bucks because, like, I told the guy if I buy one at that price, it’s going to tank, right, and then it kind of went down. It was a bit of a joke. I think it’s back up.
Laura Shin:
Well, now it’s up again.
Vinny Lingham:
Now it’s up again, and the market’s just irrational, just largely irrational across the board, right, like those coins worth 350 million dollars or something right now. So, everyone who kind of knows and has been around for a while knows that this is an irrational market, doesn’t mean you can’t make money, and I think that probably the biggest mistake you make is shorting an irrational market. It’s a bad idea. So, I’m not shorting. I’m not, you know, going long. I’m just sitting back and waiting to see what happens.
I think there’s a lot of good crypto projects out there right now, and these projects will end up a real value, but there’s a lot of noise, and if you can’t see the noise from the signals, you’re going to lose some money, and that’s the way it is, and I think people need to learn lessons as well. So, instead of me trying to tell people, hey, there’s a bubble, watch out, I kind of sit back just to see what happens, and again, I could be totally wrong.
Laura Shin:
But you think there’s going to be a correction? Wait, like if…so right now Bitcoin is above two thousand dollars.
Vinny Lingham:
25 hundred.
Laura Shin:
25 hundred, yeah. So, what do you think would be like a more reasonable price, and kind of like what market fundamentals do you look at to kind of gauge what the value should be? Like, and also what risks do you see right now?
Vinny Lingham:
It’s not a price issue. It’s a velocity of value increase. It’s the quality of money going into the system versus the…I mean no one can argue a lot of money’s coming into crypto in the past couple months. It’s the quality of money. Are these people long term, or are they just speculators running it up?
Laura Shin:
Well, but what about like things like the potential hard fork? I mean do you…?
Vinny Lingham:
That’s the issue. People putting money in, they don’t understand this stuff, and so you have people, even in Bitcoin who do understand it, who say, well, the hard fork will be fine. The reality is that even an 80 percent hard fork is a contagious hard fork. Then you’re going to have a split, and then you’re going to have Roger, who owns Bitcoin.com and BTC.com or whatever else, and then you’re going to have two different flavors of Bitcoin, and oh, all of a sudden, the whole thesis of Bitcoin only has 21 million units? Well, that’s probably 42 million. Actually, no, it’s 63 million because now there’s three chains. Like, this is not a conversation that you can have with a man on the street who just sees the price going up and wants to buy bitcoins.
Laura Shin:
Right.
Vinny Lingham:
So, this is stuff where Bitcoin can go up to five thousand from where it is today. It can double. It can triple. The faster it happens, the more likely it’s going to crash.
Laura Shin:
So, and what are the odds, do you think, of a split in Bitcoin where we end up with two coins or three coins?
Vinny Lingham:
Much higher than the market’s pricing it.
Laura Shin:
Okay, but you don’t want to name odds?
Vinny Lingham:
No, I don’t think it’s up to…I’ve written blog posts about this. I’ve said my piece. I try to…like, I’ll always be known as the guy who tried to prevent the bubble, and I failed, clearly, because it’s going to happen, and I think it’s part of a learning cycle. We have to go through these bubbles. I don’t think one man can prevent the market from being irrational, and if the bubble never bursts, then that’s great. I’m happy for Bitcoin. I have bitcoins. I’m not going to be complaining about it, but again, I tried to be rational and…
Laura Shin:
Okay, so do you think that the odds of a split are more than 50 percent?
Vinny Lingham:
Yeah.
Laura Shin:
Yeah?
Vinny Lingham:
Yes.
Laura Shin:
Oh wow, and so if Bitcoin does split, which chain do you think will take the greater market share or be considered the real Bitcoin?
Vinny Lingham:
That one is a very difficult one. That’s very…because when you say considered the real Bitcoin, by what, by the market, by the price, based on market cap, based upon what fundamentals?
Laura Shin:
The majority of people.
Vinny Lingham:
In the whole world, people in China, people in Japan, people in Korea, people in the US?
Laura Shin:
Yeah, I guess.
Vinny Lingham:
So, how do you average it out?
Laura Shin:
Everybody.
Vinny Lingham:
Everyone? Well, BitPay themselves have had they would basically have to run two Bitcoins at that point that’ll operate on both chains.
Laura Shin:
Permanently, though?
Vinny Lingham:
Well, for a while, so they would be operating on both chains. It’s kind of scary, right, so from someone with a consumer tech background, when you go and buy one bitcoin, you go to Gyft and you want to go spend the coins there, and now like you get told that, oh, you have the wrong Bitcoin, this is just not good for business, it’s not good for either Bitcoin. A contentious hard fork is the biggest problem we’ve got right now, and that was my biggest concern, and I think that it’s going to happen, and the market’s not pricing it in, and so the moment the market gets spooked that this is actually going to happen, and the moment it gets closer to actually happening, the more we are going to see the bubble, you know, deflate a bit, maybe temporarily, maybe for a while.
Laura Shin:
Okay.
Vinny Lingham:
I don’t know. It’s, you know, I never gave myself the oracle name. People call me the oracle. It’s kind of funny. Like, again, I like to be pretty even keeled about these things. So, when sentiment’s low, I look like I’m positive, and when sentiment’s high, I look like I’m negative, and it’s all a perspective thing, right? So, let’s see. Like, I want to see us get through the year without a contentious hard fork, and if we do, then I’ve been totally wrong about everything I’m saying, and if we do have a contentious hard fork this year, then people need to realize that, again, I was the guy who tried to stop it, but no one listened.
Laura Shin:
Okay, well let’s talk more generally, also, about the ICO trend. You kind of like made a few remarks earlier that sort of give a hint what you think, but so what would you say is your overall opinion of what’s going on right now?
Vinny Lingham:
Well, look, I think there’s a number of…it’s like the dotcom days, in a sense, right? There’s this new thing. People don’t quite understand it. Everyone wants a piece of it. It’s like, you know, they’ve seen their friends do it and whatever. The dotcom bubble and burst was really bad for a lot of people in a short space of time but really good for the majority of the world for a long period of time, and so you got to kind of take the good with the bad, and so when I look at it as, I mean, Google raised 25 million bucks during the dotcom mania and we have Google today, thankfully, for a lot of things, right?
And so I think that you will get some companies and some organizations that leverage it well and are able to use this current “environment” to build amazing services for the world and make a difference long term, and those will more than pay back all the losses and whatever else, but then you get people who are, just like dotcom days, got scammed, scammed, and you have these crazy parties that these companies throw, and you know in Vegas, and burning five million dollars in launch parties. Like, you’re going to have all that crazy stuff happening, potentially.
You’re also going to have the problem that people think that because cryptography and technologists are now distributed around the world that the culture’s the same around the world, around building companies and building organizations. It’s not, and so the discipline around building tech companies differs from market to market and how people spend money, how they behave, how they act, how they hire, how they fire, how they build these services. Now, I think we’re a lot more aligned now than we were 20 years ago in terms of the differences between cultures, but these cultures, there are cultural differences across countries. I mean I’m South African, and I have investments in Africa. The culture is different there to the US. I’m not saying it’s bad.
Laura Shin:
So, I don’t see what you’re saying there. You’re saying that because of that, for that reason, then the ICOs in different places are…some are going to be more scammy or…is that what you’re saying?
Vinny Lingham:
Potentially, yeah.
Laura Shin:
Okay.
Vinny Lingham:
And look at the culture of Silicon Valley. You know if founders go out and buy a Ferrari and drive around in the streets, I think…I’m not going to point out examples, but they get hit pretty hard, right? So, you don’t do that in Silicon Valley. You don’t go buy a Ferrari once you get funding or whatever. People walk around in, you know, sneakers and t-shirts. It’s a lot more understated, and so it really is about the welfare, but there are other parts of the world where, you know, it’s like founders will go buy Ferraris, and the culture is to go, you know, it’s less intellectual, and I’m not saying it’s everywhere, and I’m not saying every company is the same, but there are certain cultures that it’s not about the good you do in the world, the technology you do in the world.
It’s about you as a founder and your, you know, if you’re single, the car you drive and the house you have and the pleasurable lifestyle. I see this as I travel around the world and making investments and looking at the people behind it, and so the problem with that is that a lot of people around the world are really good at marketing and selling and not as good at technology. I’m not saying, again, I’m not saying Silicon Valley has the monopoly on this. I mean you’ve got great companies in every part of the world, but the moment you pull out the bad elements out of certain cultures, don’t expect the money to be spent well.
Laura Shin:
Okay, and also, so, what are some of the things going on in the ICOs right now where, like, you look at that and you’re like I wish people would stop that? What are some of those things?
Vinny Lingham:
Well, first of all, founders taking money off the table and through a token sale in ICOs is just nuts. Like, teams that want to take…that’s just…like, I heard a story about that yesterday, and I haven’t confirmed it, but if that’s the case, then now we’re really, like…
Laura Shin:
And by that you mean like not putting some of it…just like immediately…?
Vinny Lingham:
Yeah, yeah, into their pockets.
Laura Shin:
Oh wow.
Vinny Lingham:
Yeah.
Laura Shin:
Interesting.
Vinny Lingham:
So that, to me, that’s a red flag straightaway. I think the notion of uncapped token offerings is a bad idea as well. I think it sends the wrong signal. I think the Dutch auction system was bad, I think, in my opinion, but markets kind of rewarded the system there, so, so be it. Yeah, I think it’s about being fair. I think, like, you have to create the value for everyone in the network, and so it depends. It’s like I’ll go ____ 00:52:55 network and make sure everyone benefits from the network in many ways, and I don’t think everyone else has the same sort of ambition. So, some people, this is a get rich quick scheme. Some people, basically, because they’re outside the US, they can do these ICOs in other jurisdictions, and they can take the money and run, and there’s nothing you can really do about it, and so the people and the team and the quality of the work and the track record is very important to me, not to say that people with no track record should be discarded.
I mean the quality of the work…but I think it’s…you got to find, I mean, I think people go from one end to another. They go from the end of, well, if it’s a venture-backed company, it must be great, to if it’s not venture-backed, it must be crap, okay, and I think there’s a middle ground here, and there’s a middle ground where just because a team isn’t venture backed or necessarily have experience that they couldn’t be building something amazing, but there should be some governance structure in place, some, you know, besides those two guys in the room, who’s on their team? Do they have some advisors? Do they have a board member? Do they have someone who is going to, you know, look over them and help them? Is there some pedigree, you know, and sometimes you can just argue it doesn’t matter, but I mean you’re building companies, and you’re building technology companies and startups and you’re working with people and you’re hiring, and the way you treat your people is important.
The way you build the culture is important. The way you try to be non-racist, non-prejudicial, like equal opportunity for women, all these things, I think it’s important. I think you can’t operate in today’s society with the same biases that we’ve had in the past, and you’ve got to be a bit more forward thinking, and sometimes the technologists who sit in the room come up with this stuff, and they don’t know how to operate these organizations and these businesses, and so you get the situation where it’s changing. Now, I mean, Bitcoin’s been largely male dominated. Now, I don’t think it’s entirely the technologists’ fault. I think it’s just the nature of the people who were into crypto and whatever else and this technology cycle were largely, you know, largely male for whatever reason, just the education…
Laura Shin:
Well, society.
Vinny Lingham:
Society, education.
Laura Shin:
Yeah.
Vinny Lingham:
Yeah.
Laura Shin:
It shapes boys into tech-y, financial types and girls into not.
Vinny Lingham:
Exactly.
Laura Shin:
So, yeah.
Vinny Lingham:
Exactly, so, but so you can’t blame the people necessarily, but then it’s also upon us to try and bring in diversity into our organization. So, we can’t say, well, because society created this problem where it’s heavily slanted towards one group that we can’t fix it.
Laura Shin:
Yeah.
Vinny Lingham:
And so I think that’s, so, again, culture’s important and I think when you’re backing a team and you don’t know about their views on culture and what they’re doing, like, I like to look at capital as something which, like, I call it conscious capital. So, if I invest in something, I kind of want to believe in the team. I want to believe in what their vision is, their values. These are the important things to me, like to only invest in a team that is…well, I mean, would I invest in a team that’s racist? No. Would I invest in a team that’s prejudicial toward a certain group? No. Like, so, why don’t we find these facts out? And the only way you do is like by getting to know the people and understanding their vision and what they see and their values, and I think it’s a lot easier to align values when you know people versus when you’re just reading a whitepaper.
Laura Shin:
Oh wow. So, that means that it must be pretty difficult to invest in an ICO then?
Vinny Lingham:
I think it is, and another thing, again, sometimes it’s investing. Sometimes it’s buying tokens. Like, there’s certain tokens you can easily buy because of what it is, and it’s not really linked to the culture of the company, and it’s a distributed model, and it’s open…
Laura Shin:
You just want to use the service.
Vinny Lingham:
People want…exactly, so there’s lots of reasons for it, but I think, I look at this as a startup investor, I’ve done a ton of investing, I’ve done Shark Tank. Like, on Shark Tank, if I don’t get a sense that the people have got a cultural alignment with my values, I don’t invest.
Laura Shin:
Okay. Yeah, I actually, so we don’t have a lot of time left, but I do want to ask you a few remaining questions.
Vinny Lingham:
Sure.
Laura Shin:
And one of them is about Shark Tank. How did you get on that, and how has that experience been for you?
Vinny Lingham:
So, yeah, that was a great experience. I was invited to be on Dragons’ Den, which is like the UK and Canadian version of Shark Tank, three years ago in South Africa. Now, I went on it and it was a great experience, and then Sony owns the rights to Dragons’ Den, so they brought out Shark Tank in South Africa, and myself and the other dragon were slated to be sharks as well. So, it was great, and Shark Tank’s one of my favorite TV shows in the US, and I’ve been watching it for years, so I really enjoy it. I sit in Mark Cuban’s seat.
Laura Shin:
Nice.
Vinny Lingham:
And I get to see all these South Africans pitch ideas, and one of the deals we did was Augmentors, which was on the show, and these guys came and they were trying to like figure out how to monetize this thing and build…and I was like, guys, why don’t you just use like the blockchain, and why don’t you create the rarity of these items, and so they did an ICO, and they sold a million dollars’ worth of tokens, and now it’s literally up, like, the databits are up 20X.
Laura Shin:
Oh wow.
Vinny Lingham:
And so, I mean, yeah, and the market’s frothy to say the least, so everything’s up 20X, but it was interesting that we were able to take something on Shark Tank…I did the first ever Bitcoin deal on Shark Tank.
Laura Shin:
That’s great.
Vinny Lingham:
And I was wearing my Bitcoin socks, at the time, as well.
Laura Shin:
Oh nice. All right.
Vinny Lingham:
And so it was a good experience, and again, met some interesting people.
Laura Shin:
What other projects and tokens are you interested in?
Vinny Lingham:
I actually never, I mean, Shark Tank I kind of had to talk about databits and whatever else because that was a TV show, a broadcast. I couldn’t hide the fact that I was behind it, but I actually never talk about what I like and what I don’t like publicly because I do have a large audience on Twitter and a large following. So, if I say XYZ coin is going to be big, the price will just move and people will buy it because I said so, and I just don’t want to be responsible for that. So, I’ve largely limited my commentary to Bitcoin because I can’t move the Bitcoin price.
Laura Shin:
Right.
Vinny Lingham:
Trust me, like, no matter what I say, it’s not going to move the Bitcoin price, try as I might.
Laura Shin:
Right.
Vinny Lingham:
So, I limit it to Bitcoin and actually Ethereum, a little bit. I mean I’m less ____ 00:58:39 with Ethereum than I am, obviously, with Bitcoin.
Laura Shin:
Yeah, well I wanted to get…what’s your take on Ethereum?
Vinny Lingham:
I don’t like the unlimited supply. The numbers don’t add up for me. I know they’re trying to move to proof of stake, but I mean when it comes, we can have a look at what the supply looks like then. I’m not sure why, if you do the math, that we need so much Ethereum out there in terms of at that price, and so I’m still trying to get my head around that. So, I don’t know. It looks _____ 00:59:03 to me. It looks extremely _____ 00:59:05 to me, but again, I could be wrong. You know it’s hard to call a top as well. You just have no idea. I mean if there’s irrational demand for a certain item, then it’ll go up in price.
It’s one of those things, and at the end of the day, it needs to be used in the real world, and Ethereum is arguably a better technology. You know it’s got a different use case than Bitcoin, I think. I mean Bitcoin is a real long-term store of value, and I think Ethereum’s more of a settlement layer, smart contracts. It’s probably closer to what we’re trying to do with Civic, so I respect Ethereum as, again, price and value are always two things which people don’t understand. Like, I don’t hate Ethereum. I’m just not sure that the price is aligned with the value long term.
Laura Shin:
Okay. Do you have any price predictions for Bitcoin by the end of the year?
Vinny Lingham:
My price prediction for end of this year was three thousand bucks.
Laura Shin:
Okay.
Vinny Lingham:
And I did say we should get there as slowly as possible, and no one cares.
Laura Shin:
Okay. Yeah. We’ll be there in like a day.
Vinny Lingham:
We’ll see, but that was the prediction I made last year, and so I think my annual predictions have been spot on for four years now.
Laura Shin:
Okay.
Vinny Lingham:
So, we’re pretty good.
Laura Shin:
Well, we’ll check back in and see how you did. Okay, well, where can people learn more about your work and get in touch with you?
Vinny Lingham:
VinnyLingham.com is my blog, and I do a lot of blogging there. I’m at @VinnyLingham on Twitter, and then Civic.com is my company, so check it out. If you’re a developer, get ahold of us. We’d love to figure out how to get you some tokens and how to get you up and running, and if you’re a user down on Civic, we’re going to be giving users tokens, as well, as part of the distribution, so yeah, just try it out and tell people about it and use it, and give us feedback, and tell us how to make it better and how we can better protect your data.
Laura Shin:
Great. Well, thank you, so much, for coming on the show.
Vinny Lingham:
Thank you, Laura.
Laura Shin:
Thanks, everyone, for joining us today. Before you switch off this podcast, don’t forget, go to SurveyMonkey.com/R/Unchained to give me your feedback. If you’re interested in learning more about Vinny, check out the show notes, which are available on my Forbes page, Forbes.com/sites/LauraShin. Unchained comes out every other Tuesday. Please share the podcast with friends and on social media and remember to review, rate, and subscribe to it in iTunes or your preferred platform. Thanks, again, for listening.
