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Did prison teach Charlie Shrem anything? In a recent NPR interview with NPR’s Keith Romer, Shrem’s time in jail honed his fascination for how people buy things, a focus that has served him well throughout his diverse though occasionally jaded career.
Shrem was processing more than a million dollars a day allowing people to trade dollars for bitcoins through his company, BitInstant. One of his biggest customers, however, was Silk Road, a forum where people bought illegal drugs using bitcoin.
Caught In The Silk Road Meltdown
Unfortunately, Shrem did not realize he had gone too far until the police handcuffed him in 2014. Silk Road became one of bitcoin’s most celebrated associations with criminal activity and its 2013 shutdown left a black mark on the cryptocurrency’s reputation. Shrem pleaded guilty to aiding and abetting an unlicensed money transmitting business.
Shrem was released early last year after spending time in a federal prison camp in Pennsylvania since March 30, 2015.
Prison, however, did not dampen his fascination with how people buy things. A lot of bartering took place in prison.
“So the guy who fixes headphones only accepts protein bars,” Shrem told Romer. “The guy who cuts your hair wants jars of peanut butter. But I would say the overwhelming majority of people would accept mackerel just because everyone else would accept it.”
Shrem suspected prisoners would benefit if they digitized mackerel. Inmates could keep accounts using physical notebooks for how much digital mackerel they owned. He wanted to set up an experiment based on this assumption.
But before setting up this experiment, he was released from prison. And when he got out, he soon learned that bitcoin and blockchain had become more mainstream and were no longer the purview of drug dealers and libertarians.
Not The Same Bitcoin He Remembers
“When I got out, that year was the year of the blockchain,” he said. “That’s when a lot of things happened.”
Charley Cooper, managing director at R3, told Romer the bank consortium has nearly 80 members, covering every continent.
Hence, the technology that Shrem thought could evade the big banks is now being co-opted by them. The bottom line: It’s not the ideology behind the technology, but what it’s good for that determines how it will be used.
A New Direction
Shrem himself offers a good example of how digital assets can be put to good use.
Late last year, Shrem co-founded a startup called Intellisys Capital which allows investors to invest in profitable companies by buying a digital token backed by real assets. The firm has a portfolio management platform for middle market growth equity investments, according to its website.
Shrem teamed with Jason Granger, who has built teams in banking, real estate, construction and private equity.
Intellisys seeks to ensure regulatory compliance as virtual currencies and blockchain-based businesses evolve into a core role in the global economy.
Intellisys works to modernize private equity and offer investors the opportunity to reap returns of strong businesses in the U.S. they currently don’t have access to, amid profit-erasing fees of mutual funds, high-risk equity picks and low-yielding bonds.
Image from Shutterstock.