When BlockFi co-founder Zac Prince suffered online attacks alleging that his firm could have lost $232 million from a reversal in an arbitrage play between the price of bitcoin and a premium to net asset value for the Grayscale Bitcoin Trust, he knew what to do.
Rather than issuing a formal rebuttal of the allegations, Prince instead made appearances on bitcoin podcasts where he could be confident of a friendly reception. Prince’s firm is a sponsor of one of the podcasts, something that should inspire confidence in any guest.
Prince isn’t just hoping to profit from holding bitcoin, however. He is trying to build a financial services business that will “redefine banking” by moving beyond its core crypto lending activity.
Prince isn’t just hoping to profit from holding bitcoin… He is trying to build a financial services business that will ‘redefine banking’
BlockFi already has more than 500 employees and aims to expand beyond 1,000. It recently raised $350 million in a funding round that was announced with excellent timing just as speculation about trading losses spread and that took the firm’s valuation to $3 billion.
A bitcoin rewards credit card is planned for some time in the second quarter of this year and, with BlockFi now in ‘unicorn’ territory, it is easy to see a path to an eventual public listing that makes Prince a billionaire in fiat money.
Prince lined up an impressive array of promotional quotes from investors in his latest funding round and presumably spends much of his time with backers such as Bain Venture Capital, Susquehanna and Tiger Global.
As crypto financiers take their business models mainstream, they also need to keep an eye on the evangelists who first pushed up the value of bitcoin and have surges of enthusiasm for different tokens – and who will remain the core client base for the near future.
Prince has clearly thought about using lines that resonate with both his two main audiences of investors and clients.
Predictable enemies
In one podcast appearance he outlined how “crypto financial services will compete and disrupt traditional fintech and banking,” which usefully combined a jab at firms such as PayPal with a disparaging aside towards predictable enemies like JPMorgan, whose chief executive Jamie Dimon is widely reviled online for sceptical remarks about bitcoin he made years ago.
Prince also made remarks that sounded very much like the pitch he made to sophisticated financial investors in his last funding round. “We believe we are fundamentally in the business of risk management at BlockFi,” he said, for example.
This is not the call to anti-fiat currency arms that the average bitcoin bro wants to hear on a podcast from a charismatic leader. Prince may have sensed this, as he delivered more rousing remarks towards the end of the podcast.
“Banks are getting their butts kicked by fintech and payments companies anyway,” he said, returning the focus to the real enemy. He also dismissed the prospect of crypto clients eventually wanting insurance, which at the moment is prohibitively expensive.
“FDIC insurance is cool, but bitcoiners are so rich it’s not going to matter,” Prince said.
It was an adept example of code switching, or the practice of shifting language to address different audiences.
Among BlockFi’s investors is Valar Ventures, one of the firms started by investor (and PayPal co-founder) Peter Thiel that have names taken from JRR Tolkien’s ‘Lord of the Rings’ mythology.
Hopefully Prince won’t need to learn elvish, the language developed by Tolkien. After all, he already has some of Thiel’s money.
