Hash Power – Ep. 1 - Understanding Blockchains

**Patrick O'Shaughnessy** (0:05)
The documentary you were about to hear started with an email from Matt Goetz, the now CEO of cryptocurrency investment firm Block Tower Capital. Matt emailed me and invited me to lunch. He had a great job at Goldman Sachs, but was leaving it to start a new hedge fund that dealt in cryptocurrencies, to which I said, that sounds cool, what the hell is a cryptocurrency? His partner, Ari Paul, was also leaving his job as a portfolio manager at the University of Chicago's endowment. Ari would be the CIO, and Matt would run the business. Over the next several months, with the significant help of Matt and Ari, I had conversations with leading thinkers and creators in the field. Big picture philosophers like Naval Ravikant and Fred Ehrsam, creators like Juan Bonet and Muni Bali, investors like Ari Paul and Olaf Carlson-Wee. In the coming episodes, these leaders will be your guide to understanding blockchain technology, cryptocurrency investing, and the future of markets.
Hash Power is meant to be an introduction, but really it's an invitation to explore this emerging world on your own. As you'll see, nothing that is this early in its development is easy to understand. I hope Hash Power will serve as a litmus test for your own interest in blockchain and cryptocurrencies.
Now crucially, nothing you hear here is investment advice of any kind. Naval Ravikant and several others made a very good suggestion to me. Don't buy any cryptocurrencies unless you spent an enormous amount of time investigating them. It's important to note that as I was having these conversations, I owned virtually no cryptocurrency. I did buy small amounts so that I could watch and experience the blockchain in action. Buying, sending, receiving, converting between currencies. Things like watching transactions settle on the chain without ever being verified by a centralized entity or authority or sending money to Europe and back. You wouldn't opine on Uber by reading stories about it. You'd order a car, ride somewhere, and compare your experience to that in a yellow cap. One thing I think you'll find as I have, everyone is talking about this, but very few have actually tried it.
To dismiss this emerging asset class is, I think, foolish. You don't have to buy cryptocurrencies and most probably shouldn't, but you should explore. We will cover the technology, the power of decentralization, Bitcoin, Ethereum, ICOs, cryptography, and hashing. We will spend time with the leading active hedge fund managers in the field and with outside investors who are both optimistic and skeptical.
In this episode, we focus on blockchain technology itself and its potential impact on the world. In episode two, we will explore investing in cryptocurrencies, and in episode three, we will cover the most exciting projects currently underway and discuss where things will go next.
In producing Hash Power, I searched for a presenting sponsor who was thoughtful, forward-thinking, and willing to experiment. I knew I'd found one such company when I learned that the CEO, in this case, Abby Johnson, has a Bitcoin mining rig in her office. This episode is brought to you by Fidelity Investments, a company that is constantly researching and experimenting with emerging technologies like crypto assets and blockchain to improve the lives of their customers. Fidelity provides a comprehensive set of products and services to individual investors, employers, and financial advisory firms. For more information, please visit fidelity.com. If you enjoy what follows, you'll still be very early in understanding this field. Most don't. So help me spread this like wildfire, because the more people that understand blockchain, the better its impact might become. Let's dive in.
If you are like me, you heard about Bitcoin a few years ago, forgot about it, and saw it come roaring back to prominence in 2017 I remember watching a poorly produced YouTube clip three years ago that tried to explain Bitcoin and mining. God, do I wish I had paid closer attention back then. Now you hear many people saying that Bitcoin could be a store of value for the digital age. Now, the very concept of digital scarcity requires a new kind of technology, what we call blockchain. And this is where we begin. Bitcoin was the first of these technologies and may turn out to be the most successful, but it's also one of the simplest and may only hint at the broader potential of blockchains.
But what literally is a blockchain itself? Every time I ask, I get a slightly different answer. Here's one of the best answers from Jeremiah Lowin, who is a risk, statistics and machine learning expert working for a private family office who has personally explored Bitcoin as a potential investment. We start with his brief description before diving into the far-reaching implications of blockchain with one of our key guides, Naval Ravikant.