Venture capital fund El Zonte Capital launched today with a focus on advancing hyperbitcoinization around the world through strategic investments in startups building the future of the Bitcoin economy.
The fund’s name alludes to El Zonte, El Salvador, the city where the Bitcoin Beach community was founded to build a circular economy leveraging Bitcoin and the Lightning Network and later inspired President Nayib Bukele to draft legislation to make BTC a legal tender in the country.
The husband and wife stars of “Orange Pill Podcast” and RT’s “The Keiser Report” Max Keiser and Stacy Herbert spearheaded the El Zonte Capital firm, or “EZ Cap” for short, after living for the past two months in the coastal city and experiencing hands-on what a Bitcoin-based economy looks like.
“El Zonte is hyperbitcoinization. Hyperbitcoinization is economic freedom, and hyperbitcoinization is our main investment thesis,” Keiser told Bitcoin Magazine. “After experiencing what it actually looks like, we see this as the inevitable near future for everyone else. We are riding this wave as any surfer would.”
Hyperbitcoinization is the inflection point at which Bitcoin becomes the default value system of the world. As more individuals and groups around the world realize the advantages of a borderless, censorship-resistant and natively-digital system for transacting value, a critical mass of users will eventually fuel currency demonetization and the replacement of our world’s ingrained financial institutions and world powers with a more equitable, publicly-driven system.
The town of El Zonte is arguably the most “Bitcoinized” municipality on the planet, with much of local commerce conducted using Bitcoin. Keiser and Herbert have immersed themselves in the local scene, meeting with residents, business owners and politicians at all levels, including Bukele.
“We’ve been asking hard, deep questions to all of them and discussing their plans extensively,” Herbert said. “This is the place to be.”
Keiser and Herbert first started investing in Bitcoin companies in 2013 and have since made venture investments in over 15 firms, including exchanges Kraken, Swan Bitcoin and Bitfinex; security company Casa; payments firm BitPay; and payroll services company BitWage. Now, they want to further empower Bitcoin adoption by supporting companies building a future where Bitcoin and Lightning are an ever-increasing part of people’s lives.
“The future is all around us,” Keiser said. “I haven’t been this excited about Bitcoin since I first heard about Bitcoin.”
EZ Cap will begin with a $5 million committed capital seed-stage fund. Keiser and Herbert are the firm’s general partners (GPs), along with the founder of Swan Bitcoin and Bitcoiner Ventures, Cory Klippsten. The advisory board will include several of the most knowledgeable and connected Bitcoiners from around the world, according to the partners.
“We hope to facilitate a two-way exchange of ideas and resources, with companies around the world bringing their products and services to El Salvador, and companies based in El Salvador exporting their innovation to the rest of the world,” Klippsten said.
EZ Cap’s investment thesis is hyperbitcoinization, but the road to hyperbitcoinization will likely not be easy. The firm will focus on empowering companies developing solutions around Lightning, payments and the use of bitcoin as savings technology –– what it sees as three vital pillars of a hyperbitcoinized world. The fourth pillar, legislation, is currently best seen precisely in El Salvador.
Lightning rose to the global spotlight last year after El Salvador turned bitcoin into a lawful currency that citizens could use in daily commerce, despite the common criticism that bitcoin is unable to meet the requirements of a successful medium of exchange. By creating payment channels off-chain, however, Lightning enables Bitcoin to scale and accommodate higher-frequency transactions that are unfeasible on the base layer while ensuring they abide by the same rules.
“El Salvador is drawing in the smartest, most creative people,” Herbert said. “Jack Dorsey recently said that ‘a big part of the future is happening in El Salvador,’ and he’s not wrong. The future is now and it is right here. And so are we.”
Keiser explained that most tech hubs have three things in common: good education centers, access to capital and entrepreneurs. EZ Capital will initially bring capital to the country’s entrepreneurs as well as invite worldwide builders to go there, and later look at education.
“We will look at education and education technology to onboard as many people as possible,” Keiser said. “El Salvador will be bigger than Singapore.”