Why Cryptocurrency Matters | Mike Taormina

Tyler Gardner (0:00)

Hello friends, this is Tyler Gardner welcoming you to another episode of Your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance, and investing. So let's get started and get you one step closer to where you need to be. Back in 2003, I met this guy at the London School of Economics.

If you had told either of us then that we'd still be in touch decades later, let alone traveling the world together annually, we probably would have laughed it off. Well, I probably would have laughed it off as I remember turning to him right before we left for the year and saying, well, I'll never see you guys again because that's usually how life had worked for me. Luckily, we've stayed in touch, and here we are, bonded by years of debates, deep dives into finance, and as unshakable, sometimes questionable, devotion to the Mets, the Jets, and Georgetown basketball. Mike Taormina isn't just a diehard sports fan with an encyclopedic knowledge of crypto. He's the co-founder and CEO of Vault, a fintech company that enables lenders to extend credit backed by digital assets. Before that, he co-founded CommonBond, which helped originate over $5 billion in student loan refinancing, and Alluvial, the team behind the Liquid Collective, a decentralized Ethereum staking protocol for institutions. And he's got a credential or two to back it up. MBA from Wharton, finance background from Georgetown and LSE. Oh, and he's a CFA charter holder. That said, his single greatest credential has nothing to do with where he attended some classes or listened to some people talk. But rather, the number one reason why I wanted to bring Mike on the show is because of his lifelong devotion and his ongoing patience teaching others why crypto matters for the future of transparency and efficiency in finance. The best part, he makes all this complex crypto stuff actually somewhat interesting and engaging. But obviously, I will let you be the judge of that. So without further ado, a conversation with Michael Taormina. Mike, appreciate your joining me today. You started your professional career, your traditional finance career at JPMorgan, and then you spent years learning more and more about decentralized finance and how it pertains to our current practices and modes of being. Could you start by telling us just a little bit about how this all came together for you personally and professionally, and what led you to where you are, an incredibly accomplished finance professional, about to embark on yet another venture?

Mike Taormina (2:30)

This will be my fourth startup. My first startup was a lender. We built a lending company. This goes back to late 2011 I actually met my co-founder Nate in 2012 He helped with the incorporation. He became our first employee. And we went from three guys living in the back of the office to an origination machine. We did over $5 billion of refinance to loans over a 10 year plus period. And so we're bringing that experience to bear here. I've also worked in digital assets. A few years ago, and I did this also in concert with Nate, we started digging into decentralized finance. And so this term refers to financial transactions that take place on a blockchain. Lending, it's trading, it's insurance. And we went way down the rabbit hole. There's a lot of innovation going on. There's also a lot of noise. We came out of that experience very mindful of the noise, but also mindful of the opportunity. And that is that there's a technology at its core that offers unique benefits that can be applied to traditional commerce. We're not going to be the lender. We're going to be the infrastructure. And allow them to offer up a loan that can be partially collateralized by the applicant's Bitcoin worthier. Why would you want to do that? Today, if you went to a fintech lender and you were getting an unsecured loan because you want to consolidate your credit card debt, they will only look at your underlying credit fundamentals. They'll look at your credit score. They'll look at your income. But that's it.

It's really hard to use anything that you own personally outside of a car or a home as collateral for a loan. You end up getting an interest rate that reflects that reality. And what if I offered you the opportunity to take an asset that you already have as so many Americans are increasingly owning the Quinn or Ethereum, that's the bulk of the digital asset market, and actually put it to use. So, you can post some of your digital assets and actually have the opportunity to lower your interest rate and improve your financing.